| 1 | 1 | | 25.752.11 100th Legislative Session 1147 |
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| 4 | 4 | | 2025 South Dakota Legislature |
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| 5 | 5 | | House Bill 1147 |
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| 12 | 12 | | Introduced by: Representative Garcia |
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| 14 | 14 | | Underscores indicate new language. |
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| 15 | 15 | | Overstrikes indicate deleted language. |
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| 16 | 16 | | An Act to require that public entities submit to forensic accounting in cases of 1 |
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| 17 | 17 | | financial misconduct. 2 |
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| 18 | 18 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 |
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| 19 | 19 | | Section 1. That a NEW SECTION be added to chapter 4-11: 4 |
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| 20 | 20 | | Any state agency, board, commission, department, officer, penal or educational 5 |
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| 21 | 21 | | institution, or any other public entity receiving moneys by appropriation or expending 6 |
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| 22 | 22 | | moneys pursuant to state law must submit to a forensic audit by the Department of 7 |
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| 23 | 23 | | Legislative Audit if, after preliminary investigation of a credible allegation, the Department 8 |
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| 24 | 24 | | of Legislative Audit determines there is probable cause that fraud or embezzlement, as 9 |
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| 25 | 25 | | described in chapter 22-30A, misappropriation of public moneys, as described in § 4-9-5 10 |
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| 26 | 26 | | or 22-30A-46, or other financial misconduct has occurred. 11 |
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| 27 | 27 | | The forensic audit must be conducted by the Department of Legislative Audit, or 12 |
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| 28 | 28 | | the Department of Legislative Audit may authorize an independent auditor with expertise 13 |
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| 29 | 29 | | in forensic accounting and fraud detection to conduct the forensic audit. 14 |
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| 30 | 30 | | The forensic audit must include: 15 |
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| 31 | 31 | | (1) An examination of all financial transactions of the public entity for the time period 16 |
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| 32 | 32 | | in question; 17 |
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| 33 | 33 | | (2) An evaluation of the public entity's internal controls and risk management systems; 18 |
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| 34 | 34 | | (3) Detailed documentation of any applicable finding of error, financial misconduct, 19 |
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| 35 | 35 | | internal control weakness, or other financial irregularity; and 20 |
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| 36 | 36 | | (4) Recommendations for improvements necessary to prevent future financial 21 |
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| 37 | 37 | | irregularities. 22 |
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| 38 | 38 | | Results of the forensic audit must be reported and filed as provided in § 4-11-9. 23 |
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| 39 | 39 | | Any costs associated with the forensic audit must be paid by the public entity 24 |
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| 40 | 40 | | subject to the forensic audit. 25 |
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