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Indiana hires Deloitte to assess $500M in mistakes

June 4, 2012

Indiana's state budget leaders picked international accounting firm Deloitte on Monday to determine the scope of an external audit looking at how the state lost track of more than $500 million in tax revenues.

The five-person State Budget Committee announced its pick during a meeting at Vincennes University, but the terms of the review won't be signed off on until the next budget committee meeting in July.

"Clearly everyone has a desire to start as soon as possible," said state budget director Adam Horst, a member of the committee.

Deloitte now will determine what the audit will cover and most likely will be chosen to conduct the actual work once the parameters are set. Ten companies bid for job.

The review follows the disclosure in December that $320 million in corporate tax money that the Department of Revenue collected over several years hadn't been properly deposited in the state's general fund. State officials then announced in April that $206 million in local income tax revenues had been mishandled and not distributed over the previous 14 months to Indiana counties.

An initial review of the first error by the State Board of Accounts showed that the state lacked the auditing capabilities to have discovered the problem on its own. Since then, Republican legislators agreed to an external audit.

That agreement marked something of a vindication for Democrats, who tried twice during a December budget committee meeting to authorize an external audit but were voted down both times by the three Republican committee members.

State officials intend for the audit to review information technology at the revenue department and the state's overall tax collection system.

Democratic gubernatorial candidate John Gregg has called on the state to speed up the process. But leaders of the budget committee say they are moving as fast as they can.

"This audit is a major undertaking, and one that must be done right," said Republican Rep. Jeff Espich, the committee's chairman. "Time is of the essence, but there is no benefit — only pitfalls — to rushing unnecessarily."

Horst, an appointee of Republican Gov. Mitch Daniels, cautioned at the committee's April meeting that more errors will likely be uncovered but said he wasn't ready to disclose them.

The budget committee, is made up of Horst, two Republican and two Democratic legislators.

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