By Ratliff S.B. No. 32
75R10219 JRD-F
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 only if:
3-6 (1) the agency or corporation is authorized to do so
3-7 by law or through a delegation of authority from the state auditor;
3-8 (2) the scope of the proposed audit has been submitted
3-9 to the state auditor for review and comment; and
3-10 (3) the services of the private auditor are procured
3-11 through a competitive selection process in a manner allowed by law.
3-12 (b) At the joint direction of the lieutenant governor and
3-13 the speaker of the house of representatives, the state auditor
3-14 shall provide contract management services to the agency or
3-15 corporation for an audit described by this section.
3-16 SECTION 5. Chapter 321, Government Code, is amended by
3-17 adding Section 321.022 to read as follows:
3-18 Sec. 321.022. COORDINATION OF INVESTIGATIONS. (a) If the
3-19 administrative head of a department or entity that is subject to
3-20 audit by the state auditor has reasonable cause to believe that
3-21 money received from the state by the department or entity or by a
3-22 client or contractor of the department or entity may have been
3-23 lost, misappropriated, or misused, or that other fraudulent or
3-24 unlawful conduct has occurred in relation to the operation of the
3-25 department or entity, the administrative head shall directly and
3-26 immediately report the reason and basis for the belief to the state
3-27 auditor. The state auditor may investigate the report or may
4-1 monitor any investigation conducted by the department or entity.
4-2 (b) All records of a communication by or to the state
4-3 auditor relating to a report to the state auditor under Subsection
4-4 (a) are audit working papers of the state auditor.
4-5 SECTION 6. Section 403.024(b), Government Code, as added by
4-6 Section 5.30, Chapter 76, Acts of the 74th Legislature, Regular
4-7 Session, 1995, is amended to read as follows:
4-8 (b) In this section, "state agency" has the meaning assigned
4-9 by Section 2056.001 [403.013].
4-10 SECTION 7. Subchapter F, Chapter 411, Government Code, is
4-11 amended by adding Section 411.132 to read as follows:
4-12 Sec. 411.132. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION:
4-13 STATE AUDITOR. (a) The state auditor is entitled to obtain from
4-14 the department criminal history record information for purposes of:
4-15 (1) performing risk assessment in devising the annual
4-16 audit plan; or
4-17 (2) performing an investigation under Chapter 321 of
4-18 specified acts or allegations of impropriety, malfeasance, or
4-19 nonfeasance.
4-20 (b) The department and the state auditor shall enter into an
4-21 agreement providing the state auditor with electronic access to the
4-22 information that includes appropriate safeguards against
4-23 unauthorized disclosure of the information.
4-24 (c) Except as provided by Subsection (d), information
4-25 obtained by the state auditor under Subsection (a) may not be
4-26 released or disclosed to any person except on court order or with
4-27 the consent of the person who is the subject of the criminal
5-1 history record information.
5-2 (d) If, in the judgment of the state auditor, information
5-3 obtained under Subsection (a) indicates a substantial risk to the
5-4 interests of the state, the state auditor shall report the
5-5 information to the legislative audit committee and to the
5-6 administrative head of the affected agency. The reports are audit
5-7 working papers of the state auditor.
5-8 (e) The state auditor shall destroy information obtained
5-9 under Subsection (a) when the information is no longer needed for
5-10 audit purposes or to support audit findings.
5-11 SECTION 8. Section 2102.003(3), Government Code, is amended
5-12 to read as follows:
5-13 (3) "State agency" means [includes] a department,
5-14 board, bureau, institution, commission, or other agency in the
5-15 executive branch of state government [of the state].
5-16 SECTION 9. Section 2102.005, Government Code, is amended to
5-17 read as follows:
5-18 Sec. 2102.005. INTERNAL AUDITING REQUIRED. A state agency
5-19 shall conduct a [full-time] program of internal auditing that
5-20 includes:
5-21 (1) an annual audit plan that is prepared using risk
5-22 assessment techniques and that identifies the individual audits to
5-23 be conducted during the year; and
5-24 (2) periodic audits of the agency's major systems and
5-25 controls, including:
5-26 (A) accounting systems and controls;
5-27 (B) administrative systems and controls; and
6-1 (C) electronic data processing systems and
6-2 controls.
6-3 SECTION 10. Section 2102.009, Government Code, is amended to
6-4 read as follows:
6-5 Sec. 2102.009. ANNUAL REPORT. [(a)] The internal auditor
6-6 shall prepare an annual report and submit the report before
6-7 November 1 of each year to the governor, the Legislative Budget
6-8 Board, the Sunset Advisory Commission, the state auditor, the state
6-9 agency's governing board, and the administrator. The state auditor
6-10 shall prescribe the form and content of the report, subject to the
6-11 approval of the legislative audit committee.
6-12 [(b) The report must contain:]
6-13 [(1) a copy of the annual audit plan;]
6-14 [(2) a list of audits completed;]
6-15 [(3) an explanation of any deviation from the approved
6-16 annual audit plan;]
6-17 [(4) a narrative description of the most significant
6-18 findings and recommendations for each audit;]
6-19 [(5) a narrative description of the management actions
6-20 taken in response to the audit findings and recommendations;]
6-21 [(6) a table listing the auditor's audit
6-22 recommendations and the five-year fiscal impact for each
6-23 recommendation;]
6-24 [(7) a table of the audit recommendations from the
6-25 previous fiscal year's report and an explanation of the status of
6-26 each recommendation; and]
6-27 [(8) a statement of the last date on which an external
7-1 peer review of the agency's internal audit program was conducted.]
7-2 [(c) Each audit recommendation must show whether:]
7-3 [(1) the recommendation has been implemented;]
7-4 [(2) the recommendation is in the process of
7-5 implementation;]
7-6 [(3) action on implementation of the recommendation
7-7 has been delayed; or]
7-8 [(4) the agency does not intend to take action on the
7-9 recommendation.]
7-10 [(d) The report must emphasize the findings in important
7-11 areas that are difficult to quantify, including weaknesses in
7-12 management controls or quality of services.]
7-13 SECTION 11. Sections 12(d), (e), and (f), Article 21.28,
7-14 Insurance Code, are amended to read as follows:
7-15 (d) Audit. The state auditor may [shall] conduct an
7-16 [annual] audit of the liquidator in accordance with the audit plan
7-17 reviewed and approved by the legislative audit committee. The
7-18 audits authorized [or required] by this subsection shall be
7-19 conducted in the manner provided by Chapter 321, Government Code.
7-20 (e) Contents of Auditor's Report. The state auditor's
7-21 report of the audit authorized [required] by Subsection (d) of this
7-22 section may include:
7-23 (1) an analysis of the overall performance of the
7-24 liquidator;
7-25 (2) an analysis of the liquidator's financial
7-26 operations and condition;
7-27 (3) an analysis of receipts and expenditures made in
8-1 connection with each audited receivership and an analysis of the
8-2 adequacy of the receiver's bond in relation to assets, receipts,
8-3 and expenditures;
8-4 (4) the amount of funds made available to the
8-5 liquidator by a guaranty association in connection with each
8-6 audited receivership and a detail of the purpose and manner of
8-7 expenditure of such funds;
8-8 (5) the ratio of the total amount of claims paid to
8-9 the total costs incurred in connection with each audited
8-10 receivership;
8-11 (6) the ratio of the liquidator's administrative
8-12 expenses to the total costs incurred in connection with each
8-13 audited receivership; or
8-14 (7) an analysis of the feasibility of using attorneys
8-15 who are employees of the liquidator in all litigation.
8-16 (f) Filing of Auditor's Reports. Copies of the auditor's
8-17 report shall be filed[,] in the manner required by Section 321.014,
8-18 Government Code[, not later than March 31 of the year following the
8-19 year covered by the audit]. An additional copy of the report shall
8-20 be filed with the board and the commissioner.
8-21 SECTION 12. Article 26.57(a), Insurance Code, is amended to
8-22 read as follows:
8-23 (a) The transactions of the system are subject to audit by
8-24 the state auditor in accordance with [shall conduct annually a
8-25 special audit of the system under] Chapter 321, Government Code.
8-26 [The state auditor's report shall include a financial audit and an
8-27 economy and efficiency audit.]
9-1 SECTION 13. Section 223.041, Transportation Code, is amended
9-2 to read as follows:
9-3 Sec. 223.041. ENGINEERING AND DESIGN CONTRACTS. (a) The
9-4 department's policy regarding the regular use of private sector
9-5 professional services for preliminary and construction engineering
9-6 and engineering design shall achieve a balance between the use of
9-7 department employees and the use of private contractors if the
9-8 costs are equivalent.
9-9 (b) [The office of the state auditor shall determine
9-10 relevant costs to be considered under Subsection (a).]
9-11 [(c)] The commission may provide for hearings at which
9-12 private sector complaints relating to the selection process are
9-13 heard.
9-14 SECTION 14. The following laws are repealed:
9-15 (1) Section 58.017(c), Agriculture Code;
9-16 (2) Section 61.029(e), Education Code;
9-17 (3) Section 321.013(j), Government Code;
9-18 (4) Section 321.015, Government Code; and
9-19 (5) Section 15A, Texas State College and University
9-20 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
9-21 Texas Insurance Code).
9-22 SECTION 15. The importance of this legislation and the
9-23 crowded condition of the calendars in both houses create an
9-24 emergency and an imperative public necessity that the
9-25 constitutional rule requiring bills to be read on three several
9-26 days in each house be suspended, and this rule is hereby suspended.