There hasn’t been a nefarious conspiracy to undermine performance auditing efforts in cities and states over the last several years, at least not that we know of. But auditing services, like other front-office operations, have been vulnerable to cuts. That’s because they’re perceived as not providing a direct service, even though “performance auditing is critical” to providing direct services, says Drummond Kahn, director of Audit Services in the Auditor’s Office in Portland, Ore.

So after a decade in which performance auditing was spreading like reality programming on TV, many governments have shifted into reverse. The Association of Local Government Auditors, which closely tracks news about cutbacks in audit offices or efforts to eliminate them, has an alarming list. Closed offices can be found all over the country, from Ft. Myers, Fla., and Macon, Ga., to Tacoma, Wash., and Jefferson County, Colo. Closings aren’t the only issue. Local governments such as Lynchburg, Va., and Reno, Nev., have failed to replace retired auditors. Albuquerque, N.M.; Frederick County, Md.; and Knox County, Tenn., have been under threat either of closure or severe defunding. And cities like Dallas, Phoenix and San Jose, Calif., have lost positions.

Similar circumstances prevail in states as well. Washington’s well respected performance audit function, for example, was cut dramatically in last year’s budget and was threatened with more cuts this year.

There are some exceptions. Denver, for one, is becoming the poster child for expanding rather than contracting the performance audit function. Even though budgets have been very tight in the Denver Auditor’s Office, it has continued increasing its performance auditing workload to the benefit of the city.

Prior to 2008, the Auditor’s Office functioned as the city’s accountant as well as its auditor. But public leaders worried that this risked conflicts of interest and determined that it needed to separate the two functions. With the passage of a 2006 ballot measure, the Auditor’s Office was refocused on performance auditing and in 2008 a new financial office was formed to take over the fiscal role.

Since then, the office was budgeted to add a dozen employees. Audits released since 2008, as well as commentary from the elected Auditor Dennis Gallagher, have pulled few punches. Recent audits have focused on such topics as a broken contracting process for city and county Public Works, the safety impact of photo enforcement programs (like red light cameras) and the need for improvements in cost effectiveness for the Medical Examiner’s Office. Earlier audits have borne fruit as well, such as a report about emergency medical response times that continue to inspire efforts at reform.

One of the keys to the success of Denver’s performance audit office was recognition at the outset that it would need a lot of autonomy. “I don’t think there’s another model that has this level of independence,” says Kip Memmott, director of audit services.

Using the very successful Portland Auditor’s Office as an example, leaders in Denver codified a number of elements to ensure its auditors knew what had to be known, and reported what should be reported.

Among the elements that Memmott considered important are:

• access to all records, including all internal memos;

• confidentiality of an auditor’s work, except for the final work product;

• a requirement that people must respond to auditors’ requests within 15 days. (When the performance audit program first got going, Memmott saw that the responses to an audit were often weak. Sometimes responses weren’t even provided or they were provided by a midlevel manager, not by the department head.); and

• the ability to establish its own audit plan. Audits are determined using good risk assessment processes. But the auditor’s office also builds in time to be flexible so it can quickly respond to changing public policy and city needs. “We’re reacting to what’s happening in the city, real time,” says Memmott.

In addition, an audit committee was created, populated with members appointed by the City Council, the mayor and the auditor, and chaired by the auditor. Audits are released through televised meetings of the committee, but the audit committee cannot block or suppress a report. A well established, consistent release point helps keep people from being caught off guard. When agency directors respond to an audit in front of cameras, they tend to take issues seriously.

Communication has been key. Meetings with department heads and elected officials help managers and decisionmakers understand what auditors are doing, which establishes a team dynamic and avoids debilitating adversarial confrontations. This is critical stuff. We’ve long been convinced that a successful audit shop needs to take every step it can to avoid publishing material that will needlessly and publicly embarrass agencies.

Perhaps most important, the office also sends a strong message that it will follow up on its audits. Memmott describes this as “the Achilles’ heel” of the profession. “You get people agreeing just to make it go away,” he says, “and then they don’t do anything.”

The bottom line: Agencies have agreed to comply with 94 percent of audit recommendations. That’s an astonishing number. Maybe we could learn a lesson from Denver.