(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 sufficiently and effectively carried out its responsibilities and complied with applicable laws and regulations. An audit shall be conducted in accordance with generally accepted auditing standards, standards issued by the chief inspector, and, as applicable, the single audit requirement of OMB Circular A-133 Audits of States, Local Governments and Non-Profit Organizations as amended or revised from time to time, or any successor circular.
(b) "Examination" includes an audit or review as defined in this section.
(c) "Federal awards" means federal financial assistance and federal cost-reimbursement contracts that nonfederal entities receive directly from federal awarding agencies or indirectly from pass-through entities.
(d) "Federal financial assistance" means assistance that nonfederal entities receive or administer in the form of grants, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, or other assistance, but does not include amounts received as reimbursement for services rendered to individuals in accordance with guidance issued by the director of the federal office of management and budget.
(e) "Financial audit" includes financial statement audits and financial related audits, as defined by government auditing standards.
(f) "Government auditing standards" means the government auditing standards issued by the comptroller general of the United States, which are applicable to financial audits of government organizations, programs and activities.
(g) "Local government" means any unit of local government within the state, including a county, county board of education, municipality, and any other authority, board, commission, district, office, public authority, public corporation, or other instrumentality of a county, county board of education, or municipality or any combination of two or more local governments.
(h) "Nonfederal entity" means a state, local government, or nonprofit organization.
(i) "Office of management and budget (OMB)" means the executive office of the president of the United States, office of management and budget.
(j) "Review" means an inquiry or analytical procedures that provide the auditor 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, if applicable, with another comprehensive basis of accounting.
(k) "Single audit" means a financial and compliance audit as defined in the federal Single Audit Act of 1996, as amended, in section 7502(d), chapter 75, title 31 of the United States Code, of a nonfederal entity that includes the entity's financial statements and federal awards. Each single audit conducted for any fiscal year shall cover the operations of the entire nonfederal entity; or at the option of the nonfederal entity, the audit shall include a series of audits that cover departments, agencies, and other organizational units that expend or otherwise administer federal awards during the fiscal year being audited except that each such audit shall encompass the financial statements and schedule of expenditures of federal awards for each department, agency, and organizational unit, which shall be considered to be a nonfederal entity.
The chief inspector is vested and charged with the duties of administering and enforcing the provisions of this article and is authorized to promulgate and to enforce such rules as may be necessary to implement the administration and enforcement. The chief inspector shall use due diligence to ensure that all reports and audits are issued in a timely manner and to comply with all federal audit and bonded indebtedness requirements so as not to jeopardize the entity's funding. The power and authority herein granted shall be in addition to all other power and authority vested by law in the state tax commissioner as chief inspector or otherwise.
(a) It is unlawful for any person to use a local government purchasing card, issued in accordance with the provisions of section two-a of this article, to make any purchase of goods or services in a manner which is contrary to the provisions of section two-a of this article or the rules promulgated pursuant to that section.
(b) It is unlawful for any person to knowingly or intentionally possess with the intent to use a purchasing card without authorization pursuant to section two-a of this article or the rules promulgated pursuant to that section.
(c) Any person who violates the provisions of this section is guilty of a felony and, upon conviction thereof, shall be confined in a state correctional facility not less than one year nor more than five years, or fined no more than $5,000, or both fined and imprisoned.
(d) A violation of this section may be prosecuted in the county in which the card was issued, unlawfully obtained, fraudulently used, used without authorization, or where any substantial or material element of the offense occurred.
(b) When required for compliance with regulations for federal funds received or expended by county boards of education the chief inspector or his or her designee, including any certified public accountant approved by the chief inspector shall conduct and issue an audit report within the time specified in controlling federal regulations. Examinations of other local governments shall be conducted and audit or review reports issued in accordance with uniform procedures of the chief inspector.
(c) A county board of education may elect, by May 1 of the fiscal year to be audited, to have its annual examination performed by a certified public accountant approved by the chief inspector to perform the examinations. When this election is made, a copy of the order of the county board making the election shall be filed with the chief inspector and the State Board of School Finance. The county board of education is allowed to contract with any certified public accountant on the chief inspector's then current list of approved certified public accountants, unless the State Board of School Finance or the prosecuting attorney of the county in which the board is located timely submits to the chief inspector a written request for the examination to be performed by the chief inspector or a person appointed by the chief inspector, or the chief inspector determines that a special or unusual situation exists. The county board shall follow the audit bid procurement procedures established by the chief inspector in obtaining the audit.
(d) The chief inspector shall, at least annually, prepare a list of certified public accountants approved by the chief inspector to perform examinations of local governments. Names shall be added to or deleted from that list in accordance with uniform procedures of the chief inspector. When each list or updated list is issued, the chief inspector shall promptly file a copy of the list in the State Register and send a copy to the State Board of Education, the State Board of School Finance and to local governments who request a copy.
(e) A county board of education, when procuring the services of a certified public accountant on the chief inspector's list, shall follow the procurement standards prescribed by the grants management common rule, OMB Circular A-102 "Grants and Cooperative Agreements with State and Local Governments" in effect for the fiscal year being examined, or in any replacement circular or regulation of the office of management and budget and in addition shall follow those standards as determined by the office of chief inspector.
(f) The approved independent certified public accountant making examinations under this section shall comply with requirements of this section applicable to examinations performed by the chief inspector, including applicable requirements of the federal government and uniform procedures of the chief inspector applicable to examinations of county boards of education.
(1) Upon completion of the certified public accountant's examination and audit or review report, the certified public accountant shall promptly send two copies of the certified report to the county board of education who shall file one copy with the Federal Audit Clearing House. The certified public accountant shall send one copy of the certified report to the State Board of School Finance, and one copy to the chief inspector.
(2) If any examination discloses misfeasance, malfeasance or nonfeasance in office on the part of any public officer or employee, the certified public accountant shall submit his or her recommendation to the chief inspector regarding the legal action the approved certified public accountant considers appropriate, including, but not limited to, whether criminal prosecution or civil action to effect restitution is appropriate, and three additional copies of the certified audit report. After review of the recommendations and the audit report, the chief inspector shall proceed as provided in subsection (n) of this section. For purposes of this section and section thirteen, article nine-b, chapter eighteen of this code, a certified audit report of an approved certified public accountant shall be treated in the same manner as a report of the chief inspector.
(g) On every examination, 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.
(h) If a local government office is not subject to a single audit requirement under federal regulations or if it is not otherwise required by law or contract to undergo an annual audit and its expenditures from all sources are less than $300,000 during the fiscal year the chief inspector may choose to perform either a review or audit on the local government office and may in his or her discretion determine the frequency of such review or audit.
(i) 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.
(j) 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 $100 and imprisoned in jail not more than six months.
(k) A person convicted of willful false swearing in an examination is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $100 and imprisoned in jail not more than six months.
(l) Except as otherwise provided in this section, a copy of the certified report of each examination shall be filed in the office of the commissioner, chief inspector with the governing body of the local government and with other offices as prescribed in uniform procedures of the chief inspector.
(m) If any examination discloses misfeasance, malfeasance or nonfeasance in office on the part of any public officer or employee, a certified copy of the report shall be published electronically by the chief inspector with notice of the publishing sent in writing to 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 the certified audit report is published, the chief inspector shall notify the proper legal authority of the agency, 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.
(n) If the proper legal authority or prosecuting attorney, within nine months of receipt of the certified audit report 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.
(o) A local government that is not a county board of education may elect, by May 1 of the fiscal year to be audited, to have its annual examination performed by a certified public accountant approved by the chief inspector to perform the examinations. When this election is made, a copy of the order of the governing body making the election shall be filed with the chief inspector. An electing local government is allowed to contract with any certified public accountant on the chief inspector's then current list of approved certified public accountants, unless the prosecuting attorney of the county in which the local government is located timely submits to the chief inspector a written request for the examination to be performed by the chief inspector or a person appointed by the chief inspector, or the chief inspector determines that a special or unusual situation exists: Provided, That the audit of a local government may be performed by the chief inspector at his or her discretion. The local government shall follow the audit bid procurement procedures established by the chief inspector in obtaining the audit: Provided, however, That the chief inspector may elect to conduct the audit of a local unit of government 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.
(b) For the purpose of permitting payments to be made at definite periods to deputy inspectors and assistants for per diem compensation and expenses, there is hereby created a revolving fund for the chief inspector's office. The fund shall be accumulated and administered as follows:
(1) There shall be appropriated from the state general revenue fund the sum of twenty-five thousand dollars to be transferred to this fund to create a revolving fund which, together with other payments into this fund as provided in this article, shall constitute a fund to defray the cost of this service;
(2) Payments received for the cost of services of the chief inspector's office and interest earned on the invested balance of the chief inspector's revolving fund shall be deposited into this revolving fund, which shall be known as the chief inspector's fund;
(3) Any appropriations made to this fund may not be considered to have expired at the end of any fiscal period; and
(4) The chief inspector may transfer an amount not to exceed four hundred thousand dollars from the chief inspector's fund to the special operating fund created in article four, chapter thirty-two of this code: Provided, That any transfers shall be completed prior to the first day of July, two thousand three.
(a) Notwithstanding any other code provision to the contrary, the chief inspector shall establish a one time audit cost amnesty program to be conducted during the 2014 fiscal year.
(b) The amnesty program shall apply only to:
(1) Audits conducted by the chief inspector; and
(2) Audit costs that are for fiscal years prior to the two most recent audits completed or in progress as of July 1, 2013.
(c) The chief inspector shall establish procedures and forms for processing applications to the program.
(d) An entity is not eligible to participate in the amnesty program unless fees related to its two most recent audits completed or in progress as of July 1, 2013, have been paid in full prior to its request for amnesty.
The state auditor shall assume and perform those duties previously vested in the tax commissioner under this section and any section of this code relating to the chief inspector, which sections are identified in subsection (d) of this section, pertaining to:
(1) Making annual or special financial and compliance examinations or audits of local government offices;
(2) Providing annual training to county officials pertaining to their work: Provided, That this annual training may not include matters directly or indirectly pertaining to determining the appraised or assessed value of property or equalization of assessed values of property for ad valorem property tax purposes;
(3) Reviewing and approving annual budgets and changes in budgets during the fiscal year; and
(4) Approving proposed levy rates, whether regular or special.
(b) Effective the first day of July, one thousand nine hundred ninety-nine, all records, property of whatever kind and character, including, but not limited to, current office space occupied by the chief inspector division of the tax division, all personnel in positions assigned to the chief inspector division and the fund established in section eight of this article shall be transferred to the state auditor.
(c) The state auditor shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code to implement the provisions of this section and any section of this code relating to the chief inspector.
(d) Notwithstanding any provision of this code to the contrary, after the thirtieth day of June, one thousand nine hundred ninety-nine, whenever the words "tax commissioner" or "state tax commissioner" appear in the following subsections, sections or articles of this code, these words shall mean the "state auditor in his or her capacity as the chief inspector and supervisor of local government offices": Article nine, chapter six; section nine, article one, chapter seven; sections sixteen and eighteen, article five of chapter seven; sections two, three, four and seventeen, article seven of chapter seven; section twelve, article twelve of chapter seven; section nine, article thirteen of chapter seven; section seventeen, article seventeen of chapter seven; section sixteen, article eight of chapter eight; sections seven, eighteen, nineteen and twenty-three, article thirteen of chapter eight; section seven, article sixteen of chapter eight; section four, article twenty-three of chapter eight; section sixteen, article twenty-nine of chapter eight; section four, article twenty-nine-a of chapter eight; section two, article thirty-two of chapter eight; section eight, article thirty-three of chapter eight; section six, article one of chapter ten; sections six-b, six-c, seven, eight, ten, ten-a, eleven, twelve, twelve-a, thirteen, fourteen, fourteen-a, fifteen, eighteen, twenty, twenty-one, twenty-three, twenty-four, twenty-five-a, twenty-six-a and thirty, article eight of chapter eleven; subsections (i) and (j), section five-a and subsections (i) and (j), section six, article thirteen-a of chapter eleven; sections eight, twelve and thirteen, article one of chapter eleven-a; section eleven, article two of chapter eleven-a; sections fourteen, thirty-two and sixty-four, article three of chapter eleven-a; section twenty, article three of chapter twelve; section five, article four of chapter twelve; section twenty, article one of chapter thirteen; section twenty-five, article two of chapter eighteen; section three-a, article nine of chapter eighteen; sections one, three, six, nine, twelve and thirteen, article nine-b of chapter eighteen; section five, article nine-d of chapter eighteen; section thirteen-b, article twenty-one-a of chapter nineteen; section eight, article two of chapter twenty-four; section nineteen, article twenty-one of chapter twenty-nine; section twenty, article one of chapter fifty-two; and section thirty, article one of chapter fifty-nine, all of this code.
(e) On or before the first day of July, one thousand nine hundred ninety-nine, the state auditor and the state tax commissioner shall file with the governor, the president of the Senate and the speaker of the House of Delegates, an interagency agreement clarifying transition procedures and respective powers of the auditor and tax commissioner. A copy of the interagency agreement shall be filed with the secretary of state, and shall be a public record.
(f) On or before the first day of December, one thousand nine hundred ninety-nine, the state auditor and the state tax commissioner shall jointly report to the Legislature as to any conflicts in this code created by the enactment of this section for which legislation is recommended for enactment during the regular session of the year two thousand.