When Govorner Jon Corzine proposed creating the Office of the State Comptroller, he did
so with a clear goal in mind: to bring greater efficiency to the operation of all levels of
government in New Jersey.
Local government officials across our state share that same goal. They strive to balance the need to provide high caliber services with the need to keep those services affordable.
With that in mind, the Office of the State Comptroller looks to bring a spirit of impartiality, independence and cooperation to its mission of finding ways to save taxpayer dollars.
Our efforts are not designed to catch public officials in a game of “gotcha.” Rather, our intent is to work with government entities to point out deficiencies so they can be corrected. We hope public entities will use our audits, program reviews, reports on best practices and our training capabilities to take proactive measures to keep costs low and fix small inefficiencies before they mushroom into larger ones.
The jurisdiction of our office is broad and includes state agencies, public institutions of higher education, independent state authorities, municipal governments, county governments and boards of education. It also includes all of the various local government units with contracting power, such as local parking authorities, bridge commissions, improvement authorities and park commissions.
As we have found in our efforts so far, the number of such government entities in New Jersey is startling—more than 1,900 government units. That means we have a government unit in this state approximately every four miles.
As a result, deciding where to focus this office’s efforts is crucial and requires a clear delineation of priorities. Our determination of what entities to audit or review is based on a number of objective criteria, including the size of the budget in question, the results of previous audits, referrals from other government agencies and other credible information.
Our office’s efforts fall into the following areas: financial audits, performance reviews, contracting oversight, coordination of state auditing agencies and training.
Financial Audits By the close of summer, this office was engaged in financial audits of a number of local and state entities. The audits typically begin with a review of prior financial audits and then involve an examination of internal controls and financial practices and procedures. They conclude with remediation plans for fixing any deficient practices. Especially in the current fiscal climate, we believe it is critical to promote financial practices that will yield the greatest efficiencies in the operation of state and local governments. We will continue to work toward that goal.
Performance Reviews Performance reviews are another key component of our mission. Traditionally, New Jersey has lagged behind other states as well as the federal government when it comes to looking at the performance of taxpayer-funded government programs. Rather than simply asking whether our programs are working or adhering to guidelines, our performance reviews examine whether the program can be administered more effectively and whether the amount of taxpayer dollars spent on the program is warranted.
It is important for us as public servants to continually re-evaluate whether a program’s benefits justify the tax dollars being dedicated to the program. Particularly at a time when public entities are being confronted with increasing taxes and/or decreasing services, every dollar spent should be scrutinized.
Contract Review The statute creating the Office of the State Comptroller also charges the office with oversight responsibilities concerning government contracting. Specifically, it requires any government unit seeking to award a contract worth more than $10 million to present the proposed contract to this office for review at least 30 days before any advertisement is placed. Separately, public entities are also charged with reporting information on contracts between $2 million and $10 million no later than 20 business days after the contract is awarded.
Earlier this year, we sent letters to government units in New Jersey informing them of these responsibilities. In providing notice to this office of these large-dollar contracts, public entities are asked to identify the type of goods or services that are being procured, the anticipated cost of the procurement and the selection process that will be used to select the vendor.
The contract review is not focused on whether entering into a particular contract is sound public policy – that is a question for elected officials. Instead, we simply look at whether the contracting process is legally appropriate. If it is not, the statute sets forth possible remedial options.
Coordination In addition to performing our own audits, this office serves as a coordinating agent for other state audits, including those performed by other state agencies. We meet periodically with those agencies to exchange information and avoid duplication.
Training The Office of the State Comptroller also provides technical assistance and training regarding best practices in financial management systems and in strengthening internal controls to prevent the misuse of public funds.
Similarly, the office is charged with providing guidance on the selection and rotation of external auditors. We did just that with our first public report, which advised all public entities to select auditors through a competitive bidding process at a minimum of every five years. We also called on public entities to switch to a new auditor at least every 10 years and refrain from hiring auditing firms that have made political donations in the previous year.
The external auditing system is crucial to the financial health of local governments in New Jersey. Aside from the millions of dollars public entities pay outside auditors, we ask these firms to play a primary role in reviewing and analyzing the spending of billions of taxpayer dollars.
In reviewing New Jersey’s external auditing system, we asked every public entity two important questions: how long has your current auditor been in place and what process did you use to hire that auditor? We found hundreds of public entities are hiring outside auditors without ever opening the selection process to competition, and then retaining those auditors for far too long—in some cases, 40, 50 and even 60 years. Our review showed such practices have substantial repercussions for the quality of audits being produced.
To be sure, the relationship between public entities and the Office of the State Comptroller will not always be a comfortable one. No one enjoys being audited, including us. But the relationship between this office and New Jersey governments need not always be an adversarial relationship either. Welcoming a team of auditors into Municipal Hall might be a less than joyful experience, but so are visits to the dentist or the doctor’s office. Yet dentists and doctors help find problems early, before they become bigger problems. Our office aims to do the same—and we’re even willing to make house calls.