H. B. 4535
(By Mr. Speaker, Mr. Kiss, and Delegate Ashley)
[By Request of the Executive]
[Introduced February 24, 1998; referred to the
Committee on Finance.]
A BILL to amend article nine, chapter six of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
by adding thereto a new section, designated section one-a;
and to amend and reenact section seven of said article, all
relating to the supervision of public offices; defining
audit and review of public offices; and permitting offices
with annual expenditures equal to or less than three hundred
thousand dollars to satisfy financial examination
requirements by review.
Be it enacted by the Legislature of West Virginia:
That article nine, chapter six of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new section, designated section one-a; and
that section seven of said article be amended and reenacted, all to read as follows:
ARTICLE 9. SUPERVISION OF PUBLIC OFFICES.
§6-9-1a. Definitions.
As used in this article:
(a) "Audit" means a systematic examination and collection of
sufficient, competent evidential matter needed for an auditor to
attest to the fairness of management's assertions in the
financial statements and to evaluate whether management has
efficiently and effectively carried out its responsibilities and
complied with applicable laws and regulations. Such audit shall
be conducted in accordance with generally accepted auditing
standards, government auditing standards, and, as applicable, the
single audit requirements of OMB Circular A-133 Audits of states,
local governments and nonprofit organizations.
(b) "Review" means an inquiry of the analytical procedures
designed to provide the accountant with a reasonable basis for
expressing limited assurance that there are no material
modifications that should be made to the financial statements in
order for them to be in conformity with generally accepted
accounting principles or with another comprehensive basis of
accounting.
§6-9-7. Examinations into affairs of local public officers.
(a) The chief inspector shall have power by himself or herself, or by any person appointed by him or her to perform the
service, to examine into all financial affairs of every local
governmental office or political subdivision and all boards,
commissions, authorities, agencies or other offices created under
authority thereof and shall make an examination at least once a
year, if practicable: Provided, That when required for
compliance with regulations for federal funds received by county
boards of education, the chief inspector shall conduct the audits
of all county boards of education within twelve months after the
end of the fiscal year and issue the reports within thirty days
after completion of the audit work or assign the work to a
certified public accountant in a timely manner so that the work
is completed within the specified time limits.
(b) A local governmental office, political subdivision,
board, commission, authority, agency or other office created
under authority thereof may elect to have a review performed to
satisfy the annual examination requirement if its total annual
expenditures are equal to or less than three hundred thousand
dollars during the fiscal year that is the subject of the
examination: Provided, That a single year audit must be
performed at least once every five years. If the total annual
expenditures of the local governmental office, political
subdivision, board, commission, authority, agency or other office created under authority thereof to be examined exceed the sum of
three hundred thousand dollars during the fiscal year that is the
subject of the examination, the requirement that an examination
be conducted shall be satisfied only by an audit as defined in
article nine, section one-a of this chapter.
(c) On every examination audit or review, inquiry shall be
made as to the financial conditions and resources of the agency
having jurisdiction over the appropriations and levies disbursed
by the office and whether the requirements of the constitution
and statutory laws of the state and the ordinances and orders of
the agency have been properly complied with and also inquire into
the methods and accuracy of the accounts and such other matters
of audit and accounting as the chief inspector may prescribe.
(d) He or she The chief inspector or any authorized
assistant may issue subpoenas and compulsory process, direct the
service thereof by any sheriff, compel the attendance of
witnesses and the production of books and papers at any
designated time and place, selected in their respective county,
and administer oaths. If any person refuses to appear before the
chief inspector or his or her authorized assistant when required
to do so, refuses to testify on any matter or refuses to produce
any books or papers in his or her possession or under his or her
control, he or she is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than one hundred
dollars and imprisoned in the county jail not more than six
months.
(e) A person convicted of willful false swearing in an
examination audit or review is guilty of a misdemeanor and, upon
conviction thereof, shall be fined not more than one hundred
dollars and imprisoned in the county jail not more than six
months.
(f) A report of each examination audit or review shall be
made in duplicate, one copy to be filed in the office of the
state tax commissioner and one in the auditing department of the
agency. If any examination audit or review discloses
misfeasance, malfeasance or nonfeasance in office on the part of
any public officer or employee, a certified copy of the report
shall be filed with the proper legal authority of the agency, the
prosecuting attorney of the county wherein the agency is located
and with the attorney general for such legal action as is proper.
At the time of the filing of such certified audit or review, the
chief inspector shall notify the proper legal authority, the
prosecuting attorney and the attorney general in writing of his
or her recommendation as to the legal action that the chief
inspector considers proper, whether criminal prosecution or civil
action to effect restitution, or both. If the proper legal authority or prosecuting attorney, within nine months of the
receipt of the certified audit or review and recommendations,
refuses, neglects or fails to take efficient legal action by a
civil suit to effect restitution or by prosecuting criminal
proceedings to a final conclusion, in accordance with the
recommendations, the chief inspector may institute the necessary
proceedings or participate therein and prosecute the proceedings
in any court of the state to a final conclusion.
(b) (g) When requested by the governing body of a
municipality, the chief inspector shall take bids on the audit or
review of that municipality, and, if he or she finds that a
reputable certified public accountant or registered public
accountant outside the state tax department can conduct the audit
or review at a cost lower than if the department did it, and if
the accountant meets all criteria set forth by the chief
inspector, he or she shall contract with the accountant for the
audit or review: Provided, That the chief inspector may elect
to conduct the audit or review of a municipality with one or more
members of his or her audit staff where, in the opinion of the
chief inspector, a special or unusual situation exists.
NOTE: The purpose of this bill is to permit public offices
that have annual expenditures of three hundred thousand dollars or less to fulfill financial examination requirements by having
a review rather than audit.
§6-9-1a is new; therefore, strike-throughs and underscoring
have been omitted.
Strike-throughs indicate language in current law that would
be deleted; underscoring indicates new language that would be
added.