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S O U T H C A R O L I N A G E N E R A L A S S E M B L Y
Legislative
Audit
Council







A
NNUAL
A
CCOUNTABILITY

R
EPORT
FY

06-07


L A C




L A C


S O U T H C A R O L I N A G E N E R A L A S S E M B L Y
Legislative Audit Council
Independence, Reliability, Integrity





September 14, 2007



His Excellency, Mark Sanford, Governor
and Members of the General Assembly:

We are pleased to provide the annual accountability report of the South Carolina Legislative
Audit Council for the fiscal year ended June 30, 2007. The LAC encourages legislative requests
for performance audits and is committed to audit work that will be responsive to legislative
needs. Please call me or Jane Thesing, deputy director, at (803) 253-7612 with questions or
comments.

Respectfully submitted,

George L. Schroeder
Director Table of Contents


I. Executive
Summary

1. Mission and Values...............................................................................................1


2. Major Achievements in FY 06-07 .......................................................................1


3. Key Strategic Goals .............................................................................................1


4. Opportunities and Barriers....................................................................................1


5. Use of the Accountability Report ........................................................................1

II.
Organizational
Profile


1. Main Products and Services..................................................................................2


2. Key Customers and Their Key Expectations ........................................................2

3.
Key
Stakeholders ..................................................................................................2


4. Key Suppliers and Partners...................................................................................2

5.
Office
Location .....................................................................................................3

6.
Number
of
Employees ..........................................................................................3

7.
Regulatory
Environment.......................................................................................3


8. Key Strategic Challenges......................................................................................3


9. Performance Improvement Systems .....................................................................3


10. Organizational Structure .......................................................................................3


11. Expenditures and Appropriations .........................................................................4


12. Major Program Areas............................................................................................4



III. Elements of Malcolm Baldrige Criteria

Category 1 Leadership ...........................................................................................5

Category 2 Strategic Planning ...............................................................................8

Category 3 Customer and Market Focus .............................................................11

Category 4 Measurement, Analysis, and Knowledge Management ...................12

Category 5 Workforce Focus ..............................................................................14

Category 6 Process Management.........................................................................17

Category 7 Results ...............................................................................................19


FY 06-07 Annual Accountability Report
Legislative Audit Council
Page 1
Section I Executive Summary


1. Mission and Values

The LACs mission is to conduct performance audits of state agencies and programs to help
ensure that their operations are efficient and that they maximize performance and follow the law.
In conducting audits, the LAC seeks to uphold the values of independence, reliability, accuracy,
and thoroughness.

2. Major Achievements in FY 06-07

In FY 06-07, the Legislative Audit Council published six performance audits and five follow-up
reports of state government programs. We made 100 recommendations and identified potential
financial benefits of approximately $50,000.

In an audit we published of the South Carolina Department of Transportation, we found
approximately $42 million in misspent funds, including $40.7 million in payments to contractors
and $1.7 million in lost interest. Following publication of this audit, we testified at several
legislative committee hearings regarding our recommendations to improve operations at the
department.

In each of our audits, we also identified ways to improve the performance of state government
that are not financial.

Summaries of the audits and follow-up reports we published in FY 06-07 are on pages 19 23.


3. Key Strategic Goals

The LAC has three strategic goals:

1. Reduce the cost of state government.
2. Improve the performance of state government.
3. Provide information to the South Carolina General Assembly and the public.


4. Opportunities and Barriers

In FY 06-07, the LAC added two additional auditors. Due, in part, to our additional staff, the
number of performance audits we published increased from three in FY 05-06 to six in
FY 06-07. The number of follow-up audits we published increased from four in FY 05-06 to
five in FY 06-07.

5.

Use of the Accountability Report

The process of developing annual accountability reports has resulted in our use of formal
strategic planning. It has also resulted in our development of outcome measures. In FY 03-04,
we introduced a new outcome measure called Percent of Audit Recommendations
FY 06-07 Annual Accountability Report
Legislative Audit Council
Page 2
Implemented. In FY 04-05, we introduced a new outcome measure called Financial Benefits
Realized. We calculate these two statistics each year through our follow-up audit process. In
FY 06-07, we were able to complete all of our scheduled follow-up audits, including a backlog
of projects from the prior year, to ensure that our outcome statistics are up-to-date.

Section II Organizational Profile

1. Main Products and Services

The LACs main products are performance audits of state agencies and programs, in which we
identify ways to reduce the cost and improve the performance of state agencies, and provide
information to the General Assembly and the public. We help ensure that operations are efficient
and that agencies follow the law to achieve the desired results. We communicate the results of
these audits in published reports.


2. Key Customers and Their Key Expectations

The LACs key customers are the General Assembly and the citizens of South Carolina. We
provide information, analysis, and recommendations to help the General Assembly improve state
agencies and to help the citizens of South Carolina oversee state government. Our customers
key expectations include independence, reliability, accuracy, and thoroughness.

3. Key Stakeholders

The LACs key stakeholders are the agencies we audit. We provide information, analysis, and
recommendations to assist them in improving their operations.

4. Key Suppliers and Partners


The primary inputs used by the LAC to produce audits are labor and information. Below we
describe the key suppliers of these inputs:

LAC employees conduct almost all of the information collection, analysis, and writing
required to prepare an audit. Infrequently, we obtain the services of an outside entity to
conduct analysis. The key suppliers of our employees are colleges and universities in South
Carolina and elsewhere, as well as other government agencies.

Our key suppliers of information are the agencies we audit, central state government agencies
in South Carolina (such as the Office of the Comptroller General, Office of the State
Treasurer, and the Office of Human Resources), agencies in other states, and the federal
government.


We have no formal partnerships; however, on an as-needed basis, we consult with the Office of
the Attorney General, the Office of the State Auditor, the procurement audit section of the
Budget and Control Board, and the State Law Enforcement Division.

FY 06-07 Annual Accountability Report
Legislative Audit Council
Page 3
5. Office Location


The LAC operates out of a single location at:

1331 Elmwood Avenue
Suite 315
Columbia, SC 29201

6. Number of Employees

The LAC had 17 employees, all unclassified, at the end of FY 06-07.

7. Regulatory Environment

The LAC operates under the requirements of Government Auditing Standards established by the
Comptroller General of the United States.

8. Key Strategic Challenges

The LACs key strategic challenges are to reduce the cost and improve the performance of state
government.




9. Performance Improvement Systems

The LACs senior leaders encourage input and innovative ideas from staff throughout the year.
Our organization has informal discussions, formal sta