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February 26, 2009 Jay Finegan, 287-1445
Rep. McKane Bill Would Contract Out State Auditing Procedures, Reducing Costs

AUGUSTA – State Rep. Jon McKane has introduced legislation to have the State Single Audit performed by outside accountants. He said switching the work from internal to external auditors could potentially save the state millions of dollars and strengthen public trust in the impartiality of the process.

Currently, the Department of Audit, a state agency, conducts the State Single Audit, which is a mandatory compliance audit of all federal assistance funds that come into the state.

The bill, LD 295 – An Act To Contract Out the State Single Audit – has been referred to the Joint Standing Committee on State and Local Government, where a public hearing and work sessions will precede a committee vote on the measure.

Rep. McKane noted that the state’s Department of Audit has two primary functions. “One is to conduct audits of any organization or institution in Maine receiving or requesting federal government funds,” he said. “But by far the biggest responsibility is to conduct the State Single Audit as required by the federal government.”

Rep. McKane said the Department of Audit now has a biennial budget approaching $3 million, adding that “their job is almost entirely to perform the Single State Audit.” He continued: “The State of Kansas, with a population twice that of Maine, contracts its Single Audit for $300,000 for a three-year period. Do we really need to spend 10 times what Kansas spends for a government that is half the size?”

If the Department of Audit were eliminated, he said, any work beyond the State Single Audit could be absorbed by the state controller, the state fiscal office, the Department of Administrative and Financial Services, the Federal Inspector General or OPEGA – the Office of Program Evaluation and Government Accountability.

Besides the financial savings, Rep. McKane said, contracting out the State Single Audit would enhance objectivity. “It is imperative that any financial audit, whether in business or government, be independent and objective,” he said. “In Maine, where one political party chooses the state auditor, the perception of bias, whether justified or not, will continue to erode public trust. We have been fortunate so far to have had many qualified and unprejudiced state auditors, but this might not always be the case.”

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