June 10, 2015
"Suspend
current law…requiring the Legislative Audit Bureau to conduct an
annual financial audit of the UW System. Instead, require the UW
System to contract with an independent accounting firm,” read the
motion introduced by Senator Harsdorf and Representative Schraa.
Recent action
by a majority of the state’s budget writing committee not only
kicked the nonpartisan Legislative Audit Bureau (LAB) out of the UW
System but also approved a process to get rid of state purchasing
laws at the UW and waive the state’s bidding process for some UW
building projects.
The motion
effectively throws Wisconsin taxpayer controls out the window for a
significant portion of the state budget. The UW System 2-year budget
is over $11 billion – about a 7th of the entire state budget.
To justify
suspending the LAB’s annual UW audit, the Harsdorf/Schraa motion
required UW officials to contract with a private accounting firm.
This action
kicked out the watchdog and replaced it with a goldfish.
Private
accounting firms count things. They can tell us money was spent and
the books were balanced. But their reports won’t tell us about how
the money was spent and whether or not the spending was in students’
and taxpayers’ best interest.
Since its
creation in 1966, financial audits are a primary responsibility of
the Legislative Audit Bureau. In the past two years, the LAB
completed 26 financial audits – including the audit opinion of the
Comprehensive Annual Financial Report (CAFR) of state operations.
In
a recent letter to the Co-Chairs of the Legislative Audit Committee,
State Auditor Joe Chrisman explained:
“In conducting financial audits, LAB follows professional auditing
standards issued by the American Institute of Certified Public
Accountants, as well as generally accepted government auditing
standards issued by the Comptroller General of theUnited States.”
The LAB
financial auditors adhere to the same standards as private firms.
They are required to be independent and sharpen their skills and
knowledge through continuing education. Every three years the
National State Auditors Association subjects the LAB to peer review.
State law prohibits any meddling or outside influence with audit
investigations and protects whistleblowers with strong
confidentiality rules.
The LAB has
extensive experience auditing the over $6 billion annual UW System
budget.
Over the last 8
years or so the LAB reported on the following: how the UW allocates
state tax money and tuition to campuses; the process followed to
assess the financial reporting of entities like the UW Foundation and
the Wisconsin Alumni Research Foundation (WARF); overpayments for
retirement contributions and health insurance (some of the health
insurance contributions were for employees no longer with the UW);
audit differences including financial reporting errors by the UW
System; changes in financial activities of the UW including an
increase in unrestricted net assets; and internal controls.
The UW does not
hire the LAB. Auditors answer to the State Auditor who answers to the
Legislature, who answers to the people. No private firm involved.
The LAB answers
questions my colleagues, taxpayers and I most often ask: What’s
going on? How is it working? Can we do things better?
Kick out the
LAB? Doing away with state procurement policies on contracting and
hiring private firms? Doing away with some bidding rules? Contracting
with a private auditing firm who knows nothing about the complex
accounting and operations of the UW?
When I reviewed
the Harsdorf/Schraa motion, I was left with a serious question: Why?
Recently
Representatives Craig (R-Big Bend) and Jarchow (R-Balsam Lake)
drafted a bill to entirely eliminate the Legislative Audit Bureau and
the Legislative Audit Committee. They want to create an Inspector
General for each state agency over 100 employees. They transfer all
legislative oversight of the executive branch and the fraud, waste
and abuse hotline to two partisan leaders. Their bill imbeds auditors
in the agencies making them ripe for corruption by executive staff
and partisan leaders.
The
breadth of the Representatives’ ignorance of LAB activities and
processes is staggering. Their bill shows a complete unfamiliarity
with the skills of auditors, the efficiencies in government LAB staff
helped created and the fraud, waste and abuse auditors discovered and
further prevented through their oversight. All I can ask is why would
legislators want do away with the LAB?
