Missing accountability.

Byline: The Register-Guard

With the state of Oregon staring down the gun barrel of a $2.5 billion deficit in the upcoming 2003-05 biennium, it should be obvious to state agencies that every single dollar should be spent wisely and that every precaution should be taken to protect against waste.

Yet a newly released state audit reveals that 11 of the state's largest agencies have no inside auditing systems to protect against loss or mismanagement. In the absence of such essential safeguards, nearly $12 billion of public money runs a heightened risk of being misspent.

That's not only unacceptable, it's foolish at a time when it's imperative for the state to rebuild shattered public trust in its ability to manage public funds. And the main excuse cited by agency officials - budget constraints - is shortsighted and unacceptable. Internal auditing is not a dispensable luxury for state agencies that handle billions of dollars in public funds each year.

The state Audits Division employs 65 auditors, and it performs a valuable watchdog role for state government. But it is unable to provide the focused, rigorous monitoring of operations of individual agencies. So state policy recommends that departments have internal auditors when they spend more than $100 million in two years, employ more than 400 full-time workers or process $10 million in cash annually. Yet the report found that only three of the 27 state agencies that fall into these categories have satisfactory auditing practices - the departments of transportation, higher education and justice.

The roster of state agencies lacking internal audit systems includes the Department of Education, with a $6.3 billion two-year budget; the Oregon Housing and Community Services Department, with a $932 million two-year budget; and the Oregon Economic and Community Development Department, with a $473 million two-year budget. During 2001-03, these agencies had a combined budget of $9.8 billion and nearly 6,000 full-time employees. The absence of internal auditing meant that they were unable to put the necessary controls in place to ensure that taxpayer dollars are being spent wisely and efficiently.

Gov. Ted Kulongoski has correctly observed that any effort to raise new state revenues is doomed to failure until Oregonians are convinced that the state is exercising good stewardship of the money it currently manages. The absence of internal auditing for such high-profile public agencies as the Department of Education serves only to erode, not build, the foundation of public confidence that will be essential to any future effort to stabilize Oregon's precarious finances.