Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Legislative Management, to which was referred H.B. No. 1821, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to provide the Office of the Auditor (Auditor) with sufficient funds to conduct financial audits of the Departments of Education, Health, and Human Services, as well as other state agencies.

The Auditor testified in support of this measure. The Department of Accounting and General Services was notified about this bill but did not submit any testimony.

The Auditor is authorized by article VII, section 10 of the State Constitution to conduct financial audits. In addition, chapter 23, Hawaii Revised Statutes, requires the Auditor to conduct post-audits of the transactions, accounts, programs, and performance of all departments, offices, and agencies of the State and its political subdivisions.

The Auditor testified that if her office were to handle all financial audits, the Legislature and the public would receive the results of the audits in a timely manner. The Auditor further testified that having the responsibility for the financial audits would alert the Auditor's Office of any areas that may require a management audit or follow-up procedures.

Your Committee finds that the current practice of allowing DAGS to conduct the audits of executive departments and agencies raises questions regarding the independence of the auditing function. Your Committee further finds that this bill will not increase the overall state budget but merely changes the expending agency.

As affirmed by the record of votes of the members of your Committee on Legislative Management that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1821, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Finance.