Editorial: The Board of District Judges should immediately terminate County Auditor Phyllis Martin for the “Up-YOU-affer”

County Auditor Phyllis Martin insulted Montgomery County taxpayers with publication of a public advertising announcement which she calls the “PAFR.” It places Martin’s gross conflict-of-interest on public display.

Eric Yollick, The Golden Hammer

The Board of District Judges should terminate Montgomery County Auditor Phyllis Martin immediately for her publication and use of County government tax dollars for a public advertising announcement which she calls the PAFR and which she ought to call the UPUIAFR (pronounced Up-YOU-affer) for “UnPopular Unnecessary Insulting Annual Financial Report.”

The UPUIAFR contains very little information about Martin’s role as County Auditor. It contains no information whatsoever about the massive about of growth in County government spending that has greatly exceeded population growth and inflation since 2000. It contains no information about corruption and waste out of Martin’s office, Phonoscope, ghost employees, massive Commissioners Court salaries, the cost of the County Treasurer’s release of private employee information, more than $13 million of general revenue funds on an unpopular and unnecessary 3 mile tollroad, or the $55 million slush fund which Martin admitted existed during the Commissioners Court meeting on March 27, 2018.

The “Up-YOU-affer” is nothing but pro-government-spending propaganda.

It is not the place of an auditor to brag about the very subject or goals of her financial audit. Her sole place is to audit.

The United States Government Accountability Office publishes the Government Auditing Standards, which are the Generally Accepted Accounting Principles and maintained in a publication sometimes called the “Yellow Book.” The County Auditor’s publication of the advertisement known as the “Up-YOU-affer” reveals her failure to maintain her independence. It is not the place of an auditor to advertise the services and programs of the subject of her audit.

There are three Standards which the Board of District Judges should consider in their meeting:

Section 3.31. Internal Auditor Independence – GAAP requires the internal auditor to be located organizationally outside the staff or line-management function of the unit under audit. Furthermore an audit must be sufficiently removed from political pressures to conduct audits and report findings, opinions, and conclusions objectively without fear of political reprisal. In this instance, however, the County Auditor works closely with the Commissioners Court on a regular basis for budgeting purposes. She sits with the Commissioners Court at their regular meetings. The Commissioners Court sets her salary, which is substantially higher than every county auditor in Texas with the exception of Harris County. The County Auditor regularly meets with individual Commissioners Court members (the County Judge and Commissioners) to work with them to establish their department budgets. These meetings occur on an ongoing basis. There clearly is a political relationship with the County Auditor because she not only audits but works on the budget side of the accounting ledger. There is not sufficient independence between the internal auditor and the Commissioners Court under GAAP scrutiny.

Section 3.35. Nonaudit Work by Auditor. – The Yellow Book makes a major point: “If an auditor were to assume management responsibilities for an audited entity, the management participation threats created would be so significant that no safeguards could reduce them to an acceptable level. Management responsibilities involve leading and directing an entity, including making decisions regarding the acquisition, deployment and control of human, financial, physical, and intangible resources.” The County Auditor has assumed significant management responsibilities for Montgomery County. She sits with the Commissioners Court, interrupts meetings regularly, injects her opinions and her department’s policies as policy guidance for the Court, and supervises the individual Court members in budgeting. As Chief Budget Officer of the County, the County Auditor has direct management responsibilities under the Texas Local Government Code. One cannot criticize her for fulfilling these duties but the dichotomy of her role as Chief Budget Officer and as County Auditor has created this major conflict of interest that suggests the necessity of an independent internal audit of the County’s finances.

Section 3.36 provides the following examples of practices, which constitute exercising management responsibilities for the audited entity, in which such practices the Montgomery County Auditor engages:

“…setting policies and strategic direction for the audited entity”;

“directing and accepting responsibility for the actions of the audited entity’s employees in the performance of their routine, recurring duties”;

“reporting to those charged with governance on behalf of management”;

“accepting responsibility for designing, implementing, or maintaining internal control”; and

“providing services that are intended to be used as management’s primary basis for making decisions that are significant to the subject matter of the audit”.

Very clearly, the “Up-YOU-affer” doesn’t provide information from the auditor’s actual work as an auditor but instead is a clear attempt to justify expenditures for the County services which the subject of her internal audit hope to continue or expand.

Under Chapter 115 of the Texas Local Government Code, however, the County Auditor is a function of the Judicial Branch of our County government. County Auditor Phyllis Martin’s report, which is little more than an advertisement for which the taxpayers must pay, is an attempt my the County’s management to persuade their constituents to accept “the basis for making decisions that are significant to the subject matter of the audit.”

The PAFR, also known as the “Up-YOU-affer,” reflects Martin’s and her entire staff’s lack of independence from the subject of her audit.

The Board of District Judges should step in, fulfill their statutory duty to oversee the work of the County Auditor, and bring this important functionary’s lack of independence to an immediate close.

Comments

comments

You must be logged in to post a comment Login