the auditor’s office access

A bill limiting the state auditor’s access to certain information heads to the governor’s desk Wednesday, despite concerns from Democrats and auditing groups that the measure will hamper investigations of waste and fraud and put federal funding at risk.

Senate File 478 passed the Senate on a 33-16 vote. Sen. Mike Bousselot, R-Ankeny, said the  Legislature is acting as a “watchdog of the auditor,” in light of Iowa Supreme Court decisions on subpoenas by Democratic state auditor Rob Sand.

Bousselot said a 2021 Iowa Supreme Court decision highlighted the need to define in law when an audit begins. Another state Supreme Court decision in April found Sand’s office did not have the authority to investigate the Iowa Communities Assurance Pool (ICAP), an insurance pool providing coverage for hundreds of Iowa public entities. Sand initiated the audit after the Associated Press reported in 2019 that board members frequently held meetings at out-of-state resorts.

Bousselot said the court rulings show “legitimate public policy questions exist,” which the bill answers, and protects Iowans’ private information.

“When government goes too far, we are the watchdogs,” he said. “… I believe that the mission of the audit, protecting taxpayer dollars, is paramount. But we also protect Iowans.”

The bill limits the state auditor’s ability to access personal information when performing investigations. It was amended by the Iowa House to address problems raised with the original language that lawmakers acknowledged could have put billions in federal funds at risk. But Sand said the amended bill still would put that funding at risk by making changes to the state auditor’s subpoena power, directing disputes between government offices and agencies to a board of arbitration rather than a court.

Audited agencies could refuse to disclose requested information and the three-member arbitration board — two members appointed by the parties involved in the dispute and a third member appointed by the governor — would issue a final decision.

The amended bill garnered bipartisan opposition, with the former U.S. Comptroller General David Walker, the National State Auditors Association and the Institution of Internal Auditors writing letters telling lawmakers federal funds may still be at risk.

If the state auditor is denied access to information that is necessary to meet generally accepted government auditing standards, the office would release an audit with a qualifier or disclaimer, critics of the bill said. That could leave the audited agency out of compliance with auditing standards required to receive federal funds.

Democrats echoed these concerns in the Senate debate, saying the bill will prevent the auditor’s office from accessing information that could show mismanagement of public funds. Bousselot said the amendment addresses this concern in allowing the office to access this information when required to meet recognized auditing standards.

But Sen. Janice Weiner, D-Iowa City, said the problem arises when audited agencies dispute whether the information is necessary.

“Who decides what is necessary to comply with those state and federal regulations? According to this bill, not the auditor,” Weiner said. “What if the auditor believes it is necessary to obtain certain documents, based on the auditor’s standard practices, and experience doing similar audits in the past? … What if the office that holds those documents disputes that and sends it to arbitration? That process is stacked two to one against the auditor, and that decision is final. Who’s going to win? I’ll give you a hint: It’s not the office tasked with conducting an independent audit.”

Bousselot disagreed that the arbitration process could prevent the office from conducting independent audits or investigations into wrongdoing. In addition to the exemption for auditing standards, the bill also allows exemptions for cases of alleged or suspected embezzlement or theft.

“The watchdog still has teeth,” Bousselot said. “It’s just making sure that those teeth aren’t getting sank into something they shouldn’t be in, which is Iowans’ most personal and private information information.”

While Democrats said they were not aware of a time any Iowa state auditor has released confidential information, Bousselot cited situations where he believed Sand crossed the line in accessing information. He brought up a 2020 audit of the Iowa Department of Public Health on COVID-19 testing results, in which the auditor’s office requested information, “without redactions necessary.”

The audit was conducted in response to concerns over delays in COVID-19 test results, in which Sand found that the test results should be sent directly from the State Hygienic Laboratory to the health department, instead of being sent to two private Utah-based companies and another separate state office before going to IDPH. No personal information about individuals’ COVID-19 tests was released.

In the House subcommittee meeting on the bill, staff with the state auditor’s office disputed characterizations that confidential information, like medical records or grades, is being requested needlessly. The office requests information protected by federal privacy laws in order to ensure taxpayer funds are being spent correctly in programs like Medicaid and student aid, John McCormally, chief of staff of the state auditor’s office, told lawmakers.

Sand said the legislation is the “greatest pro-corruption bill and the worst perversion of checks and balances in Iowa’s history” in a news release Wednesday. The bill will allow state government to hide documents from auditors, he said, and end judicial review of these decisions.

“This bill doesn’t just open the door to fraud and corruption, it blows it off of its hinges,” Sand said in a statement. “It allows governmental entities to hide records necessary to prove abuse of tax dollars and allows dishonest, double-dealing insiders to conceal their waste, fraud, and abuse.”