Analysis: The Mess at UMMS—Part II: Legislative action must be stronger than HB 1428

By Charlie Hayward
For MarylandReporter.com

The type of audit cited in legislation, and who controls the audit, will be pivotal to whether all, or only a few of the red flags, are considered by the auditor. HB 1428 would require the University of Maryland Medical System Corporation (UMMS) to hire an: “independent certified public accountant (CPA) to conduct a performance audit of its administrative and financial offices – specifically to evaluate the efficiency and effectiveness of financial management practices, including procurement and contracting.”

Professional auditing standards describe several kinds of audits. Performance auditors examine internal controls for efficiency and effectiveness and recommend prospective improvements. They don’t investigate possible wrongdoing or reconstruct previous transactions or events; they typically don’t examine source documents or verify transactions; they don’t assess motives; and they don’t perform any forensic work—unless the mandate requires it and the legislation does not.

A “performance audit” is jargon for a non-critical review whose principal objectives are aligned with future improvements of economy and efficiency. The legislature needs to tighten up language describing the audit to include an investigation covering at least three years prior, including forensic work.

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