State Auditor details staffing, training and single-audit workload in budget hearing for HB1004

State Auditor Josh Gallion told the House Appropriations — Government Operations Division that his office is asking for targeted changes to help local governments, address rising federal single-audit work and absorb increased IT and cybersecurity costs as it presented House Bill 1004, the auditor—s appropriation bill.

"I have the honor of serving the citizens of North Dakota," Gallion said in opening remarks, and he described the office—s role auditing state agencies, local governments and the university system while administering a federally funded mineral-royalty audit program.

Why it matters

The auditor—s office audits nearly every government entity in the state and conducts financial, compliance and performance audits that underpin transparency for citizens, bond markets and grantors. The office reported a large increase in federal funding subject to single-audit requirements and said that training and a new Office of Good Government position have expanded local-government outreach.

Key details

Gallion and Chief Financial Officer James Carroll described three conversion requests: converting two special-funded positions that perform small-government financial reviews and one special-funded quality-assurance position focused on single-audit compliance to general fund support. The office said converting the two small-government review positions would relieve local governments of review fees and estimated that doing so would save local governments roughly $380,000 in combined fees for the positions— salaries and operating costs.

Audit workload and single audits

The auditor—s office said single-audit workload has grown substantially. James Carroll reported federal-expenditure totals subject to single audit rose from about $4.4 billion in 2019–20 to $6.7 billion in 2021–22, with current-year reviews approaching $6.9 billion — a roughly 56 percent increase over six years. The office said each single-audit engagement can require a minimum of 40 hours and cost about $5,000.

Training, delinquency and local-government support

The office highlighted a new training and education coordinator funded last session who has provided live training at seven conferences, created video resources and helped produce guidance for small governments. Dan Cox, director of audit services, told the committee that many small jurisdictions use volunteers or part-time staff who lack accounting training; the office said there are about 793 small governments subject to reporting and that 153 were more than four years delinquent on filings, which the office termed a significant compliance concern.

IT, cybersecurity and peer-review costs

The auditor—s office asked for one-time funding to complete a migration of its audit software (Teammate) and to cover increased NDIT server rates that will require parallel hosting during transition. CFO James Carroll said the agency—s previous server costs that would have been roughly $3,000 are now projected at about $48,000 over a biennium because of higher NDIT rates. The office also asked to convert a previously special-funded cybersecurity assessment appropriation into general fund authority and increase the assessment scope and funding to $585,000 general fund to permit a broader security review that would include higher education.

Internships and workforce pipeline

Gallion and staff emphasized the auditor—s internship pipeline: since 2021 the office had hired 31 interns, with about 12 later converted to full-time positions. The office requested additional temporary-salary authority ($200,000 total) to continue the internship program while it shifts two small-government review positions to general fund support.

Federal mineral-royalty program

The office asked for appropriation authority for one federally funded FTE in its mineral-royalty audit program; the office said the program is reimbursed by the federal Office of Natural Resources Revenue and that the requested authority would not increase state net cost because the position would be federally reimbursed.

Committee questions and follow-up

Members asked about the difference between single audits and regular audits, why operating lines were reduced under the governor—s budget limit and where NDIT and rent charges are paid. The auditor—s office said many agencies absorbed executive-branch requested cuts in operating lines to protect salaries. The auditor said ongoing efforts to expand training, outreach and automation aim to reduce recurring audit costs for local governments.

Ending

No appropriation votes were recorded during the session excerpt. The committee thanked the auditor—s staff for outreach efforts and indicated it will continue follow-up review of detailed budget change packages.