About

Article V, Section 10(4) of the Montana Constitution mandates a legislative post-audit function. The Legislative Audit Act, contained in Title 5, chapter 13, MCA, establishes the Legislative Audit Committee of the Montana Legislature and the Legislative Audit Division. The Mission and Goals of the Legislative Audit Division include: provide the Legislature, its committees, and its members with factual and timely information vital to the discharge of their legislative duties.

Legislative Audit Committee

The Legislative Audit Committee is a bicameral and bipartisan standing committee of the Montana Legislature. It consists of six members of the Senate and six members of the House of Representatives. The Audit Committee appoints, consults with, and advises the Legislative Auditor. The Audit Committee reviews the audit reports submitted by the Legislative Auditor, releases the audit reports to the public, and serves as the conduit between the Legislative Auditor and the Legislature.

Legislative Auditor

The Legislative Auditor is solely responsible to the Legislative Assembly and is appointed by and operates primarily through the Legislative Audit Committee. The term of office is for two years beginning July 1 of each even numbered year.

The Legislative Auditor and staff have the statutory authority to examine, at any time, all the books, accounts, and records, confidential or otherwise, of a state agency. All state agencies are required by law to aid and assist the Legislative Auditor in the auditing of books, accounts, and records.

The Legislative Auditor and staff have two primary duties prescribed by the Legislative Audit Act:

1. Conduct audits of state agencies, programs, and operations in accordance with Governmental Auditing Standards.
2. Assist the Legislature, its committees, and its members by gathering and analyzing information when requested.

Organization and Staff

The Legislative Audit Division is comprised of administrative staff and three operational components: Financial-Compoliance Audit, Performance Audit, and Information Technology Audit. Number of positions: Financial-Compliance 24, Performance 14, Information Technology 7, and Administrative 7.

Financial-Compliance audits determine if an agency’s financial operations are properly conducted; if the agency has complied with applicable laws and regulations; and if the financial reports are presented fairly. Financial-compliance audit staff members hold degrees with an emphasis in accounting. Most staff members hold CPA certificates.

The primary objectives of financial-compliance audits are to ascertain that agencies:

1. Make expenditures only in furtherance of authorized activities and in accordance with the requirements of applicable laws and regulations.
2. Collect and account properly for all revenues and receipts arising from their activities.
3. Maintain adequate safeguards and accountability for assets in their custody.
4. Submit reports and financial statements to the Governor, the Legislature, and central control agencies which disclose fully the nature and scope of the activities conducted, and provide a proper basis for evaluating the agencies’ operations.

A secondary objective of financial-compliance audits is to identify instances and areas where improvements to the efficiency and/or effectiveness of agency operations or a program could be made. These areas may be developed as part of the financial-compliance audit or as separate performance audits depending upon the magnitude of the areas and the need for concentrated audit resources.

Performance audits assess the effectiveness and efficiency of the operations of state government. In order to fulfill this purpose the members of the performance audit staff hold degrees in disciplines appropriate to the audit process. Areas of expertise include business and public administration, statistics, economics, accounting, communications, computer science, and engineering.

The performance audit process starts with a review of statutory directives and program goals and objectives. Audit criteria are established and the program is evaluated in relation to whether statutory directives are met and associated goals achieved. The program is also evaluated to determine if directives and goals can be achieved with greater efficiency and economy while being properly controlled and managed.

Information Technology audits combine some of the elements of both financial-compliance and performance audits. Controls within Information System operations are examined to determine whether assets are adequately safeguarded and to determine the reliability of computer-generated reports. In addition, Information System audits address efficiency and effectiveness issues, such as acquisition of computer equipment and management of computer resources.

With the increase in computerization of state government, the Legislative Auditor has devoted resources to reviewing computer related issues, developing specialists and technicians, and providing additional training to staff members.

Information System audits include an annual audit of the state’s information processing facility and Statewide Accounting, Budgeting and Human Resource System (SABHRS). The Information System audit staff also audits state departments’ data processing functions and participates in planning and reviewing work on various financial-compliance and performance audits.

Other Activities

Contract Audits

Contract audits between the Legislative Auditor and private CPA firms help ensure audit coverage as required by law is maintained, and help satisfy needs of some agencies’ additional audit requirements. Any qualified accounting firm may submit proposals for auditing selected state agencies. The Legislative Audit Committee awards the contract to the lowest qualified bidder. The contract auditor presents the completed audit report to the Legislative Audit Committee.

Special Projects

Special projects consist of an audit or review project undertaken with a specific but limited scope. Generally these projects are undertaken to obtain information used to analyze a specific state activity that has occurred or is contemplated. Information may be used to determine whether audit work is warranted or feasible. Special projects may involve accounting, compliance, program results, efficiency, defalcations, or other matters.

Legislative Requests

Any member of the Legislature may request an audit by the Legislative Auditor of activity of state government. Such requests should be presented in writing to the Chair of the Legislative Audit Committee. The 12-member, bipartisan, bicameral audit committee considers all audit requests and approves and sets priorities for audits. Once an audit is approved, and there is sufficient staff and funding available, it is conducted by the Legislative Auditor’s staff following Governmental Audit Standards. When completed, all audit reports are issued through the Legislative Audit Committee.

Statutorily Mandated Audits

The Legislative Auditor is responsible for the Single Audit of Montana that is mandated by the federal government. The Legislative Auditor performs other related assignments, including performance audits, Information System audits and financial-compliance audits that are mandated by statute.

Legislative Audit Hotline Program

The Hotline Program, another mandated responsibility for the Legislative Auditor, has generated hundreds of phone calls to its toll-free hotline that have resulted in improved government operations, the punishment of wrongdoers and the collection of thousands of dollars of state funds. Investigations are limited to state departments and agencies — problems at the federal or local level are not handled by the audit staff. Investigations range from embezzlement to the misuse of state telephones. The audit hotline can provide anonymity and protection to complainants.

The hotline number is (800) 222-4446, and is staffed Monday through Friday from 8:00 a.m. to 12:00 p.m. An answering machine records messages from after-hours callers.