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. (HB282 HD1)

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 funds for all of the auditor's functions and related expenditures.

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 subdivisions. This Act also provides a mechanism 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. 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, into which shall be deposited:

(b) Moneys in the audit revolving fund shall be expended by the auditor to conduct audits of state departments, offices, and agencies, audits of special, revolving, capital improvement, or trust funds, and 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 $600,000 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.

SECTION 4. There is appropriated out of the audit revolving fund the sum of $2,450,000 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.

SECTION 5. The sums appropriated shall be expended by the office of the auditor for the purposes of this Act; provided that all funds expended by the office of the auditor for the purposes of this Act shall be deemed to have been expended by the departments, offices, and agencies of the State and its political subdivisions subject to the Single Audit Act of 1984, P.L. 98-502, as amended.

SECTION 6. New statutory material is underscored.