COMMITTEE SUBSTITUTE
FOR
H. B. 4535
(By Mr. Speaker, Mr. Kiss, and Delegate Ashley)
[By Request of the Executive]
[Originating in the Committee on Finance]
[March 3, 1998]
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: Provided,
however, That if a local governmental entity has elected to have a
review performed and there are any problems or discrepancies
discovered as a result of such review, then an audit shall be
performed.
(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.