Legislature(2013 - 2014)HOUSE FINANCE 519
02/22/2013 08:00 AM Senate LEGISLATIVE BUDGET & AUDIT
| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Executive Session | |
| 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
February 22, 2013
8:01 a.m.
MEMBERS PRESENT
Senator Anna Fairclough, Chair
Senator Click Bishop
Senator Cathy Giessel
Senator Donald Olson
Senator Mike Dunleavy (alternate)
Representative Mike Hawker, Vice Chair
Representative Kurt Olson
Representative Andy Josephson
MEMBERS ABSENT
Senator Kevin Meyer
Representative Alan Austerman
Representative Bob Herron
Representative Scott Kawasaki (alternate)
Representative Bill Stoltze (alternate)
COMMITTEE CALENDAR
APPROVAL OF MINUTES
EXECUTIVE SESSION
RELEASE OF AUDITS
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
KRISTIN CURTIS
Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the audit request.
SENATOR HOLLIS FRENCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Requested an audit of the Department of
Revenue (DOR) oil and gas production tax audit process.
ACTION NARRATIVE
8:01:10 AM
CHAIR ANNA FAIRCLOUGH called the Legislative Budget and Audit
Committee meeting to order at 8:01 a.m. Representatives Olson,
Josephson, and Hawker and Senators Fairclough, Bishop, Olson,
Giessel, and Dunleavy (alternate) were present at the call to
order.
^Approval of Minutes
Approval of Minutes
8:01:59 AM
CHAIR FAIRCLOUGH announced that the first order of business
would be approval of the minutes.
REPRESENTATIVE HAWKER made a motion to approve the minutes of
January 29, 2013. There being no objection, the minutes from
the meeting of January 29, 2013 were approved.
^Executive Session
Executive Session
8:02:16 AM
CHAIR FAIRCLOUGH announced that the next order of business would
be to move into Executive Session.
REPRESENTATIVE HAWKER made a motion to move to executive session
under Uniform Rule 22 for the purpose of discussing confidential
audit reports under AS 24.20.301. There being no objection, the
committee went into executive session at 8:02 a.m.
8:45:19 AM
CHAIR FAIRCLOUGH brought the committee back to order at 8:45
a.m. Representatives Olson, Josephson, and Hawker and Senators
Fairclough, Bishop, Olson, Giessel, and Dunleavy (alternate)
were present at the call back to order.
^Release of Audits
Release of Audits
REPRESENTATIVE HAWKER made a motion for the preliminary audit
for the State of Alaska Single Audit for FY 12 to be released to
the appropriate agency for response. There being no objection,
it was so ordered.
^Other Committee Business
Other Committee Business
8:45:55 AM
CHAIR FAIRCLOUGH announced that the next order of business would
be reports on the next audits on the agenda.
KRISTIN CURTIS, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, explained that the preliminary audit
report on the Knik Arm Bridge & Toll Authority was not yet
prepared for release. She expressed anticipation that the
report would be brought to the committee "in the near future."
8:46:29 AM
MS. CURTIS briefed the committee on the status of the audit on
the Alaska Statewide System for Employee Time (ASSET) which had
been started two years prior. She reported that ASSET had been
purchased by Department of Administration to replace its time
and attendance system. The audit had been initiated by the
legislative auditor to support the opinion on the financial
statements. She directed attention to a status report, "ASSET"
[Included in members' packet] which revealed that the project
had been cancelled in July, 2012. She relayed that the
Legislative Budget and Audit Committee formal policies and
procedures had a procedure for termination of an audit; however,
these procedures referred to a special request audit, and, as
this was not a special request audit, it was not necessary to
follow these procedures. Therefore, no action was necessary by
the committee members. Referring to an earlier Legislative
Budget and Audit Committee meeting in which she had reported
that ASSET was an ongoing audit, she stated that this audit was
now terminated as the ASSET project had been cancelled.
8:48:09 AM
CHAIR FAIRCLOUGH announced that the final order of business
would be an audit request by Senator French.
8:48:22 AM
SENATOR HOLLIS FRENCH, Alaska State Legislature, directed
attention to his letter to the committee, dated February 13,
2013, requesting that an audit be performed on the effectiveness
of the Department of Revenue's oil and gas production tax audit
process [Included in members' packets]. He reported that Alaska
had shifted to a profits based tax system in 2006, which was
then modified in 2007. He acknowledged that, as this was "a new
and difficult era of auditing company tax returns," there had
been a request at that time by Department of Revenue for
additional staff because it had been difficult to retain senior
auditors. He noted that the recently released Statewide Single
Audit Report had, as in past years, "pointed out significant
deficiencies in our auditing function." He relayed that he had
met earlier in the year with Ms. Curtis, and had asked for her
help to streamline his "broad request into specific verifiable,
measureable items," which were now listed in the aforementioned
letter. He questioned the reasons for the tax audit delay,
noting that this was the sixth year of the new tax system
without audits.
8:50:14 AM
CHAIR FAIRCLOUGH asked if he had submitted these requests to
Department of Revenue (DOR) for a response.
SENATOR FRENCH replied that he had not.
8:50:28 AM
REPRESENTATIVE HAWKER confirmed that the Legislative Budget and
Audit Committee had addressed this issue several times
previously, and that the Statewide Single Audit Reports were the
only public documents. He endorsed a preliminary conversation
with DOR for a better understanding of its perspective before
framing this audit request.
8:51:33 AM
REPRESENTATIVE JOSEPHSON asked Senator French if he had been a
legislator prior to Alaska's Clear and Equitable Share (ACES)
and the production profits tax (PPT).
SENATOR FRENCH replied that was correct.
REPRESENTATIVE JOSEPHSON asked Senator French if he had any
personal recollection for a "backlog at audit under the old
severance production tax system."
SENATOR FRENCH replied that he did not have any timing
information for audit returns during the economic limit factor
(ELF) tax system.
SENATOR FRENCH directed attention to an e-mail he had received
from DOR concerning the completion of audits. He confirmed that
he had "checked with them about the level of completion." He
read from this e-mail from Matt Fonder, Director, Tax Division:
"the department has completed certain audits covering the 2007
tax year, first filed in March, 2008, and is in the process of
finalizing the remainder of the 2007 audits." Senator French
shared that Mr. Fonder had pointed to the complexity of the 2007
audits due to that tax year being divided between the PPT and
ACES tax systems.
8:53:20 AM
CHAIR FAIRCLOUGH asked Ms. Curtis about the timing for
completion to this audit request.
MS. CURTIS replied that, currently, there was one audit in the
queue, approved at a previous Legislative Budget and Audit
Committee meeting, on the Alaska Public Offices Commission
(APOC). She suggested conducting this proposed DOR tax audit
alongside the Statewide Single Audit during the upcoming summer;
however, she pointed to the difficulty for making conclusions
about assessments prior to completion of the DOR audit. She
requested more information on the DOR timeline for completion,
as that could impact the audit schedule.
8:55:01 AM
CHAIR FAIRCLOUGH asked for a projected date for resolution to
this audit.
MS. CURTIS replied that the proposed audit would begin during
the upcoming summer, and be available during the next
legislative session.
8:56:09 AM
CHAIR FAIRCLOUGH, noting that the result for the proposed audit
would not be available until next legislative session, whether
or not it was requested today or in the near future, suggested
bringing DOR to speak directly to the committee and then
determining the timing for an audit proposal.
8:57:22 AM
REPRESENTATIVE HAWKER expressed his agreement.
8:57:42 AM
REPRESENTATIVE JOSEPHSON offered his agreement.
8:57:55 AM
CHAIR FAIRCLOUGH said that the Legislative Budget and Audit
Committee would meet in 30 days, and that the Tax Division of
DOR would be scheduled to testify. She endorsed that a decision
for the proposed audit be determined after this presentation by
DOR.
SENATOR FRENCH expressed his agreement.
8:58:44 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
8:58 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| LB&A Agenda FINAL 2.22.13.pdf |
JBUD 2/22/2013 8:00:00 AM |
|
| LB&A Meeting Minutes 1.29.13.pdf |
JBUD 2/22/2013 8:00:00 AM |
|
| ASSETS project info.pdf |
JBUD 2/22/2013 8:00:00 AM |
|
| Sen. French Audit Request 2.13.13.pdf |
JBUD 2/22/2013 8:00:00 AM |