S.B. 205

VETOES

In accordance with Article II, Section 17 of the Maryland Constitution, I have today
vetoed Senate Bill 205.

Senate Bill 205 would require State agencies that perform internal audits to-designate a
chief internal auditor and appropriate professional staff. The bill specifies the
qualifications and responsibilities of the chief internal auditor and provides the criteria
under which internal audits would be prepared and conducted. Senate Bill 205 is
substantially similar to legislation that I vetoed last year.

As I stated in my veto letter last year, I agree with the principles embodied in the internal
audit legislation that was passed by the General Assembly. My Administration has
devoted considerable time and effort to eliminating waste in government and to
improving the overall efficiency of State 'government. The continuing efforts of the Fraud,
Waste, and Abuse Committee and its Internal Control Self-Assessment program are
designed to accomplish the same ends as Senate Bill 205. The agencies that would be
subject to the provisions of Senate Bill 205 perform internal control self-assessments
every, two years and report their findings to the Committee. The next self-assessment
reports are due to be received by the Committee on September 30, 1993. The Committee
is achieving its mission by analyzing those self-assessments and targeting areas for
improvement in internal management. Internal auditors continue to review the strengths
and weaknesses of units of State government. A program is then created to overcome
weaknesses, a time line is developed to measure progress and hold the agency
accountable, and an improvement program is implemented. By improving internal
management controls, services are delivered more efficiently and effectively to the
citizens of the State of Maryland.

The constitutional defect that plagued last year's bill has been corrected. However, I still
believe that the bill is, at best, unnecessary and, at worst, costly and counterproductive.
Executive Branch agencies can upgrade and professionalize their internal audit capability
without the mandates of this bill. Each of the provisions of Senate Bill 205 could, if
deemed necessary, be accomplished by an executive order issued by the Governor.
Moreover, while the procedures set forth in the bill are in many ways duplicative of
existing efforts of the Executive Branch, inclusion of these procedures in statute would
remove all flexibility in establishing internal audit procedures and the qualifications of
chief internal auditors.

Senate Bill 205 would apply only to agencies that currently perform internal audits. It is
possible, therefore, that the more cumbersome and inflexible provisions of the bill could
serve to discourage agencies that do not currently perform internal reviews from initiating
these examinations. That would be an unfortunate consequence of legislation that was
intended to improve internal self-assessment procedures among the agencies of State
government.

I am also advised by the Department of Budget and Fiscal Planning that the provision of
Senate Bill 205 that requires agencies to employ "professional and support staff that have
the technical proficiency and educational background appropriate for the performance of
the audits" would require the hiring of additional personnel. Although it is impossible to
determine how many positions would be required, the costs associated with the additional
personnel that would be necessary to comply with this provision of the bill have not been
addressed in the budget.

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