OPINION EDITORIAL

February 8, 2005

Independent performance audits within reach

By Jason Mercier
Oh, what a difference a few words can make! And a few words are the difference between a performance audit bill taxpayers could have applauded and the one the House passed last week. It sets off warning bells of "here we go again."

The bill the House approved—ESHB 1064—improves on proposals from recent years, but it unfortunately doesn't include the most important ingredient: independence! The House version does not authorize the state auditor to conduct independent performance audits; instead it allows an unelected political board the power to determine what type of audits will occur. This violates accounting standards for independent performance audits. By changing just a few words in the bill, however, the Senate could correct this problem and negate the need for the pending voter initiative.

Why should we care? Consider the fact that performance audits in Texas have saved taxpayers more than $9 billion since 1991 and Arizona expects to save $900 million by fiscal year 2008—all a result of performance audits.

Furthermore, comprehensive performance audits are a wonderful tool legislators can use to ensure the programs they support are delivering services in the most efficient, effective and economical manner possible.

The ability to achieve significant budget savings, while at the same time improving delivery of essential state services, is why we at the Evergreen Freedom Foundation have waged a battle for truly independent and comprehensive performance audits for more than ten years.

As currently approved by the House, an unelected board of political appointees determines what types of performance audits are needed, what the scope of those audits will be, and who will actually conduct them. If the Senate changes these provisions and charges the elected state auditor with establishing criteria for performance audits and conducting or contracting them (auditor's discretion), the question of independence would be laid to rest.

The U.S. Government Accountability Office auditing standards require auditors be independent both in fact and appearance from personal, external, and organizational impairments to independence. But the current version of performance audits gives an unelected citizen board the ability to establish the parameters of any performance audits. Essentially this means the elected state auditor must get approval from the political appointees on the board for any performance audits. This is organizational impairment; it is not independence.

In essence, this sets up a process similar to the one currently employed by the Joint Legislative Audit and Review Committee (JLARC). JLARC is made up of legislators and staff, and it already does targeted performance audits. This type of legislative audit is valuable and has its place. But taxpayers expect and deserve independent and comprehensive performance audits that will look at all areas of state government.

If signed into law without changes, the bill makes the state auditor a non-voting member of a ten-person citizen board and he or she would be prohibited from serving as chair. In addition, the state auditor would be forced to contract out all performance audits. Rather than being relegated to the role of figurehead, the people's elected state auditor should be authorized to direct and conduct all performance audits.

A draft amendment crafted by the state auditor and Speaker Frank Chopp's office would have addressed these concerns, but it was not considered on the House floor. An amendment offered by Rep. Mike Armstrong, which included key provisions from the state auditor's draft amendment, was considered, but failed in a 47-49 vote.

Thankfully, the Senate can fix this problem. We hope they do, because the proper place for this matter to be resolved is in the legislature. And the proper officeholder to put in charge of performance audits is the independently elected state auditor. But the political momentum is on the side of truly independent and comprehensive performance audits, and should the legislature miss this opportunity, a citizens' initiative waits in the wings.

Jason Mercier is a budget analyst for the Evergreen Freedom Foundation, a non-partisan, public policy watchdog organization, focused on advancing individual liberty, a free-market economy, and limited and responsible government.

Contact: 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