HOUSE BILL REPORT

HB 2563

As Reported by House Committee On:

State Government

Title:  An act relating to performance audits.

Brief Description:  Creating the governor's performance audit standards and scorecard commission.

Sponsors:  Representatives Miloscia, O'Brien, Kirby, Kessler, Haigh and McIntire.

Brief History:

Committee Activity:

State Government:  2/7/02, 2/8/02 [DPS].

Brief Summary of Substitute Bill

$Creates the Governor=s Performance Audit Standards and Scorecard Commission to advise the Office of Financial Management (OFM) in making recommendations on establishing a performance audit and a performance scoring program for all state agencies.

HOUSE COMMITTEE ON STATE GOVERNMENT

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass. Signed by 6 members: Representatives Romero, Chair; Miloscia, Vice Chair; McDermott, Schindler, Schmidt and Upthegrove.

Staff:  Marsha Reilly (786‑7135).

Background:

The state auditor, the (OFM), and the Joint Legislative Audit and Review Committee (JLARC) are authorized to conduct performance, fiscal, and compliance audits of state agencies and departments. 

The OFM provides necessary professional and technical assistance to assist state agencies in the development of strategic plans that include the mission of the agency and its programs, measurable goals, strategies, and performance measurement systems.

The State Auditor conducts financial audits and is authorized to perform or participate in performance verifications and performance audits only as expressly authorized by the Legislature in the omnibus biennial appropriations acts or in the performance audit work plan approved by the JLARC.

The JLARC conducts performance audits, performance reviews, sunset reviews and other studies as directed by the Legislature.  In addition to special studies delineated by the Legislature, the JLARC develops a biennial work plan that identifies state agency programs for evaluation.

Summary of  Substitute Bill:

The Governor's Performance Audit Standards and Scorecard Commission (the commission)  is established.  The commission includes seven citizen members who demonstrate professional knowledge and expertise in performance management, quality management, auditing, or a closely related field.  The commission members will serve terms of four years and may be reappointed.

Duties of the commission include the following:

Assist in the development of criteria for performance excellence and a scoring system for grading agency performance; advise the Governor and director of the OFM on the conduct of the performance audit program; develop recommendations for the director of the OFM on the subjects of performance audits and the audit schedule; and evaluate audit findings and identify opportunities to develop government partnerships and eliminate program duplications and redundancies.

The OFM will staff the commission and implement the performance audit and scoring program.  The role of the OFM includes the following:

1.Establish a program and strategic plan for the conduct of audits of state agencies and their programs and functions;

2.Conduct performance audits or contract with public or private entities with expertise in the conduct of public sector reviews;

3.Develop an implementation plan for a phased-in audit schedule for a program and periodic audit and scoring of all state agencies, including higher education;

4.Submit audit results,  performance scoring, and any necessary implementing legislation   to the Governor and the Legislature by November 1 of each year, and release audit results and performance scoring to the public;

5.Collect, disseminate, and share best practices to all state agencies and institutions of higher education; and

6.Contract for a performance audit of the developed audit and performance scoring program by November 1, 2004.

Performance audit is defined as an objective systematic assessment, survey, or directed self-assessment.  The performance audits will include, but are not limited to quality and process management practices; independent and internal audit functions; internal and external customer satisfaction; program effectiveness; fiscal productivity and efficiency; regulatory and procedural compliance; and any other areas as appropriate.

Substitute Bill Compared to Original Bill:

The structure of the commission is changed from a directorial role to an advisory role.  The director of the OFM assumes the responsibilities for the conduct of the performance audit and scoring program.  The commission membership is limited to seven citizen members appointed by the Governor.  The requirement to disseminate and share best practices is limited to state agencies, and the requirement to include local governments, K-12, and public and private entities that contract with or receive grants from the government is removed.

Appropriation:  The sum of $1 million.

Fiscal Note:  Not Requested.

Effective Date of Substitute Bill:  The bill takes effect after approval by the people (through referendum).

Testimony For:  (Substitute bill) Continuous improvement of our government, its operations,  functions and customer satisfaction is needed and the commission establishes an independent body to advise the OFM in an audit program and yearly performance scoring system.  The scoring system envisioned in this bill, similar to the one done by the Office of Management and Budget, will contribute toward improving the trust of the citizens of the state.

Effective efficiency and accountability are critical to improving public confidence in government.  It is a hard, but necessary,  job to evaluate programs to see that they are doing what was intended.  Some concerns include the scope and breadth of some of the auditing targets, but overall the major elements are important.

(Original bill) It provides for a continuation of performance audit systems.  The advantages are:  1) improved public confidence; 2) compatibility with zero-based budgeting; and 3) it sets a good example for local municipalities to follow.  The disadvantages are:  1) revealed deficiencies through unfunded mandates make the Legislature look bad; 2) the courts are not included; and 3) the appropriation of just $1 million is too small.

Testimony Against:  None.

Testified:  (In support) Representative Miloscia, prime sponsor; and Fred Hellberg, Governor=s Office.

(Information only) Robert Hill.