Legislature(2017 - 2018)SENATE FINANCE 532
02/23/2017 12:00 PM Senate LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of the Agenda | |
| Approval of the Minutes | |
| Executive Session | |
| Audit Contracts | |
| 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 23, 2017
12:03 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Cathy Giessel
Senator Click Bishop
Senator Lyman Hoffman
Representative Andy Josephson, Vice Chair
Representative Scott Kawasaki
Representative Paul Seaton
Representative Ivy Spohnholz
Representative Jennifer Johnston
MEMBERS ABSENT
Senator Anna MacKinnon
Senator Natasha von Imhof (alternate)
Representative Dan Ortiz (alternate)
COMMITTEE CALENDAR
APPROVAL OF THE AGENDA
APPROVAL OF THE MINUTES
EXECUTIVE SESSION
AUDIT CONTRACTS
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 and updates on the
audits currently being conducted by the Legislative Audit
Division.
ACTION NARRATIVE
12:03:34 PM
CHAIR GARY STEVENS called the Legislative Budget and Audit
Committee meeting to order at 12:03 p.m. Senators Stevens,
Giessel, and Bishop, and Representatives Josephson, Kawasaki,
Seaton, Spohnholz, and Johnston were present at the call to
order. Senator Hoffman arrived as the meeting was in progress.
^Approval of the Agenda
Approval of the Agenda
12:04:20 PM
CHAIR STEVENS announced that the first order of business would
be approval of the agenda.
12:04:28 PM
REPRESENTATIVE JOSEPHSON made a motion that the Legislative
Budget and Audit Committee approve the agenda. There being no
objection, it was so ordered.
^Approval of the Minutes
Approval of the Minutes
12:04:37 PM
CHAIR STEVENS announced that the next order of business would be
approval of the minutes.
REPRESENTATIVE JOSEPHSON made a motion to approve the minutes of
the Legislative Budget and Audit Committee of January 27, 2017.
There being no objection, the minutes from the meeting of
January 27, 2017 were approved.
^Executive Session
Executive Session
12:04:51 PM
CHAIR STEVENS announced that the next order of business would be
to move into Executive Session.
12:05:05 PM
REPRESENTATIVE JOSEPHSON made a motion to move to executive
session under Uniform Rule 22(b)(1), discussion of matters, the
immediate knowledge of which would adversely affect the finances
of a government unit.
12:05:32 PM
A roll call vote was taken. Representatives Kawasaki, Seaton,
Spohnholz, Johnston, and Josephson, and Senators Stevens,
Hoffman, Giessel, and Bishop voted in favor of moving into
executive session. Therefore, by a vote of 9 yeas - 0 nays, the
committee moved into executive session at 12:06 p.m.
12:06:17 PM
The committee took an at-ease from 12:06 p.m. to 12:31 p.m.
^Audit Contracts
Audit Contracts
12:31:16 PM
CHAIR STEVENS brought the committee back to order and announced
that the next order of business would be for audit contracts.
REPRESENTATIVE JOSEPHSON made a motion that the Legislative
Budget and Audit Committee authorize the Chair, as procurement
officer, to solicit and award a contract or contracts for
statewide single audit services for a total amount, including
all contracts, not to exceed $120,000.
12:31:33 PM
A roll call vote was taken. Representatives Kawasaki, Seaton,
Spohnholz, Johnston, and Josephson and Senators Stevens,
Hoffman, Giessel, and Bishop voted in favor of the authorization
to the Chair to award a contract or contracts for statewide
single audit services. Therefore, this authorization was passed
by the Legislative Budget and Audit Committee by a vote of 9
yeas - 0 nays.
12:32:21 PM
REPRESENTATIVE JOSEPHSON made a motion that the Legislative
Budget and Audit Committee approve an amendment to the contract
with MBE CPAs, in the amount of $15,000 for audit services, not
to exceed $50,000.
12:32:34 PM
A roll call vote was taken. Representatives Kawasaki, Seaton,
Spohnholz, Johnston, and Josephson and Senators Stevens,
Hoffman, Giessel, and Bishop voted in favor of an amendment to
the contract with MBE CPAs. Therefore, this amendment was
passed by the Legislative Budget and Audit Committee by a vote
of 9 yeas - 0 nays.
^Other Committee Business
Other Committee Business
12:33:08 PM
CHAIR STEVENS announced that the final order of business would
be for other committee business.
12:33:25 PM
KRISTIN CURTIS, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, directed attention to the financial
audit of the Alaska State Legislature [Included in members'
packets] and explained that there was a requirement in statute
for this to be performed annually. She pointed to the first
document titled the Schedule of Appropriations, Expenditures,
and Encumbrances and the Schedule of Revenues, and explained
that this was the financial statement for the legislature. She
referred to the audit opinion, and relayed that this was
included for the members' information but did not contain
anything of significance. She presented the second document,
the Letter to the Members of the Legislative Council and
Legislative Budget and Audit Committee. She explained that
these two entities were referenced by the accounting profession
as "those charged with governance" and the letter was required
by auditing standards for every financial audit. She added
that, as the format of the letter was dictated by auditing
standards, there was nothing unusual with the section that said
Significant Difficulties Encountered during the Audit. She
shared that there was a similar letter to the Executive Branch
at the end of the audit, and she offered her belief that there
were no concerns raised in the letter. She pointed to the
representation letter from the financial management at
Legislative Affairs Agency making specific representations,
which was also required by auditing standards. She reported
that she provided this information to the Legislative Budget and
Audit Committee every year.
12:35:00 PM
REPRESENTATIVE SPOHNHOLZ referenced page 3 of the Schedule of
Appropriations, Expenditures, and Encumbrances and asked where
the per diem would appear in the itemization.
12:35:22 PM
MS. CURTIS, in response, said that per diem would be in the
travel line. She directed Representative Spohnholz to the
Legislative Budget and Audit Committee listing, then to the
allocation of committee expense, and then to the travel line.
She explained that within each allocation, the travel line would
include airfare, per diem, and rental cars.
12:35:51 PM
REPRESENTATIVE SPOHNHOLZ referenced page 5 of the same document
and asked about the line item titled Restricted Revenues,
Federal Compliance Audit. She said, "we have appropriated
revenues of $750,000 and actual revenues of $300,000" and she
asked for an explanation.
12:36:10 PM
MS. CURTIS replied that, traditionally, there was an RSA
(Reimbursable Service Agreement) with the Department of
Administration (DOA) to pay for part of the cost for the single
audit. However, during the budget cycle for FY16, this was
increased to the current $750,000 with the idea that DOA pay
more for the actual cost of the single audit. She reported
that, as the department did not have that money in its budget,
in FY 16 the remaining $450,000 was requested in the
supplemental budget. However, this request was denied and the
Legislative Audit Division only received the $300,000. She
opined that, as the Legislative Audit Division had lapsed money
in FY16, this may have been part of the reason for denial of the
supplemental budget request.
12:37:08 PM
CHAIR STEVENS moved on to discussion of the audit for the Alaska
Mental Health Trust Authority. He asked Ms. Curtis whether it
was possible to speed up the process, as it was projected to not
start for another year.
12:37:58 PM
MS. CURTIS, in response, said that the audit of the Alaska
Mental Health Trust Authority would be done by the staff in the
Anchorage office of the Legislative Audit Division. She offered
her belief that this performance audit could begin by May, if
all went smoothly. She explained that the 2008 audit request
for the Matanuska Maid dairy plant had not been completed due to
the unfinished disposition of its assets. The final piece of
property in this disposition had just been sold in January,
which would allow for this audit to be finished. However, if
the Legislative Budget and Audit Committee asked to prioritize
the audit of the Alaska Mental Health Trust Authority, she would
re-visit the audit request for the Matanuska Maid dairy plant at
a later date. She added that there were also two other older
audits, which included an audit of the Board of Game Local
Advisory Committees and an audit of the MV Tustumena Overhaul
and Refurbishment. As these audits were Juneau office based,
the audit of the Alaska Mental Health Trust Authority by the
Anchorage office would not be impacted.
12:39:51 PM
REPRESENTATIVE KAWASAKI pointed out that there were other audits
posted in December 2016, including the audit of Medicaid and
Children's Health Insurance Program Travel Costs and the audit
of the Alaska Gasline Development Corporation. He asked if the
audit of the Alaska Mental Health Trust Authority would
supersede these audit requests.
12:40:18 PM
MS. CURTIS replied that, as all three of those audits were
received at the December Legislative Budget and Audit Committee
meeting, the first audit started would depend on availability
and location of staff. She relayed that, although direction
from the committee could determine to first start the audit of
the Alaska Mental Health Trust Authority, as there was a
competing priority for the federal compliance audit which had a
statutory time line, it may be necessary to "put it [the audit
of the Alaska Mental Health Trust Authority] down to address
those requirements, and then pick it back up." She stated that
she did not have an estimate for completion of the audit of the
Alaska Mental Health Trust Authority.
12:41:09 PM
SENATOR BISHOP asked when the audit of the MV Tustumena Overhaul
and Refurbishment had been requested.
MS. CURTIS offered her belief that it was a 2013 request. She
explained that subsequent litigation had delayed the audit, but,
as this litigation was now completed, the audit would now
proceed.
CHAIR STEVENS asked the committee for its approval to move
forward on the audit of the Alaska Mental Health Trust
Authority, and he acknowledged that "things may change and we
find we can't complete it because of other issues."
12:42:07 PM
REPRESENTATIVE JOSEPHSON offered his belief that the audit of
the Alaska Mental Health Trust Authority was more urgent than
the 2008 audit request for the Matanuska Maid dairy plant.
12:42:32 PM
MS. CURTIS asked that the Legislative Budget and Audit Committee
members determine which audit was more urgent. She shared that
she had not reviewed either audit enough to comment on the
urgency for each, and that she would abide by the decision of
the committee.
12:43:05 PM
SENATOR GIESSEL stated that she advocated for priority to an
audit of the Alaska Mental Health Trust Authority as it was a
current issue of concern, whereas the audit request for the
Matanuska Maid dairy plant "was sort of a done deal at this
point."
SENATOR HOFFMAN stated that he concurred.
12:43:28 PM
REPRESENTATIVE SEATON expressed his agreement to prioritize the
audit of the Alaska Mental Health Trust Authority. He suggested
that the statute of limitations could be nearing for the audit
of the Matanuska Maid dairy plant.
12:43:48 PM
CHAIR STEVENS acknowledged that there were no objections to
prioritizing the audit of the Alaska Mental Health Trust
Authority.
12:44:02 PM
CHAIR STEVENS offered an update for the consultants for oil and
gas. He reported that earlier discussion for a contract with
Paul Morgan had revealed that Mr. Morgan had taken a position
with Wood Mackenzie, which would have created a conflict of
interest. He shared that, after discussions with the House
Finance Committee and the House Resources Standing Committee
regarding the hiring of another consultant for this legislative
session, a contract had been signed with Rich Ruggiero of Castle
Gap. He reported that the Senate was satisfied with its current
consultants, Roger Marks and Nikos Tsafos. He declared that he
did not anticipate the hiring of any other consultants in the
near future. He pointed out that the contract with Mr. Tsafos
had been extended through May 31, 2017 for an additional
$20,000, and the contract with Mr. Marks had been extended
through June 30, 2017 and, as there was money still in this
contract, there had not been a need for any additional funds.
CHAIR STEVENS stated that work had begun for an RFP (Request for
Proposal) for long term consultants. He invited the committee
members for their suggestions of individuals and companies to
send the RFP to, and on the scope of work language.
12:46:04 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
12:46 p.m.
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