RELEASE: Secretary Richardson Releases Audit of Internal Audit Functions at Oregon State Agencies

SALEM, OR — Internal auditing has been persistently undervalued and neglected by state leadership, increasing financial and programmatic risks, according to an audit released today by the Secretary of State. 

Historically, the Oregon Department of Administrative Services (DAS) has done little to meet its statutory requirement to coordinate internal audits, promote their effectiveness, and ensure audit integrity in the state. The findings are outlined in the report entitled: “Opportunities Exist to Increase the Impact of State Agency Internal Audit Functions.” 

“I have witnessed first-hand the incredible value auditors bring to the state in terms of transparency, accountability, and increasing quality of work products,” said Secretary of State Dennis Richardson. “In particular, internal auditing is critical to promoting accountability and ensuring Oregonians are getting the best possible value for their tax dollars. I’m disappointed that DAS plans to delay implementation of nine of the 16 audit recommendations for over two years. This shows an unfortunate aversion to accountability.” 

Internal auditors should help organizations improve services, identify savings, and prevent future problems. In an era of declining public trust in institutions and state government, internal auditors promote transparency, accountability, and the effective use of resources. However, auditors in the Secretary of State Audits Division have found state agencies do not attain the best value from internal auditing. This is due to a number of factors, including:

  • DAS has done little to fulfill its obligation to promote effectiveness and ensure the integrity of internal auditing in state agencies.
  • Internal auditors face threats to independence and objectivity, and internal audit staffing is at its lowest level ever recorded. 
  • Many agencies are not meeting the requirements spelled out in state policies and professional auditing standards. 
  • Agencies with insufficient audit functions have recently experienced fraud, program challenges, and wasted taxpayer dollars.

“Internal auditing is especially important in times like this, when the state is experiencing consistent budget challenges,” said Audits Director Kip Memmott. “The Secretary of State and the Audits team are committed to helping elevate the internal audit community because these functions are critical for good governance, transparency, and proper stewardship of public monies. We believe this audit establishes an excellent baseline for this effort.”

Auditors performed interviews and conducted surveys, reviewed audit documents, and researched audit practices recommended by professional auditing organizations and used by other states.

Auditors recommend that DAS take a number of steps to improve its efforts and the operation of internal audit functions within the state such as: clarifying state law and administrative rules, increasing efforts to support internal auditors, developing an internal audit strategic plan, setting policies on audit process and staffing expectations, and improving the annual report on statewide internal audit activities. DAS took the unique step of neither agreeing nor disagreeing with three of the 16 recommendations and is planning to delay implementation of several of the recommendations until 2021, 2022, and 2023.

Read the full audit on the Secretary of State website