Audit Report

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Denver Art Museum

Objective: To assess elements of the city’s relationship with the Denver Art Museum, including agreements and accounting of city-owned assets, and to review selected museum policies and practices as well as the museum board of trustees’ governance of the organization.

In 1893, several artists established the Denver Artists’ Club, which became the Denver Art Museum in 1923. In 1971, the museum opened its current location in downtown Denver.

The museum maintains over 70,000 works of art. Its mission is “to enrich the lives of present and future generations through the acquisition, presentation, and preservation of works of art, supported by exemplary scholarship and public programs” through permanent collections and temporary exhibits.

 The City’s Formal Relationship with the Denver Art Museum, as well as Its Ownership of Some Assets at the Museum, Is Unclear

  • Existing agreements between the city and the Denver Art Museum are outdated and insufficiently document several key elements found in city contracts with other cultural organizations — such as ownership of assets and the city’s participation in governance.
  • The city has not properly accounted for some of its assets used by or stored at the Denver Art Museum.

The Denver Art Museum Should Strengthen Its Art Inventory Planning and Practices, as well as Its Emergency Response Plans

  • The Denver Art Museum should improve its art inventory planning and practices — as well as database and badge access controls — to fully account for and protect all objects in its care.
  • The Denver Art Museum’s approach to emergency planning lacks some key elements — such as a formal risk assessment and
    a continuity plan — and emergency planning documents are inconsistent in the information they share.

The Denver Art Museum Board of Trustees Should Enhance Its Governance Approach

  • The board’s membership does not reflect the diversity of Denver and the surrounding area — in that women and people of color are underrepresented among the 35 trustees.
  • The board’s governing practices do not fully align with leading practices, such as limiting the number of consecutive terms trustees can serve.
  • The board’s bylaws have not been updated in 22 years and are, therefore, inconsistent with some current board practices.
1.1 Develop New Operating Agreement – The Denver Art Museum and the Mayor’s Office, with assistance from the City Attorney’s Office, should develop a new operating agreement that includes clear rights, responsibilities, and asset ownership to address gaps described in Table 1 of this audit report. This agreement should clarify the museum’s role as an “agency” for arts.

Mayor’s Office Response: Disagree Denver Art Museum Response: Disagree

1.2 Include City Representation on the Denver Art Museum’s Board of Trustees – The Mayor’s Office should work with the Denver Art Museum to add one or more mayoral appointees to the museum’s board of trustees. This city representation on the board should be a requirement documented in the board’s bylaws.

Mayor’s Office Response: Agree, Implementation Date – June 30, 2022
Denver Art Museum Response: Agree, Implementation Date – Sept. 30, 2021

1.3 Assign Oversight Responsibilities – The Mayor’s Office should assign and document a responsible agency and individual to manage the city’s agreement with the Denver Art Museum. This agency and individual should be the city’s centralized expert on the museum’s agreements and they should be responsible for overseeing the museum’s use of city funding, overseeing the annual review of city assets at the museum, and reviewing reports provided by the museum.

Mayor’s Office Response: Agree, Implementation Date – June 30, 2021

1.4 Reconcile City Assets at the Museum – The Denver Art Museum and the Controller’s Office should reconcile and document all city-owned assets used by or stored at the Denver Art Museum.

Mayor’s Office Response: Agree, Implementation Date – June 30, 2022 Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

1.5 Assign City Custodian for Assets at the Museum – The agency that the Mayor’s Office designates to be responsible for museum oversight, as called for in Recommendation 1.3, should assign a city employee as an asset custodian for the city’s assets used by or stored at the Denver Art Museum. This custodian should be trained on asset-related city rules and processes, as well as the city’s agreements with the museum.

Mayor’s Office Response: Agree, Implementation Date Dec. 30, 2021

1.6 Improve Internal Controls for Assets at the Museum – The Controller’s Office should ensure adequate internal controls over the city’s assets at the museum. This should include annually verifying that the list of city assets at the museum is complete and accurate. These duties could be assigned to the agency with museum oversight responsibilities or to an individual within the Controller’s Office.

Mayor’s Office Response: Agree, Implementation Date June 30, 2022

1.7 Annually Verify Assets – The Controller’s Office should design and implement additional internal controls to verify at least annually that city assets related to entities under agreement with the city are properly recorded. When asset ownership questions exist or transactions have occurred during the year involving a separate entity, the City Attorney’s Office should be consulted to ensure the accounting treatment is consistent with the related agreement.

Mayor’s Office Response: Agree, Implementation Date June 30, 2022

2.1 Update Policies and Procedures to Document Current Practices – The Denver Art Museum’s Exhibition and Collection Services Department should update the museum’s inventory guidelines appended to its collections management policy or create separate procedures to document the museum’s current practices related to missing and nonaccessioned collection objects.

Denver Art Museum Response: Agree, Implementation Date Sept. 30, 2021

2.2 Update Policies and Procedures to Strengthen Oversight of Missing Objects – The Denver Art Museum should update the museum’s guidelines appended to its collections management policy or create separate documented procedures to strengthen its oversight of missing objects. Additional policy or procedure elements should include a process for analyzing missing objects to identify trends as well as standard steps for investigating and resolving missing objects.

Denver Art Museum Response: Agree, Implementation Date Jan. 31, 2022

2.3 Update Formal Strategy for Collection Inventories – The Denver Art Museum’s Exhibition and Collection Services Department should update its current strategy for conducting inventories of the museum’s art collection that:

  • Identifies the museum’s priorities for physical inventories.
  • Identifies those parts of the collection that have not been inventoried in more than 10 years.
  • Includes an inventory schedule that allows as comprehensive an inventory as possible of all objects in the museum’s care within a stated time frame.

Denver Art Museum Response: Agree, Implementation Date Jan. 31, 2022

2.4 Strengthen System Controls – The Denver Art Museum’s director of technology and its Registrar’s Office should update the ARGUS database to the version with audit trail capabilities, or they should restrict user access to delete object records and require and document a periodic review of objects marked as “missing.”

Denver Art Museum Response: Agree, Implementation Date Jan. 31, 2023

2.5 Implement Additional Badge Controls – The Denver Art Museum’s Protective Services Department should implement an automated control to ensure badges cannot be valid for more than one year, or the department should establish a requirement for an annual review to identify and deactivate security badges that are active beyond the allowable period. The results of this review should be documented.

Denver Art Museum Response: Agree, Implementation Date Jan. 31, 2021

2.6 Incorporate Leading Practices in Emergency Response Planning – The director of the Denver Art Museum should ensure the museum’s emergency response plan and processes incorporate practices recommended by leading organizations, as described in Figure 7 of this audit report — including developing a risk assessment and a continuity of operations plan, maintaining records for staff training attendance, and developing a process for the board of trustees to review and approve the emergency response plan.

Denver Art Museum Response: Agree, Implementation Date Jan. 31, 2023

2.7 Reconcile All Emergency Response Documentation – The director of the Denver Art Museum should ensure museum staff reconcile all emergency response documentation to ensure procedures are aligned and consistent across various documents, including the emergency response plan and the flipbook.

Denver Art Museum Response: Agree, Implementation Date Sept. 30, 2021

2.8 Develop and Document Formal Policy for Plan Development and Maintenance – The director of the Denver Art Museum should develop and document a formal policy for developing and maintaining the museum’s emergency response plan. This policy should outline a comprehensive approach to revising the emergency plan, and it should:

  • Define the roles and responsibilities for developing and maintaining the plan.
  • Describe the departments responsible for updating the plan and state their specific responsibilities.
  • Describe how revisions should be coordinated across departments.
  • Outline a formal review and approval process and review time frames.

Denver Art Museum Response: Agree, Implementation Date Sept. 30, 2021

3.1 Develop and Document Formal Board Policies and Procedures – The Denver Art Museum Board of Trustees should develop and document formal recruitment, nomination, and renewal policies and procedures. These policies and procedures should include a periodic review of the board’s ideal composition (e.g., skills, experience, and diversity among trustees, officers, and committee members) and an action plan including descriptions of the board’s diversity goals and the steps necessary to achieve these goals. If necessary, the board should revise its bylaws to ensure consistency with its current recruitment and nomination practices.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

3.2 Require Meeting Minutes for the Committee on Trustees – The Denver Art Museum Board of Trustees should add a requirement to its bylaws that the Committee on Trustees keeps meeting minutes.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

3.3 Update Bylaws with Attendance Requirement – The Denver Art Museum Board of Trustees should update its bylaws to include a description of board attendance requirements.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

3.4 Update Bylaws with Limit to Consecutive Terms Served – The Denver Art Museum Board of Trustees should update its bylaws to include a limit on the number of consecutive terms trustees and officers can serve. To retain institutional knowledge, the board could create an honorary status for long- serving trustees transitioning off the board.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

3.5 Develop and Document Process for Ongoing Training – The Denver Art Museum Board of Trustees should develop and document a process for identifying ongoing training needs, such as a periodic survey of trustees, and for providing the required training. Financial literacy training needs to be among the types of training regularly provided to all trustees.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

3.6 Update Bylaws to Require Board Self-Assessment – The Denver Art Museum Board of Trustees should update its bylaws to include a requirement that the board conduct and document the results of regular self-assessments of its performance and adherence to leading practices. The requirement should stipulate how often these self-assessments should occur and the specific areas to be evaluated including, at minimum, trustees’ attendance rates and their training needs.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

3.7 Regularly Review and Update Governing Documents – The Denver Art Museum Board of Trustees should review and revise its bylaws to reflect current practices. This should include a requirement for regular review and revision to all governing documents — including the bylaws — and specify how often this review should occur.

Denver Art Museum Response: Agree, Implementation Date – March 31, 2022

The objective of our audit of the Denver Art Museum was to review the city’s relationship with the museum and determine the effectiveness of specific museum policies and practices, as well as the governance provided by the museum’s board of trustees. I am pleased to present the results of this audit.

The audit found existing agreements between the city and the museum do not adequately clarify their relationship, and the city has not properly accounted for some of its assets at the museum. The audit also found that inventory policies and practices, as well as one aspect of badge oversight, should be strengthened. The museum’s emergency planning activities do not align with leading practices, and its planning documents are inconsistent. Finally, the board could incorporate more leading practices into its governance approach to better ensure trustees are engaged, board guidance is updated, and that the board better represents the diversity of the Denver metropolitan community.

The city can achieve better oversight over the city’s assets at the Denver Art Museum and better clarity regarding the rights and responsibilities of both the city and the museum by implementing recommendations for an updated agreement. Updating and strengthening policies and procedures for collection management and emergency response could enable the museum to make more efficient use of its staff resources, maintain accurate inventory data, and ensure its response to emergencies is coordinated and consistent. Finally, updating the board of trustees’ bylaws and developing polices that address training and diversity could enhance the board’s governing practices.

This performance audit is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, “General Powers and Duties of Auditor.” We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

We extend our appreciation to the personnel at the Denver Art Museum who assisted and cooperated with us during the audit. For any questions, please feel free to contact me at 720-913-5000.

Follow-up report

A follow-up report is forthcoming. 

Audit Team: Katja E. V. Freeman, Emily Owens Gerber, Vilma Balnyte, Maria Durant, Tyson Faussone, Heather Burger, Caitlin Casassa

Methodological Support: Samuel Gallaher