Governments Are Freaky

So, even after reading last month’s article about the nature of audit work in the government realm, you are still interested in taking governmental clients on? Well, I need to warn you, you are going to have to adjust to a different sensibility and attitude to pull it off. Why? Governments are freaky.

Keep Austin Weird

In Austin, our city motto is “Keep Austin Weird.”  We are proud of being a little odd. My uber-conservative in-laws in Lubbock think everyone in Austin is a pot smoking, tie-dye shirt wearing freak. Since I do not smoke pot or wear tie-dye, I guess I’ll just have to remain a simple freak in their eyes. (Wait! Why be simple? Super freak, super freak, we’re super freakin’ yeah!)

And living this town of super freaks means you either work for Dell, the University of Texas, or the State. I work for all three. And man, do those cultures differ! I also work for CPA firms on a regular basis. I have to adjust how I communicate to succeed in each of those environments.

At Dell, I have to talk fast and pack in the learning. They routinely ask me to compress a full-day seminar into an hour. They don’t seem to appreciate stories or jokes because they are all business. In the government realm, I allow for much more interaction and questioning. And government employees really appreciate a good laugh, presumably because they seriously need one!

Staff at CPA firms are often frightened of talking to me because they don’t want to look bad in front of their management. So, I am often unsure if I am going too fast or not! They will laugh along with me in the afternoon only after they verify with their leadership at lunch if laughing is permissible and ensure that someone with clout really did hire me – like on purpose! Government employees are not afraid to speak out and say what is so. It is damn hard to fire them, and many of them know it.

Governments are freaky

But, before you begin that old saw/myth/put-down about government employees having nowhere else to go, think again. My favorite, off-the-charts brilliant go-to technicians have government careers. Every environment I have taught in has its fair share of employees with dim bulbs or people who hate being where they are and aren’t engaged. I can’t give everyone an IQ test or a motivations quiz before I begin – so I just have to guess what’s up. Corporate folks might think themselves superior, but I know better; they are simply in a different environment with different expectations.

And if you think government workers receive low wages, you obviously aren’t taking into account their pension plans and health benefits. My financial planner said his wealthiest client is a city employee. They are set for life in many cases. So here are a few tips to help you adjust your mindset so you can succeed with your government clients:

• In government, only things that are allowed are pursued. In corporations, folks purposely pursue that which is not expressly disallowed. In government, being a rogue, self-starter who makes your own rules will kill you! In a corporate environment, risk-taking is valued and can make you rich! Governments act at the will of those they serve, and most governments don’t make a move without permission. Bureaucracy and multiple levels of approval keep employees from doing anything radical or foolhardy with the public’s resources. But these extra layers of bureaucracy can also slow government staff down to a crawl when it comes to simple decisions. In government, beware the bureaucratic paper pusher! They may not appear to be a mover and a shaker, but they can lock you down and keep you from getting anything done.

• Laws are not road tested until they are operational. When a legislature or governing board passes a law, it is up to the government bureaucrats to implement the law. Even if the law is flawed, creates a ton of work, and has unintended consequences, once the ball starts rolling, it is virtually impossible to stop. So, what does this mean for you? That you might end up auditing some programs that really hurt your political sensibilities. A program will be so outright silly and offensive that you can hardly talk about it with a straight face, and there you will be struggling to remain independent and objective. If you are a member of the Tea Party, auditing government programs might not be a wise gig choice.

• Federal auditors dig, CPA firms skim. I worked with a federal inspector general who routinely spent 6 months on projects and created 80-page long rambling reports. When they got a hold of an issue, they were proud to say they dug and dug until they resolved it (and exhausted everyone in the process!) They did not have to worry about time budgets or expectations of their clients. CPA firms are often exactly the opposite. CPA firms are motivated to get in and get out of an engagement so they can move on and make money somewhere else. CPA firms tend to skim the surface of a variety of subject areas and dig only when absolutely necessary if at all. I had one partner in a CPA firm in California ask me if anyone really wrote up findings out there; he never did (!). Obviously, there is a happy medium between the extremes that some teams are able to strike. This cultural difference can be painful for the CPA firm because these digging feds are one of the customers of the audit. Are the feds ever going to be happy with a skimming approach to auditing? No! They design their audit expectations to be very granular and detailed because that is how they audit. Know this going in and decide whether your firm’s culture can come a little closer to the middle. In other words, you need to dig more to make your government client happy.

• The feds have very high expectations but often don’t make the grade themselves. The federal government makes all sorts of rules for others to follow. The criteria that the auditor must evaluate a federal program against under Single Audit requirements is legion and intense. But we all have to remember that the federal government still cannot create a financial statement that the GAO can express an opinion on. When you call them, sometimes they can answer your questions and sometimes they can’t. And when they can’t, you are left to interpret law and regulations for yourself. And don’t think that later someone might review your work and decide that you made an erroneous interpretation. And that gets us to my next point…

• Your reports (and maybe your working papers) will be scrutinized by desk reviewers and others. Your auditee may answer to multiple governments – the city, the state, the feds – and each of these governments may review your audit reports. They will check them for quality, and if they are concerned about the quality, they might request to review your working papers. This is a little more involved than auditing Joe’s Manufacturing on behalf of the bank.

• The ultimate customer is not the auditee. On a commercial audit – say of Joe’s Manufacturing, your main client is Joe and the bank. Joe doesn’t necessarily want you airing all of his dirty laundry in an audit report. He wants a clean opinion so he can get a loan. The bank doesn’t want to know about petty issues, they just want some assurance that Joe isn’t lying like a dog on his financial statements. So the guy you are auditing and the guy you are serving are the same or motivated by the same things. In the government realm, the guy you are auditing is not the guy you are serving. One of my favorite quotes from the Yellow Book is “A distinguishing mark of a government auditor is acceptance of responsibility to serve the public interest.” When you are auditing a housing project, your client isn’t the owner of the project, the manager of the project, or even the feds. It is the 3-year-old girl who lives in the project with her single mother. Did I get emotional on you there? Good. That is the mindset that will serve you best when auditing government programs. Righteous, yes. Important work, yes. Very important work. Go ahead, air the dirty laundry, shine light in the dark corners. In the government realm, the auditor may be the only person involved on the project that can and will tell the truth.

Next month, let’s talk about special requirements of performing government audits that often take CPAs aback during my seminars.

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Leita Hart-Fanta, CPA

Resides in Austin, Texas and can be reached at leita@yellowbook-cpe.com.
512-996-8588
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