Report Title:

Legislative Auditor

Description:

Mandates that all audits of state departments required by state or federal law be conducted by the legislative auditor or through entities contracted by the auditor. Provides the Auditor with sufficient funds to conduct financial statement audits and audits required under federal law of certain state agencies.

HOUSE OF REPRESENTATIVES

H.B. NO.

1375

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the legislative auditor.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Financial statement audits and audits required under federal law, of departments, offices, and agencies of the executive branch of the State, are currently conducted by public accounting firms contracted primarily by the department of accounting and general services (DAGS) as well as individual departments. The audits are paid for from funds appropriated to the respective agencies or DAGS. Auditing principles and standards require that these audits be conducted by an entity independent of the one being reviewed. The perception, and possibly the reality, of this situation is that the audit is not conducted by an independent entity.

The office of the auditor is authorized to conduct postaudits under article VII, section 10, of the State Constitution. In addition, chapter 23, Hawaii Revised Statutes, requires the office of the auditor to conduct postaudits of the transactions, accounts, programs, and performance of all departments, offices, and agencies of the State and its political subdivisions.

Since the establishment of the office of the auditor, the legislature has appropriated only enough funds for the office to contract for a few financial statement audits annually. The legislature believes that the time has come to appropriate and align all of the financial auditing functions and its related expenditures as legislative expenses.

The purpose of this Act is to mandate that all audits of executive departments required by federal or state law be conducted by the office of the legislative auditor or an entity contracted by the legislative auditor and to provide the office of the auditor with sufficient funds to conduct financial statement audits and audits required under federal law of certain departments, offices, and agencies of the State.

SECTION 2. Chapter 23, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"23- Financial audits; fees. (a) All audits of state departments, or divisions or agencies thereof, required under federal or state law shall be conducted by the office of the legislative auditor.

(b) The office of the legislative auditor may contract for services to effectuate the purposes of this section.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $__________, or so much thereof as may be necessary for fiscal year 2003-2004, and the same sum, or so much thereof as may be necessary for fiscal year 2004-2005, for the purposes of this Act.

SECTION 4. The sums appropriated shall be expended by the office of the legislative auditor for the purposes of this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2003.

 

INTRODUCED BY:

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