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Responding to Changes in Municipal Leadership
By Emily Kidd

The only constant is change. Changes to municipal leadership come with the territory in government auditing. Elections are won and lost and new management leaders are appointed. These changes affect your audit work and present opportunities as well as risks to the audit function.

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Perhaps your elected officials praise your audit work, give you all the resources your shop needs, and support your recommendations at each report issuance. Perhaps not. I get the general sense that we are all striving to build and maintain relationships with our leaders. The great byproducts of strong working relationships are elements of trust and acceptance of the gritty work that we do. Knowing that your work will be understood and accepted is a great place to live as an auditor. But change is around the corner in any government. Elected officials will change. Executive management will change. With these changes, it is necessary for audit to change, to evolve with those inevitable shifts in leadership.

How we respond to those changes may make the difference in a pleasant or not-so-pleasant reporting environment during the next appointment or election cycle. At each phase in an elected official or manager’s tenure, there are different needs for those leaders. As such, there are different approaches the audit shop may want to consider during those phases. I’ve termed those unique phases as Assessment, Maintenance, Mechanical, and Dissociation.


ASSESSMENT 

For those officials just starting out in their role, a general introduction meeting with the audit lead is recommended. Yes, in a perfect world, incoming leaders would have a firm understanding of the audit function and its part in the betterment of local government. (One can dream.) And yet, this may be more of an exception than the rule. By requesting a meeting with the newly elected official, the opportunity to shape the conversation of the audit function is one that is an important step in building that relationship. That first meeting can offer you the opportunity to outline the audit process, the audit universe, and quell any misconceptions that may be present with that individual. For those officials that are open-minded to the idea of accountability and transparency, this is a great first impression. For those that are not, well, at least now you know and can move onward accordingly. Depending on the structure and size of your organization, reaching out to the official directly can set a tone for the relationship or, coordination with their liaison may be more appropriate.

This Assessment phase also applies to executive management. When a new leader arrives on scene, there will be a time where drinking-from-the-firehose is very much their reality. While we don’t want to overwhelm them, we do want to have some conversations before that special time wears off. Why is this important? With a good leader, there is a distinct timeframe when everything is on the table and very little can be attributed to that leader’s actions. During that time, you can ascertain the level of “get 'er done” or “meh” attitude from this new leader. This time is especially primed for a review of a controversial area or scope of the municipality. Any negative outcomes would be hard to pin on the incomer and the desire to make change is at its height during this golden hour.


MAINTENANCE

At this phase in an elected official’s “lifecycle,” they may be pushing their initiatives or avoiding making waves. Understanding where each is may assist with your presentations and communications of audit findings. It is during this stage that they may ask for certain projects to move forward with the next audit phase to advance their own agenda. I would caution that the selection of the audit plan be vetted carefully during this time and that those requests be evaluated with an objective lens. It would be negative to our profession if we were to be seen as undertaking “pet projects” instead of following the risks of the organization.

In contrast to this, there may be areas of risk that have been less accessible, but during this time that elected officials are building or maintaining their legacy, they may be more receptive to controversial reviews and audits. As long as they align with the risks of the organization, there is no need to shy away from these challenging audits. Embracing the changes resulting from your audit findings may even be enjoyable if approached with a positive perspective. Depending on who your audit function reports to, this may be an excellent time to get your big projects done.


MECHANICAL

It is a difficult environment for most involved when a vacancy in a leadership position leads to an appointment to an interim position. Perhaps not surprisingly, these appointments are common. The resulting working environment may lead to mechanical behaviors that can stall any good program. Take for instance an appointed county manager; they often don’t want to make big decisions and generally take the lead-by-coasting position. After all, an employment search may be underway during this time and, depending on the individual, they may be very comfortable in their next-in-charge spot in the organization and would not want to do anything to jeopardize that position after the interim gig is complete. It is perhaps during this time that the apathy of government work is at its highest, when the status quo lingers on. If that status quo is efficient, this can be a fine place to be. However, I would guess that in any organization, frequent program changes and adjustments are needed at every turn. To have a leader in place without leadership characteristics could stall the organization during the entire Mechanical phase.


DISSOCIATION

This one is my favorite. The time between the election results and when the newly elected steps into the role or the moment you learn of management’s resignation. For both elected officials and executive management, it is during this phase that there is a perfect combination for intel gathering. Institutional knowledge is great, retribution is low, and their desire to affect change after they are gone is perhaps heightened. Imagine an exit meeting you may have been a part of in a previous job. Depending on the level of trust with the interviewee, there can be much information gathered during a meeting with someone headed out the door as they have dissociated with consequences. Of course, the intel obtained should be filtered through a sieve of appropriateness. That is, is the information presented reasonable and accurate? Or is it a drowning person’s desperation, grasping for Rose’s head? Sometimes a figurative punch in the face, turning away from the information presented, is what is needed. While all information is welcomed, it may not be actionable.

Executive leadership actions during this time are different as well. While it may not be well known, there are behavioral changes that may be a clue that a leader is looking to land elsewhere. However, there may not be. Similar to the elected officials, conveyance of information during this time is generally greater since the accountability is perceived as decreased. Once notification is out, the two-week to two-month process in exiting should be acted upon by audit. This window of time is our opportunity to get information that may not otherwise be shared with the audit function.


AUDIT'S PHASE-RISK

At what point in this cycle, which phase, is the audit function at the most risk? It depends. If your audit shop is structured under and reports to the elected officials, an influx of new leaders may tip the scales away from favor if the new group is not supportive of the transparency and change that audit work offers. However, there is some comfort in the majority concept of the decisions of those elected--majority rules. This is in opposition to an audit shop that is structured under an appointed employee (e.g., city manager or CFO). In those instances, all it takes is one opinion to weaken the strength of the audit function by cutting staff or budgets. Just one opinion to instill a culture that does not respect the audit function or the work coming out of the audit office.

Wherever you fit into this concept, change is coming. Consider your options and tactics during each phase. Happy auditing!


ABOUT THE AUTHOR

Emily E. Kidd, CIA, CGAP, is the Director of Internal Audit for the City of Reno, Nevada. Her professional work experience spans multiple industries including local and state government, higher education, state taxation, and gaming. She is a member of ALGA and a Professional Issues Committee board member, member and Northern Nevada Chapter President of The Institute of Internal Auditors, and also a member of the Association of Certified Fraud Examiners.