Only two years after its creation, the city of Minneapolis’ Internal Audit Department could be slashed in the proposed 2012 budget.
It was hailed by city officials as a responsible creation in 2009, but the Minneapolis City Council is considering cutting the department almost in half to generate $130,000 in savings. One of the department’s three auditor positions would be eliminated.
The Internal Audit Department is an internal watchdog of the city’s finances. The department evaluates the integrity of financial records and reports, evaluates city departments for risks of fraud and maximizes efficiency within city departments.
In a mid-November letter to Mayor R.T. Rybak and fellow audit committee members, Committee Vice Chairwoman Stephanie Woodruff requested that the department receive the same funds it did in 2011.
“I believe this reduction would open the city to more risks and potentially create obstacles which could negatively impact audit results and future plans,” she wrote.
The city would contract with external auditors more often to make up for the loss.
The potential cut will be discussed in the Ways and Means Budget Committee Monday, and the city’s budget will be finalized Dec. 14.
Minneapolis Councilwoman Elizabeth Glidden said that although the department brings “tremendous value” to the city, a tight budget has left the council with few options.
“I’m so glad we have this audit function, but this is a very challenging year for the budget because virtually every single department has already received very deep cuts,” Glidden said.
Rybak’s proposed 2012 budget doesn’t include a property tax increase — the first time in nearly a decade that the city hasn’t implemented a tax levy.
“The only solutions available to us because of the zero percent tax levy budget is that we are going to be taking further money from somewhere else,” Glidden said.
“The cuts this year reflect how deeply we’ve had to cut everywhere,” Rybak said.
Councilwoman Betsy Hodges, chairwoman of the council’s budget committee, said even though she isn’t thrilled about the cuts, the department will still have two auditors — double what the city had before the department was created.
“I know that folks have a concern that if the audit [department] gets cut … that that is a signal for bad behavior to run rampant in the city,” Hodges said. Just one auditor worked for the city for many years before two more were hired in 2009, she explained.
Internal Auditor Magdy Mossaad said it is difficult to quantify in dollars how much the audit department has saved the city, but they have found many areas where the city could improve and be more efficient.
The department hasn’t found any instances of fraud, Mossaad said.
Hodges said the department might have a better shot at escaping the proposed cut if it could quantify the savings generated since 2009.
While City Council members will have an opportunity to amend the 2012 budget before it’s officially accepted on Dec. 14, the chances of the audit department avoiding cuts are slim, Hodges said.
“Would I prefer to have three auditors? Yes, but if the resources don’t allow for it then we have to do the best we can with what we’ve got.”