85R5573 JXC-D
By: Kolkhorst S.B. No. 1563
A BILL TO BE ENTITLED
AN ACT
relating to audits of the fiscal accounts and records of emergency
services districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 775, Health and Safety Code, is amended
by adding Subchapter N to read as follows:
SUBCHAPTER N. AUDIT OF DISTRICTS
Sec. 775.451. DUTY TO AUDIT. (a) The board shall have the
district's fiscal accounts and records audited annually at the
expense of the district.
(b) The person who performs the audit shall be a certified
public accountant holding a license issued by the Texas State Board
of Public Accountancy.
(c) The audit required by this section shall be completed
not later than the 120th day after the close of the district's
fiscal year.
Sec. 775.452. FORM OF AUDIT. (a) For a district located
wholly in one county, the commissioners court shall adopt
accounting and auditing manuals.
(b) For a district located in more than one county, the
county auditors of each county in which the district is located,
with the approval of the commissioners court of each county, shall
adopt accounting and auditing manuals.
(c) Except as otherwise provided by the manuals, the
district audit shall be performed according to the generally
accepted auditing standards adopted by the American Institute of
Certified Public Accountants. Financial statements shall be
prepared in accordance with generally accepted accounting
principles.
Sec. 775.453. FINANCIAL REPORTS. The district's
depository, the district's treasurer, and the district's
bookkeeper, if any, who receives or has control over any district
funds shall keep a full and itemized account of district funds in
the depository's, treasurer's, or bookkeeper's possession. The
itemized accounts and records shall be available for audit.
Sec. 775.454. FILING OF AUDITS, AFFIDAVITS, AND FINANCIAL
REPORTS. (a) After the board has approved the audit report, the
board shall, not later than the 135th day after the close of the
district's fiscal year, submit a copy of the report to the
commissioners court of each county in which the district is located
for filing.
(b) If the board refuses to approve the annual audit report,
the board shall, not later than the 135th day after the close of the
district's fiscal year, submit a copy of the report to the
commissioners court of each county in which the district is located
for filing, accompanied by a statement from the board explaining
the reasons for the board's failure to approve the report.
(c) Copies of each audit report, annual financial dormancy
affidavit described by Section 775.458, or annual financial report
described by Section 775.459, as applicable, shall be filed
annually in the office of the district.
(d) Each district shall file with the commissioners court of
each county in which the district is located an annual filing
affidavit, executed by an authorized representative of the board,
stating that all copies of the annual audit report, annual
financial dormancy affidavit, or annual financial report have been
filed under this section.
(e) The annual filing affidavit shall be submitted with the
applicable annual document when the document is submitted to a
commissioners court for filing under this subchapter.
(f) A commissioners court shall file with the attorney
general the names of any districts in the county that do not comply
with this subchapter.
(g) A submission to a county commissioners court required by
this section may be made electronically.
Sec. 775.455. REVIEW BY COMMISSIONERS COURT. (a) The
commissioners court of each county in which a district is located
may review the audit report of the district.
(b) If the commissioners court has any objections or
determines any violations of generally accepted auditing standards
or accounting principles, statutes, or board rules, or if the
commissioners court has any recommendations, the commissioners
court shall notify the board and the district's auditor.
(c) Before the audit report may be accepted by the
commissioners court as being in compliance with the provisions of
this subchapter, the board and the auditor shall remedy objections
and correct violations of which they have been notified by the
commissioners court.
(d) If the audit report indicates that a penal law has been
violated, the commissioners court shall notify the appropriate
county or district attorney and the attorney general.
(e) A commissioners court in which a district is located may
request that the state auditor assist in the establishment of
standards and procedures for review of district audits by the
commissioners court. Participation by the state auditor is subject
to approval by the legislative audit committee for inclusion in the
audit plan under Section 321.013(c), Government Code.
Sec. 775.456. REVIEW BY COUNTY AUDITOR. (a) A county
auditor may review the audit report of each district in the county.
(b) A commissioners court may request that the state auditor
assist in the establishment of standards and procedures for review
of district audits by the county auditors. Participation by the
state auditor is subject to approval by the legislative audit
committee for inclusion in the audit plan under Section 321.013(c),
Government Code.
Sec. 775.457. ACCESS TO AND MAINTENANCE OF DISTRICT
RECORDS. (a) The commissioners court of each county in which a
district is located shall have access to all vouchers, receipts,
district fiscal and financial records, and other district records
the commissioners court considers necessary.
(b) All district fiscal records shall be prepared on a
timely basis and maintained in an orderly manner in accordance with
generally accepted accounting principles. The fiscal records shall
be available for public inspection during regular business hours. A
district's fiscal records may be removed from the district's office
for the purposes of recording the district's fiscal affairs and
preparing an audit, during which time the fiscal records are under
the control of the district's auditor.
Sec. 775.458. FINANCIALLY DORMANT DISTRICTS. (a) A
financially dormant district is a district that had:
(1) $500 or less of receipts from operations, tax
assessments, loans, contributions, or any other sources during the
calendar year;
(2) $500 or less of disbursements of funds during the
calendar year;
(3) no bonds or other long-term (more than one year)
liabilities outstanding during the calendar year; and
(4) no cash or investments that exceeded $5,000 at any
time during the calendar year.
(b) A financially dormant district may elect to file with
the commissioners court of each county in which the district is
located a financial dormancy affidavit instead of complying with
the audit requirements of Section 775.451.
(c) The annual financial dormancy affidavit must be:
(1) prepared in a format prescribed by the
commissioners court to which the affidavit is submitted; and
(2) submitted for filing by an authorized
representative of the district.
(d) The affidavit must be filed annually on or before
January 31 until the district becomes financially active. The board
shall send notice to the commissioners court of each county in which
the district is located if the district becomes financially active.
After the district becomes financially active, the district shall
file annual audit reports as prescribed by this subchapter.
(e) A district that becomes financially dormant after
having been financially active shall file annual financial dormancy
affidavits on or before January 31, until the district is dissolved
or again becomes financially active.
(f) A district governed by this section is subject to
periodic audits by the commissioners court of each county in which
the district is located.
Sec. 775.459. AUDIT REPORT EXEMPTION. (a) A district may
elect to file annual financial reports with the commissioners court
of each county in which the district is located instead of complying
with the audit requirements of Section 775.451 if:
(1) the district had no bonds or other long-term (more
than one year) liabilities outstanding during the fiscal period;
(2) the district did not have gross receipts from
operations, loans, taxes, or contributions in excess of $250,000
during the fiscal period; and
(3) the district's cash and temporary investments were
not in excess of $250,000 during the fiscal period.
(b) The annual financial report must be:
(1) accompanied by an affidavit attesting to the
accuracy and authenticity of the financial report that is signed by
an authorized representative of the district;
(2) prepared in a format prescribed by the
commissioners court to which the report is submitted; and
(3) on file with the commissioners court of each
county in which the district is located not later than the 45th day
after the close of the district's fiscal year.
(c) A district governed by this section is subject to
periodic audits by the commissioners court of each county in which
the district is located.
Sec. 775.460. FAILURE TO AUDIT. If a district fails to file
an audit report, an annual financial dormancy affidavit, or an
annual financial report, as applicable, according to the schedule
required by this subchapter, the president and treasurer of the
board are removed from the board and:
(1) in a district located wholly in one county, the
commissioners court shall fill the vacancies as provided by Section
775.034; and
(2) in a district located in more than one county,
notwithstanding Section 775.044, the commissioners courts shall
fill the vacancies with qualified persons by joint order.
Sec. 775.461. POLICIES AND AUDITS OF DISTRICTS. (a) The
board shall adopt a written:
(1) code of ethics for district directors, officers,
employees, and persons who are engaged in handling investments for
the district;
(2) policy relating to travel expenditures;
(3) policy relating to district investments that
ensures that:
(A) purchases and sales of investments are
initiated by authorized individuals, conform to investment
objectives and regulations, and are properly documented and
approved; and
(B) periodic review is made of district
investments to evaluate investment performance and security;
(4) policy and procedure for selection, monitoring, or
review and evaluation of professional services; and
(5) policy that ensures a better use of management
information including:
(A) budgets for use in planning and controlling
cost;
(B) an audit committee of the board; and
(C) uniform reporting requirements that require
the use of generally accepted accounting and audit principles.
(b) The state auditor may audit the financial transactions
of a district if the state auditor determines that the audit is
necessary.
SECTION 2. Sections 775.082, 775.0821, and 775.0825, Health
and Safety Code, are repealed.
SECTION 3. This Act takes effect July 1, 2018.