03-07 09:37 2nd Sub. (Salmon) S.B. 154
Anthony E. Loubet proposes the following substitute bill:
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Legislative Audit Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Brady Brammer
House Sponsor: Jordan D. Teuscher
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LONG TITLE
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General Description:
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This bill enacts provisions related to certain information provided to the legislative auditor
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general.
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Highlighted Provisions:
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This bill:
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▸ restates the authority of the legislative auditor general;
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▸ excludes certain information provided to the legislative auditor general from the
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definition of "record";
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▸ permits an entity to provide certain privileged items to the legislative auditor general;
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▸ requires an entity that withholds certain privileged items from the legislative auditor
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general to expressly assert a privilege;
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▸ permits the legislative auditor general to contest a privilege claim;
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▸ requires, in certain circumstances, an entity to submit privileged items to an arbitrator to
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determine a privilege claim;
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▸ coordinates enactment of provisions with S.J.R. 4, Joint Resolution Amending Court
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Rules on Attorney Confidentiality; and
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▸ makes technical corrections.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides a coordination clause.
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Utah Code Sections Affected:
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AMENDS:
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36-12-15, as last amended by Laws of Utah 2024, Third Special Session, Chapter 3
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Utah Code Sections affected by Coordination Clause:
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36-12-15, as last amended by Laws of Utah 2024, Third Special Session, Chapter 3
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Be it enacted by the Legislature of the state of Utah:
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The following section is affected by a coordination clause at the end of this bill.
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Section 1. Section 36-12-15 is amended to read:
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36-12-15 . Office of the Legislative Auditor General established -- Qualifications
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-- Powers, functions, and duties -- Reporting -- Criminal penalty -- Employment.
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(1) As used in this section:
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(a) "Audit action" means an audit, examination, investigation, or review of an entity
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conducted by the office.
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(b) "Entity" means:
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(i) a government organization; or
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(ii) a receiving organization.
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(c) "Government organization" means:
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(i) a state branch, department, or agency; or
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(ii) a political subdivision, including a county, municipality, special district, special
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service district, school district, interlocal entity as defined in Section 11-13-103,
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or any other local government unit.
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(d) "Office" means the Office of the Legislative Auditor General.
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(e) "Receiving organization" means an organization that receives public funds that is not
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a government organization.
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(2)(a) There is created the Office of the Legislative Auditor General as a permanent staff
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office for the Legislature.
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(b) The authority of the legislative auditor general is:
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(i) established in Utah Constitution, Article VI, Section 33; and
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(ii) an extension of the Legislature's inherent inquiry and investigatory power.
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(3) The legislative auditor general shall be a licensed certified public accountant or certified
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internal auditor with at least seven years of experience in the auditing or public
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accounting profession, or the equivalent, prior to appointment.
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(4) The legislative auditor general shall appoint and develop a professional staff within
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budget limitations.
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(5) The office shall exercise the constitutional authority provided in Utah Constitution,
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Article VI, Section 33.
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(6) Under the direction of the legislative auditor general, the office shall:
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(a) conduct comprehensive and special purpose audits, examinations, investigations, or
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reviews of entity funds, functions, and accounts;
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(b) prepare and submit a written report on each audit action to the Audit Subcommittee
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created in Section 36-12-8 and make the report available to all members of the
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Legislature within 75 days after the audit action is completed;
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(c) monitor, conduct a risk assessment of, or audit any efficiency evaluations that the
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legislative auditor general determines necessary, in accordance with Title 63J,
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Chapter 1, Part 9, Government Performance Reporting and Efficiency Process, and
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legislative rule;
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(d) create, manage, and report to the Audit Subcommittee a list of high risk programs
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and operations that:
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(i) threaten public funds or programs;
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(ii) are vulnerable to inefficiency, waste, fraud, abuse, or mismanagement; or
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(iii) require transformation;
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(e) monitor and report to the Audit Subcommittee the health of a government
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organization's internal audit functions;
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(f) make recommendations to increase the independence and value added of internal
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audit functions throughout the state;
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(g) implement a process to track, monitor, and report whether the subject of an audit has
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implemented recommendations made in the audit report;
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(h) establish, train, and maintain individuals within the office to conduct investigations
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and represent themselves as lawful investigators on behalf of the office;
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(i) establish policies, procedures, methods, and standards of audit work and
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investigations for the office and staff;
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(j) prepare and submit each audit and investigative report independent of any influence
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external of the office, including the content of the report, the conclusions reached in
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the report, and the manner of disclosing the legislative auditor general's findings;
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(k) prepare and submit the annual budget request for the office; and
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(l) perform other duties as prescribed by the Legislature.
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(7) In conducting an audit action of an entity, the office may include a determination of any
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or all of the following:
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(a) the honesty and integrity of any of the entity's fiscal affairs;
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(b) the accuracy and reliability of the entity's internal control systems and specific
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financial statements and reports;
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(c) whether or not the entity's financial controls are adequate and effective to properly
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record and safeguard the entity's acquisition, custody, use, and accounting of public
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funds;
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(d) whether the entity's administrators have complied with legislative intent;
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(e) whether the entity's operations have been conducted in an efficient, effective, and
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cost efficient manner;
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(f) whether the entity's programs have been effective in accomplishing intended
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objectives; and
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(g) whether the entity's management control and information systems are adequate and
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effective.
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(8)(a) If requested by the office, each entity that the legislative auditor general is
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authorized to audit under Utah Constitution, Article VI, Section 33, or this section
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shall, notwithstanding any other provision of law except as provided in Subsection
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(8)(b), provide the office with access to information, materials, or resources the office
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determines are necessary to conduct an audit, examination, investigation, or review,
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including:
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(i) the following in the possession or custody of the entity in the format identified by
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the office:
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(A) a record, document, and report; and
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(B) films, tapes, recordings, and electronically stored information;
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(ii) entity personnel; and
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(iii) each official or unofficial recording of formal or informal meetings or
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conversations to which the entity has access.
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(b) To the extent compliance would violate federal law, the requirements of Subsection
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(8)(a) do not apply.
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(9)(a) In carrying out the duties provided for in this section and under Utah Constitution,
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Article VI, Section 33, the legislative auditor general may issue a subpoena to access
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information, materials, or resources in accordance with Chapter 14, Legislative
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Subpoena Powers.
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(b) The legislative auditor general may issue a subpoena, as described in Subsection
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(9)(a), to a financial institution or any other entity to obtain information as part of an
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investigation of fraud, waste, or abuse, including any suspected malfeasance,
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misfeasance, or nonfeasance involving public funds.
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(10)(a) As used in this Subsection (10):
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(i) "Bad faith" means an action or inaction that is unambiguously not authorized
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under an authority described in Subsection (10)(a)(iii)(A), (B), or (C).
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(ii) "Item" means information, materials, or resources described in Subsection (8)(a).
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(iii) "Privileged item" means an item that is an attorney-client communication,
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attorney work product, or information relating to representation of the entity,
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governed by:
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(A) Utah Rules of Professional Conduct, Rule 1.6;
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(B) Utah Rules of Evidence, Rule 504; or
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(C) Utah Rules of Civil Procedure, Rule 26.
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(b) If an entity discloses information to the legislative auditor general that is confidential
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under Utah Rules of Professional Conduct, Rule 1.6, the disclosure is authorized in
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accordance with Utah Rules of Professional Conduct, Rule 1.6(b)(6), and does not
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make the information discoverable or prevent the entity from claiming that the
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information is privileged in another proceeding.
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(c) If requested by the legislative auditor general for an audit action, an entity may
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provide a privileged item.
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(d) If an entity withholds an item after a request by the legislative auditor general for an
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audit action, the entity shall, for each instance in which the entity asserts privilege,
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submit to the legislative auditor general a written statement:
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(i) expressly asserting the privilege and the authority for the privilege claim; and
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(ii) for each privilege claim, describing the nature of the item in a manner that,
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without revealing the attorney-client communication, attorney work product, or
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representation information itself, enables the legislative auditor general to evaluate
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the privilege claim.
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(e) The legislative auditor general may contest a privilege claim asserted under
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Subsection (10)(d) by:
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(i) notifying the entity in writing of each contested privilege claim and providing the
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list of available arbitrators described in Subsection (10)(f); and
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(ii) submitting each contested privilege claim to the arbitrator selected in accordance
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with Subsection (10)(f).
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(f)(i) The legislative auditor general shall:
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(A) maintain a list of three arbitrators; and
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(B) engage an arbitrator selected in accordance with this Subsection (10)(f).
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(ii) No later than three business days after receiving the notification under Subsection
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(10)(e)(i), the entity may select an arbitrator from the list provided by the
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legislative auditor general.
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(iii) If an entity fails to select an arbitrator in accordance with Subsection (10)(f)(ii),
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the legislative auditor general shall select an arbitrator from the list.
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(iv) The arbitrator shall be licensed to practice law in the state of Utah and in good
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standing.
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(v) Subject to Subsection (10)(i)(ii), the entity and the legislative auditor general shall
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equally bare the cost of the arbitrator.
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(g) The entity:
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(i) shall provide to the arbitrator the item and contested privilege claim no later than
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seven business days after the arbitrator is engaged under Subsection (10)(f); and
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(ii) may provide supplemental information in support of a privilege claim.
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(h) No later than seven business days after the arbitrator receives the contested privilege
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claim under Subsection (10)(g)(i), the arbitrator shall:
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(i) conduct an in camera review of each contested item and the authority for the
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relevant privilege claim;
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(ii) review supplemental information submitted under Subsection (10)(g)(ii) and any
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supplemental information provided by the legislative auditor general;
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(iii) issue a determination as to whether the entity has a valid claim of privilege,
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favoring access to the legislative auditor general of material that is not privileged;
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and
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(iv) issue a determination as to whether the entity acted in bad faith.
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(i)(i) If the arbitrator determines that an entity does not have a valid privilege claim,
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the entity shall provide the withheld item to the legislative auditor general
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immediately.
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(ii) If the arbitrator determines that the entity acted in bad faith, the entity shall bare
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the full cost of the arbitrator.
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(j) The arbitrator may not disclose:
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(i) a privileged item; or
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(ii) supplemental information described in Subsection (10)(g)(ii).
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(k) Provisions of this Subsection (10) are not subject to Title 78B, Chapter 11, Utah
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Uniform Arbitration Act.
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[(10)] (11) To preserve the professional integrity and independence of the office:
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(a) no legislator or public official may urge the appointment of any person to the office;
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and
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(b) the legislative auditor general may not be appointed to serve on any board, authority,
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commission, or other agency of the state during the legislative auditor general's term
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as legislative auditor general.
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[(11)] (12)(a) The following records in the custody or control of the legislative auditor
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general are protected records under Title 63G, Chapter 2, Government Records
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Access and Management Act:
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(i) records and audit work papers that would disclose information relating to
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allegations of personal misconduct, gross mismanagement, or illegal activity of a
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past or present governmental employee if the information or allegation cannot be
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corroborated by the legislative auditor general through other documents or
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evidence, and the records relating to the allegation are not relied upon by the
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legislative auditor general in preparing a final audit report;
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(ii) records and audit workpapers that would disclose the identity of a person who,
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during the course of a legislative audit, communicated the existence of:
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(A) unethical behavior;
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(B) waste of public funds, property, or personnel; or
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(C) a violation or suspected violation of a United States, Utah state, or political
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subdivision law, rule, ordinance, or regulation, if the person disclosed on the
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condition that the identity of the person be protected;
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(iii) before an audit is completed and the final audit report is released, records or
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drafts circulated to a person who is not an employee or head of an entity for
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review, response, or information;
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(iv) records that would disclose:
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(A) an outline;
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(B) all or part of an audit survey, audit risk assessment plan, or audit program; or
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(C) other procedural documents necessary to fulfill the duties of the office; and
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(v) requests for audits, if disclosure would risk circumvention of an audit.
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(b) The provisions of Subsection [(11)(a) ] (12)(a) do not prohibit the disclosure of
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records or information to a government prosecutor or peace officer if those records or
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information relate to a violation of the law by an entity or entity employee.
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(c) A record, as defined in Section 63G-2-103, created by the office in a closed meeting
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held in accordance with Section 52-4-205:
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(i) is a protected record, as defined in Section 63G-2-103;
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(ii) to the extent the record contains information:
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(A) described in Section 63G-2-302, is a private record; or
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(B) described in Section 63G-2-304, is a controlled record; and
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(iii) may not be reclassified by the office.
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(d) The provisions of this section do not limit the authority otherwise given to the
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legislative auditor general to maintain the private, controlled, or protected record
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status of a shared record in the legislative auditor general's possession or classify a
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document as public, private, controlled, or protected under Title 63G, Chapter 2,
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Government Records Access and Management Act.
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(e) If provided to the legislative auditor general, the following are not a record, as
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defined in Section 63G-2-103:
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(i) a privileged item, as defined in Subsection (10)(a); and
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(ii) supplemental information described in Subsection (10)(g)(ii).
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[(12)] (13) The legislative auditor general shall:
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(a) be available to the Legislature and to the Legislature's committees for consultation on
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matters relevant to areas of the legislative auditor general's professional competence;
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(b) conduct special audits as requested by the Audit Subcommittee;
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(c) report immediately to the Audit Subcommittee any apparent violation of penal
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statutes disclosed by the audit of an entity and furnish to the Audit Subcommittee all
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information relative to the apparent violation;
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(d) report immediately to the Audit Subcommittee any apparent instances of
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malfeasance or nonfeasance by an entity officer or employee disclosed by the audit of
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an entity; and
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(e) make any recommendations to the Audit Subcommittee with respect to the alteration
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or improvement of the accounting system used by an entity.
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[(13)] (14) If the legislative auditor general conducts an audit of an entity that has
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previously been audited and finds that the entity has not implemented a recommendation
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made by the legislative auditor general in a previous audit report, the legislative auditor
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general shall report to the Audit Subcommittee that the entity has not implemented the
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recommendation.
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[(14)] (15) Before each annual general session, the legislative auditor general shall:
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(a) prepare an annual report that:
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(i) summarizes the audits, examinations, investigations, and reviews conducted by the
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office since the last annual report; and
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(ii) evaluate and report the degree to which an entity that has been the subject of an
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audit has implemented the audit recommendations;
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(b) include in the report any items and recommendations that the legislative auditor
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general believes the Legislature should consider in the annual general session; and
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(c) deliver the report to the Legislature and to the appropriate committees of the
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Legislature.
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[(15)] (16)(a) If the chief officer of an entity has actual knowledge or reasonable cause to
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believe that there is misappropriation of the entity's public funds or assets, or another
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entity officer has actual knowledge or reasonable cause to believe that the chief
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officer is misappropriating the entity's public funds or assets, the chief officer or,
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alternatively, the other entity officer, shall immediately notify, in writing:
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(i) the office;
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(ii) the attorney general, county attorney, or district attorney; and
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(iii)(A) for a state government organization, the chief executive officer;
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(B) for a political subdivision government organization, the legislative body or
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governing board; or
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(C) for a receiving organization, the governing board or chief executive officer
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unless the chief executive officer is believed to be misappropriating the funds
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or assets, in which case the next highest officer of the receiving organization.
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(b) As described in Subsection [(15)(a)] (16)(a), the entity chief officer or, if applicable,
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another entity officer, is subject to the protections of Title 67, Chapter 21, Utah
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Protection of Public Employees Act.
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(c) If the Office of the Legislative Auditor General receives a notification under
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Subsection [(15)(a)] (16)(a) or other information of misappropriation of public funds
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or assets of an entity, the office shall inform the Audit Subcommittee.
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(d) The attorney general, county attorney, or district attorney shall notify, in writing, the
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Office of the Legislative Auditor General whether the attorney general, county
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attorney, or district attorney pursued criminal or civil sanctions in the matter.
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[(16)] (17)(a) An actor commits interference with a legislative audit if the actor uses
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force, violence, intimidation, or engages in any other unlawful act with a purpose to
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interfere with:
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(i) a legislative audit action; or
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(ii) the office's decisions relating to:
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(A) the content of the office's report;
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(B) the conclusions reached in the office's report; or
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(C) the manner of disclosing the results and findings of the office.
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(b) A violation of Subsection [(16)(a)] (17)(a) is a class B misdemeanor.
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[(17)] (18)(a) The office may require any current employee, or any applicant for
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employment, to submit to a fingerprint-based local, regional, and criminal history
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background check as an ongoing condition of employment.
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(b) An employee or applicant for employment shall provide a completed fingerprint card
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to the office upon request.
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(c) The office shall require that an individual required to submit to a background check
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under this Subsection [(17)] (18) also provide a signed waiver on a form provided by
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the office that meets the requirements of Subsection 53-10-108(4).
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(d) For a noncriminal justice background search and registration in accordance with
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Subsection 53-10-108(13), the office shall submit to the Bureau of Criminal
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Identification:
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(i) the employee's or applicant's personal identifying information and fingerprints for
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a criminal history search of applicable local, regional, and national databases; and
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(ii) a request for all information received as a result of the local, regional, and
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nationwide background check.
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[(18)] (19) Subject to prioritization of the Legislative Audit Subcommittee, the Office of the
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Legislative Auditor General shall conduct a feasibility study under Section 53G-3-301.1,
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53G-3-301.3, or 53G-3-301.4.
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Section 2. Effective Date.
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This bill takes effect on May 7, 2025.
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Section 3. Coordinating S.B. 154 with S.J.R. 4 if S.J.R. 4 does not pass.
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If S.J.R. 4, Joint Resolution Amending Court Rules on Attorney Confidentiality, does
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not pass, the Legislature intends that S.B. 154, Legislative Audit Amendments, not be enrolled
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and not become law.
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