SENATE BILL REPORT

SHB 732

BYHouse Committee on State Government (originally sponsored by Representatives H. Sommers, B. Williams and Belcher; by request of Office of State Auditor)

Revising provisions of the audit services revolving fund.

House Committe on State Government

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 30, 1987

Majority Report:     Do pass.

     Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, McCaslin, Zimmerman.

Senate Staff:Barbara Howard (786-7410); Eugene Green (786-7405)

                March 30, 1987

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 30, 1987

BACKGROUND:

The auditing services revolving fund was implemented in 1981 to provide a uniform basis for charging state agencies for auditing services and administrative costs, as well as to modernize the fiscal system relating to agency audits.  Among the present requirements are that the Treasurer transfer agency funds on a quarterly basis and that billings must be adjusted in line with actual costs incurred.  A statute requiring that the expenses of audit be paid from a general fund appropriation has been superseded.

The State Auditor has requested that: (1) the fund transfers be made more frequently to provide an adequate cash flow; (2) billing rates be established on anticipated costs in the new biennium, as well as on costs incurred; and (3) the obsolete requirement of paying audit costs from a general fund appropriation be repealed, since the auditing services revolving fund has replaced it.  For budgetary controls, a limit on working capital has also been requested.

SUMMARY:

Transfers by the State Treasurer to the auditing services revolving fund must be made monthly.

The billing rate for agency audits must be based on anticipated costs in the new biennium as well as costs incurred.  Expenses related to training and maintenance of working capital, including reserves for late and uncollectible accounts and adjustments to billings, are specifically considered as expenses of auditing public accounts.  Working capital must not exceed 5 percent of the revolving fund appropriation.

The requirement that expenses of audit be paid from a general fund appropriation is repealed.

Fiscal Note:    none requested

Senate Committee - Testified:   No one