INDIANAPOLIS – Administration officials, with input from legislators, have selected financial firm Deloitte to handle an audit of the Indiana Department of Revenue after uncovering more than $500 million in financial miscues since December.
It was a consensus decision, State Budget Director Adam Horst said.
New York-based Deloitte will first perform a risk assessment to determine the likely weaknesses in the system and what internal controls require focus. The cost of the assessment will be less than $250,000.
From there, the risk assessment will be used to guide the actual audit. Hourly rates have been quoted to the state, but the cost is unclear until the full scope of the audit is revealed through the risk analysis.
Horst hopes the audit is done this calendar year – and preferably months sooner.
I am very pleased with the rate at which progress is being made, said Rep. Jeff Espich, R-Uniondale, chairman of the State Budget Committee. We have moved forward as expeditiously as possible without sacrificing the integrity of the process.
This audit is a major undertaking, and one that must be done right. Time is of the essence, but there is no benefit, only pitfalls, to rushing unnecessarily.
The committee approved Deloittes selection Monday even though it was unnecessary since the executive branch is entering into the contract.
The audit was a result of two major financial mistakes.
In April, Gov. Mitch Daniels administration revealed a $206 million error that shortchanged local units of government and led to the resignation of the Indiana Department of Revenue commissioner.
In December, the revenue department found $320 million in corporate tax revenue that had been unknowingly accumulating in a holding account.
Although the administration originally resisted an independent audit in December, Horst called for one when he revealed the latest error.
The Office of Management and Budget reviewed the proposals based on four major criteria – cost, relevant experience, experience of the team and management quality.
The proposals also were provided to the four legislative members of the State Budget Committee – two Republicans and two Democrats.
Each of the four political caucuses ranked their preferences, and Deloitte was the only firm on all the lists.
In making the final decision, the Office of Management and Budget weighed the cost of the contract 20 percent; the administrative assessment of the firms 40 percent; and the legislative assessment 40 percent (each caucus at 10 percent).
The state and Deloitte still have to finalize a contract.
A small working group of state and local officials has also been tapped to address issues with the collection of local option income taxes. Allen County Auditor Tera Klutz is a member.