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What Is Different Between Auditing in Industry and Local Government?



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Is Auditing Local Government Organizations Different?

To answer this question we have to start with another question: What are the differences between a local government organization and an organization inside, let’s say the manufacturing industry?

Both organizations aim to satisfy their customers (citizens are also customers). Both use processes to provide their products or services to their customers and both need competent, involved people to realize their objectives. Both also need reliable suppliers and reliable infrastructure—like computer networks, communication channels and such.

They both seem very similar, or practically the same. OK, the products and services are different. An ID card is not the same as a personalized Happy Birthday card sent to one of your good friends. Until now it seems more or less the same, seen from the perspective of an auditor.

Let’s take a different view. How about the conditions under which all these processes take place? Let’s start with some changes that local government organizations are facing. What is going to happen after the next election in a certain municipality? Another political party has won the election, there will be a new mayor, maybe a completely new council, or even a completely new team of directors.

There is a new situation, new vision, new objectives, new discussion about allocation of resources, and maybe more. Naturally, there could be huge consequences for the way of working in processes, among others such as attention for the quality management system already in place or maybe in a phase of implementation. What is going to happen with the “chain of command” in such transition period? Authorities, responsibilities for processes, communication inside and outside the organization with relevant interested parties?

How about the fact that, if you need to renew your driver’s license, and you are not happy with the speed of this process inside your local government. You could not simply decide to look for another supplier—there is only one in your place of living (or you have to move to another town). Another clear difference having impact on the culture inside an organization is, being “monopolist” or not. Complying customer in case of another type of organization (e.g. a commercial organization) mostly could have more alternative suppliers.

Let’s look at another phenomenon related to local government, but also the field of health care. If there is a real problem, where lives of other people are involved, often things go in a different way. If a break in water distribution happens due to contamination or another cause, there will be no discussion about working times and such. At such moment, the very simple mechanism is going to work: “all hens on deck” this is a problem we have to solve, now! Procedures and such would be followed, if helpful. But the driving force in the minds of people working there is: “Other people need us. That is most important at the moment. Procedures— we will look on these later.”

Back to you, being an auditor. How are you going to perform an audit in such situations? How could you help this local government organization be better prepared for turbulence and possible changes, aiming to keep satisfaction of the citizens, customers of such organization? What other differences could you face during such an audit?

And, finally, what kind of specific competences does an auditor needs to build to be able to perform an effective audit with impact inside a local government organization?

But, also in such situations an auditor should stay inside the borders of his/her assignment and not act as a consultant.

These specific aspects of auditing will be covered in the presentation about the differences in auditing a local government organization and commercial/industrial organization.

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