Committee adopts amendment, sends codification of DFA capital-outlay safeguards forward with unanimous recommendation

The Tax, Business and Transportation Committee voted 10-0 to give a due-pass recommendation to the House Appropriations and Finance Committee substitute for House Bill 493, which would codify guidelines for the Department of Finance and Administration (DFA) and other state agencies to safeguard and manage disbursements of capital outlay and other special appropriations to local entities.

"House Appropriations and Finance Committee substitute for house bill 493 basically seeks to codify guidelines for DFA and state agencies to safeguard and manage fund distribution disbursements to local entities of capital outlay and other special appropriations," said Representative Brago as the presenter.

Committee members adopted an amendment before the final due-pass vote. Key changes in the adopted amendment include a requirement that a grantee must have completed an audit for one of the past two fiscal years and that the most recently completed annual audit be a public record under the Audit Act; replacing the term "deficiencies" with "significant deficiencies"; deleting a clause concerning certain negative audit opinions (qualified, modified, disclaimed or adverse); and adding discretionary language permitting a state agency, "if necessary," to determine it can impose special grant conditions or that another appropriate entity act as fiscal agent. The chair also noted an appeal process: if grantor and grantee cannot agree, the chief financial officer of the grantor agency would make the decision.

Rakeba Hedon, deputy state auditor, explained the terminology used in the amendment: "The terms, material weakness, and significant deficiencies are taken from the standards the auditing standards issued by the AICPA and also CASB, the general the government accounting standards board, and, standards on on auditing statements." (Transcript wording retained as spoken.)

A motion to adopt the amendment was moved by Senator O'Malley and seconded by Senator Wirth; the amendment was adopted by voice vote with no opposition. The committee then approved a due-pass recommendation for the bill as amended; the clerk recorded all present in the affirmative, 10-0.

Committee discussion referenced that the amendment language was negotiated with DFA and the state auditor's office; the presenter said parties had reached agreement after earlier parallel proposals. No in-person or online public opposition was recorded at the meeting.

The bill will proceed under standard legislative processes with the committee's due-pass recommendation.