April 1, 1977

Mr. Eldon Stoehr 
Auditor-General 
State Capitol 
Pierre, South Dakota 57501

Official Opinion No. 77-25

Whether the State Auditor-General should audit the South Dakota Housing Development Authority

Dear Mr. Stoehr:

You have requested an official opinion in regard to the following factual situation:

FACTS: 

I have been asked about the applicability of SDCL 4-11-7 regarding the approval of auditors for all public bodies and especially as it will relate to SDCL 28-19-10 as it applies to the South Dakota Housing Development Authority as an independent public instrumentality.

Based on the above facts, you ask:

QUESTION: 

Should the Auditor-General be approving the engagement of an auditor for the South Dakota Housing Development Authority as well as reviewing and accepting the final audit product?

SDCL 4-11-7 states: 
    
Nothing contained in this chapter shall prevent the governing body of any public corporation from employing a private accountant to examine and audit the books and accounts thereof or of any of its officers whenever the governing body thereof believes that the public interest requires it, provided such employment is first approved by the department of legislative audit, and provided that such private audit shall not be paid for before a copy thereof shall have been filed with and approved by the department of legislative audit.  The auditor-general may, in his discretion, accept such audit in lieu of an annual or biannual examination otherwise required to be made by the department.

In addition to the above citation, the provisions of Chapter 2-9, which were added by Chapter 26 of the Session Laws of 1976, seem to me to be appropriate and important authorities in determining the question you raise.  Pursuant to this law, the Executive Board of the Legislative Research Council was established as a standing committee of the South Dakota Legislature for the purpose of reviewing the operations, programs, accomplishments, and financial status of the South Dakota Housing Development Authority. Pursuant to this legislation, the Authority has to submit to the Executive Board a complete and detailed report on an annual basis and is required to assist the Executive Board or its legislator designee in any continuous review of the programs and projects of the Authority.  The subsequent sections of Chapter 2-9 further indicate legislative intent that the Executive Board of the Legislative Research Council should have accountability review power over the Authority.

In my opinion, the foregoing statutes would indicate that the Legislature has intended that the Executive Board of the Legislative Research Council should be the legislative reviewing authority over the activities of the South Dakota Housing Development Authority. If the Executive Board of the Legislative Research Council desires that the Auditor-General conduct an audit of the Authority, there clearly is a statutory procedure set up which would allow this to be done. Absent such direction by the Executive Board of the Legislative Research Council, it would appear to me that the Auditor-General would not undertake such an examination pursuant to Chapter 4-11 or require that SDCL 4-11-7 be compiled with respect to private audits done for the Authority. This approach will allow the Legislature the flexibility of making an investigation and audit if they believe it to be appropriate and necessary but will not burden the Auditor-General's Office or the South Dakota Housing Development Authority with repetitious, overlapping, and somewhat confusing annual procedures and filing requirements.  I do not mean to imply that it is not appropriate for the Auditor-General to accept and review copies of private audits on the Authority, but I do not believe the provisions of SDCL 4-11-7 are applicable here that would require that any private audit done by the Authority should be approved by the Department of Legislative Auditor before it can be paid for.

Respectfully submitted,

William J. Janklow
Attorney General

WJJ:DOC:cms