POLICY HIGHLIGHTER

Volume 14, Number 10
May 5, 2004

State audit oversight: Legislature's deafening silence

It has been more than a month since the state auditor released his 2003 Statewide Accountability Report which detailed 60 audit findings against state agencies, of which several were repeat findings from the year before. While this audit paints a troubling picture, the silence in Olympia is even more disturbing.

Legislators and state officials have repeatedly asserted their desire to make state government more efficient and accountable to the taxpayers, but their inaction on audit findings year after year indicates a lack of commitment toward these ends. To date no legislative hearings have been scheduled, and little to no public comment from state officials has been issued.

Contrast this with the immediate action initiated upon word that the attorney general may have unduly influenced an investigation into her agency's actions on missing a key legal filing deadline. Despite the legislature not being in session, within days of this information being made public, the Senate Judiciary Committee announced that a hearing on the situation would be scheduled.

It also appears that state agencies are delaying the release of the state auditor's report by dragging their feet in providing responses to the audit findings. This year's report was released on March 24 (after session ended), although RCW 43.88.160 indicates the auditor's official report is to be presented to the legislature on or by the 31st of December, prior to the preceding legislative session. This delay occurred as a result of the auditor's more than charitable practice of allowing state agencies the opportunity to have an official response listed in the audit report. RCW 43.88.160 also requires the director of the Office of Financial Management (OFM) to initiate corrective action of agency audit findings within six months. As evidenced by the numerous repeat findings issued against agencies, this needed corrective action is not occurring.

If legislators are truly committed to holding agencies accountable and providing the adequate oversight of government operations that taxpayers expect, they should consider implementing the following common-sense recommendations:

1) Immediately hold legislative hearings on this year's audit findings. These hearings should focus on A) agencies with repeat findings, and B) agencies that dispute the auditor's findings.

2) Agencies should be subject to substantial consequences for receiving a repeat finding. Currently, when the auditor issues a finding and is forced to conduct a follow-up audit to ensure the problem has been corrected, new areas of review may be dropped. This is because the auditor has limited billing hours. Repeated wrongdoing by agencies handicaps the ability of the auditor to review other potential problem areas.

3) RCW 43.88.160 should be fully enforced in the following manner: A) If agencies do not respond to the auditor in a timely manner, the report should be released regardless, noting that the agencies failed to respond, and B) the corrective action mandated in the audit must actually occur. If corrective action does not occur, the auditor should be permitted to charge OFM for the expense of any agency audits which result in repeat findings. By having the audits available at the beginning of session, legislators would be able to immediately exercise much needed agency oversight.

4) Although RCW 43.09.330 currently requires the attorney general to initiate prosecution for fraud and misconduct identified by audit findings, the "shall" from this RCW has been interpreted by the courts to mean "may." The legislature should clarify that "shall" means SHALL, not MAY. The legislature should also indicate that any necessary prosecution be funded out of the attorney general's budget, to be reimbursed by future appropriations. A recent letter from the attorney general's office to the state auditor indicated that funding concerns seem to dictate whether prosecution occurs. The letter implied that if the auditor were to recommend prosecution, the auditor should pay for it, not the attorney general. However, a 1984 court ruling (Graham vs. San Juan County) expressly prohibits the state auditor from initiating corrective legal action.

5) Finally, along with properly exercising oversight over the current fiscal and compliance audits of state government, legislators should authorize truly independent and comprehensive performance audits. Combined with the above actions, this step will further demonstrate the state's commitment to providing meaningful accountability for the investments of taxpayers.

Prepared by: Jason Mercier | Budget Research Analyst | 360-956-3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org