As Introduced 1
123rd General Assembly 4
Regular Session H. B. No. 769 5
1999-2000 6
REPRESENTATIVES METTLER-NETZLEY-JERSE-GRENDELL-JACOBSON- 8
VAN VYVEN
_________________________________________________________________ 10
A B I L L
To amend sections 117.01, 117.10, 117.11, 117.12, 12
and 117.13 of the Revised Code to make changes in 13
the law governing the Auditor of State's audits
of public offices and private persons who receive 14
public funds.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 16
Section 1. That sections 117.01, 117.10, 117.11, 117.12, 18
and 117.13 of the Revised Code be amended to read as follows: 19
Sec. 117.01. As used in this chapter: 28
(A) "Color of office" means actually, purportedly, or 30
allegedly done under any law, ordinance, resolution, order, or 31
other pretension to official right, power, or authority. 32
(B) "Public accountant" means any person who is authorized 34
by Chapter 4701. of the Revised Code to use the designation of 35
certified public accountant or who was registered prior to 36
January 1, 1971 as a public accountant. 37
(C) "Public money" means any money received, collected by, 39
or due a public official under color of office, as well as any 40
money collected by any individual on behalf of a public office or 41
as a purported representative or agent of the public office. 42
(D) "Public office" means any state agency, public 44
institution, political subdivision, other organized body, office, 45
agency, institution, or entity established by the laws of this 46
state for the exercise of any function of government. 47
(E) "Public official" means any officer, employee, or duly 49
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authorized representative or agent of a public office. 50
(F) "State agency" means every organized body, office, 52
agency, institution, or other entity established by the laws of 53
the state for the exercise of any function of state government. 54
(G) "PERSON" HAS THE SAME MEANING AS IN SECTION 1.59 OF 56
THE REVISED CODE.
(H) "AUDIT" MEANS ANY OF THE FOLLOWING: 58
(1) ANY EXAMINATION OR REVIEW OF THE STATE'S OR A PUBLIC 60
OFFICE'S FINANCIAL STATEMENTS OR REPORTS; 61
(2) ANY EXAMINATION OR REVIEW OF RECORDS, DOCUMENTS, 63
BOOKS, OR ANY OTHER EVIDENCE RELATING TO EITHER OF THE FOLLOWING: 64
(a) THE COLLECTION, RECEIPT, ACCOUNTING, USE, OR 66
EXPENDITURE OF PUBLIC MONEY BY A PUBLIC OFFICE OR BY A PERSON; 67
(b) THE DETERMINATION BY THE AUDITOR OF STATE, AS REQUIRED 69
BY SECTION 117.11 OF THE REVISED CODE, OF WHETHER A PUBLIC OFFICE 70
HAS COMPLIED WITH ALL THE LAWS, RULES, ORDINANCES, OR ORDERS 71
PERTAINING TO THE PUBLIC OFFICE.
(3) ANY OTHER TYPE OF EXAMINATION OR REVIEW OF A PUBLIC 73
OFFICE OR OF A PERSON RECEIVING PUBLIC MONEY THAT IS CONDUCTED 74
ACCORDING TO GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS 75
ESTABLISHED BY RULE PURSUANT TO SECTION 117.19 OF THE REVISED 76
CODE.
Sec. 117.10. (A) The auditor of state shall audit all 85
public offices as provided in this chapter. The auditor of state 87
also may audit the accounts of private institutions, 88
associations, boards, and corporations ANY PERSON receiving 90
public money for their use and may require of them annual reports 91
in such form as the auditor of state prescribes. ANY PERSON 92
RECEIVING PUBLIC MONEY SHALL DO BOTH OF THE FOLLOWING: 94
(1) KEEP CURRENT AND ACCURATE RECORDS OF THE RECEIPT AND 96
USE OF THAT PUBLIC MONEY, EITHER BY MAINTAINING SEPERATE BANK 97
ACCOUNTS FOR PUBLIC MONEY OR BY USING OTHER ACCOUNTING 98
CONVENTIONS TYPICALLY USED IN A FUND ACCOUNTING SYSTEM AS MAY BE 99
APPROVED BY THE AUDITOR OF STATE. THESE RECORDS ARE PUBLIC
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RECORDS UNDER SECTION 149.43 OF THE REVISED CODE AND ARE SUBJECT 100
TO DIVISIONS (B) AND (C) OF THAT SECTION. 101
(2) PREPARE FINANCIAL STATEMENTS THAT REPORT SEPARATELY ON 103
PUBLIC AND PRIVATE MONEY RECEIVED AND CONTAIN SUCH INFORMATION 104
PERTAINING TO THE PUBLIC MONEY AS MAY BE PRESCRIBED BY THE 105
AUDITOR OF STATE IN RULES ADOPTED PURSUANT TO SECTION 117.20 OF 106
THE REVISED CODE.
(B) AUDITS OF PERSONS RECEIVING PUBLIC MONEY SHALL BE 108
LIMITED TO AN EXAMINATION OR REVIEW OF THE PUBLIC MONEY RECEIVED 109
UNLESS THE PUBLIC MONEY IS COMMINGLED WITH PRIVATE MONEY. IN 110
THAT CASE, THE AUDITOR OF STATE MAY AUDIT ALL THE ACCOUNTS OF ANY 111
PERSONS RECEIVING PUBLIC MONEY.
(C) The auditor of state may audit the accounts of any 113
provider as defined in section 5111.06 of the Revised Code, if 115
requested by the department of job and family services. 117
(D) If a public office has been audited by an agency of 119
the United States government, the auditor of state may, if 121
satisfied that the federal audit has been conducted according to 123
principles and procedures not contrary to those of the auditor of 124
state, use and adopt the federal audit and report in lieu of an 125
audit by the auditor of state's own office.
(E) Within thirty days after the creation or dissolution 127
or the winding up of the affairs of any public office, that 129
public office shall notify the auditor of state in writing that 130
this action has occurred.
Sec. 117.11. (A) Except as provided in THIS division (D) 139
of this section, the auditor of state shall commence an audit of 141
each public office not more than AT LEAST ONCE EVERY two FISCAL 143
years from the release date of the last audit report of such 144
public office. THE AUDITOR OF STATE SHALL AUDIT A PUBLIC OFFICE 145
EACH FISCAL YEAR IF THAT PUBLIC OFFICE IS REQUIRED TO BE AUDITED 146
ON AN ANNUAL BASIS PURSUANT TO "THE SINGLE AUDIT ACT OF 1984," 98 147
STAT. 2327, 31 U.S.C.A. 7501 ET SEQ., AS AMENDED. In the audit, 148
inquiry shall be made into the methods, accuracy, and legality of 149
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the accounts, financial reports, records, files, and reports of 150
the office, whether the laws, ordinances, and orders pertaining 151
to the office have been observed, and whether the requirements 152
and rules of the auditor of state have been complied with. Except 154
where auditing standards or procedures dictate otherwise, each 155
audit shall cover at least one fiscal year. IF A PUBLIC OFFICE
IS AUDITED ONLY ONCE EVERY TWO FISCAL YEARS, THE AUDIT SHALL 156
COVER BOTH FISCAL YEARS. 157
(B) IN ADDITION TO THE ANNUAL OR BIENNIAL AUDIT PROVIDED 159
FOR IN DIVISION (A) OF THIS SECTION, THE AUDITOR OF STATE MAY 160
CONDUCT AN AUDIT OF A PUBLIC OFFICE OR OF A PERSON RECEIVING 161
PUBLIC MONEY AT ANY TIME WHEN SO REQUESTED BY THE PUBLIC OFFICE 162
OR UPON THE AUDITOR OF STATE'S OWN INITIATIVE IF THE AUDITOR OF 163
STATE HAS REASONABLE CAUSE TO BELIEVE THAT AN ADDITIONAL AUDIT IS 164
IN THE PUBLIC INTREST.
(B)(C)(1) The auditor of state shall identify any public 166
office in which the auditor of state will be unable to conduct an 167
audit AT LEAST once every two FISCAL years as required by 168
division (A) of this section and shall provide immediate written 169
notice to the clerk of the legislative authority or governing 171
board of the public office so identified. Within six months of 172
the receipt of such notice, the legislative authority or 173
governing board may engage an independent certified public 174
accountant to conduct an audit pursuant to section 117.12 of the 175
Revised Code.
(2) When the chief fiscal officer of a public office 177
notifies the auditor of state that an audit is required at a time 178
prior to the next regularly scheduled audit by the auditor of 179
state, the auditor of state shall either cause an earlier audit 180
to be made by the auditor of state or authorize the legislative 181
authority or governing board of the public office to engage an 182
independent certified public accountant to conduct the required 183
audit. The scope of the audit shall be as authorized by the 184
auditor of state. 185
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(3) The auditor of state shall approve the scope of an 187
audit under division (B)(C)(1) or (2) of this section as set 188
forth in the contract for the proposed audit before the contract 189
is executed on behalf of the public office that is to be audited. 190
The independent accountant conducting an audit under division 192
(B)(C)(1) or (2) of this section shall be paid by the public
office. 193
(C)(D) If a uniform accounting network is established 195
under section 117.101 of the Revised Code, the auditor of state 196
or a certified public accountant employed pursuant to this 197
section or section 115.56 of the Revised Code shall, to the 198
extent practicable, utilize services offered by the network in 199
order to conduct efficient and economical audits of public 200
offices.
(D) The auditor of state may, by rule, provide for waiver 202
of the two-year requirement of division (A) of this section with 203
respect to: 204
(1) Public offices participating in a uniform accounting 206
network established under section 117.101 of the Revised Code; 207
(2) Public offices that are not required by federal law to 209
be audited in accordance with federal auditing standards. 210
The rules may provide for the application of specified 212
audit procedures to such public offices in lieu of an audit in 213
accordance with generally accepted government auditing standards. 214
(E) The auditor of state shall, in accordance with 216
division (A)(3) of section 9.65 of the Revised Code and this 217
section, audit an annuity program for volunteer fire fighters 218
established by a political subdivision under section 9.65 of the 219
Revised Code. As used in this section, "volunteer fire fighters" 220
and "political subdivision" have the same meanings as in division 221
(C) of section 9.65 of the Revised Code. 222
Sec. 117.12. Any public accountant engaged to perform an 231
audit pursuant to division (B)(C) of section 117.11 of the 232
Revised Code shall conduct the audit pursuant to the standards, 234
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procedures, and guidelines of the auditor of state for such 235
audits. The auditor of state shall establish these standards, 236
procedures, and guidelines by rule. The audit shall cover the 237
period beginning with the termination date of the most recent 238
audit conducted under this section or section 117.11 of the 239
Revised Code and ending on the date specified by the auditor of 240
state. The accountant shall inquire into the methods, accuracy, 241
and legality of the accounts, records, files, and reports of the 242
public office and shall note whether, in his THE ACCOUNTANT'S 243
opinion, the laws, ordinances, and orders pertaining to the 245
public office have been complied with. The accountant shall have 246
no authority to make formal findings of illegality, malfeasance, 247
or gross neglect under this division or section 117.23 of the 248
Revised Code.
Sec. 117.13. (A) The costs of audits of state agencies 257
shall be recovered by the auditor of state in the following 258
manner: 259
(1) The costs of all audits of state agencies shall be 261
paid to the auditor of state on statements rendered by the 262
auditor of state. Money so received by the auditor of state 264
shall be paid into the state treasury to the credit of the public 265
audit expense fund--intrastate, which is hereby created, and 266
shall be used to pay costs related to such audits. The costs of 267
all annual and special audits of a state agency shall be charged 268
to the state agency being audited. The costs of all biennial 269
audits of a state agency shall be paid from money appropriated to 270
the department of administrative services for that purpose. The 271
costs of any assistant auditor, employee, or expert employed 272
pursuant to section 117.09 of the Revised Code called upon to 273
testify in any legal proceedings in regard to any audit, or 274
called upon to review or discuss any matter related to any audit, 275
may be charged to the state agency to which the audit relates. 276
(2) The auditor of state shall establish by rule rates to 278
be charged to state agencies or to the department of 279
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administrative services for recovering the costs of audits of 280
state agencies. 281
(B) As used in this division, "government auditing 284
standards" means the government auditing standards published by 285
the comptroller general of the United States general accounting 286
office.
(1) Except as provided in divisions (B)(2) and (3) of this 288
section, any costs of an audit of a private institution, 290
association, board, or corporation PERSON receiving public money 291
for its use shall be charged to the public office providing the 292
public money in the same manner as costs of an audit of the 293
public office. 294
(2) If an audit of a private child placing agency or 296
private noncustodial agency receiving public money from a public 297
children services agency for providing child welfare or child 298
protection services sets forth that money has been illegally 299
expended, converted, misappropriated, or is unaccounted for, the 300
costs of the audit shall be charged to the agency being audited 301
in the same manner as costs of an audit of a public office, 302
unless the findings are inconsequential, as defined by government 303
auditing standards.
(3) If such an audit does not set forth that money has 305
been illegally expended, converted, misappropriated, or is 306
unaccounted for or sets forth findings that are inconsequential, 307
as defined by government auditing standards, the costs of the 308
audit shall be charged as follows: 309
(a) One-third of the costs to the agency being audited; 312
(b) One-third of the costs to the public children services 314
agency that provided the public money to the agency being 315
audited;
(c) One-third of the costs to the department of job and 317
family services. 318
(C) The costs of audits of local public offices shall be 320
recovered by the auditor of state in the following manner: 321
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(1) The total amount of compensation paid assistant 323
auditors of state, their expenses, the cost of employees assigned 324
to assist the assistant auditors of state, the cost of experts 325
employed pursuant to section 117.09 of the Revised Code, and the 326
cost of typing, reviewing, and copying reports shall be borne by 327
the public office to which such assistant auditors of state are 328
so assigned, except that annual vacation and sick leave of 329
assistant auditors of state, employees, and typists shall be 330
financed from the general revenue fund. The necessary traveling 331
and hotel expenses of the deputy inspectors and supervisors of 332
public offices shall be paid from the state treasury. Assistant 333
auditors of state shall be compensated by the taxing district or 334
other public office audited for activities undertaken pursuant to 335
division (B) of section 117.18 and section 117.24 of the Revised 336
Code. The costs of any assistant auditor, employee, or expert 337
employed pursuant to section 117.09 of the Revised Code called 338
upon to testify in any legal proceedings in regard to any audit, 339
or called upon to review or discuss any matter related to any 340
audit, may be charged to the public office to which the audit 341
relates. 342
(2) The auditor of state shall certify the amount of such 344
compensation, expenses, cost of experts, reviewing, copying, and 345
typing to the fiscal officer of the local public office audited. 346
The fiscal officer of the local public office shall forthwith 347
draw a warrant upon the general fund or other appropriate funds 349
of the local public office to the order of the auditor of state; 350
provided, that the auditor of state is authorized to negotiate 351
with any local public office and, upon agreement between the 352
auditor of state and the local public office, may adopt a 353
schedule for payment of the amount due under this section. Money 354
so received by the auditor of state shall be paid into the state 355
treasury to the credit of the public audit expense fund--local 356
government, which is hereby created, and shall be used to pay the 357
compensation, expense, cost of experts and employees, reviewing, 358
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copying, and typing of reports. 359
(3) At the conclusion of each audit, or analysis and 361
report made pursuant to section 117.24 of the Revised Code, the 362
auditor of state shall furnish the fiscal officer of the local 363
public office audited a statement showing the total cost of the 364
audit, or of the audit and the analysis and report, and the 365
percentage of the total cost chargeable to each fund audited. 366
The fiscal officer may distribute such total cost to each fund 367
audited in accordance with its percentage of the total cost. 368
(4) The auditor of state shall provide each local public 370
office a statement or certification of the amount due from the 371
public office for services performed by the auditor of state 372
under this or any other section of the Revised Code, as well as 373
the date upon which payment is due to the auditor of state. Any 374
local public office that does not pay the amount due to the 375
auditor of state by that date may be assessed by the auditor of 376
state for interest from the date upon which the payment is due at 377
the rate per annum prescribed by section 5703.47 of the Revised 378
Code. All interest charges assessed by the auditor of state may 379
be collected in the same manner as audit costs pursuant to 380
division (D) of this section. 381
(D) If the auditor of state fails to receive payment for 383
any amount due from a public office for services performed under 384
this or any other section of the Revised Code, the auditor of 385
state may seek payment through the office of budget and 387
management. Upon certification by the auditor of state to the 388
director of budget and management of any such amount due, the 389
director shall withhold from the public office any amount 390
available, up to and including the amount certified as due, from 391
any funds under the director's control that belong to or are 392
lawfully payable or due to the public office. The director shall 393
promptly pay the amount withheld to the auditor of state. If the 394
director determines that no funds due and payable to the public 395
office are available or that insufficient amounts of such funds 396
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are available to cover the amount due, the director shall 397
withhold and pay to the auditor of state the amounts available 398
and, in the case of a local public office, certify the remaining 399
amount to the county auditor of the county in which the local 400
public office is located. The county auditor shall withhold from 401
the local public office any amount available, up to and including 402
the amount certified as due, from any funds under the county 403
auditor's control and belonging to or lawfully payable or due to 405
the local public office. The county auditor shall promptly pay 406
any such amount withheld to the auditor of state. 407
Section 2. That existing sections 117.01, 117.10, 117.11, 409
117.12, and 117.13 of the Revised Code are hereby repealed. 410