Our Side of the Story
Russ Saito
Governor was right
to veto audit billIf the audit bill were passed into law, I believe it would increase bureaucracy and costs, diffuse responsibility and accountability, do nothing to increase the independence of audits, and jeopardize the state's excellent bond rating.
To understand this bill, one must understand that there are different kinds of audits. The two most important to the bill are financial and management audits.
Financial audits provide an independent assessment of the integrity of an accounting system and the financial statements produced by that system for a given period. These audits are conducted by independent CPAs.
Management audits look for waste, fraud, incompetence or abuse in the management of an agency.
Legislative auditor Marion Higa is known for her hard-hitting management and related audits. Governor Lingle supports such audits, and proposed to legislative leaders earlier this year that funding be provided to double the number of audits Higa's office performs.
The audit bill addresses financial audits, which the governor must control to run the state as a business. Having a legislative auditor responsible for financial audits of executive departments and requiring those departments to pay to conduct those audits through another special fund would be cumbersome and wasteful, and gain nothing.
There is a misperception that having the legislative auditor arrange the financial audits would somehow make them more independent. Not true.
The executive branch follows the Comptroller General of the United States' Government Auditing Standards in contracting with CPA firms. It is the process of complying with such standards that ensures independence, not whether it's the executive or legislative branch that does the contracting.
There also are practical concerns with the audit bill. The state's financial audits are reviewed by bond-rating agencies in evaluating the state as a credit risk, and by federal agencies in sizing up how well federal funds are being used by the state. The state's excellent bond ratings by the various rating agencies and the approval of federal funds for state projects are very real benefits we are receiving based on the audits as they are currently done. I firmly believe the audit bill could jeopardize this.
There are some who disagree with me. They argue that the audit bill might not be wasteful and would not necessarily harm the state's finances. But why take the risk? That bit of common sense, "if it ain't broke, don't fix it," applies here.
The state's financial audits have received the prestigious Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers of the United States and Canada for each of the past 13 years. The process is running smoothly, and the state has maintained its bond rating.
It makes sense for Higa to do more management audits. It makes no sense to turn over the entire financial audit function to the legislative branch.
When all the facts are considered, the veto makes sense. The audit bill is a bad idea. It turns the state's financial audits into a political football, to be tossed back and forth between the legislative and executive branches with no one truly accountable if the ball gets fumbled.
The audit bill should not be confused with the need to hold government accountable for how it spends tax money. The governor remains committed to making this happen.
Russ Saito is the state comptroller.