25 LC 47 3465S
House Bill 244 (COMMITTEE SUBSTITUTE)
By: Representatives Cannon of the 172
nd
, Yearta of the 152
nd
, Greene of the 154
th
, Jackson
of the 128
th
, and Hagan of the 156
th
A BILL TO BE ENTITLED
AN ACT
To amend Article 1 of Chapter 81 of Title 36 of the Official Code of Georgia Annotated,
1
relating to local government budgets and audits, so as to update and revise provisions,2
content, and form of annual audits by local governments; to authorize regulatory basis of3
accounting framework for certain annual audits; to authorize the state auditor to prescribe4
necessary forms and information contained in certain components of such audits; to provide5
for exceptions; to provide that constitutional county officers may be liable for the failure of6
their offices to assist counties in complying with audit requirements; to provide for the7
temporary withholding of compensation for certain officers for failing to assist counties in8
complying with audit requirements; to provide for related matters; to repeal conflicting laws;9
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 Georgia 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
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"36-81-7.
17
(a)(1) The governing authority of each unit of local government having a population in
18
excess of 1,500 persons according to the latest estimate of population 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 not included in24
paragraph (1) of this subsection shall may provide for and cause to be made the an audit25
required pursuant to paragraph (1) of this subsection not less often than once every two26
fiscal years using the special purpose framework prescribed by the state auditor. The27
state auditor shall develop reporting templates to be used by a local unit of government28
making a report pursuant to this paragraph and establish an effective date to begin29
reporting under the special purpose framework. Audits performed pursuant to this30
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 reconciliation 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 years. The governing42
authority of each local unit of government not included in paragraph (1) or (2) of this43
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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 activities 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 the meaning of the49
requirements of subsections (d) through (g) of this Code section. The Department of50
Community Affairs is authorized to assist requesting local governments 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 evidence that in a particular59
fiscal year unusual circumstances resulted in expenditures exceeding 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 government has assumed any65
actual or potential liability for the obligations of any governmental or private agency,66
authority, or instrumentality. Such statement shall include the purpose of the agreement67
or arrangement, shall identify the agency, authority, or instrumentality 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
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under the agreement or arrangement. To the extent that the state auditor is able to provide
71
comparable auditing services, the governing body may contract with the state auditor.72
(c) All annual audit reports of local units of government shall 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 statements 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 an
83
audit if the basis of such adverse opinion is the result of a unit 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 account 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 cooperate 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 government deems95
necessary to prepare such financial statements or audit reports. The failure of any such96
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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 accordance with generally101
accepted government auditing standards, any apparent material violation of state or local102
law discovered during the audit of the supplemental official income 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 by 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 days 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 report due date, written112
comments on the findings and recommendations in the report, including 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 case 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
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comments notify the governing authority and the auditor who performed the audit and
124
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 Assembly whose126
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 or 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, may 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) County officers listed in Article IX, Section I, Paragraph III(a) of the
141
Constitution shall be obligated to cooperate with the county or consolidated government142
in the preparation of financial statements and audit reports required by this Code section143
and shall provide such government with all documentation deemed necessary by the144
government to prepare such financial statements or audit reports.145
(2) The failure of any such officer to cooperate with or provide required documentation146
to a county or consolidated government shall not result in any liability applying to such147
government, and the state auditor for good cause shown may waive the requirements of148
this Code section for either:149
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(A) A period of 90 days following a 180 day waiver granted pursuant to paragraph (4)150
of subsection (d) of this Code section; or151
(B) In the event that a 180 day waiver granted pursuant to paragraph (4) of subsection152
(d) of this Code section was granted to such county or consolidated government in the153
previous two years, a period of 90 days following the deadline provided for in 154
paragraph (1) of subsection (d) of this Code section.155
The waiver provided for in this paragraph shall only be granted if the county or156
consolidated government's failure to timely file an audit is the result of the failure of one157
or more such officers to cooperate or provide documentation as required by this158
paragraph.159
(3) In the event that a county or consolidated government fails to forward a copy of an160
audit or report to the state auditor within the time frame provided for in this Code section,161
and such failure is the result of the failure of a county officer listed in Article IX,162
Section I, Paragraph III(a) of the Constitution, other than judges of the probate court, to163
cooperate with such county or consolidated government in the preparation of such audit164
or report, the governing authority of such county or consolidated government,165
notwithstanding any other provision of law to the contrary, shall temporarily withhold 50166
percent of the compensation paid to such officer from county funds until such time as167
such officer has provided all cooperation and information necessary for the filing of the168
audit or report. Within 14 days of such an audit or report being completed and forwarded169
to the state auditor, the governing authority of the county or consolidated government170
shall pay all such withheld compensation to the officer; provided, however, that such171
officer shall not be entitled to receive any interest or additional compensation related to172
such withheld funds.173
(e) A copy of the report and of any comments made by the state auditor pursuant to174
paragraph (2) of subsection (d) of this Code section shall be maintained as a public record175
for public inspection during the regular working hours at the principal office of the local176
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government. Those units of local government not having a principal office shall provide
177
a notification to the public as to the location of and times during which the public may178
inspect the report.179
(f) Upon a failure, refusal, or neglect to have an annual audit made, or a failure to file a180
copy of the annual audit report with the state auditor, or a failure to correct auditing181
deficiencies noted by the state auditor, the state auditor shall cause a prominent notice to182
be published in the legal organ of, and any other newspapers of general circulation within,183
the unit of local government. Such notice shall be a prominently displayed advertisement184
or news article and shall not be placed in that section of the newspaper where legal notices185
appear. Such notice shall be published twice and shall state that the governing authority186
of the unit of local government has failed or refused, as the case may be, to file an audit187
report or to correct auditing deficiencies, as the case may be, for the fiscal year or years in188
question. Such notice shall further state that such failure or refusal is in violation of state189
law.190
(g) The state auditor may waive the requirement of correction of auditing deficiencies for191
a period of one year from the required audit filing date, provided evidence is presented that192
substantial progress is being made towards
toward removing the cause of the need for the193
waiver. No such waiver for the same set of deficiencies shall be granted for more than two194
successive years to the same local government."195
SECTION 2.196
All laws and parts of laws in conflict with this Act are repealed.197
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