Oklahoma 2023 Regular Session

Oklahoma House Bill HB2362 Compare Versions

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	3	+	ENGR. H. B. NO. 2362 Page 1 1
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29		-	SENATE FLOOR VERSION
30		-	April 6, 2023
31		-
32		-
33	28		ENGROSSED HOUSE
34	29		BILL NO. 2362 By: Boles of the House
35	30
36	31		and
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38	33		Garvin of the Senate
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43		-	An Act relating to cities and towns; amending 11 O.S.
44		-	2021, Section 17-105, as amended by Section 2,
45		-	Chapter 254, O.S.L. 2022 (11 O.S. Supp. 2022, Section
46		-	17-105), which relates to annual audits of
47		-	municipalities; providing agreed-upon-procedures;
48		-	directing the governing body of each municipality to
49		-	carry out certain audit procedures; and providing an
50		-	effective date.
	38	+
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	40	+	An Act relating to cities and towns; amending 11
	41	+	O.S. 2021, Section 17 -105, as amended by Section
	42	+	2, Chapter 254, O.S.L. 2022 (11 O.S. Supp. 2022,
	43	+	Section 17-105), which relates to annual audits
	44	+	of municipalities; providing agreed-upon-
	45	+	procedures; directing the governing body of each
	46	+	municipality to carry out certain audit
	47	+	procedures; and providing an effective date.
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55	52		BE IT ENACTED BY THE PE OPLE OF THE STATE OF OKLAHOMA:
56	53		SECTION 1. AMENDATORY 11 O.S. 2021, Section 17-105, as
57	54		amended by Section 2, Chapter 254, O.S.L. 2022 (11 O.S. Supp. 2022,
58	55		Section 17-105), is amended to read as follows:
59	56		Section 17-105. A. The governing body of each municipality
60	57		with Fifty Thousand Dollars ($50,000.00) or more in total revenue to
61	58		all funds, including component units of which the municip ality is a
62	59		beneficiary, during a fiscal year shall cause to be prepared, by an
63	60		independent licensed pub lic accountant or a certified public
64	61		accountant, an annual financial statement audit to be cond ucted in
65	62		accordance with auditing standards generally acce pted in the United
	63	+	States of America and Government Auditing Standards as issued by the
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	65	+	ENGR. H. B. NO. 2362 Page 2 1
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93		-	States of America and Government Auditing Standards as issued by the
94	90		Comptroller General of the United States. Such audit shall be
95	91		ordered within thirty (30) days of the close of each fiscal year.
96	92		Copies shall be filed with the State A uditor and Inspector within
97	93		six (6) months after the close of the fiscal year in accordance with
98	94		the provisions of this act and with the governing body of the
99	95		municipality.
100	96		B. The governing body of each municipality with Fifty Thousand
101	97		Dollars ($50,000.00) or more in total revenue to all funds,
102	98		including component units of which the municipality is a
103	99		beneficiary, and with a population of less than two thousand five
104	100		hundred (2,500) as of the most rec ent Federal Decennial Census, and
105	101		for whom an annual finan cial statement audit is not requir ed by
106	102		another law, regulation or contract, shall cause to be prepared, by
107	103		an independent licensed public accountant or a certified public
108	104		accountant, a biennial financial statement audit in accordance with
109	105		auditing standards generally accepted in the Unite d States and
110	106		Government Auditing Standards as issued by the Comptrol ler General
111	107		of the United States. Each biennial audit shall cover the two (2)
112	108		preceding years.
113	109		The governing body of each municipality may alternatively
114	110		request a biennial agreed -upon-procedures engagement to be
115	111		prescribed by the State Auditor and Inspector , developed in
116	112		collaboration with a r epresentative from a statewide organization
	113	+	that has represented municipal governments for at least fifty (50)
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118		-	SENATE FLOOR VERSION - HB2362 SFLR Page 3
119		-	(Bold face denotes Committee Amendments) 1
	115	+	ENGR. H. B. NO. 2362 Page 3 1
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144		-	that has represented municipal governments for at least fifty (50)
145	140		years, a representative from an organization that advises or trains
146	141		municipal clerks and treasurers, and a certified public accountant.
147	142		Each biennial agreed -upon-procedures engagement shall cover the t wo
148	143		(2) preceding years.
149	144		For engagements performed for the fiscal year ending June 30,
150	145		2023, the prescribed procedures developed under the terms of this
151	146		subsection will be utilized on a one-year basis ending June 30,
152	147		2024. The procedures shall then be submitted to the Legislature for
153	148		ratification. If the rules are not ratified by the Legisla ture on
154	149		or before December 31, 2023, the Municipal Audit Reform Act of 202 2
155	150		shall sunset and be repealed as a matter of law . Agreed-upon
156	151		procedures required under this act shall be performed in accordance
157	152		with the applicable attestation standards of The A merican Institute
158	153		of Certified Public Accountants .
159	154		The audit or agreed-upon-procedures engagement shall be ordered
160	155		within thirty (30) days o f the close of the fiscal year that the
161	156		audit is due. Copies shall be filed with the State Auditor and
162	157		Inspector within nine (9) months after the close of the fiscal year
163	158		in accordance with the provisions of paragraph 2 of subsection A of
164	159		Section 212A of Title 74 of the Oklahoma Statutes and with the
165	160		governing body of the municipality, with the deadline to order and
166	161		file the audit or agreed-upon procedures eligible for extension by
	162	+	the State Auditor and Inspector for special circumstances or
	163	+	emergencies.
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194		-	the State Auditor and Inspector for special circumstances or
195		-	emergencies.
196	190		C. The municipal income requ irements in subsections A and B of
197	191		this section shall not include any grant monies provided to a
198	192		municipality from any federal, state, or other gover nmental entity.
199	193		The municipal income requirements shall not include income of any
200	194		public trust established under Sections 176 through 180.4 of Title
201	195		60 of the Oklahoma Statutes with a municipality a s the beneficiary
202	196		of the trust; provided, income from trusts established principally
203	197		for the purpose of operating electric, water, wastewater , and
204	198		sanitation utilities shall be included for purposes of the municipal
205	199		income requirements.
206	200		D. The governing body of each municipality that requests the
207	201		biennial agreed-upon-procedures engagement of subsection B of this
208	202		section shall:
209	203		1. Determine the establishment of policies related to
210	204		adjustments, write-downs, or write-offs for various receivables due
211	205		to the municipality and/or the utility-related trust and select a
212	206		sample of adjustments to test for adherence to policies and for
213	207		appropriate supporting documentatio n;
214	208		2. Obtain two (2) months of bank statements of the General Fund
215	209		and Utility Fund and confirm that cash deposits were made in the
216	210		appropriate account(s) and verify utility billing receipts and/or
217	211		posting reports agree to the daily deposits ;
	212	+	3. For the following four positions: city manager/town
	213	+	administrator, city/town clerk, c ity/town treasurer, and payroll
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219		-	SENATE FLOOR VERSION - HB2362 SFLR Page 5
220		-	(Bold face denotes Committee Amendments) 1
	215	+	ENGR. H. B. NO. 2362 Page 5 1
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245		-	3. For the following four positions: city manager/town
246		-	administrator, city/town clerk, c ity/town treasurer, and payroll
247	240		clerk, the governing body shall agree upon a pay rate to be
248	241		authorized and documented in the personnel file or in approved
249	242		meeting minutes. Inquire of the payroll clerk or equivalent if any
250	243		employees received compensation o ver and above their authorized
251	244		salary or hourly rate, and if so, trace to appropriate docum entation
252	245		of authorization for such pay . This shall not include expense
253	246		reimbursements, but shall include any allowances considered taxable;
254	247		4. For entities that us e debit or credit cards, determine the
255	248		establishment of policies of use , select a sample of transactions to
256	249		test for supporting documentation, proper municipal purpose, and
257	250		adherence to prescribed policies;
258	251		5. Prepare a cash basis schedule of changes in f und balances
259	252		for each fund and determine compliance with the statutory
260	253		prohibition of creat ing fund balance deficits;
261	254		6. Agree material fiscal year-end bank account balances to bank
262	255		statements and trace significant reconciling items to subsequent
263	256		clearance; shall determine if any bank accounts exist that are not
264	257		under city council purview ;
265	258		7. Compare uninsured deposits at fiscal year-end to the fair
266	259		value of pledged collateral ;
267	260		8. Inquire if any instances of known fraud, illegal acts, or
268	261		noncompliance with law and regulations have occurred; and
	262	+	9. Compare the use of material-restricted revenues and
	263	+	resources to their restrictions .
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	265	+	ENGR. H. B. NO. 2362 Page 6 1
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296		-	9. Compare the use of material-restricted revenues and
297		-	resources to their restrictions .
298	290		E. Public trusts with m unicipal governments as the beneficiary
299	291		that meet the same financial requirements established in subsection
300	292		B of this section may, in alternative to obtaining an audit as
301	293		required in Section 180.1 of Title 60 of the Oklahoma Statutes ,
302	294		follow the biennial agreed -upon-procedures engagements outlined in
303	295		subsection D of this section.
304	296		SECTION 2. This act shall beco me effective November 1, 2023.
305		-	COMMITTEE REPORT BY: COMMITTEE ON GENERAL GOVERNMENT
306		-	April 6, 2023 - DO PASS
	297	+	Passed the House of Representatives th e 6th day of March, 2023.
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	302	+	Presiding Officer of the House
	303	+	of Representatives
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	306	+
	307	+	Passed the Senate the ___ day of __________, 2023.
	308	+
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	312	+	Presiding Officer of the Senate
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