Founded in 1884, the City of Bondurant is just northeast of Des Moines and a part of its larger metropolitan area. Home to 7,300 people according to the 2020 Census, Bondurant is the second fastest-growing city in Polk County.
Establishing a Strong Internal Audit Function, Strategic Evaluation, and Internal Controls
Local governments can face key challenges, including a lack of administrative staff. This was the case for the City of Bondurant. For several years, its annual independent audit report had found that the city’s internal controls were weak and did not provide appropriate segregation of duties.. A new management team took the helm, bringing experience in and passion for strategic evaluation and control to transform the city’s policies, procedures, and workflows—as well as its culture. This new way of working was put to the test in 2020 when the pandemic upended life in Bondurant.
Changes the process
For the City of Bondurant, the path to establishing stronger internal controls and gaining more strategic perspective led to implementing a new, team-based approach incorporating technology and automation. This shift would allow its small city staff to maximize scarce resources as well as reduce error and decrease duplicate or unproductive work.
With previous independent audit findings in hand, the City of Bondurant’s new management team established an internal audit function, a systematic evaluation, analysis, and communication of operation execution, resource allocation, and policy and procedure compliance. It’s a perpetual cycle that at regular intervals focuses on individual facets of the organization, as well as a mechanism that staff use during daily tasks and procedures.
The first step was to adopt a policy of internal auditing with strategic evaluation and focus on internal controls. Then, measures of performance were established, along with recommendations for workflow and audit schedule cycles in a perpetual process keyed to strategic objectives.
“The approach recognizes that not everything can be audited all the time,” said Jene Jess, Finance Director for the City of Bondurant. “It’s perfect for a small administrative staff, because you can take a piece of the puzzle, dissect it, run it through this process, and follow up.”
The city took a team-based approach in which its central administration guides the process, and all departments implement it. This model recognizes that each department provides different services and has distinct obligations and responsibilities to the public. Delegating ownership to key individuals in each department has been key to success, as well as strong supervisory oversight and follow-up.
In Bondurant, processes and communication can look very different by department as each director is responsible for the processes in their respective department, and as each implements changes and procedures directed by the council.
Changing the culture
Establishing new processes is one part of the process but overcoming resistance to change is fundamental to success. “It is important first to create an organizational culture that is nourished by new ideas—and is not afraid to try them,” Jess emphasized. “We worked to create a safe place in which everyone was able to express concerns or ask for clarification.”
This was rooted in getting input from stakeholders and staff early in the process, so they felt involved. In addition, as part of each department’s strategic evaluation process, leaders identified individuals who displayed signs of resistance or self-doubt. Department heads and administrative management then worked together on strategies that reduced struggle and removed barriers to success.
The implementation of new technologies—like accounting software—can be daunting, and it was important to recognize this reality. Jess stressed that budgeting for all necessary tools and resources is important to reducing frustration and delay. “Keep an eye, too, on the desired outcomes,” she said. “Ultimately it doesn’t matter how slow the train goes or how many stops it makes, as long as it reaches the station in the end.”
Working through the pandemic
The City of Bondurant had established its new approach before the pandemic hit, but the crisis highlighted the benefits of the solution. Because the city was in a constant cycle of internal auditing and had already invested in and implemented technology and automation, there was no lag time in its reaction.
City staff swiftly transitioned to online services and work-from-home platforms. Staff were also able to quickly establish health and safety policies for internal and external users. As a result, Bondurant was able to be nimble and adapt and expand services during the pandemic.
Jess illustrated this through an example, explaining that part of the central administration’s mission is to display fiscally responsible behaviors. “Analyzing cash flows was already a regularly scheduled audit we focus on. We were able to quickly analyze data and produce a recommendation for social safety nets, budget amendments, and grant applications while keeping an eye on projected revenues.” As she explained, this was important because Bondurant has a 25% reserve requirement in its budget policy, so it was critical to ensure that expenditures matched up with projected revenues in making adjustments to the original budget. “We created policy and procedures within recommendations that have been internally audited. This is how the cycle goes.”
Other local governments can adopt this process through key steps. The first is to adopt a policy of internal auditing with strategic evaluation and focus on internal controls. A designated staff lead begins the process by evaluating, analyzing, and creating a measure of performance. This person then makes recommendations for workflow and operational audit schedule cycles and delegates the function of performing internal auditing procedures on specific tasks to establish strong internal controls. Ultimately, this staff member is responsible for maintaining the process through measuring performance and evaluating if inputs and outputs are achieving the community’s vision. Regular communication of audit and analysis results should be easy to understand. The final component of the infinite cycle is using data insights to make recommendations to improve process functionality.
Essential to success is investment in infrastructure and implementation. Budgeting for the necessary tools and training can help to overcome resistance and avoid derailing or delaying the process. “Be patient with yourself and your team,” Jess said. “Recognize that it’s a marathon and not a sprint—and it won’t be perfect the first time.”