STAND. COM. REP. NO. 3012

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2588
                                        H.D. 1
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred H.B. No. 2588, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO AUDIT AND ACCOUNTING,"

begs leave to report as follows:

     The purpose of this measure is to enable the State to pay
vendors on a more timely basis by eliminating duplicative
preaudit reviews currently being performed by both the
Comptroller and the respective departments.

     This measure allows the Comptroller to delegate the preaudit
responsibility for proposed payment amounts below $1,000 to the
executive branch departments which shall then preaudit the
proposed payments to determine the propriety of the expenditures
and compliance with applicable laws, executive orders, and rules
that may be in effect.

     Testimony in support of this measure was received from the
Lieutenant Governor, the Department of Accounting and General
Services, the Department of Human Services, the Department of
Land and Natural Resources, Government Efficiency Teams, and NFIB
Hawaii.

     Your Committee finds that eliminating duplicative audits by
the Comptroller for proposed payments below a specific amount
will increase government efficiency by allowing the Comptroller

 
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to focus on larger proposed expenditures which affect a greater
number of Hawaii's residents.

     Your Committee finds, however, that the amount set forth in
this measure which triggers the Comptroller's right to delegate
the preaudit to the respective departments requires additional
information and departmental feedback and for that reason, your
Committee has amended this measure to leave the amount blank.

     Your Committee has also amended this measure to assess a
one-time five per cent penalty against the State for each failure
to promptly pay contractors for services or goods tendered under
section 103-110, Hawaii Revised Statutes, which shall force the
State to expedite the review and audit process for state
procurement contracts.

     In order to ensure that this measure is an appropriate step
towards maximizing government efficiency, your Committee requests
that the Office of the Governor, the Office of the Lieutenant
Governor, the Attorney General's Office, and the Department of
Budget and Finance submit timetables for their respective
interdepartmental review and approval processes that include
support and justification for the implementation of this measure.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 2588, H.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 2588, H.D. 1, S.D. 1, and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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