REPORT TITLE:
Preaudits


DESCRIPTION:
Authorizes the Comptroller to delegate the preaudit
responsibility for proposed payments less than $           to the
departments.  Imposes a one-time penalty against the State for
failing to make timely payment for services or goods rendered
under state contract.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2588
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                S.D. 1
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO AUDIT AND ACCOUNTING.


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 40-1, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (b) to read as follows:
 
 3      "(b)  With respect to the executive branch, except the
 
 4 University of Hawaii and the department of education, the
 
 5 comptroller shall have complete supervision of all accounts.  The
 
 6 comptroller shall preaudit all proposed payments of $10,000 or
 
 7 more to determine the propriety of expenditures and compliance
 
 8 with executive orders and rules that may be in effect.  The
 
 9 comptroller may delegate the preaudit responsibility for proposed
 
10 payment amounts below $           to the executive branch
 
11 departments that shall then preaudit the proposed payments to
 
12 determine the propriety of expenditures and compliance with
 
13 applicable laws, executive orders, and rules that may be in
 
14 effect.  When necessary, the comptroller shall withhold approval
 
15 of any payment.  Whenever approval is withheld, the department or
 
16 agency concerned shall be promptly notified.  With respect to the
 
17 University of Hawaii and the department of education, the
 
18 comptroller shall issue warrants for the release of funds for the
 
19 operating costs of the university or the department of education,
 
20 as applicable, in amounts and at times mutually agreed upon by
 

 
Page 2                                                     2588
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                                                        S.D. 1
                                                        

 
 1 the governor or director of finance and the university or
 
 2 department of education, as applicable; provided:
 
 3      (1)  The amounts released shall not exceed the allotment
 
 4           ceilings for the respective funding sources of the
 
 5           university's or the department of education's
 
 6           appropriations established by the governor for an
 
 7           allotment period pursuant to section 37-34; and
 
 8      (2)  The comptroller may issue warrants as an advance from
 
 9           the state treasury to the University of Hawaii and the
 
10           department of education to establish a checking account
 
11           and provide working capital in amounts and at times
 
12           mutually agreed upon by the governor or director of
 
13           finance and the University of Hawaii and the department
 
14           of education.
 
15      The University of Hawaii and the department of education
 
16 shall preaudit all proposed payments to determine the propriety
 
17 of expenditures and compliance with applicable laws, executive
 
18 orders, and rules as may be in effect.  The University of Hawaii
 
19 and the department of education shall make disbursements for
 
20 operating expenses from the amounts released by the comptroller
 
21 and maintain records and documents necessary to support those
 
22 disbursements at times mutually agreed upon by the university
 
23 president or the superintendent of education, as applicable, and
 

 
Page 3                                                     2588
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 the comptroller; provided that when requested by the university
 
 2 or department of education, the comptroller shall make all
 
 3 disbursements for the university or department of education, as
 
 4 applicable, subject to available allotment.  Funds released
 
 5 pursuant to this section shall be deposited by the university or
 
 6 department of education, as applicable, in accordance with the
 
 7 provisions applicable to the director of finance by chapter 38.
 
 8 Any interest earned on the deposit of funds released pursuant to
 
 9 this section shall be deposited in the state treasury at the end
 
10 of each fiscal year."
 
11      SECTION 2.  Section 103-10, Hawaii Revised Statutes, is
 
12 amended by amending subsection (a) to read as follows:
 
13      "(a)  Any person who renders a proper statement for goods
 
14 delivered or services performed, pursuant to contract, to any
 
15 agency of the State or any county, shall be paid no later than
 
16 thirty calendar days following receipt of the statement or
 
17 satisfactory delivery of the goods or performance of the
 
18 services.  In the event circumstances prevent the paying agency
 
19 from complying with this section, in addition to a one-time five
 
20 per cent penalty, the person shall be entitled to interest from
 
21 the paying agency on the principal amount remaining unpaid at a
 
22 rate equal to the prime rate for each calendar quarter plus two
 
23 per cent, but in no event shall exceed twelve per cent a year,
 

 
Page 4                                                     2588
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 commencing on the thirtieth day following receipt of the
 
 2 statement or satisfactory delivery of the goods or performance of
 
 3 the services, whichever is later, and ending on the date of the
 
 4 warrant.  As used in this subsection, "prime rate" means the
 
 5 prime rate as posted in the Wall Street Journal on the first
 
 6 business day of the month preceding the calendar quarter."
 
 7      SECTION 3.  New statutory material is underscored.
 
 8      SECTION 4.  This Act shall take effect on July 1, 2000.