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Minutes for HB2441 - Committee on Federal and State Affairs
Short Title
Audits of state agencies; financial-compliance audits; Kansas lottery security audit; selection of auditors, contracts with.
Minutes Content for Wed, Jan 17, 2018
Chairperson Barker opened the hearing on HB2441. Jason Long, Revisor, provided an overview of the bill (Attachment 1). HB2441 reorganizes various statutory requirements concerning financial-compliance audits of the Kansas Lottery, KPERS, and the Department of Administration, as well as a security audit of the Lottery. Under current law the Legislative Post Auditor is charged with conducting these audits. Typically, the Legislative Post Auditor would enter into contracts with outside auditing firms to complete these audits. HB2441 would shift those responsibilities to the executive agency with continued involvement by the Legislative Post Auditor.
Chairperson Barker then recognized Scott Frank, Legislative Post Auditor, as a proponent of HB2441 (Attachment 2). Mr. Frank explained that there are two types of audits -- performance audits and financial audits. His office conducts the performance audits and oversees the financial audits which are contracted out to CPA firms. With regard to KPERS, the Lottery and the Department of Administration, each agency prepares financial statements illustrating what has gone on in the prior fiscal year in terms of revenues and expenses as well as a current balance sheet showing assets.and expenses. An outside auditor is engaged to perform an audit and issue an opinion as to whether or not you can rely on those documents. It takes an accountant with a lot of public accounting expertise to perform a financial audit. Performance audits are much broader in scope and do not require an accountant to perform them. Legislative Post Office currently oversees five audit contracts, which are set out in his written testimony, as well as the responsibilities of Legislative Post Audit in connection with those contracts. HB2441 would transfer responsibility for procuring the independent audits from Legislative Post Audit to the audited agencies. They worked extensively with the Department of Administration, KPERS and the Lottery in developing this bill. They are all in support of both the concept and the language in this bill. The rationale for this bill is that Legislative Post Audit doesn't have the expertise or the personnel to perform the financial audits. Questions were asked by Representatives Smith, Clayton, Awerkamp, Lusk, and Horn.
Chairperson Barker explained that what HB2441 does is remove the middle man on bidding out these contracts. The same process will be in place, but the contracting out will be done by the individual agencies.
At the Chairman's request, Mr. Frank introduced Justin Stowe, who will be the interim Legislative Post Auditor. Mr. Stowe briefly introduced himself to the Committee.
Chairperson Barker asked if there were any further conferees on HB2441. Seeing none, the hearing was closed.
