By Wolens H.B. No. 2906
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the duties of the state auditor, state audits, and
1-3 investigations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 7.022, Education Code, is amended to read
1-6 as follows:
1-7 Sec. 7.022. INTERNAL AUDIT. [(a)] The auditor appointed by
1-8 the commissioner under Section 7.055 shall coordinate the agency's
1-9 efforts to evaluate and improve its internal operations.
1-10 [(b) The state auditor shall review the quality and
1-11 effectiveness of the agency's process for auditing internal
1-12 operations and shall report the state auditor's findings to the
1-13 commissioner and the board.]
1-14 SECTION 2. Section 321.008, Government Code, is amended to
1-15 read as follows:
1-16 Sec. 321.008. QUALIFYING FOR OFFICE. (a) To qualify for
1-17 office, the State Auditor must take the constitutional oath of
1-18 office [and execute a bond in an amount determined by the committee
1-19 to be sufficient to protect the state's interests, payable to the
1-20 governor. The bond must be approved by the committee, be
1-21 conditioned on the faithful discharge of his duties, and have a
1-22 solvent surety company as surety. At least once in each five-year
1-23 period, the committee shall review the amount of the bond and
1-24 adjust the amount as necessary to take account of changed
2-1 conditions].
2-2 (b) The State Auditor must file the oath [and approved bond]
2-3 with the secretary of state not later than the 10th day after the
2-4 date on which the committee appointed the State Auditor, or the
2-5 committee or a majority of the committee members shall appoint
2-6 another qualified person as State Auditor.
2-7 [(c) The state shall pay the premium to the surety company
2-8 for the execution of the bond required by Subsection (a).]
2-9 SECTION 3. Section 321.014, Government Code, is amended by
2-10 adding Subsections (f) and (g) to read as follows:
2-11 (f) Each audited department or entity shall report on the
2-12 manner in which the department or entity has addressed the findings
2-13 and recommendations that are included in a report prepared by the
2-14 state auditor under this section. The state auditor shall
2-15 prescribe the form and schedule for a report by the department or
2-16 entity under this subsection.
2-17 (g) If a department or entity does not implement a change
2-18 recommended by the state auditor's report, the department or entity
2-19 shall file a report with the persons specified by Subsection (c).
2-20 The report must:
2-21 (1) identify the recommendation the department or
2-22 entity did not implement; and
2-23 (2) state the reason the department or entity did not
2-24 implement the recommendation.
2-25 SECTION 4. Chapter 321, Government Code, is amended by
2-26 adding Section 321.020 to read as follows:
2-27 Sec. 321.020. COORDINATION OF CERTAIN AUDITS.
3-1 (a) Notwithstanding any other law, a state agency, or a
3-2 corporation that is dedicated to the benefit of a state agency and
3-3 that meets the criteria specified by Section B, Article 2.23B,
3-4 Texas Non-Profit Corporation Act (Article 1396-2.23B, Vernon's
3-5 Texas Civil Statutes), may employ a private auditor to audit the
3-6 state agency or corporation only if:
3-7 (1) the agency or corporation is authorized to do so
3-8 by law or through a delegation of authority from the state auditor;
3-9 (2) the scope of the proposed audit has been submitted
3-10 to the state auditor for review and comment; and
3-11 (3) the services of the private auditor are procured
3-12 through a competitive selection process in a manner allowed by law.
3-13 (b) At the joint direction of the lieutenant governor and
3-14 the speaker of the house of representatives, the state auditor
3-15 shall provide contract management services to the agency or
3-16 corporation for an audit described by this section.
3-17 SECTION 5. Chapter 321, Government Code, is amended by
3-18 adding Section 321.022 to read as follows:
3-19 Sec. 321.022. COORDINATION OF INVESTIGATIONS. (a) If the
3-20 administrative head of a department or entity that is subject to
3-21 audit by the state auditor has reasonable cause to believe that
3-22 money received from the state by the department or entity or by a
3-23 client or contractor of the department or entity may have been
3-24 lost, misappropriated, or misused, or that other fraudulent or
3-25 unlawful conduct has occurred in relation to the operation of the
3-26 department or entity, the administrative head shall report the
3-27 reason and basis for the belief to the state auditor. The state
4-1 auditor may investigate the report or may monitor any investigation
4-2 conducted by the department or entity.
4-3 (b) The state auditor, in consultation with state agencies
4-4 and institutions, shall prescribe the form, content, and timing of
4-5 a report required by this section.
4-6 (c) All records of a communication by or to the state
4-7 auditor relating to a report to the state auditor under Subsection
4-8 (a) are audit working papers of the state auditor.
4-9 SECTION 6. Section 403.024(b), Government Code, as added by
4-10 Section 5.30, Chapter 76, Acts of the 74th Legislature, Regular
4-11 Session, 1995, is amended to read as follows:
4-12 (b) In this section, "state agency" has the meaning assigned
4-13 by Section 2056.001 [403.013].
4-14 SECTION 7. Subchapter F, Chapter 411, Government Code, is
4-15 amended by adding Section 411.132 to read as follows:
4-16 Sec. 411.132. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION:
4-17 STATE AUDITOR. (a) The state auditor is entitled to obtain from
4-18 the department criminal history record information for purposes of:
4-19 (1) performing risk assessment in devising the annual
4-20 audit plan; or
4-21 (2) performing an investigation under Chapter 321 of
4-22 specified acts or allegations of impropriety, malfeasance, or
4-23 nonfeasance.
4-24 (b) The department and the state auditor shall enter into an
4-25 agreement providing the state auditor with electronic access to the
4-26 information that includes appropriate safeguards against
4-27 unauthorized disclosure of the information.
5-1 (c) Except as provided by Subsection (d), information
5-2 obtained by the state auditor under Subsection (a) may not be
5-3 released or disclosed to any person except on court order or with
5-4 the consent of the person who is the subject of the criminal
5-5 history record information.
5-6 (d) If, in the judgment of the state auditor, information
5-7 obtained under Subsection (a) indicates a substantial risk to the
5-8 interests of the state, the state auditor shall report the
5-9 information to the legislative audit committee and to the
5-10 administrative head of the affected agency. The reports are audit
5-11 working papers of the state auditor.
5-12 (e) The state auditor shall destroy information obtained
5-13 under Subsection (a) when the information is no longer needed for
5-14 audit purposes or to support audit findings.
5-15 SECTION 8. Section 2102.003(3), Government Code, is amended
5-16 to read as follows:
5-17 (3) "State agency" means [includes] a department,
5-18 board, bureau, institution, commission, or other agency in the
5-19 executive branch of state government [of the state].
5-20 SECTION 9. Section 2102.005, Government Code, is amended to
5-21 read as follows:
5-22 Sec. 2102.005. INTERNAL AUDITING REQUIRED. A state agency
5-23 shall conduct a [full-time] program of internal auditing that
5-24 includes:
5-25 (1) an annual audit plan that is prepared using risk
5-26 assessment techniques and that identifies the individual audits to
5-27 be conducted during the year; and
6-1 (2) periodic audits of the agency's major systems and
6-2 controls, including:
6-3 (A) accounting systems and controls;
6-4 (B) administrative systems and controls; and
6-5 (C) electronic data processing systems and
6-6 controls.
6-7 SECTION 10. Section 2102.009, Government Code, is amended to
6-8 read as follows:
6-9 Sec. 2102.009. ANNUAL REPORT. [(a)] The internal auditor
6-10 shall prepare an annual report and submit the report before
6-11 November 1 of each year to the governor, the Legislative Budget
6-12 Board, the Sunset Advisory Commission, the state auditor, the state
6-13 agency's governing board, and the administrator. The state auditor
6-14 shall prescribe the form and content of the report, subject to the
6-15 approval of the legislative audit committee.
6-16 [(b) The report must contain:]
6-17 [(1) a copy of the annual audit plan;]
6-18 [(2) a list of audits completed;]
6-19 [(3) an explanation of any deviation from the approved
6-20 annual audit plan;]
6-21 [(4) a narrative description of the most significant
6-22 findings and recommendations for each audit;]
6-23 [(5) a narrative description of the management actions
6-24 taken in response to the audit findings and recommendations;]
6-25 [(6) a table listing the auditor's audit
6-26 recommendations and the five-year fiscal impact for each
6-27 recommendation;]
7-1 [(7) a table of the audit recommendations from the
7-2 previous fiscal year's report and an explanation of the status of
7-3 each recommendation; and]
7-4 [(8) a statement of the last date on which an external
7-5 peer review of the agency's internal audit program was conducted.]
7-6 [(c) Each audit recommendation must show whether:]
7-7 [(1) the recommendation has been implemented;]
7-8 [(2) the recommendation is in the process of
7-9 implementation;]
7-10 [(3) action on implementation of the recommendation
7-11 has been delayed; or]
7-12 [(4) the agency does not intend to take action on the
7-13 recommendation.]
7-14 [(d) The report must emphasize the findings in important
7-15 areas that are difficult to quantify, including weaknesses in
7-16 management controls or quality of services.]
7-17 SECTION 11. Subsections (d), (e), and (f), Section 12,
7-18 Article 21.28, Insurance Code, are amended to read as follows:
7-19 (d) Audit. The state auditor may [shall] conduct an
7-20 [annual] audit of the liquidator in accordance with the audit plan
7-21 reviewed and approved by the legislative audit committee. The
7-22 audits authorized [or required] by this subsection shall be
7-23 conducted in the manner provided by Chapter 321, Government Code.
7-24 (e) Contents of Auditor's Report. The state auditor's
7-25 report of the audit authorized [required] by Subsection (d) of this
7-26 section may include:
7-27 (1) an analysis of the overall performance of the
8-1 liquidator;
8-2 (2) an analysis of the liquidator's financial
8-3 operations and condition;
8-4 (3) an analysis of receipts and expenditures made in
8-5 connection with each audited receivership and an analysis of the
8-6 adequacy of the receiver's bond in relation to assets, receipts,
8-7 and expenditures;
8-8 (4) the amount of funds made available to the
8-9 liquidator by a guaranty association in connection with each
8-10 audited receivership and a detail of the purpose and manner of
8-11 expenditure of such funds;
8-12 (5) the ratio of the total amount of claims paid to
8-13 the total costs incurred in connection with each audited
8-14 receivership;
8-15 (6) the ratio of the liquidator's administrative
8-16 expenses to the total costs incurred in connection with each
8-17 audited receivership; or
8-18 (7) an analysis of the feasibility of using attorneys
8-19 who are employees of the liquidator in all litigation.
8-20 (f) Filing of Auditor's Reports. Copies of the auditor's
8-21 report shall be filed[,] in the manner required by Section 321.014,
8-22 Government Code[, not later than March 31 of the year following the
8-23 year covered by the audit]. An additional copy of the report shall
8-24 be filed with the board and the commissioner.
8-25 SECTION 12. Article 26.57(a), Insurance Code, is amended to
8-26 read as follows:
8-27 (a) The transactions of the system are subject to audit by
9-1 the state auditor in accordance with [shall conduct annually a
9-2 special audit of the system under] Chapter 321, Government Code.
9-3 [The state auditor's report shall include a financial audit and an
9-4 economy and efficiency audit.]
9-5 SECTION 13. Section 223.041, Transportation Code, is amended
9-6 to read as follows:
9-7 Sec. 223.041. ENGINEERING AND DESIGN CONTRACTS. (a) The
9-8 department's policy regarding the regular use of private sector
9-9 professional services for preliminary and construction engineering
9-10 and engineering design shall achieve a balance between the use of
9-11 department employees and the use of private contractors if the
9-12 costs are equivalent.
9-13 (b) [The office of the state auditor shall determine
9-14 relevant costs to be considered under Subsection (a).]
9-15 [(c)] The commission may provide for hearings at which
9-16 private sector complaints relating to the selection process are
9-17 heard.
9-18 SECTION 14. Section 58.017, Agriculture Code, is amended to
9-19 read as follows:
9-20 Sec. 58.017. PERFORMANCE MEASURES [COST-BENEFIT REPORT].
9-21 The board, in conjunction with the Legislative Budget Board, the
9-22 state auditor, and the Office of the Governor, shall develop a
9-23 minimum of two performance measures that provide information on the
9-24 benefits of the authority's loan programs. The performance
9-25 measures shall be included in the report required under Section
9-26 58.016(d) of this code or as a component of the measures
9-27 incorporated into the Appropriations Act [(a) The board shall
10-1 perform a biennial cost-benefit study of the authority's active and
10-2 inactive programs and prepare a report regarding that study. The
10-3 study must include an examination of the number of jobs created or
10-4 retained in this state as a result of each program and the costs
10-5 and benefits associated with those jobs].
10-6 [(b) The chairman of the board shall file the report
10-7 prepared under Subsection (a) with the state auditor before
10-8 December 1 of each even-numbered year.]
10-9 [(c) The state auditor shall review the report filed under
10-10 Subsection (b) and send the report and the auditor's comments
10-11 regarding the methodology used by the authority in performing the
10-12 cost-benefit study to the governor and the presiding officer of
10-13 each house of the legislature not later than February 1 of each
10-14 odd-numbered year. The state auditor shall provide assistance to
10-15 the department in preparing the report required by this section.]
10-16 SECTION 15. The following laws are repealed:
10-17 (1) Section 61.029(e), Education Code;
10-18 (2) Section 321.013(j), Government Code;
10-19 (3) Section 321.015, Government Code;
10-20 (4) Section 2303.0525, Government Code; and
10-21 (5) Section 15A, Texas State College and University
10-22 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
10-23 Texas Insurance Code).
10-24 SECTION 16. The importance of this legislation and the
10-25 crowded condition of the calendars in both houses create an
10-26 emergency and an imperative public necessity that the
10-27 constitutional rule requiring bills to be read on three several
11-1 days in each house be suspended, and this rule is hereby suspended.