78R10216 JJT-D


By:  Hochberg                                                     H.B. No. 2485



A BILL TO BE ENTITLED

AN ACT

relating to internal auditing of state agencies.                              
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 2102.004, Government Code, is amended to 
read as follows:
	Sec. 2102.004.  APPLICABILITY.  (a)  Sections 
2102.005-2102.012 apply only to a [This chapter applies to each] 
state agency that:
		(1)  has an annual operating budget that exceeds $10 
million;        
		(2)  has more than 100 full-time equivalent employees 
as authorized by the General Appropriations Act; or
		(3)  receives and processes more than $10 million in 
cash in a fiscal year.
	(b)  Sections 2102.013 and 2102.014 apply to each state 
agency that receives an appropriation and that is not described by 
Subsection (a).
	SECTION 2.  Chapter 2102, Government Code, is amended by 
adding Sections 2102.013 and 2102.014 to read as follows:
	Sec. 2102.013.  ANNUAL RISK ASSESSMENT; REPORT.  (a)  A state 
agency described by Section 2102.004(b) shall conduct each year a 
formal risk assessment consisting of an executive management review 
of agency functions, activities, and processes.
	(b)  The risk assessment must:                                          
		(1)  evaluate the probability of occurrence and the 
likely effect of financial, managerial, and compliance risks and of 
risks related to the use of information technology; and
		(2)  rank risks according to the probability of 
occurrence and likely effect of the risks evaluated.
	(c)  The state agency shall submit the written risk 
assessment to the state auditor in the form and at the time 
prescribed by the state auditor.
	Sec. 2102.014.  EVALUATION OF RISK ASSESSMENT REPORTS; 
AUDITS.  (a)  The state auditor shall:
		(1)  evaluate each report submitted under Section 
2102.013;          
		(2)  identify agencies with significant financial, 
managerial, or compliance risk or significant risk related to the 
use of information technology; and
		(3)  recommend to the governor that the identified 
agencies obtain an audit to address the significant risks 
identified by the state auditor.
	(b)  The governor may order an agency identified under this 
section to:
		(1)  obtain an audit under governmental auditing 
standards;          
		(2)  submit reports and corrective action plans as 
prescribed by Section 2102.0091; and
		(3)  report to the state auditor the status of the 
agency's implementation of audit recommendations in the form and 
addressing issues as prescribed by the state auditor.
	(c)  The governor may provide funds to agencies as necessary 
to pay the costs of audits ordered under this section from any funds 
appropriated to the governor for this purpose.
	SECTION 3.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2003.