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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 895 By: Rosino of the Senate
and
Kannady of the House
COMMITTEE SUBSTITUTE
An Act relating to state audits; amending Sec tion 74
O.S. 2011, Section 212, as last amended by Section 1,
Chapter 187, O.S.L. 2014 (74 O.S. Supp. 2020, Section
212), which relates to the duti es and powers of the
State Auditor and Inspector ; allowing state agencies
to choose public audit; providing that the state
agency director has sole discretion to utilize a
public audit and to request cost estimate from the
State Auditor and Inspector ; requiring submission of
acquisition and contract to State Purchasing Director
for review; requiring certain notification upon
decision; relieving State Auditor and Inspector of
statutory duties upon noti fication; requiring
agencies utilizing a public audit to submit
information to Office of Management and Enterprise
Services and State Auditor and Inspector for
statewide audit; requiring information to be
submitted to OMES by certain date; modifying
definition; amending 74 O.S. 2011, Section 212A, as
amended by Section 8 43, Chapter 304, O.S.L. 2012 (74
O.S. Supp. 2020, Section 212A) , which relates to
audits of governmental entities; adding provision for
state agencies; and providing an effecti ve date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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SECTION 1. AMENDATORY 74 O.S. 2011, Section 212, as last
amended by Section 1, Chapter 1 87, O.S.L. 2014 (74 O.S. Supp. 2020,
Section 212), is amended to r ead as follows:
Section 212. A. STATE TREASURER AND OKLAHOMA TAX COMMISSION
1. The State Treasurer and the Oklahoma Tax Commission shall
prepare annual financial statements in accordance with the reporting
requirements set forth by the Governmental Acco unting Standards
Board (GASB). The State Treasurer and the Tax Commission shall
prescribe and implement sound internal control, accounting and
recordkeeping practices consistent with and to facilitate compliance
with all reporting requirements as set fort h by law.
2. The annual financial statements of the State Treasurer and
the Tax Commission shall be delivered by the State Treasurer and the
Tax Commission to the State Auditor and Inspector within ninety (90)
calendar days after the close of the state fi scal year.
3. The State Auditor and Inspector shall perform an audit of
the annual financial statements of the State Treasurer and the Tax
Commission for each state fiscal year. Such audits shall be
conducted in accordance with auditing standards general ly accepted
in the United States and the standards applicable to financial
audits contained in Government Auditing Standards, latest revised
edition, issued by the Comptroller Ge neral of the United States.
The State Auditor and Inspector shall complete th e audits not later
than ninety (90) calendar days after the financial statements are
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delivered to the State Auditor and Inspector. The annual aud it
reports and related financial statements shall be delivered by the
State Auditor and Inspector to the Gover nor, President Pro Tempore
of the Senate, and Speaker of the House of Representa tives. The
annual audit report and related financial statements o f the State
Treasurer shall also be delivered to the Attorney General and the
members of the Cash Management a nd Investment Oversight Commi ssion
created by Section 71.1 of Title 62 of the Ok lahoma Statutes. The
annual audit report and related financial st atements of the Tax
Commission shall also be delivered to the Director of the Office of
Management and Enterpr ise Services and the Legislat ive Service
Bureau. The State Auditor and Inspecto r shall conduct unannounced
cash audits of the State Treasury at l east once each quarter.
4. The audit of the Tax Commission shall be continuous in
nature. The Tax Commission shall furnish the necessary office space
for the employees of the State Auditor and Inspector making the
audit and, to the extent of the amount i ncluded in the Tax
Commission’s appropriation therefor, the Tax Commission shall pay
the expenses of the audit s, including personal service s, equipment
and supplies, from the appropriation.
B. STATE AGENCIES
1. Except as otherwise provided by law , the State Auditor and
Inspector shall audit at least once every two (2) fiscal years the
books and accounts of all s tate agencies whose duty it i s to
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collect, disburse or manage funds of the state . The State Auditor
and Inspector shall audit a state agency each fiscal year if that
state agency 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 age ncy is audited only once every
two (2) fiscal years, the audit sha ll cover both fiscal years.
2. Except as otherwise provided by law, the scope of audits
performed by the Stat e Auditor and Inspector shall include all funds
collected, disbursed, or managed by a state agency including, but
not limited to, all special, rev olving, depository, canteen, or
other nonstate funds.
3. State agencies may choose to have the required audit
performed by a public accountant or certified public accountant
registered to do business with this state. Use of a public
accountant or certifi ed public accountant shall follow the
procedures and standards established for government entities in
Section 212A of this title .
4. The decision to utilize a public accountant or certifi ed
public accountant instead of the State Auditor and Inspector shal l
be at the sole discretion of the agency di rector. The agency
director may request a cost estimate from the State Auditor and
Inspector to assist him or her in deciding which entity shal l
perform the audit. Prior to an agency making an award of a contra ct
for audit services, the acquisition docum entation and proposed
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contract shall be reviewed and approved by the State Purchasing
Director.
5. The agency director shall notify the State Au ditor and
Inspector if he or she chooses to have the agency ’s audit performed
by a public accountant or certifi ed public accountant.
6. Upon notification by a state agency to use a public
accountant or certified public accountant, the State Auditor and
Inspector is relieved of his or her statutory duty to perform that
audit.
7. If a public accountant or certified public accountant is
chosen to perform an agency audit, state agencies shall still
provide the information required by the Office of Management and
Enterprise Services and the State Auditor and Inspector in order to
prepare and audit the statewide Compreh ensive Annual Financial
report and the statewide Single Audit.
8. Any audit reports that are prepared by a public accountant
or certified public accountant shall be finalized and submitted to
the Office of Management and Enterprise Service by October 15 for
preparation and final review of the Comprehensive Annual Financial
Report.
3. 9. As used in this section, “state agency” means every
agency, board, or commission included in the primary gove rnment of
the State of Oklahoma. For purpos es of this paragraph, the primary
government of the State of Oklahoma includes all agencies, boards,
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and commissions included in the primary gov ernment in the State of
Oklahoma Comprehensive Annual Financial Repo rt. The agencies,
boards, and commissions included in the primary government of the
State of Oklahoma shall be determined u sing criteria set by the
Governmental Accounting Standards Board .
4. 10. 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 o n the
fairness with which they are presented in conformity
with generally accepted a ccounting principles or any
other comprehensive basis of accounting, as defined by
the American Institute of Cer tified Public
Accountants’ Professional Standards, latest re vised
edition. Financial audits must be conducted in
accordance with auditing stand ards generally accepted
in the United States and the standards appli cable to
financial audits contained in Gover nment 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 of which is to evaluat e
management’s performance in administering assigned
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responsibilities in accordance with applicable laws,
administrative rules , and other policies and
guidelines and to determine the extent to which the
internal control, as designed and placed in operation ,
promotes and encourages the achievement of
management’s control objectives in the categories of
compliance, reliability of financial records a nd
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 appl icable Government
Auditing Standards. The term includes, but is not
limited to, an audit to assess program, activity, or
function effectiveness, econom y 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 shall be, conducted in
accordance with applicable Government Auditing
Standards, and shall include a management response
that is limited in length to the same number of pages
as the special or investigative audit report, and
e. any other type of engagement cond ucted in accordance
with Government Auditing Standards.
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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 a nnually audit the
books and accounts of the se veral 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 statutes and rules, and compliance
with any regulations of state or federal programs. The expense of
the audits shall be paid by the entity audited.
2. The State Auditor and Inspector shall exam ine and file a
report of the accounts establis hed within the office of each
district attorney for bogus check programs, drug task force
programs, child support collection programs , and any other programs
receiving any nonstate funds. The reports shall be filed with the
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President Pro Tempore of the Se nate, the Speaker of the House of
Representatives, and the Executive Coordinator of the District
Attorneys Council.
F. DEPARTMENT OF CORRECTION S
The State Auditor and Inspector shall perform an annual audit,
as defined in paragraph 4 8 of subsection B of th is section, of the
books and accounts of the Department of Corrections. The scope of
the audit shall be determined by the State Auditor and Ins pector
using a risk-based approach. The audit may include, but shall not
be limited to, the audit of the financ ial records, performance
measures, and compliance with a ny state or federal statutes and
rules, and compliance with any regulations of state or federal
programs. The expense of the audits shall be paid by th e Department
of Corrections.
G. OKLAHOMA EMPLOYEES INSURANCE AND BENEFITS BOARD
The State Auditor and I nspector 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 fi nancial records, performance measures,
compliance with any state or federal statutes and rules , and
compliance with any regulations of state pro grams. The audit shall
be contracted out to private audit firms . The cost of the audit
shall be borne by the O klahoma Employees Insurance and Benefits
Board.
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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. The 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 officers or custodians o f the
various funds of the county; and payment for such examination shall
be made by the county so examined.
J. AUDITORS
The State Auditor and Inspecto r 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 ac cording to the most recent Federal
Decennial Census. The State Auditor and Inspector may employ on an
as-needed basis only, legal counsel to carry out the statutory
duties of the Office of the State Auditor and Inspector.
K. EXAMINATION OF LEVIES
It shall be the duty of the State Auditor and Inspector to
examine all levies to raise public revenue to see that they are made
according to law and constitutional provisions. The State Auditor
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and Inspector shall have the power to order all excessive or
erroneous lines (levies) to be corrected by the proper officers, and
shall report any irregularities to the Governor, t he Speaker of the
House of Representatives and the Presi dent 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 Stat e of Oklahoma upon petition
signed by the requis ite number of voters registered in the
subdivision and meeting the requirements set out in this subsection.
2. The petition must contain the nu mber of signatures
equivalent to ten percent (10%) of the regist ered voters of the
subdivision as determined by the county election board or, if the
county election board determines that the number of registered
voters in the subdivision cannot be determin ed due to boundary lines
not conforming to precinct lines, the r equired 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 public
trust, the required number of petitioners shall be the same as those
required for an audit of its beneficiary. The appropriate county
election board shall provide the number of signatures so req uired
upon request.
3. The petition shall be in the form of an affidavit wherein
the signatory shall declare upon oath or affirmation that the
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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 entity to be audited and the anticipated range
of the cost of the audit provided by the State Auditor and
Inspector.
4. Any person desiring to petition for an audit shall list the
areas, items or concerns they want to be au dited, and request 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 petit ion form to the person
requesting the informatio n which shall state the anticipated range
of the cost and the items or concerns to be audited. The
circulators of the petition shall have thirt y (30) days from the
date the petition is mailed by the State Au ditor and Inspector to
obtain the requisite numb er of signatures and return it to the State
Auditor and Inspector.
5. Upon collection of the required number of signatures, the
person desiring the audit shall present the signed petitions to the
State Auditor and Inspector. Within thirty (30) days of re ceipt of
the petitions, the State Auditor and Inspector shall present the
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petitions to the county election board located in the county in
which the subdivision is located.
6. The county election board shall determine whether the
signers of the petition ar e registered voters of the county in which
the subdivision to be audited is located and whether the petition
has the requisite number of signatu res 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 a udit shall be borne by the public entity
audited. Upon notifica tion by the State Auditor and Inspector of
receipt of the petition, certified by the county election boa rd as
having the required number of signatures, the public entity shall
encumber funds in an amount specified by the State Auditor and
Inspector, which shall be within the range of anticipated cost
stated on the petition from any funds not otherwise specif ically
appropriated or allocated. Payment for the audit from such
encumbered funds shal l be made as work progresses, and final payment
shall be made on or before its publication.
8. The names of the signers of any petition shall be
confidential and neith er the State Auditor and Inspector, the county
election board nor the county treasurer m ay release them to any
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other person or entity except upon an ord er from a court of
competent jurisdiction.
M. PENALTIES FOR NONPAYMENT
Except as otherwise provided by law, the cost of any services
provided by the State Auditor and Inspector or as specifie d in an
audit contract shall be borne by the entity or fund audi ted and
shall be due and payable upon receipt of progress billing during the
course of an audit. Any su ch 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. AMENDATORY 74 O.S. 2011, Section 212A, as
amended by Section 843, Chapter 304, O.S.L. 2012 (74 O.S. Supp.
2020, Section 212A), is amended to read as follows:
Section 212A. A. 1. Except as otherwise provided by law, all
government entities, as define d by the Governmental Accounting
Standards Board, shall and, pursuant to the provisions of Section
212 of this title, any state age ncy is authorized to have an audit
conducted in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards.
Copies of any audit, performance audit, agreed -upon-procedures
report, or other attestation engagement report produced by a person
other than the State Auditor shall be filed with the State Auditor
and Inspector by that person. The expense of the audit shall be
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paid by the government entity. For fiscal years endin g after
December 31, 1995, all government entities receiving public funds
that are included in the reporting entity of the State of Oklahoma
shall file a copy of the audit required by this para graph with the
Director of the Office of Management and Enterpr ise Services no
later than four (4) months after the end of the fiscal year of the
government entity. For purposes of this paragraph, the reporting
entity of the State of Oklahoma includes all government entities
included in the State of Oklahoma Comprehe nsive Annual Financial
Report. The government entities included in the State of Oklahoma
reporting entity shall be determined by the Director of the Office
of Management and Enterprise Service s using criteria set by the
Governmental Accounting Standards B oard.
2. Any public accountant or certified public accountant filing
an audit, performance audit, agreed-upon-procedures report or other
attestation engagement report with the State Auditor an d Inspector
pursuant to this section shall be required to pay a filing fee of
One Hundred Dollars ($100.00) for the purposes of processing such
reports and ensuring compliance with the provisions of this section.
Such payments shall be deposited in the St ate Auditor and Inspector
Revolving Fund, created pursuant to S ection 227.9 of this titl e.
B. All registrants, as defined in the Oklahoma Accountancy A ct,
before entering into audit contracts required under this section,
shall satisfy the Oklahoma Account ancy Board and the State Auditor
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and Inspector that such regist rant meets Government Aud iting
Standards and has a current permit to practice issued by t he
Oklahoma Accountancy Board.
The State Auditor and Inspecto r shall receive annual reports
from the Oklahoma Accountancy Board of all registrants meeting the
requirements of this subsection. The Oklahoma Accountancy Board
shall provide changes and update s to the annual report to the State
Auditor and Inspector upo n request.
C. Schedules of federal awards expended will be in a form
consistent with the guidance in the most recent audit guide f or
state and local governments prepared by “The American Institu te of
Certified Public Accountants”. State agencies or other pass-through
grantors of federal awards ex pended will not place reporting
requirements on a grantee or su brecipients in addition t o the
required federal compliance reports and schedules of feder al awards
expended, without approval of the State Auditor and Inspector.
D. All governmental entities s hall report grant funds received,
administered or used by the e ntity and all grant funds under the
direct or indirect control of the governmental entity or any of its
employees in their employment capacity. A cop y of the report shall
be filed with the Sta te Auditor and Inspector and the Director of
the Office of Management and Enterprise Ser vices within four (4)
months after the end of the fiscal year of the governmental entity.
The State Auditor and Inspector ma y audit any funds reported. The
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cost of the audit shall be paid by the governmental entity unless
the grant provides for the cost of audits from grant funds.
SECTION 3. This act shall become effective November 1, 2021.
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