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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
HOUSE BILL 3778 By: Roberts (Sean)
AS INTRODUCED
An Act relating to audits of nonappropriated
agencies; amending 74 O.S. 2021, Section 212, which
relates to the State Auditor and Inspector; modifying
requirements for frequenc y of audits of
nonappropriated agencies; requiring schedule for
audits; and providing an effec tive date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 74 O.S. 2021, Section 212, is
amended to read as follows:
Section 212. A. STATE TREASURER AND OKLAHOMA TAX COMMISSION
1. The State Treasurer shall prepare annual financial
statements in accordance with the reporting requ irements set forth
by the Governmental Accounting Standards Board (GASB). The State
Treasurer shall pres cribe and implement sound internal control,
accounting and recordkeeping practices consistent with and to
facilitate compliance with all reporting requ irements as set forth
by law.
2. The annual financial statements of the State Treasurer shall
be delivered by the State Treasurer to the State Auditor and
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Inspector within ninety (90) calendar days after the close of the
state fiscal year.
3. The State Auditor and Inspector shall perform an audit of
the annual financial statements of the State Treasurer for each
state fiscal year. Such audits shall be conducted in accordance
with auditing standards generally accepted in the United States and
the standards applicable to financial audits contained in Government
Auditing Standards, latest revised edition, issu ed by the
Comptroller General of the United States. The State Auditor and
Inspector shall complete the audits not later than ninety (90)
calendar days after the financial statements are delivered to the
State Auditor and Inspector. The annual audit repor ts and related
financial statements shall be delivered by the State Auditor and
Inspector to the Governor, President Pro Tempore of the Senate, and
Speaker of the House of Representatives. The annual audit report
and related financial statements of the St ate Treasurer shall also
be delivered to the Attorney General and the members of the Cash
Management and Investment Oversight Commission created by Sec tion
71.1 of Title 62 of the Oklahoma Statutes. The State Auditor and
Inspector shall conduct unannounce d cash audits of the State
Treasury at least once each quarter.
4. The audit of the Tax Commission shall be an operational
audit performed annually. To the extent of the amount included in
the Tax Commission's appropriation, the Tax Commission shall pay the
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expenses of the audit including personal services, equipment and
supplies, from the appropriation.
B. STATE AGENCIES
1. Except as otherwise provi ded by law, and except as provided
by paragraph 5 of this subsection, the State Auditor and Inspector
shall audit at least once every two (2) fiscal years the books and
accounts of all state agencies whose duty it is to collect, disburse
or manage funds of the st ate. The State Auditor and Inspector shall
audit a state agency each fiscal year if that state ag ency is
required to be audited on an annual basis pursuant to the federal
Single Audit Act of 1984, as amended, 31 U.S.C., Section 7501 et
seq. If the state agency is audited only once every two (2) fiscal
years, the audit shall cover both fiscal years.
2. Except as otherwise provided by law, the scope of audits
performed by the State Auditor and Inspector shall include all funds
collected, disbursed, or mana ged by a state agency including, but
not limited to, all special, revolving, depository, canteen, or
other nonstate funds.
3. As used in this section, "state agency" means every agency,
board, or commission included in the primary government of the State
of Oklahoma. For purposes of this paragraph, the p rimary government
of the State of Oklahoma incl udes all agencies, boards, and
commissions included in the primary government in the State of
Oklahoma Comprehensive Annual Financial Report. The agencies,
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boards, and commissions included in the primary gove rnment of the
State of Oklahoma shall be determ ined using criteria set by the
Governmental Accounting Standards Board.
4. As used in this subsection, "audit" means any of the
following:
a. "financial audit", which means an audit of financial
statements in order to express an opinion on the
fairness with which they are presented in conformity
with generally accepted accounting principles or any
other comprehensive basis of accounting, as defined by
the American Institute of Certified Public
Accountants' Professional Standards, latest revised
edition. Financial audits must be conducted in
accordance with auditing standards generally accepted
in the United States and the standards applicable to
financial audits contained in Government Auditing
Standards, latest revised edition, issued by the
Comptroller General of the United States,
b. "operational audit", which means an audit conducted in
accordance with applicable Government Auditing
Standards, the purpose o f which is to evaluate
management's performance in administering assigned
responsibilities in acco rdance with applicable laws,
administrative rules, and other policies and
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guidelines and to determine the extent to which the
internal control, as designed an d placed in operation,
promotes and encourages the achievement of
management's control objectives in the categories of
compliance, reliability of financial records and
reports, and safeguarding of assets,
c. "performance audit", which means an audit of a
program, activity, or function of a state agency
conducted in accordance with applicable Government
Auditing Standards. The term includes, but is not
limited to, an audit to assess program, activity, or
function effectiveness, economy and efficiency,
internal control, or compliance,
d. "special or investigative audit", which means an audit
with respect to a particular situation which may be,
but is not required to be, conducted in accordance
with applicable Government Auditing Standards, and
e. any other type of engagement conducted in accordance
with Government Auditing Standards.
5. Every nonappropriated state governmental entity shall be
audited at least once every four (4) years. The State Auditor and
Inspector shall determine the total number of non appropriated state
governmental entities and shal l establish an audit schedule so tha t
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approximately twenty-five percent (25%) of the nonappropriated
agencies are audited each year.
C. GUBERNATORIAL REQUEST
Whenever called upon to do so by the Governor, it shall be the
duty of the State Auditor and Inspector to examine the books and
accounts of any officer of the state or any of the officer 's
predecessors. The cost of the audit shall be borne by the entity to
be audited.
D. COUNTY TREASURER
The State Auditor and Inspector shall examine without notice all
books and accounts of each county treasurer of the state twice each
year.
E. DISTRICT ATTORNEYS
1. The State Auditor and Inspector shall annually audit the
books and accounts of the several offices of the district attorneys
of this state. The audits shall be reported in separate reports for
each entity. The audit may include, but shall not be limited to,
the audit of the financial records, performance measures, and
compliance with state or federal st atutes and rules, an d compliance
with any regulations of state or federal programs. The expense o f
the audits shall be paid by the entity audited.
2. The State Auditor and Inspector shall examine and file a
report of the accounts established within the o ffice of each
district attorney for bogus check programs, drug task force
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programs, child support collection programs, and any other programs
receiving any nonstate funds. The reports shall be filed with the
President Pro Tempore of the Senate, the Speake r of the House of
Representatives, and the Executive Coordinator of the District
Attorneys Council.
F. DEPARTMENT OF CORRECTIONS
The State Auditor and Inspec tor shall perform an annual audit,
as defined in paragraph 4 of subsection B of this section, of t he
books and accounts of the Department of Corrections. The scope of
the audit shall be determine d by the State Auditor and Inspector
using a risk-based approach. The audit may include, but shall not
be limited to, the audit of the financial records, per formance
measures, and compliance with any state or federal statutes and
rules, and compliance wit h any regulations of state or federal
programs. The expense of the audits shall be paid by the Department
of Corrections.
G. OKLAHOMA EMPLOYEES INSURANCE AN D BENEFITS BOARD
The State Auditor and Inspector shall cause to be audited the
books and accounts of the office of the Oklahoma Employees Insurance
and Benefits Board. The audit may include, but shall not be limited
to, the audit of the financial records, performance measures,
compliance with any state or federal statutes and rules, and
compliance with any regulations of state programs. The audit shall
be contracted out to private audit firms. The cost of the audit
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shall be borne by the Oklahoma Employee s Insurance and Bene fits
Board.
H. DISTRICT ATTORNEY REQUEST
Whenever called upon to do so by any of the several district
attorneys of the state, it shall be the duty of the State Auditor
and Inspector to examine the books and accounts of any officer of
any public entity. T he cost of the audit shall be borne by the
entity audited.
I. COUNTY OFFICERS BY REQUEST
Upon request of the county commissioners of any county or the
Governor, the State Auditor and Inspector shall examine the books
and accounts of all or any of the offi cers or custodians of the
various funds of the county; and payment for such ex amination shall
be made by the county so examined.
J. AUDITORS
The State Auditor and Inspector shall have power to employ
auditors. No auditor shall examine the books or records of the
county of the auditor 's residence in counties of under two hundred
thousand (200,000) population according to the most recent Fed eral
Decennial Census. The State Auditor and Inspector may employ on an
as-needed basis only, leg al counsel to carry out the statutory
duties of the Office of the State Auditor and Inspector.
K. EXAMINATION OF LEVIES
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It shall be the duty of the State Aud itor and Inspector to
examine all levies to raise public revenue to see that they are made
according to law and consti tutional provisions. The State Auditor
and Inspector shall have the power to order all excessive or
erroneous lines (levies) to be correc ted by the proper officers, and
shall report any irregularities to the Governor, the Speaker of th e
House of Representatives and the President Pro Tempore of the
Senate.
L. PETITION AUDITS
1. The State Auditor and Inspector shall audit the books and
records of any subdivision of the State of Oklahoma upon petition
signed by the requisite number of vo ters registered in t he
subdivision and meeting the requirements set out in this subsection.
2. The petition must contain the number of signatures
equivalent to ten percent (10%) of the registered voters of the
subdivision as determined by the county elect ion board or, if the
county election board determines that the number of registered
voters in the subdivision cannot be determined due to boundary lines
not conforming to precinct lines, the required number of petitioners
shall be twenty-five percent (25%) of the total number of persons
voting in the last general election. If the subdivision is a publ ic
trust, the required number of petitioners shall be the sa me as those
required for an audit of its beneficiary. The appropriate county
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election board shall provide the number of signatures so required
upon request.
3. The petition shall be in the form of an affidavit wherein
the signatory shall declare upon oat h or affirmation that the
information given is true and correct and that he or she is a
citizen of the entity to be audited. The petition shall clearly
state that falsely signing shall constitute perjury. It shall
include the signature of the individual, the name of the signatory
in printed form, the individual 's residential address, the date of
signing, the public enti ty to be audited and the anticipated range
of the cost of the audit provided b y the State Auditor and
Inspector.
4. Any person desiring t o petition for an audit shall list the
areas, items or concerns they want to be audited, and reque st from
the State Auditor and Inspector the anticipated range of cost of the
audit. Within thirty (30) days from the receipt of the request, the
State Auditor and Inspector shall mail a petition form to the person
requesting the information which shall st ate the anticipated range
of the cost and the items or concerns to be audited. The
circulators of the petition shall have thirty (30) days from the
date the petition is mailed by the State Auditor and Inspector to
obtain the requisite number of signatures and return it to the State
Auditor and Inspector.
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5. Upon collection of the required number of s ignatures, the
person desiring the audit shall present the s igned petitions to the
State Auditor and Inspector. Within thirty (30) days of receipt of
the petitions, the State Au ditor and Inspector shall present the
petitions to the county election board l ocated in the county in
which the subdivision is located.
6. The county election board shall determine whether the
signers of the petition are registered vot ers of the county in which
the subdivision to be audited is located and whether the petition
has the requisite number of signatures of such registered voters.
The county election board shall certify the petition as having the
required number of signatures or as failing to have the required
number of signatures and return it to the State Auditor and
Inspector.
7. The cost of the audit shall be borne by the pub lic entity
audited. Upon notification by the State Auditor and Inspector of
receipt of the petiti on, certified by the county election board as
having the required number of signatures, the public entity shall
encumber funds in an amount specified by the S tate Auditor and
Inspector, which shall be within the range of anticipated cost
stated on the petition from any funds not otherwise specifically
appropriated or allocated. Payment for the audit f rom such
encumbered funds shall be made as work progresses, and final payment
shall be made on or before its publication.
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8. The names of the signers of any petition shall be
confidential and neither the State Auditor and Inspector, the county
election board nor the county treasurer may release them to any
other person or entity except upon an order from a court of
competent jurisdiction.
M. PENALTIES FOR NON PAYMENT
Except as otherwise provided by law, the cost of any services
provided by the State Audito r and Inspector or as specified in an
audit contract shall b e borne by the entity or fund audited and
shall be due and payable upon receipt of progress billin g during the
course of an audit. Any such costs not paid within ninety (90) days
of the date of receipt of billing shall incur a penalty of Ten
Dollars ($10.00) per day for each day from the date of receipt of
billing.
SECTION 2. This act shall become effect ive November 1, 2022.
58-2-10004 MAH 01/10/22