Get the Facts About Auditor Subpoena Power
Published on March 25, 2022
Auditor Subpoena Power - What's Next
The subpoena power ordinance was first approved in May 2021 after extensive engagement with community groups and members of the City Council. Nonetheless, on Monday, March 14, a majority of the Denver City Council voted to repeal the subpoena power from the elected Denver Auditor’s Office.
A City Council member said he plans to propose a future ordinance to restore the subpoena power for our wage enforcement work. Auditor O’Brien and his team are looking forward to seeing this draft legislation and engaging to find a solution that aligns with the Denver Charter.
This effort has always been about doing the best possible work on behalf of the public our office serves. With subpoena power restored for wage investigations, our wage analysts would be able to use faster ways, when necessary, to make workers whole after they were not paid according to the law.
As for the Audit Services Division, Auditor O’Brien believes — and has previously said— our office has always had the right to all records it needs without restrictions, according to the Denver Charter and contract audit clauses. However, without the subpoena power the process will simply be slower.
While people across the country in all types of work environments have found ways to securely work from remote locations, some City Council members have shown they prefer to limit audit access and require us to use outdated on-site procedures that prevent our office from applying modern data analytics techniques. Auditor O’Brien intends to engage further with council members to explain how local government auditing works and the standards our office must follow according to the Denver Charter.
Removing a tool for quicker audit access is certainly a disappointment to some businesses and others in our community that would have preferred the cheaper and more focused subpoena process instead of years of contract litigation. However, our auditors will continue to do their best work to minimize the high costs to the city and to businesses that this outdated process will require, should audited organizations refuse to provide us with the necessary records.
Correcting the Record
There has been a lot of misinformation circulating related to the subpoena power and our office’s work. We want to clarify the facts.
- Misinformation: We use unsecured thumb drives to manage confidential information.
- The Facts: We use highly secure data transfer portals when moving data from an agency or vendor to the Auditor’s Office.
Our office frequently assesses the cybersecurity of city agencies, and we audit confidential information every day — and have for many years without data breaches. We have a track record of professionalism and secure practices. We follow the confidentiality requirements of the Generally Accepted Government Auditing Standards as required by the Denver Charter. We are also compliant with the National Institute of Standards and Technology and our work is periodically peer reviewed.
We use secure audit software called Teammate to safeguard our audit workpapers, which are confidential records protected by law. Our procedures are standard and fully secure — Auditor O’Brien has even prioritized work to help other city agencies pinpoint cybersecurity risks so they can further strengthen Denver’s overall data protections.
- Misinformation: The Auditor’s Office doesn’t follow best practices for audit processes.
- The Facts: The Auditor’s Office is a leader among local government auditing offices across the U.S. and Canada and strictly adheres to the Generally Accepted Government Auditing Standards required by the Denver Charter.
We are regularly recognized by the Association of Local Government Auditors for the quality and professionalism of our work. We are leaders in our field and absolutely use secure and established protocols to work with confidential data every single day. Recent awards we’ve received include:
- 2022 Knighton Distinguished Award – Airport Parking Shuttle System
- 2021 Knighton Exemplary Award – Neighborhood Sidewalk Repair Program
- 2019 Knighton Distinguished Award – Denver Preschool Program
- 2018 Knighton Distinguished Award – Affordable Housing
- 2015 Knighton Exemplary Award – Rocky Mountain Human Services
The Knighton Awards are managed by the Association of Local Government Auditors — which judge audits based on criteria for best practices such as:
- The potential for significant audit impact.
- The extent to which conclusions are persuasive, logical, and firmly supported.
- The feasibility of the recommendations in making government programs more effective and efficient.
- The use of clear and concise communication.
Winners of the awards must also show they use appropriate research methods and tools and that they are responsive to the needs and concerns of decision-makers and the public.
Meanwhile, the Generally Accepted Government Auditing Standards require the Auditor to assess data security in compliance with laws prescribing data security. If we were to manually take notes on-site, errors could be introduced. Additionally, security and quality control risks would be higher than when we securely work directly with the source data.
The Auditor’s Office uses advanced analytics, machine-learning, and continuous auditing techniques that have been recognized both nationally and internationally. These are standard audit tools that require direct data access. Data extraction and analysis is required for analyzing risk, testing identified risks, and testing data completeness, accuracy, and reliability.
Limitations to audit access would stop or grossly impair our office’s use of cybersecurity experts in information technology and network security audits as nearly all information used in such audits — including active directory user accounts — can be considered confidential.
- Misinformation: The Auditor did not engage in the legislative process for the subpoena ordinance City Council approved last May.
- The Facts: We held more than 30 meetings with stakeholder community groups and almost every member of the City Council to discuss the ordinance and we also discussed the topic at numerous meetings of Denver’s registered neighborhood organizations in the year prior to the proposed ordinance. Most community members we spoke to were surprised the Auditor didn’t already have the subpoena power, when every other Denver elected official does.
We attended three Finance and Governance Committee meetings to discuss the ordinance, and we sent multiple memos and presentations to council members. The dates when we met with key stakeholder groups and council members are provided below.
The Auditor’s Office was invited to attend the first reading of the ordinance before the full council on May 3, 2021, and an executive from our office was there. Not a single member of council asked him any questions or opened the floor for him to speak.
Our office was not invited to attend the second reading of the ordinance on May 10, 2021, when the amendment affecting our audit access was introduced at the last minute. Despite this, Auditor O’Brien was watching the meeting virtually and he was prepared for the meeting. When members of Council requested a 10-minute recess to allow Auditor O’Brien to join the Zoom meeting once it became apparent there were questions for him, the council president refused.
Petty disagreements about Zoom attendance distract from all the authentic community engagement we performed.
KEY MEETING DATES
- Colorado Building Trades – Feb. 24, 2021
- Denver Chamber of Commerce and Colorado Competitive Council – March 3, 2021
- Towards Justice – March 8, 2021
- SEIU – March 8, 2021
- Downtown Denver Partnership – March 8, 2021
- Restaurant Association – March 15, 2021
- Unite Here – April 9, 2021
- Hispanic Chamber of Commerce of Metro Denver – April 12, 2021
- Jobs with Justice – April 12, 2021
- Denver Area Labor Federation – April 14, 2021
- Asian Chamber of Commerce – April 14, 2021
- Discussion with Audit Committee Broadcast on Denver8 TV – April 15, 2021
- Denver Chamber of Commerce, Downtown Denver Partnership, Colorado Competitive Council – April 15, 2021
- Denver Museum of Nature and Science and Denver Zoo – April 20, 2021
- Denver Art Museum – April 28, 2021
- Numerous other RNO and community meetings where the subpoena power was mentioned, and constituents were surprised we didn’t already have it.
- Councilwoman Kendra Black – Feb. 1, 2021
- Councilman Paul Kashmann – Feb. 5, 2021
- Councilwoman Candi CdeBaca – Feb. 16, 2021
- Council President Stacie Gilmore – Feb. 17, 2021
- Councilwoman Debbie Ortega – Feb. 18, 2021
- Councilman Kevin Flynn – Feb. 19, 2021
- Council President Pro Tem Jamie Torres – Feb. 22, 2021
- Councilwoman Robin Kniech – Feb. 22, 2021
- Councilman Chris Hinds – Feb. 22, 2021
- Councilman Chris Herndon – Feb. 25, 2021
- Councilwoman Amanda Sandoval – March 2, 2021
- Councilwoman Amanda Sawyer – March 5, 2021
- Councilwoman Robin Kniech (additional meeting) – March 16, 2021
- Councilwoman Amanda Sandoval (additional meeting) – March 16, 2021
- Councilman Jolon Clark – never responded to several requests to engage.
After the audit access amendment passed at the last minute with no community or stakeholder engagement, we wrote letters to the City Attorney’s Office and met several times with council leadership and the City Attorney’s Office to try to find a resolution. It was only after nearly a year of work to find a solution that we were given permission by the City Attorney’s Office — as Denver requires — to have a court determine the legality of the amendment.
We remain happy to engage with any community group that would like to discuss this issue further. We encourage anyone to reach out to us at firstname.lastname@example.org to set up a meeting.
Lawsuit and Legal Processes
- Misinformation: The lawsuit regarding the subpoena power amendment would have had a high cost for the city and taxpayers.
- The Facts: The City Council forced us to ask a judge to determine whether the audit access amendment was legal after the council passed a law that conflicted with the Denver Charter. After nearly a year of working to find a resolution and repeatedly proposing several options to council leadership, we had no choice but to take this step.
However, the court action would have little to no cost to the city. The City Council would have been represented by the City Attorney’s Office, an existing city agency that is funded regardless of a court action. By law, our office had the option to request additional funds for this action and we elected not to; instead, we used existing “legal services” funds that are always included in our office’s annual budget.
Moreover, we sought equitable relief — a determination by the court that a portion of the amendment was illegal. There would have been no money damages or financial cost to the city based on the court’s determination.
We expected a swift, inexpensive resolution to the court’s decision, which would not have involved a full jury trial.
- Misinformation: The Auditor’s Office asked the court to interfere with the legislative process.
- The Facts: Courts regularly review and determine whether a law is legal or conflicts with another law. Since 1803, U.S. courts have been determining the legality of executive and legislative action. The Denver City Council, the city’s legislative body, is not exempt from judicial review.
Audit Analytics and Data Security
A central point of Auditor O’Brien’s work has focused on developing new data analytics tools to modernize how we audit. Using automation, machine learning, and scripting languages, we can efficiently sort through thousands or even millions of data points in a fraction of the time and with greater reliability than if we relied solely on older audit techniques.
The Denver Auditor’s Office is a leader in the nation among local government auditing offices in developing these advanced capabilities. Through recent research, we found many local government audit offices are moving in this direction because it is more efficient in identifying risk and looking for red flags that might otherwise be missed.
Both the public and private sectors recognize the importance of audit analytics as a necessary skill for auditors and as a critical technique in auditing. Large public accounting firms frequently write about the need for analytics in the audit profession.
Through our audit analytics program, we apply a range of statistical and data science tools alongside more traditional audit analytics tools to find specific conditions within large datasets. Our processes are in compliance with Generally Accepted Government Auditing Standards and the National Institute of Standards and Technology.
Our work has been informed by training presentations and conversations at audit conferences, other auditors’ published analytics work, and information from professional associations such as The Institute for Internal Auditors, the Association of International Certified Professional Accountants, and the Association of Fraud Examiners.
As previously described, our office uses secure data transfer portals and follows strict security requirements according to Generally Accepted Government Auditing Standards and requirements of Denver’s Technology Services agency. We work daily with confidential and secure data as part of both audits and wage investigations — with a track record of confidentiality and professionalism.
How the Subpoena Power Should Have Worked
Denver law requires the Auditor’s Office to conduct financial and performance audits of the city and its contractors in accordance with Generally Accepted Government Auditing Standards. In addition, Denver law requires the Auditor’s Office to enforce Denver’s wage ordinances. Denver law grants the Auditor’s Office access to all city and contractor records necessary to conduct these duties without limitation.
At the outset of every audit, the Auditor’s Office provides notice of this right and invites any relevant objection. Despite this right and advanced notice, audited parties occasionally refuse to produce necessary information.
The American Institute of Certified Public Accountants’ Statements on Auditing Standards — which is adopted by reference in both Generally Accepted Government Auditing Standards and Denver law — says management must provide unrestricted access to any information and persons within an audited entity necessary to comply with audit standards for professionalism and independence.
The subpoena power ordinance was intended to grant the Auditor subpoena authority with specific and necessary safeguards, including that:
- The subpoena could be used only in the performance of one of the Auditor’s statutory duties.
- Subpoenas could not be used against a city officer or employee.
- Due process protections were required to protect against unreasonable requests.
Writing additional safeguards into statute would be unnecessarily restrictive and quickly outdated because of the rapidly changing environment in which we work. No safeguards written in an ordinance would be better than what the court would do under the existing framework, because the courts have the flexibility to take changing work environments and technology into consideration over time.
Using the subpoena process is less costly and time consuming for audited organizations than going through years of litigation for breach of contract. And breach-of-contract litigation still would not guarantee the production of records.
Many audit functions in governments across the country can use the subpoena power as part of their duties, including:
- Department of Examiners of Public Accounts, Alabama
- Division of Legislative Audit, Alaska
- Division of Legislative Audit, Arkansas
- Office of State Auditor, California
- Office of the State Auditor, Colorado
- Office of the Auditor of Accounts, Delaware
- Department of Audits and Accounts, Georgia
- Office of the Public Auditor, Guam
- Office of the Auditor, Hawaii
- Office of the Auditor General, Illinois
- State Board of Accounts, Indiana
- Office of the Auditor of State, Iowa
- Office of the Auditor of Public Accounts, Kentucky
- Legislative Auditor, Louisiana
- Office of the State Auditor, Maine
- Office of Legislative Audits, Maryland
- Office of the Auditor General, Michigan
- Office of the Legislative Auditor, Minnesota
- Office of the State Auditor, Minnesota
- Office of the State Auditor, Mississippi
- Office of the State Auditor, Missouri
- Office of the Auditor of Public Accounts, Nebraska
- Office of the State Auditor, New Mexico
- Office of the State Comptroller, New York
- Office of the State Auditor, North Carolina
- Office of the Auditor of State, Ohio
- Office of the State Auditor and Inspector, Oklahoma
- Division of Audits, Oregon
- Office of the Comptroller, Puerto Rico
- Department of Legislative Audit, South Dakota
- Office of the Comptroller of the Treasury, Tennessee
- Office of the State Auditor, Utah
- Office of the State Auditor, Vermont
- Office of the Auditor of Public Accounts, Virginia
- Office of the State Auditor, Washington
- Legislative Audit Bureau, Wisconsin
- Department of Audit, Wyoming
Why Subpoena Power Matters to the Community
Transparency and swift access to records benefits members of the community who are most at risk of wage theft, and it benefits small businesses that are trying to compete with organizations holding lucrative and non-transparent city contracts.
The subpoena power would help our audits progress efficiently and would help us get restitution to underpaid workers faster.
Our wage investigations help support some of the most at-risk and underserved groups in the city. Ensuring people get paid at least the money they are owed according to the law is essential to workers and their families. As a result, we are dedicated to doing whatever we can to speed up the restitution process.
Similarly, our audit work sheds light on how Denver government is serving its constituents. By examining third-party contracts, we hope to encourage transparency and an even playing field for all businesses. Small businesses and businesses owned by women or people of color stand to benefit from our work, which ensures establishment organizations cannot hold on to lucrative contracts by skirting the rules and fair competition.
Without the subpoena power, litigation for production of records could take years and cost the taxpayers and businesses significantly more money. The subpoena process is certainly quicker, cheaper, and more focused.
We have faced challenges in working with members of the City Council on this issue over the past year, but we hope to work together in the future and rebuild positive working relationships.
AUDITOR TIMOTHY O'BRIEN, CPA
Denver Auditor's Office
201 W. Colfax Ave. #705 Denver, CO 80202
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