Legislature(2011 - 2012)HOUSE FINANCE 519
01/23/2012 08:00 AM House LEGISLATIVE BUDGET & AUDIT
| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Audit Requests | |
| Other Committee Business | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
January 23, 2012
8:05 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Chair
Representative Mark Neuman
Representative Kurt Olson
Representative Bill Thomas
Senator Bert Stedman, Vice Chair
Senator Lyman Hoffman
Senator Linda Menard
Senator Thomas Wagoner
MEMBERS ABSENT
Representative Mike Doogan
Representative Scott Kawasaki (alternate)
Representative Bill Stoltze (alternate)
Senator Kevin Meyer (alternate)
Senator Hollis French
COMMITTEE CALENDAR
APPROVAL OF MINUTES
AUDIT REQUESTS
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
KRISTIN CURTIS, Acting Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the status of
current audits and on the new audit requests.
ACTION NARRATIVE
8:05:13 AM
CHAIR MIKE HAWKER called the Legislative Budget and Audit
Committee meeting to order at 8:05 a.m. Representatives Hawker,
Thomas, Olson, and Neuman and Senators Hoffman, Menard, Wagoner,
and Stedman were present at the call to order.
^Approval of minutes
Approval of minutes
8:07:53 AM
CHAIR HAWKER announced that the first order of business would be
the approval of the minutes.
SENATOR STEDMAN made a motion to approve the minutes of December
5, 2011. There being no objection, the minutes from the meeting
of December 5, 2011 were approved.
^Audit Requests
Audit Requests
8:08:29 AM
CHAIR HAWKER announced that the next order of business would be
the annual status update on current audits, as well as requests
for two new audits.
KRISTIN CURTIS, Acting Legislative Auditor, Legislative Audit
Division, Alaska State Legislature, reported on the current
ongoing audits, directing attention to the statewide single
audit, the largest annual audit, and noted that this audit was
95 percent complete, with anticipation for presentation at the
upcoming scheduled February 27, 2012, Legislative Budget and
Audit Committee meeting. She declared that currently there were
five other special audits being conducted, the oldest being the
Alaska Statewide System for Employee Time (ASSET). She observed
that this audit had begun in January 2011, as the State of
Alaska had anticipated replacement of its current time and
attendance system with this system in December 2011, explaining
that time and attendance were integral to the payroll system.
She reported that the Division of Finance had rescheduled the
implementation of this new system for June 2013; therefore, the
Legislative Audit Division had postponed this audit until
January 2013.
MS. CURTIS summarized the Film Production Incentive Program
audit, which focused on both the financial and the performance
issues. She noted that the financial aspect of the project was
60 percent complete with an anticipated presentation of the
audit preliminary to the committee at its scheduled February 27,
2012, meeting. She explained that staffing for the audit of the
performance aspect had just been initiated, and, as there was
not yet an approved scope, she did not anticipate completion of
the audit during the current legislative session. Referring to
the Virus Free Seed Potatoes audit, she stated that it was 25
percent complete, with a projected presentation for the
scheduled March 28, 2012, committee meeting. She directed
attention to the review of the annual report from the Regulatory
Commission of Alaska (RCA), as statute dictated that the RCA be
audited every two years. She reported that this audit was 60
percent complete, also with a projected presentation for the
March 28, 2012, committee meeting. Referencing the still active
Matanuska Maid sale audit, which required a report on the
disposition of the assets, she noted that the Department of
Natural Resources (DNR) had not yet sold one of the assets. She
specified that upon the sale of this asset, the audit could be
closed. In response to Chair Hawker, she explained that the
remaining asset was a parcel of land in Palmer.
8:11:37 AM
MS. CURTIS pointed out that, as six boards and commissions would
be terminated on June 30, 2013, each would require an audit
during the upcoming year and therefore, the Legislative Audit
Division would need to staff accordingly. She listed these as
the Board of Marine Pilots, the Alaska State Medical Board,
Alaska Board of Public Accountancy, Statewide Suicide Prevention
Council, Special Education Service Agency, and the Alaska Bar
Association.
8:12:10 AM
MS. CURTIS, in response to Chair Hawker, confirmed that this
would be a high work load for the Legislative Audit Division.
8:13:07 AM
CHAIR HAWKER presented the first of two submitted audit
requests. He defined the Knik Arm Bridge and Toll Authority
(KABATA) audit as a status request, not a financial audit, in
order to disclose where the current project started, what it was
doing, and what involvement was taking place between the public
and private partnership, and to include a description of the
funding received, spent, and anticipated. He asked that it
incorporate an evaluation of the projections and parameters to
the project to be used as benchmarks to future considerations.
8:14:40 AM
REPRESENTATIVE NEUMAN, identifying himself as a KABATA board
member, expressed his agreement that many communities wanted to
review the project. In reference to the recent fiscal note on
KABATA submitted by the Department of Transportation & Public
Facilities, he declared that there would not be any fiscal
impact to the state if the expected income from tolls was
received. He reported that the administration was writing
language "to make sure we got some sideboards on this for the
state's liability, so it's not open ended on that." He directed
attention to the KABATA website, which he declared to have been
thoroughly vetted by more than one hundred public meetings.
Observing that Governor Parnell fully supported the project, he
declared that he welcomed the audit, as this had been an open
process.
8:16:51 AM
SENATOR MENARD disclosed that she was also a KABATA board
member, albeit a non-voting member. She questioned the
necessity of an audit, endorsing KABATA as capable of presenting
the requested information.
CHAIR HAWKER, in response to Senator Menard, explained that the
purpose of an independent state audit was:
to verify and validate information that is represented
to us from sources in which we may or may not have
confidence. ... It's a report to the legislature that
is developed in accordance with national standards for
accounting, reporting functions for review by people
that are absolutely independent of the project, rather
than folks on the board of the project making
representations related to their project, or even
members of that project.
CHAIR HAWKER concluded that it was necessary for the audit
process to maintain, in both fact and in appearance, "the
absolute independence and objectivity of this panel ... in
making the legislative decision as to whether to ask for an
audit to be completed." He declared that it was inappropriate
for the record of testimony to have a potential auditee being
seen as potentially influencing the outcome of a decision.
8:18:53 AM
SENATOR MENARD declared that she "just wanted to go on record
that I'm comfortable with the audit, but they're [KABATA]
squeaky clean and I just would question why we can't get a lot
of the information off the website."
8:19:05 AM
SENATOR STEDMAN, referencing the two major bridge projects in
Alaska during the previous decade, pointed out that he had
requested the audit for the Gravina Bridge project, in order to
clarify "what is on the table."
8:19:53 AM
SENATOR MENARD, offering her support to the audit, declared: "I
have that attitude I think it's stellar what they have done, and
so, we'll just be sharing it with the full committee and I'm
comfortable with that."
8:20:13 AM
SENATOR STEDMAN moved to approve the request for an audit of the
Knik Arm Bridge Toll Authority (KABATA) as presented. There
being no objection, it was so ordered.
8:20:43 AM
CHAIR HAWKER noted that the second audit request was in response
to public concern for the use of independent contractors at the
Office of Public Advocacy (OPA). He acknowledged that earlier
discussions with the Legislative Audit Division had resulted in
agreement that there was a legitimate question that the hiring
and employment of third party contractors resulted in potential
issues of discrimination in the community and was in violation
of procurement codes.
8:22:22 AM
SENATOR STEDMAN moved to approve the request for the audit of
the Office of Public Advocacy's procurement practices related to
personal services contracts. There being no objection, it was
so ordered.
^Other Committee Business
Other Committee Business
8:22:48 AM
CHAIR HAWKER asked if there was any other business to be brought
before the committee.
8:22:56 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
8:22 a.m.
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