04/12/1993 09:20 AM Senate FIN

                                                                               
  SENATE BILL NO. 128                                                          
                                                                               
       An Act relating to legislative audits.                                  
                                                                               
  Co-chair  Pearce  directed  that SB  128  be  brought before                 
  committee,  referenced  the Senate  State  Affairs committee                 
  substitute for the bill,  and noted the presence of  Senator                 
  Phillips, the Legislative Auditor, and staff from the Office                 
  of Management and Budget.                                                    
                                                                               
  SENATOR  RANDY  PHILLIPS again  came  before committee.   He                 
  explained that the bill was introduced at the request of the                 
  Legislative  Budget  and  Audit   Committee.    It  provides                 
  systematic follow-up procedures  for recommendations made by                 
  the Legislative  Auditor.   In  the past,  when audits  were                 
  conducted,  there  was no  formal  follow-up to  ensure that                 
  recommendations  for  accounting or  procedural improvements                 
  were effected.                                                               
                                                                               
  RANDY   WELKER,  Legislative   Auditor,  next   came  before                 
                                                                               
                                                                               
  committee.   He  explained  that  the  legislation  provides                 
  recognition that ultimate responsibility  for implementation                 
  of audit recommendations rests with  the administration.  To                 
  enhance implementation, a structured  follow-up processes is                 
  needed.  The  proposed bill would  effect that process.   It                 
  allows the Legislative Budget and  Audit Committee to select                 
  which items warrant follow-up.   It would then  become OMB's                 
  responsibility  to  undertake  follow-up  on  those   items,                 
  resolve differences of  opinion between  the agency and  the                 
  Legislative Audit  Division, and  report the  status of  the                 
  recommendations to LBA.                                                      
                                                                               
  Senator  Rieger noted language indicating that the committee                 
  could direct the Office of Management and Budget to continue                 
  to monitor implementation.  He then asked if the Legislative                 
  Budget and Audit  Committee actually  has that  power.   Mr.                 
  Welker explained  that some  audit recommendations  may take                 
  time to implement.   The foregoing language  recognizes that                 
  "not everything can be satisfied in a one-year time . . . ."                 
  The  Office of  Management and  Budget is  thus to  continue                 
  monitoring as the  recommendation is  implemented.   Senator                 
  Rieger noted that  direction from committee would  not carry                 
  the force of law.  Mr. Welker concurred.                                     
                                                                               
  At the request  of Co-chair  Pearce, Mr.  Welker provided  a                 
  step-by-step description of action under various sections of                 
  the bill, using recommendations from the recent audit of the                 
  Division of Elections as an example.                                         
                                                                               
  SHELBY  STASTNY again came  before committee  accompanied by                 
  GARY ANDERSON,  Director, Division  of Audit  and Management                 
  Services,  Office  of  Management  and  Budget,  came before                 
  committee.    Mr.  Anderson  said  that  the  bill  presents                 
  difficulties for OMB.   He explained that, on one  hand, the                 
  office is sympathetic to legislative  concerns.  The problem                 
  is that the  legislation requires  the Office of  Management                 
  and  Budget  to   perform  follow-up  functions.     OMB  is                 
  approximately one-third  the size  of the  Legislative Audit                 
  Division.  Major resources  would have to be devoted  to the                 
  effort.  The executive branch  already performs follow-up on                 
  audits conducted by  the administration.  Mr.  Anderson then                 
  suggested   that   Legislative   Audit   perform   follow-up                 
  procedures  for  its audits  as well.    He noted  that many                 
  audits are complex.  For OMB to follow up on recommendations                 
  made by  another branch  of government  would be  difficult.                 
  OMB staff would need access to Legislative Audit work papers                 
  and have to develop an  understanding of the recommendations                 
  to provide implementation oversight.   That is not the  most                 
  efficient or effective means  of follow up.  In  his closing                 
  comments,  Mr. Anderson  expressed OMB  willingness  to work                 
  with Legislative Audit on oversight.                                         
                                                                               
  Mr. Stastny concurred in  remarks by Mr. Anderson.   He said                 
  an  even  more  overriding  concern  involves the  issue  of                 
                                                                               
                                                                               
  separation of powers.   There is a reason for  separation of                 
  legislative functions from those of the administration.                      
                                                                               
  Senator Phillips said he  had not before been made  aware of                 
  OMB concerns.                                                                
                                                                               
  Co-chair Pearce called for additional questions or testimony                 
  relating to  the legislation.   She then queried  members on                 
  disposition  of the  bill.   Senator  Rieger MOVED,  for the                 
  purpose  of  discussion,   that  SB  128  (STA)   pass  from                 
  committee.   Co-chair Frank OBJECTED,  seeking clarification                 
  of  concerns  relating  to separation  of  powers.   Senator                 
  Phillips said that he foresaw no territorial domain problems                 
  occasioned  by the  bill.   He  noted  that the  legislature                 
  establishes  public  policy,  and  the  burden is  upon  the                 
  executive branch to execute that policy.                                     
                                                                               
  End, SFC-93, #57, Side 2                                                     
  Begin, SFC-93, #59, Side 1                                                   
                                                                               
  Co-chair Frank WITHDREW his OBJECTION.   CSSB 128 (STA)  was                 
  REPORTED OUT  of committee with a zero  Senate State Affairs                 
  Committee fiscal note  for the  Office of the  Governor/OMB.                 
  Co-chair  Pearce  and  Senators Jacko,  Rieger,  Sharp,  and                 
  Kerttula signed  the committee  report "no  rec."   Co-chair                 
  Frank signed "do pass."                                                      
                                                                               
  [NOTE - The foregoing action on CSSB 128 (STA) was rescinded                 
  4/13/93.  See committee minutes of 4/13/93 and 4/14/93]