1 s2.0 S104523540600092X Main

Critical Perspectives on Accounting 19 (2008) 99126
Public secrecy in auditing: What government

auditors cannot know
Vaughan S. Radcliffe
Richard Ivey School of Business, University of Western Ontario, 1151 Richmond Street N.,
London, Ont. N6A 3K7, Canada
Received 28 December 2000; received in revised form 15 May 2006; accepted 1 July 2006
Abstract
This paper critically examines government auditing through use of Taussigs [Taussig M. Deface-
ment: public secrecy and the labor of the negative. Stanford, CA: Stanford University Press; 1999]
observations regarding the public secret, or knowing what not to know [Taussig M. Defacement:
public secrecy and the labor of the negative. Stanford, CA: Stanford University Press; 1999. p. 2]
together with his related concept of analysis as defacement. These ideas are combined with prior
research which suggests that government auditors express audit ndings with care so as to work
within prevailing discourses. The auditors approach can at once be seen as pragmatic, in aiming to
affect whatever change or improvement is possible, and limiting, in that they are constrained both
by themselves and others from making observations that may be publicly unpalatable. While other
work uncovers this approach in general, this paper explores the consequences of auditors in effect
maintaining public secrets, using the ndings of a performance audit of the Cleveland (Ohio) City
Public Schools as an exemplar.
2006 Elsevier Ltd. All rights reserved.
Keywords: Auditing; Government; Secrecy; Cleveland; Schools; Ohio; U.S.A.
Tel.: +1 519 661 3206; fax: +1 519 661 3485.

E-mail address: vradcliffe@ivey.uwo.ca.
1045-2354/$ see front matter 2006 Elsevier Ltd. All rights reserved.
doi:10.1016/j.cpa.2006.07.004
100 V.S. Radcliffe / Critical Perspectives on Accounting 19 (2008) 99126
1. Introduction
Performance or efciency auditing
1
is unusual in the breadth of latitude and judgment
which it requires of auditors. This latitude often starts with such fundamentals as the choice
of what should be audited (resource limitations effectively precluding the blanket approach
of nancial statement attest auditing), continues with the method by which performance
auditing is operationalized, and ends with the way in which audit ndings are framed and
communicated. While other work uses history to examine the development of performance
auditing mandates (Radcliffe, 1998), and eldwork to explore how such work is conducted
in practice (Radcliffe, 1999), this analysis both draws from such observations and moves
beyond themin considering the consequences of auditors behavior in presenting their work.
In short, while other analyses concern history and practices, the focus here is much more
on consequences, and especially the consequences of auditors choosing to work within
accepted discourse rather than to challenge it.
This paper builds on ndings in earlier research regarding performance auditing. This
research suggested that auditors policed themselves and their work such that their ndings
would be more likely to be adopted, affect change, and so be seen as successful by auditors
and by various stakeholders concerned with their work. It is argued here that such limitations
on auditors work, observed by auditors themselves but being a product of wider discursive
possibility, have overwhelming consequences both for the truth of their ndings and the
potentiality of auditing as a practice.
The remainder of the paper is organized as follows. Work concerning the design of audit
reports by auditors is discussed, and previous approaches to understanding this evidence
are analyzed. This is followed by discussion of Michael Taussigs suggestion of the power
of the public secret in everyday life and his related analysis of defacement. This is
linked to auditing research and then to the case of the Cleveland City Public Schools audit.
The specics of this performance audit are introduced, and the ndings of this project are
discussed in terms of public secrecy and its consequences. The ramications of auditors
upholding of public secrets are addressed in conclusion.
2. Prior research
2.1. A pragmatic practice: performance auditing in the eld
The operationalization of performance auditing has previously been the subject of
extensive eldwork and ethnographic analysis. As a result of this auditors notions of effec-
tiveness were seen as key to the expression of auditing ndings. Simply put, auditors said
what they thought their audiences were ready to hear, both in terms of a willingness to act,
1
There being no settled term or usage the various descriptions of such audits as efciency, value for money,
comprehensive or performance audits are treated here as having the same essential meaning, in referring to the
broad area of non-attest based auditing that examines the economy, efciency or effectiveness of a program. Since
the particular case examined in this paper was termed by its auditors a performance audit, that description is used
here.
V.S. Radcliffe / Critical Perspectives on Accounting 19 (2008) 99126 101
in terms of political possibility, and in terms of an ability to act, given auditees nancial
knowledge and ability to appreciate the issues raised (Radcliffe, 1999). In this work a key
interaction in an audit planning meeting crystallized the idea of effectiveness as an analyti-
cal category. During the exchange auditors
2
discussed what they would say in an upcoming
audit report regarding physician remuneration schemes:
Brian: What were getting at is a need to fundamentally review the way that physicians are
compensated. There are things in process that may go that waynot the capping,
but moving away from fee for service. We have some important things to say, but
we dont want to say things about whats already going on.
Sam: There are ongoing plans to reform health care. Leonard [senior health ofcial] says
we should replace fee for service [. . .]. He says we are working on this and maybe
you guys should have been on the boat then.
Fred: We couldnt have talked about fee for service then.
Brian: No, it wouldnt have been strategically wiseit would have been impossible to say
that then (Radcliffe, 1999, p. 348).
In analyzing this material, it was understood as part of an approach that was on the whole
a pragmatic response to the difculties of applying auditing to areas that were ultimately
under political control and direction. In this case auditors were discussing the potentially
explosive issue of limiting physician remuneration in a Canadian provinces health care
plan. The idea of moving away from traditional fee for service billing had the potential both
to limit physician incomes and erode doctors status as independent practitioners. Salaried
physicians might lose much of the independence that the arms length remuneration of fee
for service provided, itself a signicant challenge to the professional image of a politically
powerful group.
At the time this kind of self-editing of audit ndings by auditors was presented less in
terms of its consequences and more in terms of its role in making performance auditing
tractable; hence this behavior was not a slavish attendance to the concerns of those in
positions in power (Radcliffe, 1999, p. 348) but was a way of getting a difcult job done.
In a sense this mirrored auditors own understandings; as one auditor put it, the likelihood
of whether an audit recommendation would be accepted and so be seen by the auditors
themselves as successful depends on the context, and so therefore you have to be aware
of that reality (Radcliffe, 1999, p. 348). Auditors efforts to generate what they termed
knowledge of business or knowledge of social reality were therefore many and diverse,
including careful attention to legislative debates, review of newspapers and other media
outlets, and auditors everyday exposures to the inner workings of government.
This element of pragmatism if not forgiveness of auditings limitations is suggested in
other work concerning auditing more generally, but also analyzing government auditing
itself. Power discusses government auditing in the context of what has been termed new
public management, a project which he likens to programs in nancial services and other
areas to enhance and transform organizational governance (Power, 1997). Power notes in
particular that audit institutions have taken on substantial roles in these developments and
2
The names of all auditors quoted here were changed for reasons of condentiality.
that value for money (VFM) auditing has become a prominent and constantly evolving
instrument of nancial control (Power, 1997, p. 42). In this way what is variously termed
VFM, efciency or performance auditing is a signicant part of the broader invocation of
the audit society that Power discusses.
In concluding his inuential book The Audit Society Power presents a critique of audit-
ing as a new form of image management, dogged by deluded visions of control and
transparency which satisfy the self-image of managers, regulators and politicians, but are
neither as effective nor as neutral as commonly imagined (Power, 1997, p. 143). To this
he presents two hypothetical counterarguments, rst that the evidence presented in his
research is itself limited, and second, and most importantly here, that auditing may be the
best option available in developing assurance about a broad range of activities, including
those of government. As Power notes:
The knowledge base of auditing may be obscure and professional institutes may invest
extensively in defensive guidance documents but, in the nal analysis, audit represents
a formof pragmatic muddling through with experienced professionals giving it their
best shot. There can be no guarantees of assurance or control, nor can assurance be
tightly quantied in a manner that would give it an appropriate aura of objectivity.
There is much to be said for this pragmatic modesty and, quietly, this is the viewof
most practitioners. But the selling of audit has not taken place so modestly; audit is a
practice which in every sphere where it operates must necessarily talk up expectations
at the very same time as it may suffer from so doing (Power, 1997, p. 1434).
He goes on to suggest that the expectations gap is a constitutive principle of modern
auditing in that the exaggerated hopes of auditing that it exposes are key to auditings
adoption in ever broader arenas. Hence, just as some nancial institutions are said to be too
big to fail, auditing as a project becomes too big to fail or indeed to be subjected to overly
taxing scrutiny:
The audit explosionhas actuallyclosedoff avenues of ofcial skepticismandmodesty;
auditing has become central to regulatory programmes. It is too greatly needed for
many of the changes which have taken place for an open and fundamental diagnosis
of benets and dangers. Diagnosis is necessary and yet constantly deferred by a range
of other localized and procedural issues which occupy regulatory energies (Power,
1997, p. 144).
This paper suggests that while a pragmatic readingof performance auditings outputs may
be useful in understanding practice and in appreciating auditors work as they themselves
understand it, the consequences of their concern to present work that is strategically wise
and hence likely to be accepted needs to be seriously explored. The paper therefore presents
what Power suggests is a somewhat overdue diagnosis.
3. Public secrecy and public auditing
Just as prior work in government auditing has at times drawn on ethnographic research
approaches, so Michael Taussig bases his analysis on the product of reported ethnographies
in anthropology. His work, rst presented in the Raymond F. West memorial lectures at
Stanford in 1996, is published in a volume as Defacement: Public Secrecy and the Labor of
the Negative in 1999. Taussigs analysis suggests the prevalence and importance of secrecy
in societies both ancient and modern, and the role of secrecy in managing contradiction and
complexity in the social world. I introduce this material here, dealing rst with the key
concept of public secrecy, or knowing what not to know (Taussig, 1999, p. 195) and the
related issue of defacement, a process not unrelated to criticism in that it attempts to bring
out what is inherent yet otherwise hidden (Taussig, 1999, p. 5). This introduction is followed
with examination of the potential role of public secrecy in the practice of auditing.
4. The labor of the negative
4.1. The public secret
Taussig refers most often to the public secret as that which is generally known but cannot
be articulated or spoken (see Taussig, 1999, p. 5, 50), and later in his analysis amplies this
to things that are so publicly secret that even the appearance of knowledge of the secret
must be avoided: hence people know they must not know (Taussig, 1999, p. 131). By
his account this rst came to his attention in living in Colombia in the early 1980s, which
presented many situations in which, in his words, people dared not state the obvious
(Taussig, 1999, p. 6). When Colombias military pulled people off buses and performed
searches at check stops, the ostensible reason was to combat guerillas. Yet the military and
police performing these actions were themselves more likely to be involved in terrorism
and drug running than the guerillas they portrayed as outlaws. Similarly, the expression
the law of silence was used in Northern Columbia to deal with the suspension of civil
liberties and the daily appearance of mutilated corpses, courtesy of death squads who were
well known to work in concert with ofcial military forces. This leads to a situation in
which all know the truth, but all know not to know it:
We all knew this [collusion between death squads and the military], and they knew
we knew, but there was no way it could be easily articulated, certainly not on the
ground, face-to-face. Such smoke screens are surely long known to mankind, but
this long knowness is itself an intrinsic part of knowing what not to know[. . .] Such
is the labor of the negative, as when it is pointed out that something may be obvious,
but needs stating in order to be obvious. For example, the public secret. Knowing it
is essential to its power, equal to its denial (Taussig, 1999, p. 6).
Though these examples seem extreme, occurring in societies beset with violence and
decay, in fact Taussig argues that knowing what not to know, or the public secret, is integral
to the functioning of contemporary society in general. He goes on to indicate that while
these initial examples may seem extraordinary, they present a heightened sensitivity to
social processes that pervade ordinary life.
My examples, as much as the experience within them, seem extreme and tend to
weaken the all-consuming banality of the fact that this negativity of knowing what not
to know lies at the heart of a vast range of social powers and knowledges intertwined
with those powers, such that the clumsy hybrid of power/knowledge at last comes
into meaningful focus, it being not that knowledge is power but rather that active not-
knowing makes it so. So we fall silent when faced with such a massive sociological
phenomenon, aghast at such complicities and ours with it, for without such shared
secrets any and all social institutions workplace, marketplace, state and family
would founder (Taussig, 1999, p. 67).
You do not need guerillas, armed insurgency or bodies in the streets as in Columbia
to understand or notice the power of public secrecy: instead, Taussigs case is that these
quiet understandings are part of a range of social activities in which certain matters are
held in abeyance as part of the continued order of society. As a result knowing what not
to know becomes a skill that is learned, shared and is in certain ways functional: public
secrecy facilitates the present. Its pervasiveness and longstanding use is what makes Taussig
remark on the banality of much of its operation in everyday life.
Indiscussingthe pervasive role of public secrecyinsocietyTaussigdraws fromFoucaults
observations of sex being considered a taboo in modern society, in that it is consigned not
to a shadow existence, but is instead spoken of ad innitum as the secret. In effect,
sex becomes the secret that all know: the public secret (Foucault, 1980, p. 35; Taussig,
1999, p. 50). Hence, the idea of knowledge being power mutates into a realization of the
power of not knowing. Foucauldian work has of course come to prominence in the new
or critical accounting literature, but this perspective has in the main been used in locating
particular discourses, bodies of knowledge, etc. (e.g., Hoskin and Macve, 1986; Hoskin and
Macve, 1988; Miller and OLeary, 1987; Robson, 1991). Taussig suggests an alternate use
in locating what people do not talk about and hence leave undisturbed, and a consideration
of what this means and of its consequences in the eld.
Avariety of examples of the power of the public secret are presented throughout Taussigs
work, including the intrinsic corruption in Spain under Franco, itself a public secret, which
was seen as a valuable facilitating mechanismfor the regime in that corruption compromised
many and therefore tied them ever closer to it. The regimes downfall had the potential for
exposure and hence their own fall. This recognition led not to an effort to curtail corruption
but instead led public secrecy to be an arm of statecraft and wise government (Taussig,
1999, p. 69).
3
In more extended discussion Taussig uses ethnographic accounts of Andalusian society
to examine the public secret.
4
In short, Andalusian men maintained a ceremony in which
they would gather in what was known as the Big Hut, paint and mask themselves, and
then present themselves to women, children and uninitiated men as spirits. In discussion
3
Out and out corruption is by no means a necessary feature in the operation of public secrecy. Instead much
of this relies on a quiet collusion, and is built on broad social agreement rather than a fear of revelation of
individual wrong doing. The frailty of individuals helped public secrecy under Franco, but so too did a broader
social assessment that some things were better left unsaid.
4
Taussig relies here chiey on the work of Martin Gusinde, a Catholic missionary who had studied anthropology
in Vienna and then moving to Chile as a schoolteacher, undertaking four trips to Tierra del Fuego between 1918
and 1924. He produced a key account which informs Taussigs work in Los indios de Tierra del Fuego, vol. 1, Los
Selknam (Gusinde, 1982).
of whether the men and women actually believe the public secret, that the spirits were
in fact the men themselves, Taussig suggests that many women in fact did not believe the
general accounts of events in the Big Hut, but that they were afraid of the consequences
of appearing not to uphold the public secret, which could include death at the hands of
a village shamans. Similarly the danger of undoing the public secret was afrmed in the
mens belief that the women believed, a situation which amplied the seeming dangers of
the revelation of truth and added complexity to an already complex social system. Those
men threatening to reveal the public secret would also be killed.
At times it is suggested in rst hand accounts that the men in no sense thought they were
dealing with true beings fromother spheres (Gusinde, quoted in Taussig, 1999, p. 1245);
at others the omnipotent preoccupation of the men with the security of the secret (Gusinde,
quoted in Taussig, 1999, p. 120) meant they had to act as if the secret were true. There is
ambiguity in this; at different times and in the context of different audiences villagers might
alternately uphold or undermine the public secret, suggesting a certain distance.
5
Yet in the
act of unmasking a spirit to a newly initiated male additional levels of complexity were
revealed, in which the men were themselves caught up in ritual.
If it was a hoax it surely took over the hoaxers too. All the more peculiar, then, and all
the more wonderful, the actual hoaxing and the ritual focus on unmasking, the real
hoax, we might say (Taussig, 1999, p. 126).
Taussigs suggestion is that people may, with all sincerity, become wrapped up in the
public secret to the extent that at times they may deny its existence entirely, while at others
they may recognize the importance of upholding the public secret in the functioning of
society. In this sense the earlier account of Brians observations with regard to the audit
of physicians payment schemes, that it wouldnt have been strategically wiseit would
have been impossible to say that then simply presents a recognition of the role of public
secrets in the auditors world. The public secrets of auditing could not be revealed until the
time was right, and for some public secrets the time would never be right.
4.2. Defacement
In developing the concept of the public secret Taussig works on the parallel concept of
defacement, as in the defacement of a ag, statue or monument, but used here to additionally
describe a critical practice: the defacement of a public secret. When defacement occurs,
Taussig points to a strange surplus of negative energy [. . .] likely to be aroused fromwithin
the defaced thing itself (Taussig, 1999, p. 1). Thus, defacement as a form of critique can
be seen as working on objects in the same way that jokes work in language, drawing out
inherent meaning that would otherwise lie dormant. Defacement can itself be most powerful
when dealing with routinized and social things, holding the potential to unleash anger, even
violence (Taussig, 1999, p. 46). The dangers of defacement are detailed in the initiation of
a young male in the Big Hut. In the initiation ceremony another man, who appeared to the
initiates as the spirit Shoort, played lasciviously with the initiates, grabbed at their bodies
5
See discussion of this uncertainty below in addressing the idea of defacement.
and nally fought with them. The guides overseeing the ceremony ordered the initiates to
touch the spirits mask, and the initiates unmasking of the spirit followed.
Terrorized he slowly raised it [the spirits mask]. His gaze hardened. It was the face of
someone he knewwell. . .andthis face was smilingat him, while remainingcompletely
still (Gusinde, quoted in Taussig, 1999, p. 129).
Then the perplexed young man, formerly convinced that the beings in the Big Hut were
in fact spirits, is presented with the truth underlying the public secret. His friend, not a spirit,
stands unmasked before him, and the other men instruct him on what has been revealed:
This is a game of men. It is we who represent all this. Whats just happened to you
now that made you fear so much, this is nothing more than something made by men!
[. . .] Never reveal any of this to the women and children. Your death will follow
immediately if you do (Gusinde, quoted in Taussig, 1999, p. 129).
In this way, in its revelation or defacement the public secret became even more powerful;
the stakes were raised. Belief in the secret was replaced by knowledge of the truth and
an accompanying knowledge of the consequences of sharing this truth with others. The
enormity of the revelation of the public secret in fact strengthened it and made it more
needful in upholding social belief; demonstration of truth impelled greater secrecy.
5. Discussion
What do Andalusian villagers, their Big Hut, and their spirit games, have to do with
such modern practices as auditing? A great deal, if we draw from this the analytical
base that the idea of the public secret and the practice of defacement present. While these
extreme examples are useful in locating certain elements of public secrecy the public secrecy
of the everyday is, as indicated, more banal and more widespread in the functioning of
contemporary society. In particular, public secrecy provides a map to professionals social
agreement as to how to conduct their work. Simply put, I argue here that the matter-of-fact
approach to auditings limitations detailed earlier is not just a form of what has been termed
pragmatic modesty (Power, 1997), or indeed an avoidance of a slavish attendance [. . .]
to those in power (Radcliffe, 1999). Rather, these limitations are part of a maintenance of
public secrecy that is essential to the proliferation of auditing as a practice. In its amenability
and ready adherence to the public secrets of modern society government auditing does in
fact tend towards an attendance to those in power, though this may be unintended, through its
provision of a reliable streamof managerial diagnoses and an abrogation of political debate,
and this is in itself a signicant factor in the rapid expansion of auditing in government.
This is possible even though auditors might in the main be convinced otherwise, and act
in a way that seems to them to be entirely forthright and proper. The ambiguous status of
the public secret means that it is not necessary for auditors to simply view their ideas and
practices as cynical tools, essentially false. Instead they may approach public secrets with
a more circumspect, nuanced and complex view.
I believe that a careful reading of the products of audit inquiry provides evidence of
the complicity of auditing in maintaining public secrets, and that this complicity is in
many ways essential to the appeal of auditing in the public sector. In just one example
of this, and as has been said elsewhere, the language of auditing is itself dening, facili-
tating, for example, the denition of political problems as business problems, and hence
displacing political debate of matters that could potentially prove embarrassing (Radcliffe,
1997). Business problems are seen to be considerably less threatening than ones framed
in political terms, hence the attractiveness of auditings apparent ability to redesignate
what might otherwise be political as simply requiring the use of proper management
techniques.
What follows is an attempt at critiquing an audit report fromwithin, taking audit ndings
seriously and comparing these with things that are known but are equally known to be things
that cannot be said, or cannot be seen to be known, especially in the context of an audit
report. In other words, audit ndings will be juxtaposed against modern public secrets in a
form of defacement that seeks both to unmask and to inform the contemporary practice of
performance auditing and its consequences in society.
The idea of criticism as defacement brings out elements of the reciprocity between the
critic and the object of critique, in this case the accounting academic and the practice of
auditing. As Taussig observes, the critic, while supposing a superordinate or special position
from which critique is possible is at the same time dependent on the existence of the object
of critique. Yet the extent to which critique as defacement can succeed is bounded by
the extent to which it engages internally with the object defaced, enters into its being
(Taussig, 1999, p. 43). In this way defacement creates sacredness in the public secret in that
it shows the importance of the maintenance of the public secret in the workings of society.
Defacement stands to lead not to the collapse of a public secret but to its reinforcement, in
denial, attack and other preservation of that which is known but cannot be seen to be known.
As Taussig suggests, defacement as critique presents a drama of revelation which, like
unmasking, amounts to a transgressive uncovering of a secretly familiar (Taussig, 1999,
p. 51). Transgression is at the heart of defacement and its practice is inimical to socially
sanctioned public secrecy. It may well be seen as threatening and hence produce defensive
attack.
5.1. Forms of critique: similarity and difference
Before proceeding to a demonstration of public secrecy it is useful to drawsome compar-
ison of this mode of analysis to previous work in the accounting literature. Clearly efforts at
opening discussion of accounting practices and the truth claims that they manufacture make
such a path easier to locate and to follow. Ground breaking work such as that of Briloff
(1972), Tinker (1985), Tinker et al. (1982), Cooper et al. (1981) and Amernic (1985) allows
and prepares the way for critique. But so also does work by Hoskin and Macve (1986,
1988), Miller (1987, 1990) and Hopwood (1988) in analyzing the development of ideas and
practices.
Some might tend more towards social structure and institutions, others to a ow of
knowledge and practice. But these writers all tend to a critique of what is there, of what
is spoken of, rather than what is not. An effort at defacement is different in that it turns
away from that which is agreed upon and publicly acknowledged as known. Whether in
confronting accounting constructions with facts (even quite awful ones, such as in the case
of Love Canal, (Tinker, 1985)), or in locating bodies of knowledge and consequent practice
(Hoskin and Macve, 1988) the focus of previous work has understandably been on what
is present, what is said and what is recorded. Hence even in Foucauldian work there is a
neglect of what is unsaid, even though Foucaults analysis itself highlights certain functions
of secrecy. Having worked with what is said and making sense of this as best as possible
in prior work analysis now turns to the unsaid, learning from those auditors whose sense
of what was or was not strategically wise guided their audit ndings. This project in
particular seeks to address the potential consequences of such an agreement beyond its
facilitation of the present.
Personal experience necessarily informs defacement; critique of the type Taussig con-
templates draws from an individual sense of the operation and importance of public secrecy
in life. In focusing on the unsaid and seemingly unknown (but long known) defacement
may draw together elements of prior critique, including aspects of social structure, dis-
course and practice while moving beyond them in disturbing the silence that public secrecy
advances.
6. The public secret in practice
6.1. The Cleveland City School District performance audit
6.1.1. Origins
The Cleveland City School Districts (CCSD) performance audit began with a mandate
from the Ohio Legislature, which in 1996 requested in the states biennial budget bill that
The Auditor of State shall conduct a thorough and expedited audit of the nances of
the Cleveland Public Schools, pursuant to an audit plan developed in conjunction with
the Superintendent of Public Instruction. The audit shall examine, but shall not be
limited to, the school systems nancial practices and controls, including the payroll
system; the maintenance and utilization of facilities; personnel utilization; and student
ADM
6
counts (Am SUB HB 117, quoted in Auditor of State, 1996, p. 1-1).
This was to be the largest and most prominent performance audit yet conducted by the
Auditor of State of Ohio, and was the rst special audit conducted by the ofce.
7
The audit
followed a series of setbacks for Clevelands public schools. Repeated attempts at passing a
school levy (i.e., a property tax increase) had failed. Property taxes provide the main source
of school funding in Ohio and in the face of this failure the Cleveland schools had been
declaredbythe state government tobe ina state of nancial emergency. This categorization
allowed the state to place the Cleveland School District under the direct control of the State
6
Average Daily Membership (ADM), a measure of the enrolment gures for a school district. This statistic
greatly inuenced a school districts share of State School Foundation revenue. The audit would subsequently
question the accuracy of CCSDs reported ADM gures, pointing out a fall of some 7000 students between 1995
and 1996. This fall was expected to precipitate a reduction in school revenues of some $8m, and suggest stafng,
administrative and other functions be reduced (Auditor of State, 1996, p. 225).
7
For discussion of special audits conducted at the request of a legislative body see Radcliffe (1997).
Superintendent of Schools in 1995, circumventing the locally elected school board. As
the State Auditor described the situation in opening his audit report, CCSD is in a scal
crisis which totally inhibits their ability to provide even basic education (Auditor of State,
1996, p. 1-1). The initial audit mandate itself presupposes managerial cause and remedies
(after all this is a scal crisis), but I leave such analysis for later discussion. Instead the
aim here is to present the situation as the auditors themselves saw it and represented it to
others. I deal rst with audit methodology, and then summarize ndings, before moving to
analysis.
6.2. Scope and conduct
Unlike many modern audit agencies, such as the U.S. General Accounting Ofce (GAO),
Canadas Federal and Provincial Auditors General, and the UKs National Audit Ofce, state
audit agencies in the U.S. have refrained from practicing much efciency or performance
auditing. This was true in Ohio, which although it was one of the largest states, and the
State Audit Ofce was itself the second largest public sector audit agency in the U.S. (after
the GAO), had focused primarily on attest auditing of the State of Ohio and its political
subdivisions (cities, villages, townships and the like).
8
When the Auditor of State was
charged with developing a performance audit of the Cleveland Public Schools, it was not
moving into an area of great strength or experience. Hence much of the audit work was
conducted in cooperation with the Big Six rm Deloitte & Touche, which, the Auditor
noted, has completed performance audits in many large, urban school districts located
throughout the United States (Auditor of State, 1996, p. 1-5).
The Auditor of States Ofce dened a performance audit as,
a systematic and objective assessment of the performance of an organization, pro-
gram, function or activity to develop ndings, conclusions and recommendations.
Performance audits are usually classied as either economy and efciency audits or
program audits
9
(Auditor of State, 1996, p. 1-3).
Further discussion established that this was in the main an economy and efciency
audit, due to the scal crisis facing CCSD. With this in mind, the audit took a multi-
method approach, reportedly examining previous studies and reports issued on the district;
benchmarking it against similar entities; interviewing school administrators, principals and
8
Ohios Constitution had been amended in the mid 1800s to provide a greater scal watchdog role for the
Auditor of State. At this time the Auditor of State became a directly elected position, rather than being appointed
as had formerly been the case, and the role of the Auditor of State as Ohios Chief Accounting Ofcer was
formalized. This led to a broad array of audit involvements in the inner workings of the state, including keeping
accounts, ledgers and other nancial records, administering the states issue of bonds to nance public works
projects (primarily canals) during the mid 19th century, and even keeping operational records relating to the
states involvement in the Civil War (this material is drawn from notes made at the State of Ohios archives, Ohio
Historical Society, Columbus, Ohio, and not yet published). Efciency auditing, performance auditing and the like
seems largely to have been pushed out by the State Auditors pressing involvements in administering the day to
day business of the State.
9
See earlier discussion regarding the seemingly exible usage of these various terms in describing this set of
auditing practices.
parents; and drawing from discussions with legislative leaders, the state department of
education, current and former school board members and interested Cleveland citizens
(Auditor of State, 1996, p. 1-5: see also p. 1-61-7). Additional interviewees included the
judge overseeing the desegregation case against the Cleveland schools.
10
6.3. Findings and recommendations
The audit report itself is some two inches thick and 538 pages in length. It presents
an introduction, executive summary, and then individual analysis of operations in separate
chapters concerning: nance; governance; purchasing; facilities; food services; transporta-
tion; the use of technology; payroll systems; human resources; management reporting
and budgeting; competitive contracting; and average daily membership. Findings, com-
mendations of present practice and recommendations for the future are presented in each
chapter; in the analysis of food services alone there are twenty-seven ndings, six com-
mendations and six recommendations. It is somewhat doubtful that Ohios politicians,
journalists and other opinion leaders, however diligent, worked through the report as a
whole. Nonetheless to give a avor of the body of the audit report I reproduce in detail a
sample nding, commendation and recommendation concerning the districts food service
operations:
6.4. Finding
F7.27 The Division has allocated 561 hours per day to provide lunchroom attendant
services at 79 elementary and 2 middle schools. However, Food Services does not
receive information regarding the actual number of lunchroomattendant hours worked
and is precluded from reviewing these payroll amounts before they are charged to the
Divisions operating fund. Each school principal is responsible for stafng the number
of lunchroom attendant hours allocated by the Food Service Division. Schools are
responsible for reporting lunchroom attendant hours worked directly to the Payroll
Department for check processing. Additionally, there is inconsistency regarding lunch
room attendant time reporting across the District. Standardized time cards and sign
in sheets are not used at each location (Auditor of State, 1996, p. 7-19).
6.5. Commendation
C7.4 Becoming the rst school district in Ohio and one of only seven districts in the
country to join the Team Nutrition School program (F7.18) (Auditor of State, 1996,
p. 7-22).
10
Driven by civil rights concerns the desegregation case had been in place since the 1970s. The case had been
brought by the U.S. Department of Justice, and amongst other things had resulted in court ordered busing in an
attempt to foster more racially balanced school environments. Prior to busing Clevelands school enrolments had
mirrored the geographic distribution of Clevelands population, and so had effectively been racially segregated;
see below for further discussion of this topic.
6.6. Recommendation
R7.6 Modify the current procedure in place to report lunchroom attendant hours
worked. Actual hours worked for this position should be reported by each school
directly to the Food Service Division. This would allow the Division to review all
hours reported and detect any unauthorized lunch attendant hours before the payroll
amounts are charged to the Food Service operating fund (F7.27).
Throughout the report ndings and recommendations point to administrative decien-
cies, suggesting inter alia that the district should develop a facilities plan to co-ordinate
repairs to its buildings (Auditor of State, 1996, R6.1, p. 6-53); that management reports and
budgetary information be made available through on-line sources rather than hard copies
(Auditor of State, 1996, R12.9, p. 12-42); and that computerized calling systems might be
used throughout the district to advise parents via telephone if their children are absent from
school (Auditor of State, 1996, R14.4, p. 14-11).
The majority of recommendations continue in this vein. In reviewing purchasing and
facilities management it is recommended that budget development be co-ordinated with the
facilities master plan (Auditor of State, 1996, R6.7, p. 6-47). The Human Resources Depart-
ment (HRD) is found to be in need of a comprehensive information system, to meet with
HRDs critical business needs (Auditor of State, 1996, R11.2, p. 11-34), since the district
was unable, amongst other things, to account for staff numbers at the school level (Auditor
of State, 1996, F11.13, p. 11-15). Meanwhile review of the districts management infor-
mation systems found two mainframes in operation, running some 147 software packages
(Auditor of State, 1996, p. 9-39-6), all of which were being considered for replacement
due to age or lack of functionality (Auditor of State, 1996, F9.13, p. 9-209-21).
Given the apparently mundane focus of the bulk of the auditors work and ndings,
certain of the recommendations showcased in the Executive Summary, likely the most
inuential and widely read section, make for more excitable reaction. The summary begins:
The Cleveland City School District (CCSD) is in the midst of a nancial crisis that
is perhaps unprecedented in the history of American education. If current revenue,
spending and borrowing trends continue unchecked, by the year 2004, the CCSD will
be $1.4 BILLION in debt (Auditor of State, 1996, p. 2-1, emphasis in original).
This nancial diagnosis of the districts problems is followed with the observation that
85% of the districts costs relate to personnel, and 95% of personnel are covered by collec-
tive bargaining agreements, all of which expire in August, 1996. Thus, 81%of the CCSDs
expenditures for the balance of this century will soon be the subject of labor negotiations
(Auditor of State, 1996, p. 2-1); the district was therefore encouraged to develop a strategy
for these discussions. A variety of material concerning employees follows, suggesting that
teachers enjoyed better benets packages than in those cities that CCSD was benchmarked
against, while school bus drivers were paid more.
11
In presenting a 10 step plan for restor-
ing nancial stability expense reductions of $73m were presented, the three largest items
11
Teachers contributions to their health insurance premiums ranged from zero to $30 per month, and amounted
to 2% of the total benets costs, a comparatively generous arrangement by American standards (Auditor of State,
being reduction in bus drivers pay, reduction in employee benets packages concerning
healthcare, etc., and a reduction in the total number of teachers (Auditor of State, 1996, p.
2-122-13). Further audit recommendations included a proposal to enact a Charter school
law in Ohio, a policy endorsed by the Republican party to which the directly elected state
auditor himself belonged (Auditor of State, 1996, p. 2-6).
While suggestions of cuts in employee pay and benets would themselves have decided
redistributive and hence political effects, the suggestion of Charter schools as a counter-
balance to CCSDs difculties is the most overtly political endorsement offered in the
document. There are no directly supporting ndings associated with it, indicating this is
somewhat of a diversion from the reports style as a whole.
7. Truth or consequences
7.1. Truth
As has been seen the performance audit presents an almost entirely managerial diagnosis
of the Cleveland Schools, presenting its problems as essentially nancial ones amenable
to managerial resolution. At this point I propose a thought experiment. Suppose that the
auditors report was presented and all recommendations were immediately adopted and
implemented. Would things change? At a nancial and managerial level, perhaps they
would to some degree. But the reality of the Cleveland schools is so disastrous and cor-
rosive that managerial approaches provide an almost laughably futile response. Consider
this rare acknowledgement of the situation that the Cleveland schools are in, taken from
the introduction to the audit report, appearing between description of the school districts
geographic boundaries and a series of prior studies focusing on its problems, and offered
in the report without comment.
Of the (CCSDs) 75,424 students, 78.8% are nonwhite, 72.5% are economically and
academically disadvantaged and 15.7% are diagnosed with a disability. Statewide the
percentages are 17.8%, 19.6% and 11.9% respectively. Compared to the Statewide
average, CCSDs student body has more than three and a half times as many nonwhite
students, has more than three and a half times as many disadvantaged students, and
has almost one and a half times as many students with disabilities (Auditor of State,
1996, p. 1-4).
It is facts such as these that begin to unravel the public secrets of the Cleveland public
schools. Defacement of the public secrets at work here must begin with an acknowledgement
that matters of race, poverty and massive inequality gure centrally in the Cleveland schools
nancial and academic collapse, and audit reports, whatever their intention, are wholly
inadequate to deal with this glaring social reality. The auditors implicit message is that
if the Cleveland schools xed their payroll systems and other administrative matters all
1996). Clevelands school bus drivers were paid $14.23 per hour for part time work, which was somewhat less
than in Ohios second largest city, Columbus, but was more than the $11.33 reported national average hourly rate
for school bus drivers (Auditor of State, 1996).
would be neafter all the audit report itself diagnoses no other problems. The actuality
is that this does not even begin to address the suffocating realities that the Cleveland public
schools face. The most worrisome aspect of this public secret is that auditors, politicians,
administrators and even the most lightly informed members of the public know this. These
matters have been enumerated in countless reports and experienced in daily life for an
extended period, providing the long knowness important to Taussigs identication of
public secrets (Taussig, 1999, p. 6).
Auditing however does not provide a space for the expression of these truths, nor does
society seem driven to uncover them. We choose instead to hope for other diagnoses or
remedies, perhaps to mark time, perhaps to suggest interest while practicing indifference,
perhaps to avoid thinking of the underlying social problems in American society that the
Cleveland Public schools represent. The auditors know that updating CCSDs mainframe
computers will not alleviate the crushing poverty, awful housing conditions, lack of access
to healthcare and other burdens that Clevelands children face. But they know that they
cannot say it, least of all in an audit report to the Ohio Legislature.
12
It is better to talk of
administrative systems.
7.2. The reality of the Cleveland public schools
There is a whole genre of literature attesting to the corrosive nature of Americas inner
city public schools. The titles alone provide pause for thought, from Death at an Early
Age (Kozol, 1968), to Lives in the Balance (Diver-Stamnes, 1995), Ghetto School
(Levy, 1970) and Savage Inequalities (Kozol, 1991). The purpose here is not to review
the full literature in the area but simply to provide some sense of the chasm between the
language and approach of the audit report and the public secrets of the Cleveland public
schools.
The nature of the public secrets of the Cleveland schools is evidenced in media reports
that make plain the daily realities of urban and suburban living in America. In this an
alternate account of the Cleveland schools is available. The audit report was released on
March 15, 1996. On September 13 of that same year the U.S. Public Broadcasting Sys-
tem aired a television program, Children in Americas Schools, presented by Bill Moyers
and based on Kozols (1991) book, Savage Inequalities. The program used Ohio as an
example, because as the commentary put it, the schools here mirror American schools
everywhere (Hayden, 1996). Contrasts were offered between wealthier suburbs and poorer
inner city and rural school districts. In particular, the Cleveland schools were contrasted to
those of the Perry Local school district in Lake County, a suburb in the Greater Cleveland
area. I develop analysis using the contrast between the Perry and Cleveland schools that is
12
Note however that they can call for Charter schools, a proposal which in essence diverts funds to privately
run schools in the hope that they can provide a better chance for some students. Reality again intervenes; due to
funding constraints and other logistics charter schools could only cover a small proportion of the Cleveland school
age population. The creaky infrastructure of CCSD will continue to deal with the vast majority of Clevelands
students. The Cleveland Charter Schools are themselves under review by the U.S. Supreme Court, with their
existence being challenged on the grounds that since 96% of charter school places are at religious schools they
violate the U.S. Constitutions separation of church and state.
established in this program, together with statistics from the State of Ohio Department
of Education and a variety of reports on the Cleveland schools to provide a counter-
point to the public secrecy of which the audit report is a part and to in essence practice
defacement.
The students in Cleveland understand the practices masked by public secrecy. As one
put it in the broadcast,
I dont like going to our school because the windows fall out [camera shot of broken
windows]. The ceilings, the oors, everything is not how it is supposed to be.
Another put the issue succinctly, You come, you see, and you just dont want to come
back again. By contrast, the suburban Perry local schools were depicted in all their splendor,
with a student saying, I love it here. Theres lots of room for kids to grow, and a lot
of room for them to challenge themselves (Hayden, 1996) over footage of a modern
running track and state of the art computerized classrooms. The Perry school districts
new educational facilities, dubbed the Perry Educational Village, includes an all weather
running track identical to that at the U.S. Olympic teams training facility, a $2.8m football
stadium, a natatorium, 1620 seat gymnasium and extensive weight training and aerobic
exercise facilities (Warsinskey, 1993). The set of new school buildings comprising the
Perry Educational Village cost a total of $95m, and the facility was described in a news
editorial as a Taj Mahal complex (Editorial, 1995).
By contrast Clevelands schools are in very poor physical shape. While I worked on
this paper it was reported that the roof over the gymnasium at Clevelands East High
school had collapsed, necessitating the closure of the school. An emergency building
inspection prompted by the embarrassment at East High revealed that six other schools
had structural problems (Townsend and Okoben, 2000). As a newspaper editorial put it,
tragedy was barely averted. There were no students in the gym since a school custo-
dian had noticed cracks in the roof and the gym had been closed a few weeks earlier
(Editorial, 2000). In this context of dilapidation a Cleveland school teacher was quoted
in the PBS broadcast as explaining school conditions to the children in her classes as
follows, I just tell them were a bunch of owers growing in a garbage can (Hayden,
1996).
Simply put, the differences in the Cleveland and Perry schools can be broadly attributed
to matters of race, poverty, and inequality in the way that American schools are funded.
Local property taxes and local funding are at the heart of most states education funding
schemes, and this is true in Ohio. While bringing the benet of local control, an important
feature in American government, it also magnies the effect of prevailing socio-economic
conditions. Rich students in rich neighborhoods enjoy facilities that are often lavish; poor
students in poor districts are conned to buildings that are little more than slums. As Kozol
puts it, the funding of American schools is performed through an arcane machinery unique
amongst industrialized nations (Kozol, 1991, p. 54), in which
. . .the property tax is the decisive force in shaping inequality. The property tax
depends, of course, upon the taxable value of ones home and that of local indus-
tries. A typical wealthy suburb in which homes are often worth more than $400,000
draws upon a larger tax base in proportion to its student population than a city occupied
by thousands of poor people. Typically, in the United States, very poor communities
place high priority on education, and they often tax themselves at higher rates than do
very afuent communities. But even if they tax themselves at several times the rate of
an extremely wealthy district, they are likely to end up with far less money for each
child in their schools (Kozol, 1991, p. 545).
These inequalities are further exacerbated by the deductibility of local property taxes
against federal income taxes, which provides, in essence, a federal subsidy that amplies
inequality. Further, the disproportionate presence of nonprot entities in central cities, such
as hospitals, private universities, etc., all of which are exempt from property taxes, means
that in being unable to tax these bodies inner city communities provide them with a passive
subsidy while the services offered by elite nonprots are consumed disproportionately by
wealthier suburban residents.
The signicance of the property tax in bounding inequality is important in understanding
the contrast between Cleveland and Perry. Cleveland is a classic inner city district, with all
that that entails, while Perry, a formerly rural area, has been the site of increasing suburban
residential development. It has also been blessed with a property tax windfall: Perry is the
site one of the largest nuclear power plants in America, which is itself one of the 10 largest
tax paying facilities in the U.S. Since there is no attempt to share or otherwise apportion
property taxes, local property taxes are locally applied. This means that the accident of
the location of the power plant in Perry provides an avalanche of property tax dollars that
are solely available to the Perry schools, with revenue effects documented below. Hence
Perrys students enjoy their Taj Mahal complex, and the district is among Ohios best
funded. Indeed, the plant provides such an embarrassment of riches that the Village of
Perry is able to use surplus public funds to provide residents with free trash pickup, water,
sewer service and cable television. There are some drawbacks to living in the shadow of the
plant: 76 emergency sirens within a 10 mile range of the plant in the area locally known as
the kill zone are tested four times a year, evacuation plans are at hand and residents are
advised to keep an overnight bag packed in case of a nuclear emergency (Fenske, 2001).
But for most the benets of having the plants property tax revenues in their community
seem to outweigh these inconveniences. As one local resident commented, aside from
the schools, with all the free services offered it does cut down on monthly expenses
(Fenske, 2001, p. 9).
7.3. New modes of accountability and the demonstration of inequality
In one of many reactions to the political problemof education the State of Ohios Depart-
ment of Education maintains extensive data on school districts in what is called a Local
Report Card.
13
A part of accountability initiatives and other efforts to improve the man-
agement of schools within existing funding structures this nonetheless provides a useful
resource in defacing Ohios educational public secrets as maintained in the Auditor of States
report. Consider the following data contrasting funding levels in the Perry and Cleveland
schools and, for comparability, drawn from the time of the Audit.
13
The materials referred to here are available at http://www.ode.state.oh.us/reportcard/lrc.htm.
Table 1
Panel (A) Annual revenue per student ($) and Panel (B) median household income ($)
Source 19981999 School year 19981999 School year 19981999 School year
Cleveland city ($) Perry local ($) State average ($)
Panel (A)
Local 3192 13,011 3407
State 4641 780 2898
Federal 967 196 377
Total 8800 13,986 6682
19981999 School year 19981999 School year 19981999 School year
Cleveland median household
income ($)
Perry median household
income ($)
State average median
household income ($)
Panel (B)
20,529 31,475 27,232
Source: Ohio Department of Education Local Report Card http://www.ode.state.oh.us/reportcard/lrc.htm (Ohio
Department of Education, 2000).
The States statistics from the time of the audit (for 1998/1999) detailed in Table 1 Panel
A indicate that Perry has some 60% more funding per student than does Cleveland, with
revenue chiey coming from local property taxes, which at $13,011 per student represent
93%of Perrys revenues. In contrast local property taxes in Cleveland raised only $3, 192 per
child, or 24.5% of Perrys local tax receipts. Offsetting state revenue of $4641 and federal
aid of $967, boosted Clevelands per child funding to $8800. In other statistics, Table 1 Panel
B indicates that median household income in Cleveland is only 65% of Perrys median and
75% of the state average (Table 2).
Economic disparities translate to academic outcomes. While Cleveland struggled to
graduate a third of its students from high school, Perry consistently graduated more
than 90% of students, some 10% greater than the state average, and in compliance
with the states graduation target of 90% of each class (Ohio Department of Education,
2000). State prociency tests similarly show the inadequacy of education in the Cleveland
schools.
Table 3 compares the percentage of students passing the state mandated prociency tests
in the Cleveland and Perry schools, and shows state averages. To take one year, 1996/1997,
Table 2
High school graduation rates
Reporting school year
19951996 (%) 19961997 (%) 19971998 (%) 19981999 (%)
Cleveland 39.3 41.9 37.8 33.0
Perry 91.8 90.1 92.1 93.9
State average 79.9 79.6 80.2 81.4
State graduation standard 90.0 90.0 90.0 90.0
Source: Ohio Department of Education Local Report Card. http://www.ode.state.oh.us/reportcard/lrc.htm (Ohio
Department of Education, 2000).
V
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Table 3
State prociency test pass rates
Test grade Test subject area Reporting school year
19951996 19951996 19951996 19961997 19961997 19961997
Cleveland city
a
Perry local
a
State average
b
(%) Cleveland city
a
Perry local
a
State average
b
(%)
Prociency
performance
b
(%)
Prociency
performance
b
(%)
Prociency
performance
b
(%)
Prociency
performance
b
(%)
4th Grade Citizenship 24 80 56 32 78 54
4th Grade Mathematics 18 69 45 20 62 39
4th Grade Reading 18 74 46 28 72 52
4th Grade Writing 27 77 57 39 87 66
4th Grade Science 10 55 39 17 68 41
9th Grade Science 5 3 0 79 59
12th Grade Reading 52 80 68 40 84 68
12th Grade Writing 56 95 67 42 93 67
12th Grade Science 32 73 54 20 66 55
1
1
8
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6
Table 3 (Continued )
Test grade Test subject area Reporting school year
19971998 19971998 19971998 19981999 19981999 19981999
Cleveland city
a
Perry local
a
State average
b
(%) Cleveland city
a
Perry local
a
State average
b
(%)
Prociency
performance
b
(%)
Prociency
performance
b
(%)
Prociency
performance
b
(%)
Prociency
performance
b
(%)
9th Grade Writing 57 99 87 71 100 91
12th Grade Reading 32 81 67 38 85 69
12th Grade Writing 46 93 78 57 98 82
12th Grade Science 19 63 55 24 71 58
Source: Ohio Department of Education Local Report Card. http://www.ode.state.oh.us/reportcard/lrc.htm (Ohio Department of Education, 2000).
a
Reporting district.
b
Measures.
typical of others, Cleveland fell below the average in every test, in every subject, in every
grade, often being 50% below the state average. Similarly, the students of Perry outperform
Clevelands students in every test and every grade that year, often by stunning margins
(consider 12th Grade writing, passed by 42% of Clevelands students, 93% of Perrys and
a 67% state wide average.)
The State of Ohio now mandates performance standards for its schools. At the time of
the special audit the Cleveland City School District did not meet one of these standards
since their inception in 1995. By contrast, the Perry District met 24 of 27 standards as of
19981999 (Ohio Department of Education, 2000).
These matters are not just the stuff of arcane Department of Education statistics, rather
they are but one reection of a long known crisis in education in Americas inner cities in
general and the Cleveland schools in particular. This knowledge manifests itself in various
ways, not least in the exodus of those able to leave central cities for suburbs, or in the
imperative interest of property buyers in the character of local schools. Just as Taussig found
that extreme examples of public secrecy helped him locate that as an analytical concept, so
the extreme contrast of the Perry and Cleveland schools helps make an argument that while
demonstrated here through acute juxtaposition is nonetheless apparent in a comparison
of U.S. urban to suburban areas in general. Indeed, the generalizability of these contrasts
is apparent to anyone who has considered buying residential property in the U.S. and so
knows the signicance of the question, Howare the local schools? The question, asked and
answered, speaks to an array of social and economic conditions and establishes knowledge
of the importance of urban geography in isolating ones self and family from inner city
poverty and its effects.
This is nonetheless a situation that a child can understand. As Kozol writes, adolescents
in the poorest districts know that they get less than those in wealthier regions. They see
suburban schools on television, and travel to them for athletic competitions (Kozol, 1991,
p. 57). To these children these are long known public secrets. They know what is going
on, as is illustrated by this comment written by Davico Washington, one of a series of
sixth, seventh and eighth graders from Clevelands Eliot Middle School whose comments
on Ohios school funding were published in The Cleveland Plain Dealer after the PBS
broadcast of Children in Americas schools. As he writes,
Perry High school is a beautiful school, and you want to know why? It is because the
Perry nuclear plant pays taxes. The school has an Olympic size swimming pool and
a weight room, and its walls are so white. I recently asked my teacher if I could catch
a bus to attend Perry, but I cant go out of district. If the developers could give us our
60 percent we could look like Perry.
In conclusion, I think business owners need to start paying property tax. That way,
young people will stay out of jail. I feel as though my education is being ripped away
from me (Editorial, 1997).
Having scratched away at some of the public secrets that while known had to be denied
in the audit report for a managerial diagnosis to function, I turn now to matters of race,
the involvement of the courts, and the ultimate undermining of the public secrets of school
inequality in Ohio.
7.4. Desegregation and the Cleveland city schools
The public secrets of Ohios public schools that are detailed here have an important
pre-history. In particular, the issue of property taxes and their effects is intertwined with the
dynamics of population distribution, a matter which in America is greatly inuenced by race.
In the Brown desegregation case, the U.S. Supreme court famously declared that separate
educational facilities were inherently unequal (347 U.S. at 493). A series of desegrega-
tion lawsuits followed, not least in Cleveland, where the Reed v. Rhodes case was led in
December 1973. In 1976 the U.S. District Court found that the Cleveland School board had
in effect run racially segregated schools. Desegregation was ordered through a variety of
moves, including busing. The order was however conned to the Cleveland school district
(Stevens, 1985). To avoid having their children in racially mixed schools, whites had only
to leave Cleveland for the suburbs. This contributed to the decline of the central city. It also
added to the depression of property values and property tax revenues in the City of Cleve-
land, while enhancing those in the separately incorporated suburbs that ring the city and
operate as separate municipalities, each with their own local government and school district.
Hence the public secrets of school inequality became enabling devices for the evasion
of integration in education in the Cleveland area, and knowledge of them became crucial
in enabling continued segregation. Formerly the schools operated in the city of Cleveland
had operated with de facto segregation with strong division between what Richan termed
the lily white west side and the racially mixed east (Richan, 1967, p. 5); now segregation
would continue, but using the framework of the suburbs. Emigration to the suburbs had
begun before desegregation orders; it would continue after it. As the U.S. Commission on
Civil Rights had noted in 1967, as early as 1960, 98% of the Cleveland metropolitan areas
nonwhite school children were enrolled in the City schools while 69% of the whites were
enrolledinthe suburbs (UnitedStates CommissiononCivil Rights, 1967). Inthe years before
desegregation orders Clevelands schools were 64% black. Five years after desegregation
they were 69% black. Enrolment decline caused by out migration and lower birth rates in
the city halved the student body over a period of 14 years (Stevens, 1985, p. 35).
A later study of poverty in the City of Cleveland noted that many of those able to had left
the city. The poor had themselves been concentrated in the center due to the loss of housing,
the location of public housing projects, racial segregation and rapid population decline in
central areas (Coulton et al., 1990, p. 4). While Northern cities have overall been more
geographically segregated by race than those in the South, even by this standard Cleveland
and the surrounding Cuyahoga County area are highly segregated; as the authors noted, On
most segregation indices, Cleveland is second only to Chicago in the degree to which blacks
are segregated residentially (Coulton et al., 1990, p. 56). Hence the contours of Clevelands
political and geographic division are inuenced by the public secrets of structured racial
and economic inequality, and these in turn serve to compound the problems of Clevelands
schools.
7.5. Transformation: the audit diagnosis in context
Before moving on it is important to note transformations in the problematisation of
the Cleveland schools. While diagnoses of the Cleveland schools in the 1960s and 1970s
predominantly focus on race, there then being great concern with civil rights matters, these
diagnoses change over time. Reports on desegregations progress are gradually replaced by
reports such as that made by the Auditor of State suggesting that the Cleveland schools are
poorly managed. A translation occurs with the schools situation being attributed rst to
race and poverty and then to managerial approach.
Accounting and auditing has been key to this transformation from the start. One of
the rst of these reports was made by the accounting rm Ernst and Whinney (currently
named Ernst & Young), which then as now has its U.S. headquarters in Cleveland. The
report was prepared in 1977 in connection with the work of the Special Master appointed to
oversee desegregation. It suggested scal incompetence by central staff and school board
management personnel (Stevens, 1985, p. 61-2). This was followed by a developing repre-
sentation of the Cleveland schools as being chiey aficted by scal and managerial woes,
rather than systemic outcomes of social organization (Stevens, 1985). Financial crises were
reported in 1977, with the districts inability to pay teachers on time. The Auditor of State
had reported in October of that year that the schools lacked sufcient funds to continue
operating, prompting a state backed bail out package, which was repeated in 1978. Pro-
posed property tax levies failed, and Clevelands teachers went on strike fromOctober 1979
through mid-January 1980. In 1981 the State made another loan to the Cleveland schools
and the district remained in receivership from 1981 to 1984 (Stevens, 1985).
Managerial diagnoses continued, being presented not just by accounting rms or the
Auditor of State, but by Citizens groups, notably the Citizens League of Cleveland, a
nonprot entity whose research institute, though funded through major nonprot founda-
tions, including ones established by local property developers and businesses, presented
non-partisan reports presenting the Cleveland schools as being in nancial emergency.
Proposed remedies included budget cuts, pay cuts and management reviews (The Citizens
League Research Institute, 1992).
While a later report suggested in contrast to other work that the most important prob-
lem facing the District continues to be educationalnot nancial (The Citizens League
Research Institute, 1993, p. 9), this nding was in the minority; in the main the transforma-
tion of Clevelands school problems from the social to the nancial world was complete.
When the State Auditor made his report in 1996 his audit worked with meanings already
developed in public discourse over some 20 years. While earlier diagnoses such as Stevenss
(1985) work bore titles such as More than a Bus Ride: The Desegregation of the Cleveland
Public Schools, by 1993, a mere eight years later, The Citizens League was able to talk
briskly of A Call to Action: Responding to the Cleveland Public Schools Financial Crisis
(The Citizens League Research Institute, 1993), a diagnosis facilitated by auditors and the
nancial mechanisms (receivership, etc.) of which they are a part.
This redenition of the situation would be gravely challenged as school matters returned
to the courts. A coalition of poorer school boards challenged the State of Ohios school
funding formula as being unconstitutional, in that it failed the obligation undertaken in
the Ohio Constitution for the State to provide all children with a thorough and efcient
system of common schools. The DeRolph case as it become known was initially ruled
upon in 1997, and so was not a part of the discursive framework within which the Auditor
of State worked in presenting the 1996 audit report. It does however lay bare certain of the
public secrets within which the Auditor of State labored. In its opinion, the Ohio Supreme
Court found that the States school funding formula yielded vast wealth-based disparities
among Ohios schools, depriving many of Ohios public school students of high quality
educational opportunities DeRolph v. State (1997). It further drew upon the record of the
states constitutional convention, at which the State constitution was drafted, and in which
debates reveal the delegates strong belief that it is the states obligation, through the
General Assembly, to provide for the full education of all children within the state DeRolph
v. State (1997). The school funding formula with its reliance on municipal funding sources
was found to be unconstitutional, presenting a political crisis that continues to date.
There are questions of howit is that lawwas able to discern what accounting and auditing
could not, or of the different implications of bringing these respective bodies of knowledge
and expertise to bear. I hold these off now in favor simply of discussing the role of auditing
in sustaining and working within the bounds. The contrast between auditing and law in
these areas is rich and may facilitate further research, but for present purposes I look simply
at the auditors work and what it was they worked with.
8. Consequences
This paper started with discussion of a series of observations that suggested government
auditing was a pragmatic practice. While for auditors this may be an important way of
thinking about their work and making it tractable, allowing themselves the self assurance
that they are doing the best that they can, analysis of this pragmatismas a means of upholding
public secrets presents this as a rather more consequential stance. Pragmatism can at times
be seen as a lack of resistance to public secrecy and hence an envelopment of auditing by
it; this has consequences both for auditing as a practice and auditors as individual actors.
The rst area of consequence is that the truth value of audit ndings is severely com-
promised by auditings roles in maintaining public secrets. Indeed, in working within the
borders of public secrecy, and in its ready supply of managerial approaches to what might
otherwise be conceived of as political problems, auditing fosters a managerialisation of
public discourse that is itself partisan. There are winners and losers here. The winners in
the case of the Cleveland Public Schools include those who would be adversely affected by
a more equitable funding formula in which the rich and the strong did more to look after
the poor and the weak. A funding formula that established a state wide level of funding
per pupil would address much of the material conditions that plague Clevelands schools.
But the necessary reallocation of resources would mean considerably less public opulence
in wealthier school districts, which would generate grievances among vocal and politically
powerful groups. This, given discussion of the public secret and of government auditors
seeming pragmatism seems unlikely to be incorporated in an audit nding or recommenda-
tion. Yet we can learn fromwhat is: in the case of the Cleveland Public Schools performance
audit some of the biggest reductions in resources (and note the signicance of reductions
being proposed as a remedy to what was depicted as scal crisis) were to come from cuts
in teacher, bus driver and other employee remuneration. That auditors suggest this but did
not consider the structural inequalities that are presented by local funding of public schools
does much to demonstrate that the truth value of audit ndings in areas marked by public
secrecy is questionable.
The second area of consequence concerns auditors themselves, in terms of the way that
they understand their work, their position, and their function. For those senior auditors
charged with the drafting of published ndings the idea of the public secret suggests that
knowledge of what not to know or say is a crucial element in presenting what are likely
to be seen as successful or effective audit ndings. If the only positive outcomes seen
from audit work are those cases in which recommendations are enacted (Radcliffe, 1999),
then there is the potential for an inherently conservative and unambitious taint to enter
into audit inquiry. Auditors must deal with this as they manage their presentation of self,
both to others and in representing and making sense of their work internally as a matter of
identity.
Acknowledgement of the importance of upholding the public secret, and a commitment
to this, must necessarily be accompanied by some rationalization. In the case of the audit
of the Cleveland Schools such rationalizations might include, but not be limited to, a gen-
uine if nave belief that managerial change might actually solve the problems concealed
through public secrecy, a sense that managerial changes though minor might be in the
right direction and hence lead to the best situation then possible, or a deep seated alien-
ation from and cynicism towards audit work. I suspect that a variety of these responses in
fact come into play, for various auditors and at different junctures. Defacement of public
secrets is a transgressive act unlikely to foster a smooth career trajectory as an auditor.
Indeed, for Auditors of State, such as Ohios, who are directly elected in partisan polit-
ical elections, transgression of party lines and interests is an understandably unhealthy
career move.
Beyond this, and even for those auditors laboring at a more local and technical level there
is ultimately a pressure that means that auditors, rather than embracing a nihilistic rejection
of their trade, want to believe that some positive outcomes can come from their work. This
is a necessary part of getting by, of being an auditor amid complex social arrangements,
some of which by social agreement cannot be publicly addressed. Hence the pragmatism
that is unearthed in eldwork, and seen by Power to be the pragmatic modesty that, as he
notes, is quietly [. . .] the view of most practitioners (Power, 1997, p. 1434). But as this
analysis suggests, quietism is not without its problems for auditors, not the least of which
is an effective co-option in and alliance with the way things are. A form of auditing which
maintains public secrets presents the risk of being an inherently conservative practice.
9. Conclusions
This paper presents government auditors seeming pragmatism as part of a labor of the
negative in which social boundaries remain unchallenged and public secrets are maintained.
Notwithstanding this there are opportunities to deface public secrets and in unmasking them
to transgress social convention. These opportunities present themselves to auditors, auditees
and to observers.
For the auditor it is possible that the broad latitude seemingly conveyed by governing
statutes might, in certain environments, lead to a freedom in auditing that allows greater
efforts in acknowledging and dealing with public secrets. As an example, the Auditor
General of Canadas long term appointment and the traditions of that Ofce point to the
possibility of auditing in defacement.
14
In certain Australian States the Auditor General is
appointed to a seven-year term and is then ineligible for a renewal of ofce, an approach
which is seen, with some justication, as fostering greater independence. But whatever
the institutional boundaries within which auditors must work, this analysis suggests that
some of the most difcult transgressions that revelation of a public secret would present lie
within auditors own value systems and world view. The internalization of public secrecy
is a powerful and limiting force.
For the auditee, although placed in a subordinate position in the auditing process there
is the chance of presenting counter evidence and argument, of challenging audit work,
and of addressing matters of public secrecy. Yet this is again fraught with difculties, not
least in the auditees immersion in public secrecy. For those able to rise to the heights
of Clevelands school administration an ability and willingness to construe problems in
managerial terms, and to understand themas being amenable to managerial resolution seems
both necessary in self representation and administrative advancement, and inhibitive in that
it screens out those resistant to such understandings. Nonetheless, it might be possible for
other groups, teachers, parents and others outside accounting and managerial knowledge
to offer alternate representations as a counterpoint to the discourse of audit ndings and
recommendations. In this way various forms of debate, both major and minor, seem
possible.
For the critic there is an ongoing duty and need to address the roles of public secrecy
in society, and in the particular case of government auditing to explore its roles and con-
sequences in everyday life. While not risking death at the hands of a village shamans, this
is a course not without prospective pitfalls, uneasy relations with university administrators,
donors and other power brokers guring not least among them. But if the emancipatory and
revelatory contribution of a realization of the embeddedness of accounting in organizations
and society is to be substantively realized this is a key starting point for analysis and critique.
9.1. Further research
In pursuing work in this area a number of opportunities for further research present
themselves. Critics may choose to deface and consider other public secrets, both in cases of
their maintenance and their breach, providing broader empirical study of these issues. The
role and functioning of other branches of knowledge and practice, such as law, should be
considered in terms of its functioning in public secrecy and contrasted with the operation of
auditing in this regard. Similarly, although the public secret has been presented here in the
public sector there is no reason why the operation of public secrets should not be explored
in private sector settings. A reading of the literature suggests that the kind of sophisticated
environmental negotiation and understanding inherent in the maintenance of public secrets
is used by practitioners in the economy at large.
Finally this paper points to the potential role of ethnography in informing and critiquing
practice. The role of public secrecy was rst presented in considering an ethnography of
14
Note however that the horrible stories and other revelations presented by Canadas Auditor General have
themselves historically focused on the administration of programs, or management techniques, rather than the
overall sense of an activity (Radcliffe, 1998).
practice which itself relied on eldwork. Asimilarly ethnographic stance was used to closely
read and interpret audit ndings in the Cleveland case, suggesting that an acknowledgement
of subjectivity in the accounting literature need not be accompanied by an avoidance of
environmental factors, or as one writer has put it, a presentation of Hamlet without the
Prince (Tinker, 1998). Understandings of accounting and the social world should combine
an appreciation of the broader features of contemporary society with the local considerations
that make practice tractable in the eld.
Acknowledgements
This paper was rst drafted while acting as visiting scholar at the University of Adelaide,
South Australia. I appreciate the support and encouragement provided by colleagues at
the Universitys School of Commerce. The paper has beneted from comments made by
Brendan OConnell, Laura MacDonald, Bruce McConomy, Dean Neu and Lee Parker and
from participants at the Wilfrid Laurier University seminar series, the University of Alberta
conference on Government Accountability and the Auditor General, September, 2000, and
the APIRA Conference, Adelaide, Australia, 2001.
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