Legislature(2021 - 2022)
02/24/2021 12:00 PM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Committee Organization/election of Chair & Vice Chair | |
| Approval of Minutes | |
| Overview of Committee Process | |
| 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
February 24, 2021
12:02 p.m.
MEMBERS PRESENT
Representative Ivy Spohnholz
Representative Andy Josephson
Representative Neal Foster
Representative James Kaufman
Representative Chris Tuck, Vice Chair
Senator Peter Micciche
Senator Lora Reinbold
Senator Bert Stedman
Senator Lyman Hoffman
Senator Natasha von Imhof, Chair
MEMBERS ABSENT
Senator Click Bishop (alternate)
Representative Dan Ortiz (alternate)
COMMITTEE CALENDAR
COMMITTEE ORGANIZATION/ELECTION OF CHAIR & VICE CHAIR
APPROVAL OF MINUTES
OVERVIEW OF COMMITTEE PROCESS
PREVIOUS COMMITTEE ACTION
No previous action to record
No previous action to record
WITNESS REGISTER
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented an overview of the Legislative
Audit Division.
ALEXEI PAINTER, Director
Legislative Finance Division, Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented an overview of the Legislative
Finance Division.
ACTION NARRATIVE
12:02:29 PM
CHAIR CHRIS TUCK called the Legislative Budget and Audit
Committee meeting to order at 12:02 p.m. Representatives
Kaufman, Spohnholz, Josephson, Foster, and Tuck and Senators
Hoffman, Reinbold, Micciche, Stedman, and von Imhof were present
at the call to order.
^Committee Organization/Election of Chair & Vice Chair
Committee Organization/Election of Chair & Vice Chair
12:03:17 PM
CHAIR TUCK announced that the first order of business would be
nominations for the chair of the Legislative Budget and Audit
Committee.
12:03:23 PM
SENATOR MICCICHE nominated Senator Natasha von Imhof as chair of
the Legislative Budget and Audit Committee for the Thirty-Second
Alaska State Legislature, and he asked that nominations be
closed. There being no objection, it was so ordered.
12:03:53 PM
The committee took an at-ease from 12:03 to 12:04 p.m.
12:04:29 PM
CHAIR VON IMHOF announced that the next order of business would
be nominations for the vice chair of the Legislative Budget and
Audit Committee.
12:04:36 PM
SENATOR STEDMAN nominated Representative Chris Tuck as vice
chair of the Legislative Budget and Audit Committee for the
Thirty-Second Alaska State Legislature, and he asked that
nominations be closed. There being no objection, it was so
ordered.
12:04:57 PM
CHAIR VON IMHOF welcomed the committee members and introduced
staff to the committee. She noted that, unlike other
legislative committees, the Legislative Budget and Audit
Committee is governed by Alaska Statute and not by Uniform
Rules. She referenced the committee handbook that was
distributed to members and is available online at
www.lba.akleg.gov.
12:06:09 PM
CHAIR VON IMHOF pointed out that certain motions require six
votes to pass including releasing of audits and approval of
revised programs - legislative (RPLs). She stated that
alternates will only be called to vote [on motions] should a
quorum be required and encouraged alternate members to attend
and participate in discussions. She also noted that any member
who has filed to run for public office other than a state
legislative office is not permitted to serve on the committee.
^Approval of Minutes
Approval of Minutes
12:06:45 PM
CHAIR VON IMHOF announced that the next order of business would
be approval of the minutes.
12:07:05 PM
REPRESENTATIVE TUCK made a motion to approve the minutes of the
Legislative Budget and Audit Committee of January 18, 2021.
There being no objection, the minutes from the meeting of
January 18, 2021, were approved.
^Overview of Committee Process
Overview of Committee Process
12:07:25 PM
CHAIR VON IMHOF announced that the next order of business would
be an overview of the committee process.
12:07:45 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, gave a brief history of her
service to the division. She explained that it is the
responsibility of the division to maintain the committee
handbook, which contains the statutory authority of the
committee and its two staffed agencies - the Legislative Audit
Division and the Legislative Finance Division. She referenced
page 39 of the handbook which marks the beginning of the
policies and procedures for the committee. She added that many
of the procedures have been in place since the 1950s and, when
the date of adoption of policies and procedures is known, it is
included in the handbook for reference. She highlighted areas
of significance for the committee including the release of audit
reports, approval of audit requests, and administrative
functions such as contracts.
12:09:07 PM
MS. CURTIS referred to page 47 in the handbook which contains
procedures for confidential report distribution. She explained
that the audit process is statutorily confidential. She
cautioned members against the premature release of audit
information, and advised that, until the audit committee has
reviewed and approved the release of audits, they should not be
copied or distributed for any purpose. She explained the two-
phase process for releasing reports consists of a preliminary
report, which members do not see before the meeting, presented
in executive session, after which the committee will vote to
release the report to the agency [involved in the review]. The
report remains confidential during this process. She explained
that the agency has an opportunity to comment, and division
staff compiles comments and brings them, along with the
preliminary report, before the committee for consideration of
release as a final public document. She explained that reports
that are prepared for final approval of release by the committee
will be distributed in a sealed envelope in advance of the
committee meeting and will be marked "confidential." She noted
that a committee's member or their staff's signature will be
required to receive the documents, and that members could expect
these [pre-release] reports to be printed on blue paper to
distinguish them from other paperwork. She noted that during
session, reports will be delivered at least two days prior to a
meeting and that, during the interim, they will be delivered at
least four days prior to a meeting.
12:11:07 PM
MS. CURTIS directed attention to the handout before the
committee, entitled "Division of Legislative Audit, Audit
Status," which depicted the workload and status of assignments
at the division. She pointed out that it listed six special
audit requests, seven sunset audits, and one statewide financial
audit. She noted that the special audit requests which have
been assigned and work begun are the Alcoholic Beverage Control
(ABC) Board Licensing, the Alaska Mental Health Trust Authority,
and the Alaska CARES Act Small Business Relief. She explained
that the audit status list contains seven sunset audits for the
current year; all of these agencies have a sunset date of June
2022, and a bill to extend the programs must be passed in 2022
or the programs will terminate. She listed the sunset audits
as: Regulatory Commission of Alaska, Council on Domestic
Violence and Sexual Assault, State Physical Therapy and
Occupational Therapy Board, Board of Pharmacy, ABC Board, Board
of Chiropractic Examiners, and Board of Examiners in Optometry.
She explained that the final item on the audit status list is
the Statewide Single Audit for fiscal year 20(FY 20), which is
[usually] due March 31; however, due to COVID-19, the federal
government has extended the deadline until June 30, 2021. She
stated her intention to bring the preliminary and final reports
[for the Statewide Single Audit] prior to the end of the current
legislative session.
12:13:28 PM
SENATOR MICCICHE asked how the division determines the order of
[assignment] of performance audits.
MS. CURTIS answered that they are prioritized in a first-in/
first-out basis, unless the committee directs the division to
reprioritize, and exemplified the recent reprioritization of the
COVID-19 small business relief performance review.
12:14:00 PM
SENATOR REINBOLD asked whether the statewide audit for FY 20
included all COVID-19 relief, including all RPLs, which she
estimated to be $ 6.1 billion.
MS. CURTIS answered by explaining that there exists a dollar
amount threshold for either a type A- or a type B- [federal]
program, and those which fall into the type B category are not
subject to the audit. She added that only funds that have been
expended [during FY 20] are subject to audit, and that
additional funds will be spent after FY 20 and will be subject
to the audit during the review of the year in which they were
spent.
SENATOR REINBOLD asked whether the FY 20 review was through June
30 [2020].
MS. CURTIS confirmed that the June 30, 2020 date is correct with
the caveat that the funds had to have been expended by that
date.
12:16:00 PM
CHAIR VON IMHOF added that there are monthly reports on CARES
Act funds submitted to the legislature and, although they are
unaudited, they contain valuable information. She referred to
the audit list and cautioned the committee members to be mindful
of the workload assigned to the division and take into
consideration the work required of the division to fulfil
requests. She recalled that the committee may meet
approximately four times [during a legislative session] but that
meeting frequency could increase, especially considering that
additional CARES Act funding could be made available. She added
that meetings could take place following session and there
exists the technology to accommodate telephonic meetings.
12:17:44 PM
REPRESENTATIVE JOSEPHSON asked whether the list of sunset audits
was smaller than in years prior.
MS. CURTIS answered that sunset audits vary from year to year
anywhere from ten to two or three. She added that the division
is mindful of upcoming sunset audits and takes that into
consideration when making recommendations.
12:18:26 PM
REPRESENTATIVE JOSEPHSON asked for clarification on what the
division may make in its recommendation in a sunset audit.
MS. CURTIS explained that a sunset audit is a review of whether
a board or commission or agency is serving the public interest
and whether it should be extended and for how long- for a
maximum of up to eight years. She added that the
recommendations to either terminate or extend a program take
into consideration the current and future workload of the
division for other anticipated sunset audits.
12:19:12 PM
MS. CURTIS informed the committee that the U.S. Department of
the Treasury had ordered a desk review audit of the State of
Alaska's $1.25 billion in COVID-19 spending. She said that the
Department of Administration, Division of Finance will conduct
an entrance conference with the U.S. Department of the Treasury.
In response to Chair von Imhof, she said she did not know how
long the audit would take.
12:19:55 PM
REPRESENTATIVE TUCK asked whether the federal audit would review
all the CARES Act funds received.
MS. CURTIS postulated that the review would likely cover a
certain period of time, and likely cover only funds which had
been expended up to that time.
12:20:21 PM
REPRESENTATIVE TUCK asked whether the audit request was randomly
selected or whether Ms. Curtis was aware of any concern [by the
federal government].
MS. CURTIS answered that, while she did not know the exact
reasons for the audit, Alaska has typically small [allocations],
and she offered her assumption that the review selection
procedure was likely random.
12:20:45 PM
REPRESENTATIVE TUCK asked how many other states [are subject to
federal audit of CARES Act funds].
MS. CURTIS answered she does not know but offered to contact
federal auditors to obtain more information.
CHAIR VON IMHOF requested Ms. Curtis acquire answers to
Representative Tuck's questions, which she speculated are shared
by the entire committee.
12:21:05 PM
MS. CURTIS informed the committee that the U.S. Department of
the Treasury was identified to audit the funds as a part of the
CARES Act. She offered her perception that the audit in
question is standard in process and that her view is that the
audit is not a negative [reflection] in any way.
12:21:33 PM
CHAIR VON IMHOF suggested that the committee reconsider the
request for special audit of the $290 million in small business
relief, should the federal audit result in the information
sought during that special audit being made available to avoid a
duplication of efforts.
12:22:02 PM
MS. CURTIS stated her recollection that the committee had asked
for a review of the procurement process, which is not a typical
scope of an audit. She added that any major federal program is
additionally subject to outside audit of compliance with federal
rules. She drew a distinction between what the committee had
requested and what a federal audit would review.
12:22:53 PM
CHAIR VON IMHOF suggested that the $290 million would be audited
"every which way but Tuesday."
MS. CURTIS answered that the $290 million would be subject to
outside auditors, and that the division was reviewing the
state's subrecipient monitoring of the data, which is a very
narrow area of review.
12:23:32 PM
REPRESENTATIVE JOSEPHSON asked what workload impacts the federal
review would have on division staff.
MS. CURTIS answered that the division would review the audit
results and consider identified risks or findings going forward
when designing audit procedures. She added that ongoing routine
audits of federal programs remain unchanged for division staff.
12:24:29 PM
REPRESENTATIVE JOSEPHSON asked whether the division's role in
the federal audit is a passive one.
MS. CURTIS, after clarifying that the U.S. Department of the
Treasury audit is the one in question, stated that the division
remains available if information is requested and that the
executive branch will provide the information requested for the
review.
12:25:24 PM
REPRESENTATIVE SPOHNHOLZ asked whether the federal audit is a
financial one, as contrasted with the review [of the $290
million] as a performance one.
MS. CURTIS explained that a single audit is considered a
financial audit whereas a special audit is one of performance
review. She said that both audits are conducted in accordance
with standards set forth by the Government Accountability
Office, although the standards for each are different.
REPRESENTATIVE SPOHNHOLZ asked Ms. Curtis to describe objectives
of a performance audit, such as the $290 million.
MS. CURTIS offered her recollection that the performance review
asked to examine the fairness of the grants award process and
she referred the committee to the website for details specific
to the objectives of the review.
REPRESENTATIVE SPOHNHOLZ suggested that the objectives of the
federal audit and the committee's [special] audit request are
very different and characterized the special audit as important
to the committee's understanding of the program.
12:27:52 PM
ALEXEI PAINTER, Director, Legislative Finance Division,
Legislative Agencies and Offices, explained that the Legislative
Finance Division consists of fiscal analysts and secretaries for
the legislative finance committees who work primarily with House
and Senate Finance Committees. He added that the statute which
governs the division allows for the Legislative Budget and Audit
Committee to request reports, studies, and memoranda from the
division. He added that the main interaction between the
committee and the division is on RPLs. He described the process
in which the Office of Management & Budget (OMB) submits RPLs to
the division approximately two weeks prior to the committee
meeting and the division prepares an analysis to bring before
the committee. He explained that technical issues are resolved
in cooperation with OMB staff, and when technical issues arise
OMB will typically withdraw the RPL. He stated that the
previous legislative session and interim was atypical due to
COVID-19 and the CARES Act funding. He added that RPLs
originate in the executive branch and may proceed without
legislative approval if no action is taken within 45 days.
12:30:01 PM
REPRESENTATIVE JOSEPHSON asked whether the only remedy to
intervene with an RPL during the interim would be either a
Legislative Budget and Audit Committee meeting or a special
session.
12:30:27 PM
MR. PAINTER affirmed, yes, and added that should the committee
not approve an RPL, it may be executed after 45 days unless a
special session is convened.
12:30:42 PM
CHAIR VON IMHOF asked for confirmation that the committee may
not amend an RPL.
MR. PAINTER affirmed that is correct and added that the
committee may provide feedback and the request that the
administration revise the RPL with recommendations, and that is
usually confined to mainly technical issues.
12:31:26 PM
CHAIR VON IMHOF thanked the participants and encouraged
efficient participation.
12:32:02 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
12:32 p.m.
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