By definition, a report from the state auditor is not happy news. While the au-ditor is happy to find evidence that things are going right, the real job is to find out where things are going wrong.

That's because the ultimate goal is to improve the efficiency and quality of government work, not to hand out a lot of atta-boys.

Smart managers take these submissions from the auditor at face value and attempt to fix the places where they might have stumbled. Most normally, it is a matter of misfeasance, not malfeasance.

In this context, the latest draft of an audit on the performance of Ted Liu, direc-tor of the State Department of Business, Economic Development and Tourism, is shocking. It points a finger directly at Liu.

Liu and his boss, Gov. Linda Lingle, understandably disagree with the report. And in a smart move, Liu released the draft version of the audit, giving him at least some control of the story that ensued.

What it looks like, if you step back from the rhetoric flying around, is a clash of cultures.

Liu comes from the free-wheeling business climate of Hong Kong, where connections, friendships and handshake deals are the core of things.

This does not suggest that he has handled the state's business as some kind of Chinese entrepreneur, but his background has to inform his approach to matters.

By contrast, Auditor Marion Higa comes from a straightforward point of view that the law is the law and the books mean what they say, for good or ill.

It comes down to this: What might be acceptable — even smart — in the seat-of-the-pants world of international business does not cut it in the buttoned-down world of government accounting and procurement policies. And like it or not, that is where Liu now lives.

The most striking aspect of this draft report, if it remains in the final version, is its rather pointed personal tone. It's hard to remember the last time the auditor suggested the removal of a top official rather than administrative and accounting changes. Essentially, it was "off with his head."

The Lingle administra-tion and the auditor can quibble forever about whether this money or that money was spent properly. It's hard to imagine a two-year audit of any department that would not turn up some discrepancies.

What will be more interesting is to see if they can resolve this underlying clash of cultures, and whether there might be a satisfactory middle ground.