CITY SHOULD ADOPT AUDIT GUIDELINES.

Byline: Carl Olson  Local View

You should have seen the jaw drop of the manager of a $400 million Los Angeles city department when a City Council member, during a committee hearing, asked about the last time the department had a financial audit.

When the department manager meekly answered there have been no audits in several years, you should have seen my jaw drop.

Such is the sorry state of government finances for the public to ponder. It's just another reason to doubt anything and everything about government taxing and spending programs.

My jaw dropped for two reasons. One was the sober realization that no good financial reports were available to the public, the City Council, the department manager or the media for every department of the entire multibillion dollar Los Angeles city government It should be obvious to anyone that without audited financial statements, there is no good accounting for the billions of dollars of assets and liabilities. Tax collections and cash flows cannot be reliably reviewed or managed. This very problem has been a major sticking point with the proposed division of Los Angeles into two or more cities and school districts.

The other jaw-dropping realization was that the City Council member who asked the question was not interested in establishing audited financial statements for the city government. The City Council member was just interested in cowing the department manager over the department's proposal at the hearing.

The problem is not just with the city governments. It's also the sad state of affairs at county governments, school districts and the vast array of unelected boards, authorities and commissions. No wonder the public gets cranky so often and just says no to bonds, fees and taxes.

To put this problem into perspective, who would buy stock in a multibillion dollar company that did not produce audited financial statements?

Fortunately, the financial auditing and standards community have been trying to fix things for quite a while. Recently, the Government Accounting Standards Board has adopted a new guide for state and local governments (Government Accounting Standards Board Statement 34). It provides new and improved rules which should result in clearer and more understandable presentations of the sources and uses of the public's money with a reliable balance sheet of assets and liabilities.

Although the board can recommend implementation of its guidelines, it cannot impose them. State and local governments need to adopt them voluntarily.

I wish the City Council member who asked the question about auditing the city department had pledged to institute comprehensive audits to follow the new guidelines. But, alas, no such luck, yet. That's why we have initiated a campaign to request elected officials at the city, county and school district level to adopt these new Government Accounting Standards Board guidelines.

The resulting information will allow these officials to better do their jobs of evaluating government programs. It will encourage departments to perform better. It will let the public make better-informed decisions. And it will give the media unending material for commentary. Wouldn't it be great if the new millennium could start out so productively?