Three reasons Jon Neiderbach would be a better state auditor than Mary Mosiman

Iowa’s state auditor is a low-profile position and a difficult office to campaign for, even without a marquee U.S. Senate race sucking up all the oxygen. But there are huge contrasts between Republican incumbent Mary Mosiman, appointed to the office last year, and her Democratic challenger Jonathan Neiderbach.

Last week, Robert Rees hosted a mini-debate of the state auditor candidates during his “Morning Drive” program on the Des Moines-based talk radio station 98.3 The Torch. You can listen to the 15-minute exchange here or look it up on the list of Morning Drive podcasts for October 21. The big takeaway is that Mosiman wants to maintain the status quo in State Auditor’s office operations, despite mismanagement including secret payouts to state employees, which several years of audits failed to uncover. Neiderbach wants to improve the audits so that they are meeting the tasks set out in Iowa Code.

Follow me after the jump for highlights from last week’s debate and two more reasons to support Neiderbach for state auditor.

1. Mosiman is satisfied with the status quo, while Neiderbach want to improve on “grossly inadequate” audits.

Introducing herself during the radio debate, Mosiman concentrated on her background as a certified public accountant with 10 years of experience as the Story County auditor before she joined state government. Beginning around the 4:40 mark, Neiderbach said,

The primary difference really between us is–we agree about the financial audit side being a requirement–the big difference is, I think the Iowa Code states very clearly that every audit should contain a great many other things besides just financial audits. It should be looking at efficiency, effectiveness, compliance with law, duplication of services, and operating in a businesslike manner. Those are things that are in the Iowa Code. Those are requirements of what the office is doing.

Quite frankly, when I look at the audits, they aren’t doing those. We have, I think, grossly inadequate audits that leave out lots of things that would save taxpayers money and improve services.

And not only that, when you look at the audits, even in financial, on the financial side, there are many, many instances, time and time and time again, when audits miss cases of theft and embezzlement. And it sometimes goes on for years, and that is only found when a whistleblower comes along and blows a whistle, and then the State Auditor quantifies the damage. We need audits that actually find these things during the regular course of auditing.

Mosiman’s response begins around 6:05. She claimed that everything indicated in Iowa Code is encompassed in the audits, and she asserts that you need an accounting background to understand that. She also said the performance audits and “reports of recommendation” take place after the annual financial audit work. She added that being a certified public accountant makes her “uniquely qualified” for the job.

Around 8:00, Mosiman responded to Neiderbach’s comments about thefts and frauds going undiscovered. It’s an incredible defense of a broken system:

Annual financial statement audits are auditing the financial statements presented by management, and theft and fraud is [sic] determined in other manners. When management presents the annual statements, the role of a financial audit–which is required, again, it has defined standards to follow–those are basically the auditor providing an opinion as to whether those financial statements are fairly presented. So you can’t change the content of the financial audits.

Fraud–that is typically found by government entities that have an annual audit. Many of the frauds that you might be referencing, Jon, do not have audit requirements, such as our smallest of cities, and such as the government entities that have no audit requirements.

Fraud is caught in a number of manners, sometimes by internal auditors, sometimes by external auditors, sometimes by whistleblowers. Nationwide, fraud is typically caught by the internal folks at a government entity. And that’s the purpose of the financial audits, in our fraud discussions with not only the financial people, but also the additional employees within an entity.

So, Mosiman thinks it’s fine that years of state annual audits failed to uncover malfeasance, thefts, or sloppy practices like this, because eventually, an internal audit will bring the problems to light.

Neiderbach pointed out that in addition to the Comptroller General’s requirements for financial audits, the Iowa Code imposes certain requirements.

If you look at the audits that are on on the [State Auditor’s] website, that are posted to the public, that are sent out to the media and the local entities, there is very rarely any discussion about efficiency, or effectiveness, or operating in a businesslike manner.

Here’s an example: the Iowa Department of Administrative Services. A department that was so badly run that the governor had to fire a director. There is no mention of those problems in the most recent audit.

For background on why Governor Terry Branstad fired Mike Carroll as DAS director, click here or here. In public appearances, Neiderbach has repeatedly talked about the State Auditor’s Office releasing only a three-page audit of DAS, an agency with an annual budget of approximately $100 million.

Mosiman claimed the most recent audit of the DAS covered fiscal year 2013, ending on June 30, 2013. She says the issues that led to Governor Branstad firing the director and other problems at the department will be included in the upcoming report for fiscal year 2014. “So you have to follow the timelines that each audit goes by.”

Nice try, but Neiderbach mentioned the obvious:

I think most of the problems that were discussed that led to the firing happened before, in 2011, in 2012, all those secret payments that weren’t discussed in the audits. I mean, it’s just extraordinary, and this happens time and time again. Very, very inadequate audits.

The most recent audit of the Regents [institutions] was only a couple of pages long. […] You don’t see any outside recommendations to improve efficiency or effectiveness.

Mosiman repeated that the institutions provide the financial statements.

Radio host Robert Rees asked Neiderbach what he would do differently. This exchange starts around the 11:45 mark:

Neiderbach: Just a real good example is, Ms. Mosiman talked about how the audits are designed currently to evaluate management’s presentation.

Mosiman: Which is a requirement.

Neiderbach: And they only talk to management.

Mosiman: Yes!

Neiderbach: If you want to try and find problems,

Mosiman: Oh.

Neiderbach: If you want to dig and try and improve services, and save taxpayers money, if you are doing an audit, you don’t just talk to management, because all you’re going to get it is the antiseptic, cleaned-up version.

You need to talk to former employees. Current employees. Customers. How well is this, are these services being provided? If all you do is talk to management, of course you’re going to get the party line. […] You need to go in there with a passion for assuming things can be done better.  

Mosiman insisted that they do talk to additional employees besides management for each audit. Where would we have the authority to reach out to former employees? She questioned whether the State Auditor’s Office has the authority to change standards for an audit. It’s up to management to either follow or not follow the recommendations of the state auditor.

During the final minute of the exchange, Mosiman again asserted that her office has been following Iowa Code. Neiderbach’s closing argument:

The state code makes it very clear the auditor should be a passionate advocate for making government more efficient and more effective, not just doing the basic CPA work. It is a lot broader than that.

Mosiman claimed that if the State Auditor’s office did what Neiderbach suggests, they would be duplicating work of the Legislative Services Agency and the Department of Management. Neiderbach replied, that’s not what Iowa Code says.

I don’t think voters need any other reason to hire a new state auditor, but for those who are not convinced:

2. Mosiman didn’t blow the whistle when she had a front-seat view of mismanagement in state government.

As Bleeding Heartland discussed in detail here, Mosiman was a senior official in the Iowa Secretary of State’s Office when another colleague received tens of thousands of taxpayer dollars for doing no work. She did not report that violation. Because neither she nor that colleague were required to submit timesheets or leave slips, vacation time was not properly recorded, and Mosiman herself was paid too much in salary. Neiderbach didn’t bring up those lapses during the short radio debate, but he commented last month,

The mess at the Secretary of State’s office was worse then we thought. Turns out top management folks in that office didn’t even fill out time sheets or leave requests, making it easy to lose track of vacation taken. Indeed, our current State Auditor Mary Mosiman, formerly Matt Schultz’s deputy for elections, took two weeks of vacation that never made it into the payroll system. As a result she was overpaid when she left Schultz’s office to become State Auditor. The big questions: why didn’t she say something when she saw sloppy practices such as top management not being required to fill out time sheets or leave requests? Why didn’t she blow the whistle when she saw other top management getting paid without working normal hours? And if not for the Des Moines Register’s story and subsequent investigation of SOS personnel problems, would Mosiman have kept the extra cash?

Neiderbach’s campaign alludes to these problems in a radio ad that just started running called “Needs Her Own Watchdog”:

Female voice-over: The current, unelected state auditor wants to oversee all state and local government audits. But according to news accounts, she can’t even ensure her own employees actually exist, or that her own paycheck is accurate.

If our state auditor needs her own watchdog, she needs to be fired. Simple as that.

Jon Neiderbach will be an aggressive, impartial, and thorough watchdog of tax dollars.

Jon Neiderbach will look beyond spreadsheets to save taxpayer money. Elect Jon Neiderbach state auditor.

Neiderbach’s voice: Paid by Neiderbach for Iowa.

3. Mosiman’s claim that a state auditor needs to be a certified public accountant does not hold water.

In the closing moments of last week’s radio debate, Mosiman asserted that she has “qualifications and experience, versus just talk.” She and representatives of the governor’s office have repeatedly argued that only CPAs should be considered for the state auditor’s job.

Reality check: “Nearly all the states surrounding Iowa have highly effective State Auditors who are not CPAs: indeed [Minnesota]’s Rebecca Otto is the head of the National Association of State Auditors.” Neiderbach commented last week,

Did you know? Comptroller General Gene Dodaro heads the highly respected Government Accountability Office, the office that publishes the “Yellow Book” used by every State Auditor around the country as THE handbook for government audits. Comptroller General Gene Dodaro is NOT a CPA.

Moreover, Mosiman’s mindset limits her ability to do the job effectively. When her office released a report on improper state employee settlement agreements in August, Neiderbach commented,

The report is full of data, but it is grossly inadequate as it lacks any conclusions or recommendations. Iowa law provides that the State Auditor is supposed to make recommendations when needed to achieve greater simplicity, accuracy, efficiency, or economy, and once again she has not done that. Put another way, this is a report that a chief accountant would release, it is not a report worthy of the State Auditor’s office.

In addition to lacking recommendations, the report raises more questions then it answers. Is it normal in a workforce the size of our state government to have 2,679 grievances filed during the 4-year period? Is the frequency with which back-pay was ordered indicative of an efficient, business-like human resources system? What changes in policies and procedures could have reduced the total cost of the the 38 settlement agreements? And overall, do we have a problem in Iowa’s state government human resources system and if so what should be done to address it?

The report can be found at http://publications.iowa.gov/1…

A second radio commercial, which Neiderbach’s campaign just started running, makes the case this way:

Female voice-over: Iowa voters have a real choice in the state auditor race. We understand that if you want someone who knows how, you hire them. If you want someone who understands why, you vote for them.

Jon Neiderbach understands that government audits can be used to help ensure tax dollars are spent wisely and efficiently. Jon knows that. As Iowa taxpayers, we deserve nothing less. Learn more at NeiderbachforIowa.com.

Neiderbach’s voice: I ask for your vote. Jon Neiderbach for state auditor.

Voice-over: Paid by Neiderbach for Iowa.

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