Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 282, H.D. 2, entitled:

begs leave to report as follows:

The purpose of this measure is to establish an audit revolving fund in the Office of the Auditor.

This fund will be funded by auditing fees and legislative appropriations, and will be used by the Auditor to conduct audits of agencies and funds.

Furthermore, this measure authorizes the Auditor to charge state and county agencies fees for the audits and deems expenditures from the fund to be expenditures by the audited agencies. This measure also transfers general funds to the revolving fund and appropriates funds from the revolving fund.

Your Committee finds that this measure may provide a mechanism to maximize the underwriting of audits from sources other than the general fund. Furthermore, your Committee finds that it is the constitutional duty of the Auditor to conduct financial and management audits of all state and county agencies.

Your Committee has amended this measure by clarifying that the general funds that are being transferred into the audit revolving fund in sections 3 and 5 of the measure are being transferred for different purposes. Specifically, the transfer in section 3 reflects seed moneys to advance the costs of audits that will later be reimbursed by the federal government. The transfer in section 5 reflects amounts currently budgeted to the state agencies for their own audit costs.

The Department of Accounting and General Services submitted comments expressing concern that this measure may conflict with the Separation of Powers Doctrine. Accordingly, your Committee believes additional review of this issue is warranted.

Your Committee has amended this measure by changing the appropriation figures to blank amounts and by changing the effective date to July 1, 2053, for the purposes of continuing discussions.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 282, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 282, H.D. 2, S.D. 1, and be placed on the calendar for Third Reading.