Legislature(2003 - 2004)
05/12/2003 09:12 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 243(STA)
"An Act establishing state agency program performance
management and audit powers in the Office of the Governor for
the evaluation of agency programs; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this bill, sponsored by the House Rules
Committee at the request of the Governor, "reestablishes an audit
function in the Office of the Governor and funding will be provided
by reallocation of existing Office of the Governor funds."
JAY HOGAN, Deputy Director, Office of Management and Budget, Office
of the Governor, testified that he began working for the State in
1970 and at that time internal auditing was conducted within the
Department of Administration. In 1983, he noted, the Office of
Management and Budget was created and the internal audit functions
were assigned to it along with numerous other activities. He
continued that since that time, "the functions have been scoped
down" with the elimination of the audit function in the middle
1990s. Governor Murkowski intends to "reemphasize," "recreate" and
"broaden" the internal audit function, according to Mr. Hogan. Mr.
Hogan explained the expansion would include program evaluations to
determine their current usefulness.
Mr. Hogan stated that the Governor's FY 04 budget request includes
funds to undertake the internal auditing functions. He noted that
the House of Representatives and the Senate have approved this
funding.
Mr. Hogan expressed that this legislation is a result of the
"realization" that although internal audits had been conducted in
the past, no statutory direction exists to require them. This bill
would create the statutory direction, he said.
Mr. Hogan stated that in the undertaking of an internal audit it is
appropriate that the information is kept confidential. He informed
that testimony relevant to an audit is sometimes discovered but for
various reasons must be kept confidential. He noted this
legislation allows access to this information by auditors, similar
to the authority granted to the Division of Legislative Audit. He
pointed out a difference in that the information secured by the
Division of Legislative Audit is kept confidential until the
Legislative Budget and Audit Committee and affected State agencies
review the audit, at which time the information is released. By
contrast, he explained the information gathered in audits conducted
by the Office of Management and Budget would remain confidential
until it is released by direction of the governor.
Mr. Hogan emphasized the Office of Management and Budget would be
unable to conduct audits similar to the Division of Legislative
Audit, but rather could only conduct audits on activities within
the Executive Branch.
Senator Hoffman saw the need for this function; however he was
concerned with the absence of a defined date in which completed
audits must be released. He surmised from the witness' testimony
that the governor could determine whether the information is never
released. Senator Hoffman suggested language in the bill to provide
for timelines for release to ensure the legislature and the public
would have access to the outcome of the audits.
Mr. Hogan pointed out that no specific release date is required for
legislative audits. He predicted situations in which such releases
would not be advisable, exampling a personnel audit conducted as a
result of alleged impropriety involving "matters of delicacy". He
expressed that it would be conceivable that an audit might never be
completed although the problem itself was resolved.
Co-Chair Wilken clarified the witness would prefer not to specify a
date certain in this bill.
Mr. Hogan remarked that "great effort" was taken to follow the
legislative audit process, which he opined has worked well since
statehood. He surmised that the Governor would prefer to use
discretion.
Senator Hoffman countered that despite information held
confidential until release, members of the legislature could review
that information. In contrast, he stated this legislation would not
provide the same option.
Mr. Hogan relayed that the House State Affairs Committee discussed
the issue and determined that language in Section 3 amending AS
44.19.147. Internal audit records., on page 2, lines 5-9 of the
committee substitute, satisfied the concerns of the Division of
Legislative Audit. This language reads as follows.
…However, internal audit work papers and other related
supportive material containing information, data, estimates,
and statistics obtained during the course of an audit
conducted under AS 44.18.145(a) may be kept confidential only
to the extent required by law applicable to the agency from
which the material is or was obtained.
Senator Taylor offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
Without objection CS HB 243 (STA) MOVED from Committee with zero
fiscal note #2 from the Office of the Governor.
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