In 1909, the legislature created the State Board of Accounts. At that time, the primary responsibilities of the Board of Accounts were to examine all accounts and all financial affairs of every public office and officer, state office, state institution and entity; to prescribe and approve forms; and to create a uniform system of accounting and financial reporting in Indiana for all units of government within Indiana.
The Board of Accounts was created 12 years before the federal government created the Government Accountability Office (GAO). It has long been documented that in the early 1900’s graft and corruption was prevalent throughout the United States in State and Local Governments. Indiana was not spared from this pervasive problem and an investigation by an Indianapolis newspaper revealed pervasive wrong-doing throughout the State of Indiana within local governmental offices. In 1908, the Merchants Association of Indianapolis began an active investigation of the graft and corruption, and later that year, they appointed a bi-partisan three member committee to formulate an accounting bill to help combat the problems their investigation uncovered. The outcome of this committee would eventually become the accounting act for the State of Indiana.
At the time the bill was introduced, Indiana’s Governor was the Honorable Thomas Marshall, who was, at first, opposed to the public accounting law as he felt that it would interfere with local self-government. Eventually he became a strong supporter and included the act in his message to the General Assembly in 1909. Under the original act, that was signed into law on March 4, 1909, the Board of Accounts consisted of the Governor, Auditor of State and State Examiner. The State Examiner and two deputy examiners were appointed by the Governor. A Department of Inspection and Supervision of Public Offices was created and placed under the State Board of Accounts. In 1943, the Board of Accounts became part of the division of Accounting and Statistics under the Executive branch. In 1945 the Department of Inspection and Supervision of Public Offices was abolished and its powers and duties transferred to the “State Board of Accounts”. At that time, the Board of Accounts composition changed to a board consisting of the State Examiner and two Deputy Examiners.
STAFF
The core strength of the Board of Accounts has been and continues to be the quality of our staff. The Board of Accounts is committed to providing the legislature and other interested parties with accurate and reliable information, and the key factors in achieving this commitment are the competency and professionalism of our staff. Strong audit agencies such as the Board of Accounts help to ensure that policymakers and the public have access to timely and accurate information. The Board of Accounts, for more than 100 years, has been holding government officials accountable to their constituents for financial reporting and following the Indiana Code when making any type of decision that relates to taxpayer dollars. A government that values ethics and integrity must have and support a strong and independent agency such as the Board of Accounts as part of its system of checks and balances.
In 1909, a staff of field examiners was to be appointed by the State Examiner after each had passed a competitive examination. This was the first merit system enacted into law in the State of Indiana. Field Examiners were selected solely upon the grounds of fitness and without regard to political affiliation; however, there was a stipulation that no more than one-half of the number employed at any one time shall belong to any one political party. Such a provision at the time was considered helpful in satisfying both political parties and promoted the bill’s passage. The first State Examiner was William A. DeHority and he served from June 8, 1909 to June 7, 1913. In 1923, Lawrence Orr was appointed as State Examiner. Mr. Orr was the first State Examiner appointed from the ranks of field examiners and subsequently all State Examiners to follow were likewise appointed from the ranks. It was believed that this manner of appointing from within the ranks promoted overall consistency of audit positions and limited the possibility of politics becoming part of the audit process. Beginning in the 1970’s there were major changes taking place in the auditing profession. Those changes affected how the Board of Accounts approached and documented audits. As a result the overall makeup and education levels of field examiners also changed. Many more CPA’s and field examiners with Baccalaureate degrees were hired. Today, the Board of Accounts has more than 90 field examiners that are Certified Public Accounts and 95% have a Baccalaureate or a Master’s degree. In 1978, the Board of Accounts took a major step by hiring female field examiners for the first time.
AUDITS
The first audits were difficult and discouraging. Officials would not cooperate and resented the so-called “Governor Marshall’s snoopers”. To counter this, the State Examiner instituted the practice of assigning examiners in pairs of opposite political faith in order to facilitate examinations and reports that were free of political bias. This practice was followed for more than 50 years and was determined to be very successful.
In 1917, the General Assembly amended the accounting law with an act providing for the Board of Account reports to be open for public inspection after filing. The act also added a provision to the law that made it unlawful for field examiners or deputy examiners to disclose the results of an examination prior to being filed as a public document, except as directed by the State Examiner or the courts. The Board of Accounts is still governed by this law today. In 1946, the Board established the policy of giving officials a hearing before a report was filed officially. The policy and system is still in effect and allows officials the opportunity to respond to comments in the reports or request a meeting with the Board within ten days of the exit conference.
The 1917 law also provided for the certification of a report disclosing probable commission of a crime to the grand jury of the county where such a crime was committed, and for the furnishing of evidence to the grand jury. The law also provided for the Attorney General to prosecute all civil proceedings against an official or his bond and with the power to compromise a charge report, with the consent of the State Examiner and the Deputy Examiners.
In 1972, the GAO published Governmental Auditing Standards (the “Yellow Book”) for audits of government organizations, programs, activities and functions and of government assistance received by contractors, nonprofit organizations and other nongovernmental organizations. These standards, often referred to as generally accepted government auditing standards (GAGAS) are to be followed by auditors and audit organizations when required by law, regulation, agreement, contract or policy. These standards pertain to auditor’s professional qualifications, the quality of audit effort, and characteristics of professional and meaningful audit reports.
In 1984, the Single Audit Act was introduced to the auditing world. The Single Audit Act requires a comprehensive single audit for state and local governments receiving federal money. The Single Audit Act of 1984 standardized audit requirements for States and local governments that receive and use federal financial assistance programs. In 1985, the United States Office of Management and Budget (OMB) issue OMB Circular A-128, Audits of State and Local Governments, to help recipients and auditors implement the new Single Audit. These new guidelines and provisions were meant to standardize the Single Audit Act for all states, local governments, non-profit organizations, and institutions that receive federal funds. In 1996, the OMB published the first A-133 Compliance Supplement. This is a large and comprehensive guide used in auditing federal assistance received by state and local governments. It serves to identify existing important compliance requirements that the Federal Government expects to be considered as part of a Single Audit. The State Board of Accounts performs the Single Audits for units of local government and for the State.
TRAINING AND OTHER RESPONSIBILITIES
In 1919, the State Board of Accounts created pamphlets and publications affecting various offices and those publications were made available to public officials. In 1943, the ”County Auditor Bulletin” originated as a monthly publication containing the officers’ duties, a digest of Attorney General’s opinions and other information thought to be helpful to local officials. This publication has continued and today is a quarterly publication. In addition, over the years other quarterly publications have been published. By 1945, a “Township Trustees Bulletin” was created. In 1950, the emphasis on the furnishing of helpful information to state and local officials became a focus of the department. Many state called meetings (schools) for officials were held some centrally and others conveniently located throughout the state. The “Cities and Towns Bulletin” began publication in 1953. By 1950 additional publications included accounting manuals for hospitals, cities and towns and schools were issued on a quarterly basis. In 1943 legislation was added authorizing called conferences of county auditors by the Board of Accounts and later, other officials were added to the calling of conferences. In 1945, the legislature gave the Board the additional duties of examining the extra-curricular accounts for schools and prescribing the forms for proper accounting.
Numerous duties have been added to the responsibilities of the State Board of Accounts over the years. The regular session of 1921 placed the duty on the State Examiner to prepare and formulate a state budget, making the State Examiner the first State Budget Director. In 1925, a law added the responsibility of counting the securities held by the Treasurer of the Teacher’s Retirement Fund. In 1927, the General Assembly assigned the task of gathering information and preparing a bill for the 1929 General Assembly regarding uniform salaries for county officials. In 1929, the job of examining the National Guard Armories was assigned to the State Board of Accounts. In 1931, the Board of Accounts was given the duty of determining state relief to be given to school corporations unable to maintain their own schools. In 1933, the General Assembly amended the Public Service Commission Act of 1913 and placed all municipal utilities under the supervision of the Board of Accounts which increased the work for the Board tremendously. In 1937, the General Assembly authorized County Commissioners to install mechanical tax accounting systems in the county under the approval of the Board of Accounts. The Board of Accounts, at the request of the governor, proposed and sponsored 13 bills in the 1947 General Assembly and eleven became law. In 1949, 12 bills were sponsored and eleven were enacted into law.
STATE EXAMINERS
1. William A. Dehority - June 8, 1909 to June 7, 1913
2. Gilbert H. Hendren - June 8, 1913 to June 7, 1919
3. Jesse E. Eschbach - June 8, 1919 to April 30, 1923
4. Lawrence F. Orr - May 1, 1923 to April 13, 1933
5. William P. Cosgrove - April 16, 1933 to December 31, 1938
6. Edward P. Brennan - January 1, 1939 to April 30, 1941
7. Otto K. Jensen - May 1, 1941 to June 30, 1945 and March 16, 1949 to January 13, 1953
8. Clarence E. Ruston - July 1, 1945 to March 15, 1949
9. Robert R. Wickersham - January 14, 1953 to February 28, 1957
10. Thomas D. Hindman - March 1, 1957 - January 9, 1961
11. Buell B. McDonald - January 10, 1961 to May 9, 1965
12. Richard L. Worley - May 10, 1965 to January 12, 1969
13. Kenneth R. Beesley - January 13, 1969 to January 11, 1981
14. M. F. Renner - January 12, 1981 to January 10, 1985
15. James M. Gutting - January 11, 1985 to January 9, 1989
16. Donald L. Euratte - March 1, 1989 to February 27, 1997
17. Charles Johnson III - March 12, 1997 - March 1, 2005
18. Bruce A. Hartman - October 7, 2005 - November 7, 2013
19. Paul D. Joyce - November 8, 2013 - Current