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 Code of Georgia Annotated,
relating to local government budgets and audits, so as to update and revise provisions,
content, and form of annual audits by local governments; to authorize regulatory basis of
accounting framework for certain annual audits; to authorize the state auditor to prescribe
necessary forms and information contained in certain components of such audits; to provide
for exceptions; to provide that certain public officers and employees may be liable for the
failure of their offices to assist counties in complying with audit requirements; to provide for
the temporary withholding of compensation for certain officers for failing to assist counties
in complying with audit requirements; to provide for related matters; to repeal conflicting
laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Article 1 of Chapter 81 of Title 36 of the Official Code of Georgia Annotated, relating to
local government budgets and audits, is amended by revising Code Section 36-81-7, relating
to audit of financial affairs and transactions, contents, copy to state auditor, and public
inspection, as follows:
"36-81-7.
(a)(1) The governing authority of each unit of local government having <del>a population in
excess of 1,500 persons according to the latest estimate of population by the United
States Bureau of the Census or its successor agency or</del> expenditures of <del>$550,000.00
</del> <ins>$2.5 million</ins> or more shall provide for and cause to be made an annual audit of the
financial affairs and transactions of all funds and activities of the local government for
each fiscal year of the local government.
(2) The governing authority of each local unit of government <del>not included in
paragraph (1) of this subsection shall</del> <ins>having expenditures of $2.5 million or less may
</ins> provide for and cause to be made <del>the</del> <ins>an</ins> audit <del>required pursuant to paragraph (1) of this
subsection not less often than once every two fiscal years</del> <ins>using the special purpose
framework prescribed by the state auditor. The state auditor shall develop reporting
templates to be used by a local unit of government making a report pursuant to this
paragraph and establish an effective date to begin reporting under the special purpose
framework.</ins> <del>Audits performed pursuant to this paragraph shall be for both fiscal years.
</del> <ins>(3)(A)</ins> The governing authority of each local unit of government having expenditures
of <del>less than $550,000.00</del> <ins>$1 million or less</ins> in <del>that</del> <ins>such</ins> government's most recently
ended fiscal year may elect to provide for and cause to be made, in lieu of the <del>biennial
</del> audit otherwise <del>required under</del> <ins>provided for in</ins> <del>paragraph</del> <ins>paragraphs (1) and</ins> (2) of this
subsection, an annual report of agreed upon procedures for that fiscal year. The agreed
upon procedures shall include as a minimum: proof and reconciliation of cash,
confirmation of cash balances, a listing of bank balances by bank, <ins>copies of financial
statements and notes as prescribed by the state auditor,</ins> a statement of cash receipts and
cash disbursements, a review of compliance with state law, and a report of agreed upon
procedures. <ins>The annual report of agreed upon procedures performed pursuant to this
paragraph shall not be used for more than four consecutive years. The governing
authority of each local unit of government not included in paragraph (1) or (2) of this
</ins>
<ins>subsection shall, no less than every fifth year, provide for and cause to be made an audit
of the financial affairs and transactions of all funds and activities of the local
government in accordance with generally accepted government auditing standards.
(B) Agreed</ins> <del>This agreed</del> upon procedures <del>report</del> <ins>reports or reports using the special
purpose framework</ins> shall be in a format prescribed by the state auditor and shall
constitute an annual audit report for purposes of and within the meaning of the
requirements of subsections (d) through (g) of this Code section. The Department of
Community Affairs is authorized to assist requesting local governments in preparing
agreed upon procedures reports <ins>or special purpose framework reports</ins> required under
this paragraph and in establishing record-keeping procedures needed in preparing those
reports and is further authorized to charge those local governments reasonable fees for
that assistance. To the extent that the state auditor is able to perform the agreed upon
procedures, the governing body may contract with the state auditor.
(4) At the option of the governing authority, an audit may be made at a lesser interval
than one year.
<ins>(5) In the event that a local unit of government presents evidence that in a particular
fiscal year unusual circumstances resulted in expenditures exceeding the amounts
provided for in this subsection, the state auditor shall be authorized for good cause shown
to grant exceptions to the audit filing required under this subsection.
</ins> (b) The audits of each local government shall be conducted in accordance with generally
accepted government auditing standards. Each audit shall also contain a statement of any
agreement or arrangement under which the local unit of government has assumed any
actual or potential liability for the obligations of any governmental or private agency,
authority, or instrumentality. Such statement shall include the purpose of the agreement
or arrangement, shall identify the agency, authority, or instrumentality upon whose
obligations the unit of local government is or may become liable, and shall state the amount
of actual liability and the maximum amount of potential liability of the local government
under the agreement or arrangement. To the extent that the state auditor is able to provide
comparable auditing services, the governing body may contract with the state auditor.
(c) All annual audit reports of local units of government shall contain at least the
following:
(1) Financial statements prepared in conformity with generally accepted governmental
accounting principles, setting forth the financial condition and results of operation of each
fund and activity of the local government and such financial statements shall be the
representation of the local government; and
(2) The opinion of the performing auditor with respect to the financial statement; in
addition to an explanation of any qualification or disclaimers contained in the opinion,
such opinion shall also disclose, in accordance with generally accepted government
auditing standards, any apparent material violation of state or local law discovered during
the audit; <ins>provided, however, that the state auditor may accept an adverse opinion on an
audit if the basis of such adverse opinion is the result of a unit of local government
making a report pursuant to paragraph (2) of subsection (a) of this Code section.
</ins> (c.1)(1) The annual audit reports of a county or consolidated city-county government
shall also contain financial statements prepared in conformity with generally accepted
governmental accounting principles, providing a detailed account of the supplemental
official income and related expenditures of each county officer listed in Article IX,
Section I, Paragraph III(a) of the Constitution, provided that such county officer is paid
in whole or in part on a salary basis and over whom the county governing authority
exercises budgetary authority; and such financial statements shall be the representation
of such officers. Such officers shall be obligated to cooperate with the county or
consolidated government in the preparation of such financial statements and audit reports
and shall provide such government with all documentation the government deems
necessary to prepare such financial statements or audit reports. <del>The failure of any such
</del>
<del>officer to cooperate with or provide required documentation to a county or consolidated
government shall not result in any liability applying to such government.
</del> (2) The opinion of the performing auditor with respect to the financial statement
provided for in this subsection, in addition to an explanation of any qualifications or
disclaimers contained in the opinion, shall also disclose, in accordance with generally
accepted government auditing standards, any apparent material violation of state or local
law discovered during the audit of the supplemental official income of such county
officers.
(3) <ins>As used in</ins> <del>For the purpose of</del> this subsection, the term 'supplemental official income'
means all funds from any source other than funds appropriated by a county or
consolidated government that an individual or his or her office derives from performing
duties that are within his or her official capacity as a county officer.
(d)(1) Each annual audit report of a local unit of government shall be completed and a
copy of the report forwarded to the state auditor within 180 days after the close of the
unit's fiscal year. In addition to the audit report, the local unit of government shall
forward to the state auditor, within 30 days after the audit report due date, written
comments on the findings and recommendations in the report, including a plan for
corrective action taken or planned and comments on the status of corrective action taken
on prior findings. If corrective action is not necessary, the written comments should
include a statement describing the reason it is not. <del>In the case of units provided for in
paragraph (2) of subsection (a) of this Code section, the audit reports for both fiscal
periods shall be submitted within 180 days after the close of each second fiscal year and
the written comments shall be submitted within 30 days after the audit report due date.
</del> (2) The state auditor shall review the audit report and written comments submitted to the
auditor's office to ensure that it meets the requirements for audits of local governments.
If the state auditor finds the requirements for audits of local governments have not been
complied with, the state auditor shall within 60 days of receipt of the audit or the written
comments notify the governing authority and the auditor who performed the audit and
shall submit to them a list of deficiencies to be corrected. A copy of this notification shall
also be sent by the state auditor to each member of the General Assembly whose
senatorial or representative district includes any part of the unit of local government.
(3) If the state auditor has not received any required audit or written comments by the
date specified in paragraph (1) of this subsection, the state auditor shall within 30 days
of such date notify the unit of local government that the audit has not been received as
required by law. A copy of this notification shall also be sent by the state auditor to each
member of the General Assembly whose senatorial or representative district includes any
part of the unit of local government.
(4) The state auditor, for good cause shown by those local units in which an audit is in
the process of being conducted or will promptly be conducted, may waive the
requirement for completion of the audit within 180 days. Such waiver shall be for an
additional period of not more than 180 days and no such waiver shall be granted for more
than two successive years to the same unit of local government.
(5) No state agency shall make or transmit any state grant funds to any local government
which has failed to provide all the audits required by law within the preceding five years.
<ins>(d.1)(1) Public officers and employees serving a given county or consolidated
government, including county officers listed in Article IX, Section I, Paragraph III(a) of
the Constitution and state officers and employees specifically assigned to such local
government, shall be obligated to cooperate with the county or consolidated government
in the preparation of financial statements and audit reports required by this Code section
and shall provide such government with all documentation deemed necessary by the
government to prepare such financial statements or audit reports.
(2) The failure of any such public officer or employee to cooperate with or provide
required documentation to a county or consolidated government shall not result in any
</ins>
<ins>liability applying to such government, and the state auditor for good cause shown may
waive the requirements of this Code section for either:
(A) A period of 90 days following a 180 day waiver granted pursuant to paragraph (4)
of subsection (d) of this Code section; or
(B) In the event that a 180 day waiver granted pursuant to paragraph (4) of subsection
(d) of this Code section was granted to such county or consolidated government in the
previous two years, a period of 90 days following the deadline provided for in
paragraph (1) of subsection (d) of this Code section.
The waiver provided for in this paragraph shall only be granted if the county or
consolidated government's failure to timely file an audit is the result of the failure of one
or more such public officers or employees to cooperate or provide documentation as
required by this paragraph.
(3) In the event that a county or consolidated government fails to forward a copy of an
audit or report to the state auditor within the time frame provided for in this Code section,
and such failure is the result of the failure of a county officer listed in Article IX,
Section I, Paragraph III(a) of the Constitution, other than judges of the probate court, to
cooperate with such county or consolidated government in the preparation of such audit
or report, the governing authority of such county or consolidated government,
notwithstanding any other provision of law to the contrary, shall temporarily withhold 50
percent of the compensation paid to such officer from county funds until such time as
such officer has provided all cooperation and information necessary for the filing of the
audit or report. Within 14 days of such an audit or report being completed and forwarded
to the state auditor, the governing authority of the county or consolidated government
shall pay all such withheld compensation to the officer; provided, however, that such
officer shall not be entitled to receive any interest or additional compensation related to
such withheld funds.
</ins>
(e) A copy of the report and of any comments made by the state auditor pursuant to
paragraph (2) of subsection (d) of this Code section shall be maintained as a public record
for public inspection during the regular working hours at the principal office of the local
government. Those units of local government not having a principal office shall provide
a notification to the public as to the location of and times during which the public may
inspect the report.
(f) Upon a failure, refusal, or neglect to have an annual audit made, or a failure to file a
copy of the annual audit report with the state auditor, or a failure to correct auditing
deficiencies noted by the state auditor, the state auditor shall cause a prominent notice to
be published in the legal organ of, and any other newspapers of general circulation within,
the unit of local government. Such notice shall be a prominently displayed advertisement
or news article and shall not be placed in that section of the newspaper where legal notices
appear. Such notice shall be published twice and shall state that the governing authority
of the unit of local government has failed or refused, as the case may be, to file an audit
report or to correct auditing deficiencies, as the case may be, for the fiscal year or years in
question. Such notice shall further state that such failure or refusal is in violation of state
law.
(g) The state auditor may waive the requirement of correction of auditing deficiencies for
a period of one year from the required audit filing date, provided evidence is presented that
substantial progress is being made <del>towards</del> <ins>toward</ins> removing the cause of the need for the
waiver. No such waiver for the same set of deficiencies shall be granted for more than two
successive years to the same local government."
SECTION 2.
All laws and parts of laws in conflict with this Act are repealed.