Ohio Auditor of State Dave Yost - Press Releases - Policy and Legislation

Auditor Yost Collaborates with Rep. Hagan and Sen. Schaffer to Increase Accountability in Local Governments and Schools

Tue, 17 Apr 2012 12:00:00 -0400

Columbus – The Fiscal Integrity Act was presented today by Auditor of State Dave Yost, Representative Christina Hagan and Senator Tim Schaffer. This newly proposed legislation would address the Ohio Supreme Court decision concerning former Stark County Treasurer Gary Zeigler, among other provisions to boost accountability and penalize wrong-doing.

“One bad apple spoils the bunch and the worms must be rooted out,” Yost said. “Being entrusted with taxpayer dollars requires accountability and education – this bill provides both.”

Although the majority of Ohio’s fiscal officers and treasurers do an exceptional job for taxpayers; since taking office in January 2011, Auditor Yost said that far too many were taking advantage of their positions. Recent audits have shown that taxpayers are footing the bill for items such as boxer shorts and purchases at the local golf course. Other audits found that fiscal officers overpaid themselves, and some officials have virtually no documentation of financial transactions whatsoever.

Auditor Yost brought these concerns to the Ohio General Assembly, and Representative Christina Hagan (R-Alliance) and Senator Tim Schaffer (R-Lancaster) offered their leadership and ideas to develop legislation that would increase accountability in Ohio’s local governments and schools.

“I believe, wholeheartedly, that accountability creates an environment where people are less likely to fall short,” Representative Hagan said. “I am glad to work towards ensuring such an environment can exist; where temptation is minimized due to sound controls, further education and the understanding that repercussions are strong against one’s ill actions.”

“As taxpayers we should expect no less than optimum effort and honesty from those we entrust with public dollars,” said Senator Schaffer. “This legislation with Auditor Yost’s insights and guidance will elevate the expectations and performance of our local fiscal officers.”

HIGHLIGHTS OF PROPOSED LEGISLATION

Local Governments

If an Ohio county, township or municipal government is declared “unauditable” and fails to make a reasonable effort to bring its financial records to an auditable condition within 90 days, the Auditor of State may notify the Office of Budget Management, and state funding may be withheld.
Training requirements for township and municipal officers will be increased to ensure that those who handle the public’s money are well-versed in Ohio public finance law.
In response to the Ohio Supreme Court decision following the removal of former Stark County Treasurer Gary Zeigler, this legislation will create a uniform removal provision and due process for county auditors and treasurers, municipal fiscal officers and township fiscal officers.

Public School Districts

If a public school district is declared “unauditable,” the treasurer responsible will be suspended until the audit is completed. The state board of education can suspend, revoke or limit the license of the treasurer.
Within 45 days of the “unauditable” declaration, the school must present a plan to the Auditor of State. If the district has not made a reasonable effort to bring its records to an auditable condition, the Auditor of State may notify the Ohio Department of Education, and state payments may be withheld.
Once the audit is completed, the Auditor of State may ask the Ohio Department of Education to release the funds – much like the current rules regarding Ohio’s charter schools.

Community Schools

All community school treasurers will be required to be licensed under Ohio Revised Code Section 3301.074 – in the same way that Ohio’s public school treasurers currently are licensed.
In addition, all community schools must deposit a $50,000 bond to cover the costs of any audits after the school closes.
Like the rules for public schools, a community school treasurer will be suspended if the school is declared “unauditable”, and the state board of education may suspend, revoke or limit the treasurer’s license.
Also, upon an “unauditable” declaration, the sponsor of that community school may not open a new school between 90 days after the declaration and the date the financial audit is completed for that school.

Finally, for those egregious offenders, any fiscal officer or treasurer convicted of dereliction of duty would be prohibited from holding public office for four years and may not hold another office until any repayment or restitution required by court is repaid. The dereliction of duty conviction would also be reclassified as a fifth degree felony.

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The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,600 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Performance Audit Legislation Signed by Governor

Tue, 05 Apr 2011 12:00:00 -0400

Columbus -

Video of signing Senate Bill 4

Ohio Auditor of State Dave Yost
joined Governor John Kasich for the signing of Senate Bill 4 (Performance Audits) this afternoon.

“When you’re doing surgery, it matters what, when and how you cut,” Auditor Yost said. “Ohio government needs several operations – this bill provides the diagnostic tests for successful treatment.”

Auditor Yost announced that he would be meeting in the next couple weeks with the first three state agencies scheduled to undergo performance audits under the bill: the Departments of Transportation, Education, and Job and Family Services. As promised, the first state entity to undergo a performance audit during Yost’s tenure will be his own Auditor of State’s office.

Auditor Yost also introduced Ernest Knight, the State Performance Audit Director for his office. Knight has an MBA from Harvard and extensive private sector business experience. He comes to the Auditor of State’s office from Nationwide Mutual Insurance Company where he served as director of Nationwide Mutual Capital. Knight is tasked with the job of leading the state agency audits.

Senate Bill 4, sponsored by Senator Tim Schaffer (R-Lancaster) and passed unanimously by both the Ohio House and Senate, requires performance audits of state agencies and creates the Leverage for Efficiency, Accountability and Performance Fund (L.E.A.P. Fund); a $1.5 million fund to advance costs of a performance audit to state agencies and local governments that might otherwise not be able to afford to have one conducted. Costs will be repaid the following year from the savings reaped from the audit’s recommendations and sown again into new performance audits.

The Senate bill mirrors House Bill 2 sponsored by former State Representative Todd Snitchler (R-Uniontown) and Representative Peter Stautberg (R-Anderson Township).

“I greatly appreciate the leadership of the General Assembly on this important issue,” said Auditor Yost. “Performance audits drive better, leaner government based on objective measures and preserve scarce resources for priority programs.”

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The Auditor of State is one of five independently elected offices under the Ohio Constitution. Auditor Yost’s office is responsible for auditing over 5,600 state and local government agencies. Staff also works in partnership with state and local governments to deal effectively with financial, accounting and budgetary issues.

Contact:
Carrie Bartunek
Press Secretary
(614) 728-7198

Auditor Yost Testifies in Budget Subcommittee Today

Thu, 31 Mar 2011 12:00:00 -0400

Columbus - Chairman Gardner, ranking member Garland, and members of the House Finance and Appropriations Higher Education Subcommittee, I am pleased to come before you to review the proposed budget for the Auditor of State’s Office for FY 12 and FY 13.

The appropriations recommended by the Governor in this budget require governments across the state to live leaner. With a reduction in general fund operating expenses of 6.3%, the Auditor of State’s office is no exception.

We recognize that all Ohio government offices must tighten our belt and perform our responsibilities with the utmost efficiency without sacrificing professionalism and commitment. We can all sit around and complain about Ohio’s budget deficit, or we can roll up our sleeves and do the job Ohioans expect. Given our choices, the Auditor’s office decided to roll up its sleeves and take a proactive role in skinnying down state government.

For our office, skinnying down government begins with a performance audit of the job we do. Last month, we issued an RFP for an independent auditor to examine our operations. With this audit, the Auditor’s Office is taking a hard look in the mirror with hopes of streamlining processes and procedures, cutting costs and enhancing efficiencies. We hope to have preliminary recommendations by the beginning of the biennium.

Besides requesting a performance audit, since I took office in January, we have continually looked at ways to slim down the office and trim the fat. We’ve instituted a hiring and attrition committee to examine our personnel needs. In that respect, to keep payroll in check, we have also implemented a hiring freeze for any position that requires general fund support unless approval is given by the hiring and attrition committee.

We are re-evaluating our office and building space allocation throughout the state to make sure we are not under utilizing or wasting space. Along with reviewing office space, we are also re-examining our leases to make sure we are getting the best possible deal. Administrative support and operations are also being reviewed so any duplication or extra is eliminated.

It’s the pennies that add up so we’re also reviewing all of our expenditures to see where costs may be cut. For instance, attending the state fair costs us over $15,000 per year. The majority of these expenses are personnel costs to staff the booth. We think these resources are better directed towards our core mission so we are not planning to attend this year.

All of this is being done with a recognition that the Auditor of State’s office must continue to provide quality audits without sacrificing customer service.

RESPONSIBILITIES & PRIORITIES

Independent Guardian of Public Funds. The Auditor of State’s office is responsible for ensuring that taxpayers’ money is spent legally and appropriately by Ohio’s governments and the individuals entrusted with that money. This includes auditing public and community schools, universities, local governments, special districts, state agencies, as well as boards and commissions.

To generate the results that Ohio’s taxpayers expect, my office conducts over 4,000 audits per year with a staff of 809 dedicated public servants. Of those 809, 704 work in the audit division.

The office performs several different types of audits. To ensure public funds are being properly managed, accounted for and reported to the public in accordance with accounting principles and law, the Financial Audit Section is responsible for conducting financial audits of all public entities and others that receive public money. These audits must be performed on an annual or bi-annual basis dependent on the funding of the public office.

In the last biennium, the Auditor of State’s Office issued over 6,150 financial audits (year to date). Out of those audits, the office made $8,122,191 in findings for recovery identifying public dollars that were stolen or misspent. I want to continue the tremendous job the Lt. Governor did while in this office. Since taking over in January of this year, our office has completed 781 audits identifying over $115,000 in findings for recovery.

Fraud Detection. Another priority for the Auditor of State’s office is rooting out fraud and corruption. Each year, we receive hundreds of tips regarding suspected fraud in government. These tips come from many different sources including Ohio citizens and public employees. The Auditor’s Special Audit Task Force evaluates these tips and the best course of action on a case-by-case basis.

We also use special audits and a special investigations unit to accomplish this important mission. A special audit is a limited scope examination of financial records and other information designed to investigate fraud, theft, and the general misappropriation of public funds. In the past two years (year to date), the office has performed 63 special audits with $10,203,271 in findings for recovery.

Watchdog Over Medicaid Funds. As Medicaid continues to grow and grow, the State must be more active in managing the program. The Auditor of State’s Medicaid Contract Audit Section plays an important role in this effort by working with numerous state agencies to safeguard the program’s integrity by ensuring providers are appropriately billing the State for Medicaid services. We also review whether providers are being appropriately paid by the Department of Jobs and Family Services. This last biennium, the Auditor’s Office performed 14 Medicaid audits with $5,936,800 in findings for recovery including interest.

Promote Skinny and Effective Governments. As this committee knows from its work on House Bill 2 and Senate Bill 4, we also conduct performance audits. Thank you for all of your work on this important legislation. With the passage of Senate Bill 4, performance audits will continue to perform an important role in combating inefficiencies in government from the statehouse to the schoolhouse.

Creating the Leverage for Efficiency, Accountability, and Performance Fund (LEAP Fund) is critical to this mission. As you may recall from deliberations on Senate Bill 4, the LEAP Fund is a $1.5 million revolving fund which would fund this year’s performance audit costs from next year’s savings. Making this fund available to state agencies and local governments removes funding as the most serious barrier to using performance audits and provides additional incentives to actually implement findings and recommendations.

Since the beginning of 2007, the Auditor of State’s office has conducted 106 audits recommending almost $174.5 million in annual cost savings measures. That’s a potential return on investment of $23 for every dollar spent to conduct an audit. It is my hope we may continue discussions about additional investments in this fund.

LOCAL GOVERNMENT SERVICES

Another priority of the Auditor’s Office is to provide financial and consulting services to local governments. This includes the preparation and examination of financial forecasts, GAAP conversion assistance, annual financial report preparation, assistance to entities in fiscal watch or emergency, as well as reconstruction and reconciliation of financial records. Currently this group is working with five schools districts, and three cities and villages in fiscal watch. The group is also working with another nine schools districts and twenty-four cities, villages, counties, and townships in fiscal emergency.

The Auditor of State’s Office provides several other important services for our constituents. The Uniform Accounting Network (UAN) is a computerized, integrated financial management and information system designed for local governments. This software, along with computer equipment and technical support provided by UAN, makes it easy for public officials to apply required accounting standards to their financial record keeping. Currently more than 1,700 townships, villages, libraries, and special districts throughout Ohio are using UAN in their daily operations.

The Auditor’s Office also sponsors training and conferences throughout the year to increase local knowledge of what governments can do to become more efficient, and learn the best practices of record keeping.

FUNDING

Funding for the Auditor of State’s Office comes from two main revenue sources: the General Revenue Fund, which makes up approximately 40% of the office’s budget, and Public Audit Expense Funds, which supply the remaining 60%. These funds are comprised of fees we are paid for our audit services. They are also used for the day-to-day administrative support that is necessary to run our operations and provide our services.

The proposed budget before you also includes several new provisions that directly affect the Auditor’s Office and its funding. Current law requires that both the Auditor and the Director of the Office of Budget and Management determine what administrative costs may be paid out of the Uniform Accounting Network Fund. The proposed budget gives the Auditor autonomy and necessary flexibility when making these decisions.

The budget also earmarks $1 million in FY 12 and $1.3 million in FY 13 for School Management Assistance. These crucial dollars will help cover the costs of services rendered by the Auditor of State’s office to school districts in fiscal caution, watch, and emergency. The funds can also be used by the Auditor’s Office in consultation with the Department of Education to conduct performance audits of all school districts, with the priority given to providing audits to schools in fiscal distress. Often by the time an entity reaches fiscal emergency it is too late to adequately and timely repair the fiscal concerns so this is particularly important in today’s economy.

Finally, the budget includes changes to make my office less reliant on the general revenue fund by implementing a new, transparent process for determining audit fees for local governments. This process will help ensure consistency in costs being charged and provide a better level of predictability for budgeting purposes. We are also working on initiatives to give local governments additional tools to fight against red tape and address fiscal woes when they need to do so.

CONCLUSION

As you can see we are not simply sitting idle during these lean times and carrying on with the status quo. The Auditor’s Office wants to be at the forefront of a leaner and more effective state government. By constantly re-evaluating ourselves, we plan to lead by example. We want to help all levels of government find savings and efficiencies.

Chairman Gardner, members of the Committee, it has been my pleasure to review for you the priorities and operations of my office. I look forward to working with the Committee in the coming weeks to adopt a budget for this office and the entire state that works hard at skinnying down government. I am happy to an answer any questions the Committee may have.

Statement from Auditor of State Dave Yost

Tue, 08 Feb 2011 12:00:00 -0400

Columbus - “Timing for performance audits could not be better as state leaders look for ways to fix the state’s budget deficit. Performance audits cut to the chase -- driving better, leaner performance based on objective measures. As a result, scarce resources are preserved for priority programs as government operations become more efficient.

I am grateful for the leadership of Representatives Snitchler and Stautberg in proposing this legislation and Chairman Mecklenborg for sheparding the legislation through committee. I look forward to working with the Speaker and other members of the House as the legislative process continues.”

House Bill 2 requires performance audits of certain state agencies each biennium.

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JOINT RELEASE: Senator Schaffer Introduces Legislation to Require Performance Audits of State Agencies

Tue, 01 Feb 2011 12:00:00 -0400

Columbus - State Senator Tim Schaffer (R-Lancaster) today introduced Senate Bill 4, which requires the Auditor of State to conduct performance audits of state agencies. Auditor of State Dave Yost pledged his full support for the bill. Senate Bill 4 will be one of the Senate’s priority bills for this session.

“Performance audits will help create a roadmap of savings of state resources so we know what to cut and where to economize,” Schaffer said. “The recommendations of these audits will help make Ohio more attractive for employers.”

“Performance audits of all of our state agencies will ensure best practices, streamlined services, and increased customer support—all of which will improve the jobs and business climate in Ohio,” Schaffer said.

Senate Bill 4 promotes government efficiency and accountability by requiring the Auditor of State to conduct performance audits of certain state agencies, boards and commissions each biennium. Performance audits measure an agency’s actual performance against its goals and objectives to help identify any waste, inefficiency or duplication of services.

“I commend Senator Schaffer for his ongoing leadership with this piece of legislation and, specifically, his efforts last year in spearheading similar legislation that passed the Senate,” said Auditor Yost. “Performance audits provide us with an objective tool to measure productivity and ensure efficiency in this struggling economy. Moreover, opening up bureaucracy to more in-depth scrutiny can only increase the public trust in government.”

The bill also includes a funding component by establishing the Leverage for Efficiency, Accountability and Performance Fund (L.E.A.P. Fund). The L.E.A.P. Fund will make available $1.5 million to advance costs of a performance audit to state agencies and local governments that might otherwise not be able to afford to have one conducted. Costs will be repaid the following year from the savings reaped from the audit’s recommendations and sown again into new performance audits.

“The L.E.A.P. Fund is essential to the success of Senate Bill 4,” said Yost. “These dollars will allow entities most in need of efficiency the opportunity to be audited and provide the additional incentive for the agency or government to actually implement the findings and recommendations.”

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Contacts:
Jim Laipply Legislative Aide Senator Tim Schaffer (614) 466-5838	Carrie Bartunek Press Secretary Auditor of State (614) 728-7198

Auditor Yost Testifies in Support of House Bill 2

Wed, 19 Jan 2011 12:00:00 -0400

Columbus - Auditor of State Dave Yost today testified in support of House Bill 2, which requires performance budgeting and auditing of state agencies, boards and commissions.

“Performance audits provide a tool from outside the bureaucracy to do what the profit motive does for the private sector: to drive better, leaner performance based on objective measurements,” Yost said. “In this disastrous fiscal environment, state government will be cut back. Performance audits are a critical tool to intelligent cuts.”

Performance audits measure an agency’s actual performance against its goals and objectives to help identify any waste, inefficiency or unneeded duplication of services. To ensure objectivity, auditors follow the U.S. Government Accounting Office’s Auditing Standards, sometimes called the Yellow Book.

In addition to his support for House Bill 2, Auditor Yost asked lawmakers to establish the Leverage for Efficiency, Accountability and Performance Fund (the L.E.A.P. Fund), a $5 million fund that would advance to state agencies and local governments the costs of a performance audit to be repaid from the savings.

“Struggling governments or agencies that could benefit the most from a performance audit are often those that can least afford to have one conducted,” Yost testified. “Not only would this remove funding as the most serious barrier to using performance audits, it would also provide additional incentive for the agency or government to actually implement the findings and recommendations.”

House Bill 2, sponsored by Representative Todd Snitchler (R-Uniontown) and Representative Peter Stautberg (R-Anderson Township), is being considered by members of the Ohio House of Representatives State Government and Elections Committee. Auditor Yost’s testimony was offered during the first hearing on the bill.

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Statement from Auditor of State Dave Yost

Tue, 11 Jan 2011 12:00:00 -0400

Columbus - “I applaud Rep. Snitchler for the introduction of House Bill 2 requiring performance budgeting and audits for state agencies. Performance audits can help produce skinny governments – from the schoolhouse to the statehouse. I predict Rep. Snitchler’s bill will pass quickly, with broad bi-partisan support. I look forward to working with him, the Speaker and other members of the House as the legislative process continues.”

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