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Wednesday, May 7, 2008 | Everyone in San Diego city government and politics seems to agree that the city’s internal audit function is broken. But there is nothing close to widespread consensus on Proposition C, the initiative on the June 3 ballot designed to fix it.

The basic question surrounding Prop C — which is whether the mayor should have the power to appoint the city’s internal watchdog — has produced intense debate this political season, and made for some proverbial strange bedfellows.

Consider that Marti Emerald, organized labor’s darling in District 7, and District 5’s Carl DeMaio — labor’s Darth Vader — are both adamantly opposed to Prop. C.

Councilwoman Donna Frye, the loudest and most high profile Prop. C opponent has taken to making presentations against the measure accompanied by someone dressed in a fox suit with chicken feathers spilling from his mouth as a way of signaling her displeasure with the proposition.

City Attorney Michael Aguirre is also against the measure, along with mayoral candidate Steve Francis; and City Council candidates Sherri Lightner (District 1) and Stephen Whitburn (District 3). Supporters include Sanders, Independent Budget Analyst Andrea Tevlin, and City Council candidates; April Boling (District 7), Todd Gloria (District 3) and Phil Thalheimer (District 1).

The common analogy among opponents has San Diego in the “penalty box,” and needing an internal auditing function with absolutely no ties to the city administration, which Prop. C does not do. They want the auditor to be both hired by and report to the City Council’s audit committee.

Prop. C supporters argue that the measure guarantees more than enough independence and getting a system in place sooner rather than later is of the utmost importance.

Both sides say generally accepted accounting standards and associations of accountants and other financial professionals bolster their positions.

The issue is front and center in the battle between Boling and Emerald for the District 7 seat.

Says Emerald: “If the mayor is appointing his own auditor, that sends the wrong message about whether San Diego is cleaning up its act.”

Says Boling: “It’s not that there is one right way and one wrong way. It’s about trying to meet the goals in the most efficient way and get moving on it.”

Currently, San Diego’s internal auditor (Eduardo Luna at present) is both appointed by, and reports to the mayor. This, everyone agrees, is bad business. The auditor cannot be expected to keep an objective and vigilant watch over the individual who signs his or her paychecks.

The proposition eliminates this conflict by having the auditor report to a newly constituted City Council audit committee. It also rearranges the classification and chain of command for a host of financial jobs, including the chief financial officer, the independent budget analyst and treasurer.

There is little controversy over these changes. The rub is over the proposition’s granting the mayor power to appoint the internal auditor. Opponents call this tantamount to the fox guarding the chicken coop (hence the guy hanging out with Frye). Supporters say these concerns are baseless because under Prop. C the auditor would report to the council’s audit committee, ensuring that the mayor has no authority to fire the auditor.

Here are more specifics:

  • The measure revamps the audit committee’s make-up, which now consists of three council members. Under Prop. 3, the committee will include two council members and three private citizens with expertise in city finances.
  • Candidates for the private citizen slots will be winnowed by a screening committee consisting of council members, the independent budget analyst, the city’s chief financial officer and two members of the public. The final determination will be made through a vote of the full council.
  • The auditor would serve a 10-year term and could be removed only through a two-thirds vote of council.

The key, say all involved in the debate, is independence. Opponents focus on independence from the executive branch.

“The appearance of independence is as important as the fact,” Frye said. “When you have the person who will be audited, hiring the auditor, you have independence neither in fact nor appearance.”

Supporters say the auditor’s independence from both the executive and legislative branches is key, which they say Prop. C ensures.

Vincent Mudd, a member of the Charter Review Committee, which in 2007 made the recommendations which formed the basis of Prop. C., said an auditor can be a victim of a bad city council just as easily as a bad mayor.

“The key is that as long as the independent auditor can’t be hired and fired by the same person, that person would have a good level of independence,” Mudd said.

Please contact David Washburn directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.

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