Bill marks latest scrap between North Dakota lawmakers, state auditor – InForum

BISMARCK — City of Parshall Comptroller Kelly Woessner said the state comptroller’s office billed the city $26,750 last year for conducting a citizen-requested audit.

The state fee “was like a shock,” she told the Tribune. “It was something that we just thought should be changed.”

State Examiner Josh Gallion and the North Dakota legislature have been at odds over proposed limits on exam fees charged to local governments. Fees, Woessner said, can put a strain on small communities. For comparison, Parshall’s audit costs totaled $39,200 from 2016 to 2020 when an independent firm audited the city.

MP Emily O’Brien, R-Grand Forks, said she introduced House Bill 1508 to cap exam fees after investigating concerns about increases and discrepancies in various costs.

The House of Representatives passed the bill by a vote of 54 to 40 earlier this month and passed an amended version by a vote of 58 to 36 on Tuesday. The bill goes to the Senate.

Gallion said he looks forward to further discussions about the law and local government reviews, but called 1508 “not the right approach.” He supports a Senate bill to resolve audit issues for local governments, which he says face a 600-year audit backlog.

The state auditor and the legislature have argued in recent years about how to deal with audit results, such as B. releasing audits before lawmakers knew the results and notifying the attorney general of irregularities in a case that sparked a months-long criminal investigation but resulted in no indictment.

Gallion, the second-term Republican chartered accountant, denied his office’s accounting is “getting out of control.” Local governments can choose a private company “or us,” he added.

Auditors’ spokeswoman Emily Dalzell said the office’s hourly rate is “significantly lower than that of the private sector,” averaging $112 an hour compared to $157 an hour for a private firm.

According to Rep. Mike Brandenburg, R-Edgeley, the bill would require audits conducted by the state auditor to be reviewed and approved by a chartered accountant.

The bill had attempted to limit examination fees for local governments to one-thousandth of a percent of their annual operating budget and required the state auditor to retroactively reimburse examination fees charged to North Dakota colleges and universities since the July 2021 changes.

These components “are discussed further in the relevant budgets,” Brandenburg told the House of Representatives on Tuesday.

Gallion said last week the previous version of 1508 would undermine his office and his ability to pay his local government audit team.

He said his office’s audit costs range from $10,000 to $20,000 depending on its size and scope. The bureau’s local government audit team “functions like a small business,” calculating an hourly payroll rate that covers those employees’ salaries and operating expenses, he said.

“It’s not like we charge exorbitant prices and then have a stash of cash somewhere,” he said.

The office has “minimal resources available” to move from one payment period to the next when bills are late or customers don’t pay on time, he said.

O’Brien said the state government has the control and balance of the Legislature to set fair rates for exam fees and she asked where all the money went.

Gallion “should want to set the standard for transparency and not find it offensive,” she said.

Gallion said he found the CPA requirement “a bit offensive” because his office is “much more than numbers and just finance” with a diverse background of disciplines, such as a medical examiner who is a registered nurse.

“How will an accountant review their work and add value?” said Gallion, who has a bachelor’s degree in accounting and business administration and a master’s degree in business administration and is a military veteran.

O’Brien told the House of Representatives the CPA requirement is consistent with a similar one in state law for local governments that use a private accountant.

“The office with the authority to conduct the audit should also comply with this requirement,” she said Tuesday.

Parshall fails to pay the $26,750 bill.

“We stood our ground on that,” said Woessner, who called audits “good for a community” but denied there was anything wrong with the city’s finances.

She said the state auditor’s staff “spent a total of six hours in my office in one day” doing email correspondence for “everything else,” like records.

Woessner said bills like the Parshall could “really weigh on a lot of smaller towns”.