HOUSE BILL REPORT

HB 1351

BYRepresentatives H. Sommers, Silver, Haugen, Taylor, Doty and Miller; by request of Office of State Auditor

Authorizing the state auditor to contract with certified public accountants.

House Committe on State Government

Majority Report:  Do pass.  (9)

      Signed by Representatives H. Sommers, Chair; Anderson, Vice Chair; Baugher, Chandler, Hankins, O'Brien, Peery, Taylor and Walk.

House Staff:Ken Conte (786-7135)

AS PASSED HOUSE JANUARY 29, 1988

BACKGROUND:

The authority to audit public accounts is provided to the State Auditor in both statutory law and in the Constitution.  The Auditor's responsibilities extend both to state agencies, where audit work is overseen by the Division of Departmental Audits, and to local governments, where work is done by the Division of Municipal Corporations.

Through the Division of Departmental Audits, the Auditor annually evaluates the state-wide combined financial statements prepared by the Office of Financial Management and conducts fiscal audits of all state agencies.  The largest state agencies are audited on an annual basis and those receiving federal funds must have completed audits within a year of the fiscal year-end.  Other agencies are audited every two or three years.  On occasions when staff resources are fully utilized, the State Auditor hires additional personnel to complete agency audits.

Audits of state agencies are paid for through an auditing services revolving fund.  The Auditor provides each agency with a cost estimate for its audit, and that amount is built into the agency budget.

SUMMARY:

The State Auditor is allowed to contract with private certified public accountants to carry out duties under the Division of Departmental Audits.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Jack Heinricher, Assistant State Auditor; Kent Swisher, Association of Washington Cities.

House Committee - Testified Against:      Eugene St. John, Washington Public Employees Association.

House Committee - Testimony For:    The bill allows the State Auditor to remain within its Constitutional duty of auditing public agencies while providing flexibility to contract out portions of work when staff resources are low or when outside expertise is valuable.  Audit costs to agencies in remote areas could be reduced.

House Committee - Testimony Against:      Contracting out takes work away from state employees and there is concern whether such action would adversely affect public accountability, security of state jobs, or cost effectiveness of audits.