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Beverly Hills might utilize the services of an outside audit firm instead of hiring a replacement for former City Auditor Eduardo Luna, who resigned from his position in March.
Luna, the first city auditor, was hired in October 2018 and served for nearly two and a half years in Beverly Hills before deciding “the timing was right for me personally to step down,” he told the council in March.
In a discussion of the topic during the June 24 study session, a majority of the council supported a plan to explore the hiring of an external audit firm, which would first answer to the City Council liaison Audit and Finance Committee, then to the full City Council.
The three majority council members argued that having an external audit firm – instead of a city-employed auditor – provides a truly objective assessment of the city government.
“I just don’t see the independence when the person is an employee of the city,” Councilman Lester Friedman said.
Councilman Julian Gold added that “any audit needs to be independent or it’s not credible.”
“True independence comes from having no connection to the city, not being a city employee,” Gold said.
Vice Mayor Lili Bosse also supported outsourcing the city’s audits.
While three members were in support, Mayor Robert Wunderlich and Councilman John Mirisch expressed concerns with the plan to utilize an outside firm. Mirisch in particular was influenced by the issues raised by Ann-Marie Hogan of the Association of Local Government Auditors, who spoke during public comment and answered questions from the council.
“I’ve found – and the cities that I’ve worked with have found – that the firms that do ‘internal audit work’ … generally don’t seem to be issuing audits according to government auditing standards and often will be issuing reports that aren’t audits … As difficult as it is to find qualified city auditors, I would say it’s probably even more difficult to find contract audit firms that really have the expertise of local government auditors,” Hogan said.
Mirisch echoed her in suggesting that there may not be a qualified outside company that could conduct performance audits for the city.
“I’m not convinced there are firms that can do it in the manner in which we want,” Mirisch said.
Wunderlich argued that using an external firm is “also not a guarantee of getting what we want” for audits.
“I think developing that trusted advisor relationship depends on having somebody who’s around virtually all the time … I’m not sure we’d gain that if we outsource the totality of the function,” Wunderlich said.
Wunderlich added that outsourcing audits on an individual basis would be “a significant step backwards” for the city.
“It wouldn’t provide the benefits of … the ability to look at our city, the organization, as a whole, as opposed to the specific contract they’re involved in,” Wunderlich said.
The other council members agreed that they would attempt to find one firm that could meet the bulk of the city’s auditing needs.
“I would really like to go out and find an audit firm that could meet a significant percentage of our needs,” Gold added.
Despite their differences on the mechanics, the council members seemed to agree about the importance of the auditing function for the city.
“I don’t think this is something we can drop the ball on,” Mirisch said.
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