Morgan: Keeping an eye on audits

Fred Morgan, President and CEO

A disturbing trend has developed in local and state government over the last decade. It should alarm everyone who professes to believe in limited government. In an insatiable thirst for more revenue, public officials have turned to bounty hunters to find revenue or assets to tax or seize. More shocking is when these third parties are paid on a contingency fee basis.

Auditing those who receive government funding is an appropriate and necessary role of government. Entities receiving public funds generally acknowledge the wisdom of verifying they are spent properly as it is consistent with the role of government to protect the public at large. However, using contingency fees as the basis for government auditing contracts is a dangerous precedent that can lead to abuses. Empowering for-profit companies backed by state power to conduct audits for the purpose of seizing or taxing assets is a form of government intimidation.

Over the years, this flawed concept has been used by local governments against the oil and gas industry and even small businesses. If audits are necessary, they should be conducted by state officials, not third-party bounty hunters motivated by greed. Audits end up costing companies hundreds of thousands of dollars in compliance costs, interfere with normal business operations and risk exposure of proprietary information.

Luckily, two bills before state lawmakers would curb this practice. House Bill 1741 by state Rep. Lewis Moore, R-Arcadia, and Sen. Dan Newberry, R-Tulsa, and Senate Bill 298 by state Sen. Marty Quinn, R-Claremore, and Rep. Glen Mulready, R-Tulsa, still allow any level of government to employ outside auditors for fee collection. But those auditors must be paid for time spent on the work they do, not the amount collected. This is a reasonable proposal and addresses the issue of allowing the proper collection of fees without interfering with existing contracts.

This is an issue that could affect every company in Oklahoma. Talk to your senator and representative and let them know your feelings on the subject. Businesses owners must already navigate a morass of red tape every day to keep their companies running. They shouldn’t have to also face the added burden of an audit by a bounty hunter trying to cash in with the full backing of the government.

This article was posted in The Journal Record as part of Fred Morgan's monthly opinion editorial.

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