POLICY HIGHLIGHTER

Volume 15, Number 3
January 17, 2005

Current performance audit proposals

Performance audits have become a hot topic in Olympia with multiple proposals on the table to authorize these much needed performance reviews. As of this writing, three bills have been dropped in the legislature (including one companion bill) and an initiative to the people has been filed to permit the state auditor the ability to conduct performance audits.

The value of performance audits is unquestionable. Performance audits are a valuable management tool, carefully structured around tough, nationally recognized auditing principles—principles that cannot be ignored if the best intentions of legislators and the desires of the public are to be realized.

Below is a brief comparison of the current legislative proposals to authorize performance audits.

SB 5083: Authorizing comprehensive state government performance audits
This bill is modeled after the Evergreen Freedom Foundation's performance audit pledge supported and signed by 70 legislators (including House Speaker Frank Chopp) as well as State Auditor Brian Sonntag. SB 5083 would amend the Budget and Accounting Act to remove the current prohibition on the state auditor conducting performance audits of state government.

SB 5083 specifies that the scope of any performance audits initiated by the state auditor cannot be restricted or vetoed by an outside entity. The state auditor would also be free to analyze the economy, efficiency, and effectiveness of state government activities, as long as the audits follow United States Government Accountability Office standards. Funding for these audits is required to be equal to two one-hundredths of one percent of the state's total general fund state budget for each biennium; approximately $5 million for the 2005-07 budget.

The following legislators signed the performance audit pledge reflected in SB 5083's language.

House: Representatives Ahern, Anderson, Appleton, Armstrong, Buck, Buri, Campbell, Chase, Chopp, Clibborn, Condotta, Crouse, Curtis, DeBolt, Dunn, Dunshee, Ericks, Ericksen, Haler, Hinkle, Holmquist, Hunter, Kilmer, Kretz, Kristiansen, Lantz, McCoy, McCune, McDonald, Miloscia, Moeller, Morrell, Newhouse, Nixon, O'Brien, Orcutt, Pearson, Priest, Roach, Roberts, Rodne, Schindler, Sells, Serben, Shabro, Strow, (Pat) Sullivan, Talcott, Tom, Wallace, Walsh, Williams and Woods.

Senate: Senators Benson, Benton, Carrell, Delvin, Esser, Honeyford, Kastama, McCaslin, Mulliken, Parlette, Rasmussen, Roach, Schoesler, Sheldon, Stevens, Swecker and Zarelli.

HB 1064 and companion SB 5124: Improving government performance and accountability
The legislative intent section of these bills reads (in-part):

Citizens demand and deserve accountability of public programs. Public programs must continuously improve in quality, efficiency, and effectiveness in order to increase public trust; Washington state government and other entities that receive tax dollars must continuously improve the way they operate and deliver services so citizens receive maximum value for their tax dollars; . . . Fair, independent, professional performance audits of state agencies by the state auditor are essential to improving the efficiency and effectiveness of government.

However, HB 1064 and SB 5124 create a "citizen oversight board" to serve as a gatekeeper for the type of performance audits the state auditor is authorized to do. Consider the following sections of the bills:

Sec. 3
(2) The board shall consist of seven members as follows:
(a) One member shall be the state auditor, who shall be a nonvoting member
(3) The board shall elect a chair. Neither the chair of the joint legislative audit and review committee nor the state auditor may serve as chair.

Sec. 4
2) The board and the state auditor shall work together regarding performance audits of state government.
(a) The board shall establish criteria for performance audits.
(d) Before adopting the final work plan, the board shall consult with the legislative auditor and other appropriate oversight and audit entities to coordinate work plans and avoid duplication of effort in their planned performance audits of state government agencies. The board shall defer to the joint legislative audit and review committee work plan if a similar audit is included on both work plans for auditing. The final work plan must be agreed upon by the board and the state auditor.

Sec. 7
The citizen oversight board created in section 3 of this act and its powers and duties shall be terminated June 30, 2012...

Sec. 13
If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2005, in the omnibus appropriations act, this act is null and void.

An independently elected state auditor does not need a citizen oversight board to tell him or her what a performance audit may or may not review and what the audit plan/scope should be. This type of political review mechanism duplicates the legislative audit procedure already available with the Joint Legislative Audit and Review Committee (JLARC) audits. The sunset of the performance audit authority and the lack of specified appropriations possibly leading to the bills becoming null and void is also troubling.

Conclusion
Taxpayers expect government to operate efficiently, economically and effectively. Independent, comprehensive performance audits of state government, by the people's elected state auditor, using nationally recognized standards, is the best way to assure accountable and transparent government. Of the currently proposed performance audit bills, only SB 5083 grants the state auditor the ability to conduct unrestricted performance audits of state government. Should the legislature ultimately adopt a bill which continues to inhibit the state auditor, a voter initiative may be necessary to achieve truly independent and comprehensive performance audits.

Additional Information
Rep. Miloscia performance audit letter

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