Minnesota State Auditor Julie Blaha visited with Hubbard County commissioners Tuesday.
This week, she met with local officials from five counties in northwestern Minnesota – Hubbard, Morrison, Becker, Clay and Douglas. She also connected with the mayor of Moorhead during her trip, where the Office of the State Auditor (OSA) has a satellite office.
“I particularly wanted to come up to Hubbard because we have seen such significant work that you have done and to really honor the fact that you and your staff really worked hard to get this to the place where we can say those magic words – ‘unmodified’ and ‘no new findings.’ Those are wonderful things to hear in your audit,” Blaha told the Hubbard County Board.
Blaha thanked commissioners for their questions about the 2018 audit, urging them to “use the audit as a document to make good decisions and be assured that the decisions you made are actually becoming real.”
Blaha invited commissioners to suggest ways the audit report could be more usable for county residents and decision makers.
County Coordinator Eric Nerness praised Amy Thomas of OSA for her cooperation on the 2018 audit. “We’ve really appreciated the interaction and help we’ve had from your office,” he said.
County commissioner Ted Van Kempen asked if OSA would be auditing Hubbard County every year.
“I think we are on schedule to do that,” Blaha said. “You do have some options there.”
Last year, the county terminated its contract with a private accounting firm, then authorized Hubbard County Auditor-Treasurer Kay Rave to engage OSA to work on the 2017 and 2018 audits.
“Another reason I would like to ensure that we are staying well connected and serving you in a way that you can be effective,” Blaha said. “Our looks at your county benefits the whole state because what we learn in your county, the other counties and cities we audit has, I think, a wider value than just you.”
At issue for the counties is money – it can cost twice as much for the state auditor’s office to conduct the annual audit compared to a private firm.
Part of her work, Blaha said, is a larger conversation about how to fund OSA’s audits.
“The things we do that often change our price are often a deeper dive into legal compliance or whether it’s expanded testing. It’s an expertise because it’s all we do. It’s all government audits. That benefits everybody, so how do we make sure if they share in the benefit, they also share in the cost?” she said.
One possible funding mechanism, Blaha said, would be to mimic the tax increment finance (TIF) division, where a tiny fraction of TIF goes to OSA for oversight. “Is that a better idea?” she asked. “Is it better to have a base price for the audit, then have an amount that everyone shares?”
These funding ideas could all be part of a longer discussion, she said.
OSA audits about half of Minnesota’s counties, along with joint power groups, townships, municipal liquor stores and fire relief associations.
“We have more than just Hubbard County as our client. The Legislature is also, in a sense, our client. Every Minnesotan that is paying taxes is our client. We have a duty to all of Minnesota, so as a result, our audits look different when you have a different duty,” Blaha said.
Minnesota Statute stipulates that OSA charge for its services based on exact hours and costs. “The rate is set based on our actual costs,” Blaha said, adding it is public data and checked by Minnesota Management and Budget every year. “Our goal is to be as efficient as possible to keep that cost as low as possible. You should see their incredible efforts to do creative carpooling. I have seen the most intense carpool planning to try to save another dollar for a county… because every dollar we save gets go to improving a road or helping someone in need or improving health care.”
Private accounting firms are necessary as well, Blaha continued. “The market has to be successful, which means there has to be a fair price there. It can’t be artificially high and it can’t be artificially low.”
OSA also reviews the work of private firms.
In a press release, Blaha stated, "County commissioners, mayors, treasurers and local auditors are the lifeblood of our local communities, and I look forward to spending time with them this week. I believe that by building stronger connections, we can build stronger communities."