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MANAGEMENT UPDATE.

What’s Causing State Auditors to Lose Sleep?

Earlier this month, auditors from 21 states met in Nashville for the National State Auditors Association (NSAA) “Emerging Issues” conference. This mid-year gathering is smaller than the annual conference, with an even mix of audit directors and their deputies. 



A few days after the meeting, Josh Winfrey, the director of the association, kindly agreed to share the major topics of discussion. Here’s our edited Q&A with him. (The association is part of the National Association of State Auditors, Comptrollers and Treasures, or NASACT.)


B&G: This was a conference focused on emerging issues. What issue dominantly emerged?


JW: The dominant conversation was the auditor pipeline and addressing the limited pool of state and local government auditors.


B&G: What are you seeing as the solution?


JW: We’re seeing wage increases across the board and some are going up significantly. 


With recruiting, we’re seeing things that haven’t been done before. State auditors are trying to recruit college students in their freshman or sophomore years. They’re recruiting in a similar manner to CPA firms, and in my opinion, in an even more persuasive and convincing manner. That’s not all over the country yet, but in the next two years, you’ll start to see this more and more.


There’s an effort to build internship programs with more flexibility and to modernize messaging and marketing to humanize government employment. I think they’re doing some really cool things – like states that have featured their auditors’ lives outside of work by posting pictures of their pets and them on social media. This is a great way of showcasing work-life balance.


We’re also seeing innovative retention tools such as retention bonuses in the form of one-time payments and significant raises for gaining the CPA credential.


B&G: Could you provide a little more explanation on that point.


The accounting pipeline is a big problem. We have fewer people sitting for the CPA exam; fewer accounting majors. The graduation classes are getting smaller, and the CPA firms pick off what’s there. More audit offices are paying for staff to pursue the CPA credential. Those that take advantage of this must stay for a certain number of years and if not, they have to pay the money back. If the hiring situation doesn't improve, I think state auditors will have to get innovative with how they staff financial audits and compliance audits, because the numbers aren’t there to sustain traditional staffing levels. 


NASACT is working with the AICPA (The American Institute of Certified Public Accountants) on the accountant pipeline issue. We’re interviewing academics. We’re interviewing students. We’re interviewing state and local government officials, auditors, everybody we can. We’re really trying to learn.


B&G: We’ve been visiting auditor offices online for many years and it just seems like there are fewer audits these days. Have the budgets remained steady? Have they declined?


A: I don’t think it’s a budget issue necessarily. I think it’s a capacity issue. I think there are fewer auditors to do the work.


B&G: What other issues came up in the meeting besides the need for more auditors?


A: AI is emerging as the hot topic right now -- how to use AI, the ethics surrounding it, and how you audit the use of AI.  I’m trying to learn as much as I can because I expect the interest in this topic to grow. 


B&G: Did the conference reveal good examples of AI mastery, if that’s possible at this point? 


A. Not yet. We just don’t have enough members far enough down that path to know. But we do have early adopters. New York and Washington State, among others, are studying the issue. It’s going to be a topic of discussion for the future. 


B&G: Did this month’s conference give you a sense of the environment in which auditors are working in this post-pandemic period?


A. It’s challenging out there and difficult to get back to normal. It’s hard navigating partisanship and difficult dealing with national issues that funnel their way down to the state and local level. There are capacity issues everywhere. I can’t imagine how tired the auditors must be. We’ve just got some big headwinds to overcome.

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