HB244: HB244 State auditor; local governments to request and receive in certain circumstances due date extensions related to filing annual audits; provide

26 HB 244/AP House Bill 244 (AS PASSED HOUSE AND SENATE) By: Representatives Cannon of the 172nd, Yearta of the 152nd, Greene of the 154th, Jackson of the 128th, and Hagan of the 156th A BILL TO BE ENTITLED AN ACT To amend Article 1 of Chapter 81 of Title 36 of the Official Co de of Georgia Annotated,1 relating to local government budge ts and audits, so as to updat e and revise provisions,2 content, and form of annual audits by local governments; to aut horize regulatory basis of3 accounting framework for certain annual audits; to authorize th e state auditor to prescribe4 necessary forms and information contained in certain components of such audits; to provide5 for exceptions; to provide that certain public officers and emp loyees may be liable for the6 failure of their offices to assist counties in complying with audit requirements; to provide for7 the temporary withholding of compensation for certain officers for failing to assist counties8 in complying with audit requirements; to provide for related ma tters; to repeal conflicting9 laws; and for other purposes.10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:11 SECTION 1.12 Article 1 of Chapter 81 of Title 36 of the Official Code of Geo rgia Annotated, relating to13 local government budgets and audits, is amended by revising Code Section 36-81-7, relating14 to audit of financial affairs and transactions, contents, copy to state auditor, and public15 inspection, as follows:16 H. B. 244 - 1 - 26 HB 244/AP "36-81-7.17 (a)(1) The governing authority of each unit of local government having a population in18 excess of 1,500 persons according to the latest estimate of pop ulation by the United19 States Bureau of the Census or its successor agency or expenditures of $550,000.0020 $2.5 million or more shall provide for and cause to be made an annual audit of the21 financial affairs and transactions of all funds and activities of the local government for22 each fiscal year of the local government.23 (2) The governing authority of each local unit of government n ot included in24 paragraph (1) of this subsection shall having expenditures of $2.5 million or less may25 provide for and cause to be made the an audit required pursuant to paragraph (1) of this26 subsection not less often than once every two fiscal years using the special purpose27 framework prescribed by the st ate auditor. The state auditor s hall develop reporting28 templates to be used by a local unit of government making a rep ort pursuant to this29 paragraph and establish an effective date to begin reporting un der the special purpose30 framework. Audits performed pursuant to this paragraph shall be for both fiscal years.31 (3)(A) The governing authority of each local unit of government having expenditures32 of less than $550,000.00 $1 million or less in that such government's most recently33 ended fiscal year may elect to provide for and cause to be made, in lieu of the biennial34 audit otherwise required under provided for in paragraph paragraphs (1) and (2) of this35 subsection, an annual report of agreed upon procedures for that fiscal year. The agreed36 upon procedures shall include as a minimum: proof and reconcili ation of cash,37 confirmation of cash balances, a listing of bank balances by bank, copies of financial38 statements and notes as prescribed by the state auditor, a statement of cash receipts and39 cash disbursements, a review of compliance with state law, and a report of agreed upon40 procedures. The annual report of agreed upon procedures performed pursuant to this41 paragraph shall not be used for more than four consecutive year s. The governing42 authority of each local unit of government not included in paragraph (1) or (2) of this43 H. B. 244 - 2 - 26 HB 244/AP subsection shall, no less than every fifth year, provide for and cause to be made an audit44 of the financial affairs and transactions of all funds and acti vities of the local45 government in accordance with generally accepted government auditing standards.46 (B) Agreed This agreed upon procedures report reports or reports using the special47 purpose framework shall be in a format prescribed by the state auditor and shall48 constitute an annual audit report for purposes of and within th e meaning of the49 requirements of subsections (d) through (g) of this Code section. The Department of50 Community Affairs is authorized to assist requesting local gove rnments in preparing51 agreed upon procedures reports or special purpose framework reports required under52 this paragraph and in establishing record-keeping procedures needed in preparing those53 reports and is further authorized to charge those local governments reasonable fees for54 that assistance. To the extent that the state auditor is able to perform the agreed upon55 procedures, the governing body may contract with the state auditor.56 (4) At the option of the governing authority, an audit may be made at a lesser interval57 than one year.58 (5) In the event that a local unit of government presents evid ence that in a particular59 fiscal year unusual circumstances resulted in expenditures exce eding the amounts60 provided for in this subsection, the state auditor shall be authorized for good cause shown61 to grant exceptions to the audit filing required under this subsection.62 (b) The audits of each local government shall be conducted in accordance with generally63 accepted government auditing standards. Each audit shall also contain a statement of any64 agreement or arrangement under which the local unit of governme nt has assumed any65 actual or potential liability for the obligations of any govern mental or private agency,66 authority, or instrumentality. Such statement shall include the purpose of the agreement67 or arrangement, shall identify the agency, authority, or instru mentality upon whose68 obligations the unit of local government is or may become liable, and shall state the amount69 of actual liability and the maximum amount of potential liability of the local government70 H. B. 244 - 3 - 26 HB 244/AP under the agreement or arrangement. To the extent that the state auditor is able to provide71 comparable auditing services, the governing body may contract with the state auditor.72 (c) All annual audit reports of local units of government shal l contain at least the73 following:74 (1) Financial statements prepared in conformity with generally accepted governmental75 accounting principles, setting forth the financial condition and results of operation of each76 fund and activity of the local government and such financial st atements shall be the77 representation of the local government; and78 (2) The opinion of the performing auditor with respect to the financial statement; in79 addition to an explanation of any qualification or disclaimers contained in the opinion,80 such opinion shall also disclose, in accordance with generally accepted government81 auditing standards, any apparent material violation of state or local law discovered during82 the audit; provided, however, that the state auditor may accept an adverse opinion on an83 audit if the basis of such a dverse opinion is the result of a u nit of local government84 making a report pursuant to paragraph (2) of subsection (a) of this Code section.85 (c.1)(1) The annual audit reports of a county or consolidated city-county government86 shall also contain financial statements prepared in conformity with generally accepted87 governmental accounting principles, providing a detailed accoun t of the supplemental88 official income and related expenditures of each county officer listed in Article IX,89 Section I, Paragraph III(a) of the Constitution, provided that such county officer is paid90 in whole or in part on a salary basis and over whom the county governing authority91 exercises budgetary authority; and such financial statements shall be the representation92 of such officers. Such officers shall be obligated to cooperat e with the county or93 consolidated government in the preparation of such financial statements and audit reports94 and shall provide such government with all documentation the go vernment deems95 necessary to prepare such financial statements or audit reports. The failure of any such96 H. B. 244 - 4 - 26 HB 244/AP officer to cooperate with or provide required documentation to a county or consolidated97 government shall not result in any liability applying to such government.98 (2) The opinion of the performing auditor with respect to the financial statement99 provided for in this subsection, in addition to an explanation of any qualifications or100 disclaimers contained in the opinion, shall also disclose, in a ccordance with generally101 accepted government auditing standards, any apparent material violation of state or local102 law discovered during the audit of the supplemental official in come of such county103 officers.104 (3) As used in For the purpose of this subsection, the term 'supplemental official income'105 means all funds from any source other than funds appropriated b y a county or106 consolidated government that an individual or his or her office derives from performing107 duties that are within his or her official capacity as a county officer.108 (d)(1) Each annual audit report of a local unit of government shall be completed and a109 copy of the report forwarded to the state auditor within 180 da ys after the close of the110 unit's fiscal year. In addition to the audit report, the local unit of government shall111 forward to the state auditor, within 30 days after the audit re port due date, written112 comments on the findings and recommendations in the report, inc luding a plan for113 corrective action taken or planned and comments on the status of corrective action taken114 on prior findings. If corrective action is not necessary, the written comments should115 include a statement describing the reason it is not. In the ca se of units provided for in116 paragraph (2) of subsection (a) of this Code section, the audit reports for both fiscal117 periods shall be submitted within 180 days after the close of each second fiscal year and118 the written comments shall be submitted within 30 days after the audit report due date.119 (2) The state auditor shall review the audit report and written comments submitted to the120 auditor's office to ensure that it meets the requirements for audits of local governments.121 If the state auditor finds the requirements for audits of local governments have not been122 complied with, the state auditor shall within 60 days of receipt of the audit or the written123 H. B. 244 - 5 - 26 HB 244/AP comments notify the governing authority and the auditor who per formed the audit and124 shall submit to them a list of deficiencies to be corrected. A copy of this notification shall125 also be sent by the state auditor to each member of the General A s s e m b l y w h o s e126 senatorial or representative district includes any part of the unit of local government.127 (3) If the state auditor has not received any required audit o r written comments by the128 date specified in paragraph (1) of this subsection, the state auditor shall within 30 days129 of such date notify the unit of local government that the audit has not been received as130 required by law. A copy of this notification shall also be sent by the state auditor to each131 member of the General Assembly whose senatorial or representative district includes any132 part of the unit of local government.133 (4) The state auditor, for good cause shown by those local units in which an audit is in134 the process of being conducted or will promptly be conducted, m ay waive the135 requirement for completion of the audit within 180 days. Such waiver shall be for an136 additional period of not more than 180 days and no such waiver shall be granted for more137 than two successive years to the same unit of local government.138 (5) No state agency shall make or transmit any state grant funds to any local government139 which has failed to provide all the audits required by law within the preceding five years.140 (d.1)(1) Public officers and em ployees serving a given county or consolidated141 government, including county officers listed in Article IX, Section I, Paragraph III(a) of142 the Constitution and state officers and employees specifically assigned to such local143 government, shall be obligated to cooperate with the county or consolidated government144 in the preparation of financial statements and audit reports required by this Code section145 and shall provide such government with all documentation deemed necessary by the146 government to prepare such financial statements or audit reports.147 (2) The failure of any such public officer or employee to coop erate with or provide148 required documentation to a county or consolidated government s hall not result in any149 H. B. 244 - 6 - 26 HB 244/AP liability applying to such government, and the state auditor for good cause shown may150 waive the requirements of this Code section for either:151 (A) A period of 90 days following a 180 day waiver granted pursuant to paragraph (4)152 of subsection (d) of this Code section; or153 (B) In the event that a 180 day waiver granted pursuant to paragraph (4) of subsection154 (d) of this Code section was granted to such county or consolidated government in the155 previous two years, a period of 90 days following the deadline provided for in 156 paragraph (1) of subsection (d) of this Code section.157 The waiver provided for in this paragraph shall only be granted if the county or158 consolidated government's failure to timely file an audit is the result of the failure of one159 or more such public officers or employees to cooperate or provi de documentation as160 required by this paragraph.161 (3) In the event that a county or consolidated government fails to forward a copy of an162 audit or report to the state auditor within the time frame provided for in this Code section,163 and such failure is the result of the failure of a county offic er listed in Article IX,164 Section I, Paragraph III(a) of the Constitution, other than judges of the probate court, to165 cooperate with such county or consolidated government in the preparation of such audit166 or report, the governing authority of such county or consolidat ed government,167 notwithstanding any other provision of law to the contrary, shall temporarily withhold 50168 percent of the compensation paid to such officer from county fu nds until such time as169 such officer has provided all cooperation and information necessary for the filing of the170 audit or report. Within 14 days of such an audit or report being completed and forwarded171 to the state auditor, the governing authority of the county or consolidated government172 shall pay all such withheld compensation to the officer; provid ed, however, that such173 officer shall not be entitled to receive any interest or additional compensation related to174 such withheld funds.175 H. B. 244 - 7 - 26 HB 244/AP (e) A copy of the report and of any comments made by the state auditor pursuant to176 paragraph (2) of subsection (d) of this Code section shall be maintained as a public record177 for public inspection during the regular working hours at the principal office of the local178 government. Those units of local government not having a principal office shall provide179 a notification to the public as to the location of and times du ring which the public may180 inspect the report.181 (f) Upon a failure, refusal, or neglect to have an annual audi t made, or a failure to file a182 copy of the annual audit report with the state auditor, or a fa ilure to correct auditing183 deficiencies noted by the state auditor, the state auditor shall cause a prominent notice to184 be published in the legal organ of, and any other newspapers of general circulation within,185 the unit of local government. Such notice shall be a prominently displayed advertisement186 or news article and shall not be placed in that section of the newspaper where legal notices187 appear. Such notice shall be published twice and shall state that the governing authority188 of the unit of local government has failed or refused, as the c ase may be, to file an audit189 report or to correct auditing deficiencies, as the case may be, for the fiscal year or years in190 question. Such notice shall further state that such failure or refusal is in violation of state191 law.192 (g) The state auditor may waive the requirement of correction of auditing deficiencies for193 a period of one year from the required audit filing date, provided evidence is presented that194 substantial progress is being made towards toward removing the cause of the need for the195 waiver. No such waiver for the same set of deficiencies shall be granted for more than two196 successive years to the same local government."197 SECTION 2.198 All laws and parts of laws in conflict with this Act are repealed.199 H. B. 244 - 8 -