Enables the Auditor to conduct audits of departments, offices, and agencies of the State and its political subdivisions. Establishes the audit revolving fund. Enables the auditor to charge a reasonable fee for financial audits. Appropriates funds.

A BILL FOR AN ACT

SECTION 1. Audits of the departments, offices, and agencies of the executive branch of the State are currently conducted by public accounting firms contracted primarily by the department of accounting and general services (DAGS). DAGS, however, exercises little oversight in the administration of these contracts. The audits are paid from funds appropriated to the respective agencies or DAGS. The legislature finds that auditing principles and standards require that these audits be conducted by an entity independent of the one being reviewed.

The office of the auditor is authorized to conduct postaudits under article VII, section 10, of the State Constitution. In addition, chapter 23, Hawaii Revised Statutes, requires the office of the auditor to conduct postaudits of the transactions, accounts, programs, and performance of all departments, offices, and agencies of the State and its political subdivisions.

Since the establishment of the office of the auditor, the legislature has appropriated only enough funds for the office to contract for a few audits annually. The legislature believes that the time has come to appropriate and align all of the auditing functions and its related expenditures as legislative expenses.

The purpose of this Act is to enable the office of the auditor to conduct audits of departments, offices, and agencies of the State and its political subdivision. This Act also provides a mechanism to preserve the State’s ability to maximize the underwriting of the audits from non-general fund sources.

SECTION 2. Chapter 23, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§23- Fees for financial audits. (a) The auditor may charge an audited entity a reasonable fee for the cost of performing an audit. Moneys collected pursuant to this section shall be deposited in the audit revolving fund established by section 23- .

§23- Audit revolving fund. (a) There is established the audit revolving fund to be administered by the office of the auditor. The audit revolving fund shall consist of any moneys collected by the auditor as follows:

(b) The auditor shall use the audit revolving fund moneys for the purpose of conducting audits of departments, offices, and agencies of the state, conducting audits of special funds, revolving funds, or trust funds, or paying for the services of certified public accountants contracted to conduct such audits."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2003–2004 to be deposited into the audit revolving fund created in section 2 of this Act.

The sum appropriated shall be expended by the office of the auditor for the purposes of this Act.

SECTION 4. There is appropriated out of the audit revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2003-2004 to be used to carry out the purposes of the audit revolving fund and to provide the auditor with necessary funds to conduct any audits.

The sum appropriated shall be expended by the office of the auditor for the purposes of this Act.

SECTION 5. New statutory material is underscored.