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Indiana panel moves toward audit of $500M in mistakes

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Indiana's state budget leaders on Monday are expected to take another step toward finding what caused more than $500 million in tax-revenue accounting errors, but a final answer is still a long way off.

Members of the State Budget Committee plan during a meeting in Vincennes to sign off on a company that will begin outlining an external audit for the state's Department of Revenue.

The review follows the disclosure in December that $320 million in corporate tax money collected over several years hadn't been properly deposited in the state's general fund. State officials then announced in April that $205 million in local income-tax revenue 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, 3-2.

The start of the actual audit could still be up to six weeks away after the company being hired Monday establishes the review's scope.

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."

State budget director Adam 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, made up of two Republican and two Democratic legislators and Horst, is meeting at Vincennes University.

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  • No Shell Games
    To be crediable the scope of the audit needs to cover all state government, not just the Indiana Department of Revenue, include a broad financial/computer/process analysis that would identify red flags for further study and recommended changes.

    A commercial outside accounting firm has fiduary responsibilities for accuracy in addition to legal liability for its work. Obviously the public sector financial checks and balances system is badly broken and needs major reform.
  • Ratings Matter
    The independant state audit by an outside accounting firm needs to be directed by Tim Berry, the elected State Auditor and work should begin within 30 days.

    The firm preferably would be a large international accounting firm with public finance experience, yet no major connection with Indiana government.

    It is ridiculous to have OMB's Adam Horst in charge of checking his own work after being caught cheating more than once.

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