7 Consequences of Audit Findings

Public procurement and contracting practices are regularly under the microscope of federal, state, and local auditors for compliance with various laws, regulations, and policies. 

Disclosure not compliance:  If an audit reveals non-compliance issues, an audit finding is often published.  Auditors do not generally have enforcement authority, but are there to publicly disclose how government agencies are operating. 

Consequences of audit findings:  What are some of the negative consequences of an audit finding?  Here are just a few:

1. Negative publicity for a public agency in the form of front page news that elected officials and appointed directors would prefer to avoid.
2. Political fallout including officials being defeated for re-election, or defeat of bond/levy votes seeking additional or continued funding from the voters.
3. Personnel actions including disciplinary warnings, suspension, and termination.
4. New requirements:  Establishment of new and often cumbersome requirements for all procurements and contracts.
5. Grant funding:  Disapproval of future grant funding applications, or having to pay back previously received grant funds.
6. Bond ratings:  Lower bond ratings that increase the cost of financing operations and capital improvements.
7. The auditor will return:  Review of the agency's operations the following year to determine if corrections have been made.

Pre-audit:  Make it a practice to regularly conduct a pre-audit of your agency's procurement and contracting practices to ensure it is in compliance with applicable regulations and policies.  A pre-audit can be conducted by internal staff or through a consultant.  It is preferable to identify and fix problems before an auditor zeros in on them and issues an audit finding.

Mike Purdy's Public Contracting Blog
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