As Introduced

129th General Assembly Regular Session 2011-2012

H. B. No. 201

Representatives Rosenberger, Beck 

Cosponsors: Representatives Adams, J., Boose, Maag, Martin, Thompson 

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A BILL

To amend sections 117.13 and 131.02 and to enact

1

sections 117.60 to 117.70 of the Revised Code to

2

require the Auditor of State to perform recovery

3

audits for overpayments made to vendors by certain

4

state agencies and to permit the Auditor to

5

contract with independent audit consultants to

6

conduct those audits.

7

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 117.13 and 131.02 be amended and	8
sections 117.60, 117.61, 117.62, 117.63, 117.64, 117.65, 117.66,	9
117.67, 117.68, 117.69, and 117.70 of the Revised Code be enacted	10
to read as follows:	11

Sec. 117.13.  (A) TheExcept as otherwise provided for	12
recovery audits under sections 117.63 to 117.69 of the Revised	13
Code, the costs of audits of state agencies shall be recovered by	14
the auditor of state in the following manner:	15

(1) The costs of all audits of state agencies shall be paid	16
to the auditor of state on statements rendered by the auditor of	17
state. Money so received by the auditor of state shall be paid	18
into the state treasury to the credit of the public audit expense	19
fund--intrastate, which is hereby created, and shall be used to	20
pay costs related to such audits. The costs of audits of a state	21
agency shall be charged to the state agency being audited. The	22
costs of any assistant auditor, employee, or expert employed	23
pursuant to section 117.09 of the Revised Code called upon to	24
testify in any legal proceedings in regard to any audit, or called	25
upon to review or discuss any matter related to any audit, may be	26
charged to the state agency to which the audit relates.	27

(2) The auditor of state shall establish by rule rates to be	28
charged to state agencies for recovering the costs of audits of	29
state agencies.	30

(B) As used in this division, "government auditing standards"	31
means the government auditing standards published by the	32
comptroller general of the United States general accounting	33
office.	34

(1) Except as provided in divisions (B)(2) and (3) of this	35
section, any costs of an audit of a private institution,	36
association, board, or corporation receiving public money for its	37
use shall be charged to the public office providing the public	38
money in the same manner as costs of an audit of the public	39
office.	40

(2) If an audit of a private child placing agency or private	41
noncustodial agency receiving public money from a public children	42
services agency for providing child welfare or child protection	43
services sets forth that money has been illegally expended,	44
converted, misappropriated, or is unaccounted for, the costs of	45
the audit shall be charged to the agency being audited in the same	46
manner as costs of an audit of a public office, unless the	47
findings are inconsequential, as defined by government auditing	48
standards.	49

(3) If such an audit does not set forth that money has been	50
illegally expended, converted, misappropriated, or is unaccounted	51
for or sets forth findings that are inconsequential, as defined by	52
government auditing standards, the costs of the audit shall be	53
charged as follows:	54

(a) One-third of the costs to the agency being audited;

55

(b) One-third of the costs to the public children services	56
agency that provided the public money to the agency being audited;	57

(c) One-third of the costs to the department of job and	58
family services.	59

(C) The costs of audits of local public offices shall be	60
recovered by the auditor of state in the following manner:	61

(1) The total amount of compensation paid assistant auditors	62
of state, their expenses, the cost of employees assigned to assist	63
the assistant auditors of state, the cost of experts employed	64
pursuant to section 117.09 of the Revised Code, and the cost of	65
typing, reviewing, and copying reports shall be borne by the	66
public office to which such assistant auditors of state are so	67
assigned, except that annual vacation and sick leave of assistant	68
auditors of state, employees, and typists shall be financed from	69
the general revenue fund. The necessary traveling and hotel	70
expenses of the deputy inspectors and supervisors of public	71
offices shall be paid from the state treasury. Assistant auditors	72
of state shall be compensated by the taxing district or other	73
public office audited for activities undertaken pursuant to	74
division (B) of section 117.18 and section 117.24 of the Revised	75
Code. The costs of any assistant auditor, employee, or expert	76
employed pursuant to section 117.09 of the Revised Code called	77
upon to testify in any legal proceedings in regard to any audit,	78
or called upon to review or discuss any matter related to any	79
audit, may be charged to the public office to which the audit	80
relates.	81

(2) The auditor of state shall certify the amount of such	82
compensation, expenses, cost of experts, reviewing, copying, and	83
typing to the fiscal officer of the local public office audited.	84
The fiscal officer of the local public office shall forthwith draw	85
a warrant upon the general fund or other appropriate funds of the	86
local public office to the order of the auditor of state;	87
provided, that the auditor of state is authorized to negotiate	88
with any local public office and, upon agreement between the	89
auditor of state and the local public office, may adopt a schedule	90
for payment of the amount due under this section. Money so	91
received by the auditor of state shall be paid into the state	92
treasury to the credit of the public audit expense fund--local	93
government, which is hereby created, and shall be used to pay the	94
compensation, expense, cost of experts and employees, reviewing,	95
copying, and typing of reports.	96

(3) At the conclusion of each audit, or analysis and report	97
made pursuant to section 117.24 of the Revised Code, the auditor	98
of state shall furnish the fiscal officer of the local public	99
office audited a statement showing the total cost of the audit, or	100
of the audit and the analysis and report, and the percentage of	101
the total cost chargeable to each fund audited. The fiscal officer	102
may distribute such total cost to each fund audited in accordance	103
with its percentage of the total cost.	104

(4) The auditor of state shall provide each local public	105
office a statement or certification of the amount due from the	106
public office for services performed by the auditor of state under	107
this or any other section of the Revised Code, as well as the date	108
upon which payment is due to the auditor of state. Any local	109
public office that does not pay the amount due to the auditor of	110
state by that date may be assessed by the auditor of state for	111
interest from the date upon which the payment is due at the rate	112
per annum prescribed by section 5703.47 of the Revised Code. All	113
interest charges assessed by the auditor of state may be collected	114
in the same manner as audit costs pursuant to division (D) of this	115
section.	116

(D) If the auditor of state fails to receive payment for any	117
amount due, including, but not limited to, fines, fees, and costs,	118
from a public office for services performed under this or any	119
other section of the Revised Code, the auditor of state may seek	120
payment through the office of budget and management. (Amounts due	121
include any amount due to an independent public accountant with	122
whom the auditor has contracted to perform services, all costs and	123
fees associated with participation in the uniform accounting	124
network, and all costs associated with the auditor's provision of	125
local government services.) Upon certification by the auditor of	126
state to the director of budget and management of any such amount	127
due, the director shall withhold from the public office any amount	128
available, up to and including the amount certified as due, from	129
any funds under the director's control that belong to or are	130
lawfully payable or due to the public office. The director shall	131
promptly pay the amount withheld to the auditor of state. If the	132
director determines that no funds due and payable to the public	133
office are available or that insufficient amounts of such funds	134
are available to cover the amount due, the director shall withhold	135
and pay to the auditor of state the amounts available and, in the	136
case of a local public office, certify the remaining amount to the	137
county auditor of the county in which the local public office is	138
located. The county auditor shall withhold from the local public	139
office any amount available, up to and including the amount	140
certified as due, from any funds under the county auditor's	141
control and belonging to or lawfully payable or due to the local	142
public office. The county auditor shall promptly pay any such	143
amount withheld to the auditor of state.	144

Sec. 117.60. As used in sections 117.60 to 117.70 of the	145
Revised Code, "overpayment" means a duplicate payment made by a	146
state agency to a vendor for a single invoice or any payment made	147
to a vendor that meets any of the following:	148

(A) It represents an amount above the required payment minus	149
any available discounts applied to result in a deduction in the	150
required payment.	151

(B) It includes a late payment penalty that was improperly	152
applied.	153

(C) It was collected to cover shipping costs that were	154
incorrectly computed or incorrectly included in an invoice.	155

(D) It was paid for state sales tax.

156

(E) It was paid for a good or service that the vendor did not	157
provide.	158

(F) It was paid as a result of an invoice error.

159

(G) It was paid as a result of a pricing error.

160

(H) Its amount fails to reflect the appropriate discounts,	161
rebates, or other allowances.	162

(I) It fails to comply with the purchasing agreement.

163

Sec. 117.61. (A) Subject to division (B) of this section, the	164
auditor of state shall, once a biennium, perform a recovery audit	165
for overpayments made to vendors by each state agency that, during	166
the most recently concluded biennium, had total expenditures that	167
exceeded twenty-five million dollars or that, during the current	168
biennium, has appropriations in excess of twenty-five million	169
dollars.	170

(B) The auditor of state may exempt from a recovery audit any	171
state agency that meets the criteria established under division	172
(B) of section 117.70 of the Revised Code.	173

(C) The recovery audits required by this section are	174
supplemental to public office audits required under section 117.11	175
of the Revised Code.	176

Sec. 117.62. The auditor of state may contract with one or	177
more overpayment-recovery-audit consultants on behalf of a state	178
agency to conduct the recovery audits required under section	179
117.61 of the Revised Code. The consultants shall have	180
recovery-audit expertise. Recovery audits conducted by such	181
consultants are subject to sections 117.63 to 117.69 of the	182
Revised Code.	183

Sec. 117.63. A contract with an overpayment-recovery-audit	184
consultant executed under section 117.62 of the Revised Code shall	185
specify the scope of the recovery audit. To allow for the	186
completion of any existing internal auditing procedures of the	187
state agency, the contract shall not permit an audit to be	188
performed on payments during the one-hundred-eighty-day period	189
after the date on which the payments were made.	190

Sec. 117.64. An overpayment-recovery-audit consultant shall	191
conduct a recovery audit required under section 117.61 of the	192
Revised Code pursuant to the standards, procedures, and guidelines	193
established by the auditor of state under section 117.70 of the	194
Revised Code. Each state agency subject to a recovery audit shall	195
provide the consultant with all information necessary for the	196
audit.	197

Sec. 117.65. The auditor of state or a state agency subject	198
to a recovery audit required under section 117.61 of the Revised	199
Code may provide the overpayment-recovery-audit consultant and the	200
consultant's employees with any confidential information in the	201
auditor's or agency's custody that is necessary for the audit's	202
performance or the recovery of an overpayment, to the extent that	203
the auditor or agency is not prohibited from sharing the	204
information under an agreement with another state or the federal	205
government. The consultant, and each employee or agent of the	206
consultant, is subject to all prohibitions against the disclosure	207
of confidential information obtained from the state in connection	208
with the contract that applies to the auditor, the agency, or an	209
employee of the auditor or the agency. A consultant, or an	210
employee or agent of the consultant, who discloses any such	211
confidential information is subject to the same sanctions and	212
penalties that would apply to the auditor, the agency, or an	213
employee of the auditor or the agency.	214

Sec. 117.66. A contract for a recovery audit executed under	215
section 117.62 of the Revised Code may provide for reasonable	216
compensation for services provided under the contract, including	217
compensation determined by the application of a percentage,	218
specified in the contract, of the total amount recovered because	219
of the overpayment-recovery-audit consultant's audit activities or	220
recommendations, as a fee for services. The state agency subject	221
to a recovery audit shall pay, from recovered money, the	222
consultant conducting the audit and responsible for identifying	223
the overpayment.	224

Sec. 117.67. Any portion of an overpayment recovered that is	225
not paid to the overpayment-recovery-audit consultant under	226
section 117.66 of the Revised Code shall be credited to the fund	227
or account from which the payment originated. A state agency shall	228
expend or return to the federal government any federal money	229
recovered through a recovery audit. The state agency shall expend	230
or return the federal money in accordance with the rules of the	231
federal program through which the agency received the federal	232
money.	233

Sec. 117.68. An overpayment-recovery-audit consultant shall	234
submit a written audit report for each recovery audit the	235
consultant conducts to the state agency subject to the audit and	236
the auditor of state. The auditor, within seven days after receipt	237
of these reports, shall provide copies of them to the governor,	238
the speaker of the house of representatives, and the president of	239
the senate.	240

The auditor shall notify the attorney general in writing of	241
every recovery-audit report received that sets forth that an	242
overpayment of public money exists and has not been collected, and	243
of the date that the auditor received the report.	244

Not later than the first day of January of each even-numbered	245
year, the auditor shall issue a report to the general assembly	246
summarizing the contents of all written recovery-audit reports	247
received under this section during the state biennium ending the	248
thirtieth day of June of the previous year.	249

Sec. 117.69. When a recovery-audit report sets forth that an	250
overpayment of public money exists and has not been collected, the	251
overpayment-recovery-audit consultant may, during the	252
forty-five-day period following the issuance of the report,	253
continue attempting to recover the overpayment. The head officer	254
of the state agency receiving the report shall proceed to collect	255
the amount in accordance with section 131.02 of the Revised Code.	256
For purposes of division (A) of section 131.02 of the Revised	257
Code, the amount is to be considered due when the report is	258
received by the officer.	259

Sec. 117.70. The auditor of state shall adopt rules that do	260
both of the following:	261

(A) Establish, for the conduct of recovery audits, standards,	262
procedures, and guidelines that are designed to detect and recover	263
overpayments made by a state agency to a vendor and to recommend	264
improved state-agency-accounting operations;	265

(B) Establish criteria for determining whether a state agency	266
may be exempted from a recovery audit. The criteria shall include	267
consideration of the likely costs and benefits of performing the	268
audit.	269

Sec. 131.02. (A) Except as otherwise provided in section	270
4123.37 and division (K) of section 4123.511 of the Revised Code,	271
whenever any amount is payable to the state, the officer,	272
employee, or agent responsible for administering the law under	273
which the amount is payable shall immediately proceed to collect	274
the amount or cause the amount to be collected and shall pay the	275
amount into the state treasury or into the appropriate custodial	276
fund in the manner set forth pursuant to section 113.08 of the	277
Revised Code. Except as otherwise provided in this division, if	278
the amount is not paid within forty-five days after payment is	279
due, the officer, employee, or agent shall certify the amount due	280
to the attorney general, in the form and manner prescribed by the	281
attorney general, and notify the director of budget and management	282
thereof. In the case of an amount payable by a student enrolled in	283
a state institution of higher education, the amount shall be	284
certified within the later of forty-five days after the amount is	285
due or the tenth day after the beginning of the next academic	286
semester, quarter, or other session following the session for	287
which the payment is payable. The attorney general may assess the	288
collection cost to the amount certified in such manner and amount	289
as prescribed by the attorney general.	290

For the purposes of this section, the attorney general and	291
the officer, employee, or agent responsible for administering the	292
law under which the amount is payable shall agree on the time a	293
payment is due, and that agreed upon time shall be one of the	294
following times:	295

(1) If a law, including an administrative rule, of this state	296
prescribes the time a payment is required to be made or reported,	297
when the payment is required by that law to be paid or reported.	298

(2) If the payment is for services rendered, when the	299
rendering of the services is completed.	300

(3) If the payment is reimbursement for a loss, when the loss	301
is incurred.	302

(4) In the case of a fine or penalty for which a law or	303
administrative rule does not prescribe a time for payment, when	304
the fine or penalty is first assessed.	305

(5) If the payment arises from a legal finding, judgment, or	306
adjudication order, when the finding, judgment, or order is	307
rendered or issued.	308

(6) If the payment arises from an overpayment of money by the	309
state to another person, when the overpayment is discovered.	310

(7) The date on which the amount for which an individual is	311
personally liable under section 5735.35, section 5739.33, or	312
division (G) of section 5747.07 of the Revised Code is determined.	313

(8) Upon proof of claim being filed in a bankruptcy case.

314

(9) Any other appropriate time determined by the attorney	315
general and the officer, employee, or agent responsible for	316
administering the law under which the amount is payable on the	317
basis of statutory requirements or ordinary business processes of	318
the state agency to which the payment is owed.	319

(B)(1) The attorney general shall give immediate notice by	320
mail or otherwise to the party indebted of the nature and amount	321
of the indebtedness.	322

(2) If the amount payable to this state arises from a tax	323
levied under Chapter 5733., 5739., 5741., 5747., or 5751. of the	324
Revised Code, the notice also shall specify all of the following:	325

(a) The assessment or case number;

326

(b) The tax pursuant to which the assessment is made;

327

(c) The reason for the liability, including, if applicable,	328
that a penalty or interest is due;	329

(d) An explanation of how and when interest will be added to	330
the amount assessed;	331

(e) That the attorney general and tax commissioner, acting	332
together, have the authority, but are not required, to compromise	333
the claim and accept payment over a reasonable time, if such	334
actions are in the best interest of the state.	335

(C) The attorney general shall collect the claim or secure a	336
judgment and issue an execution for its collection.	337

(D) Each claim shall bear interest, from the day on which the	338
claim became due, at the rate per annum required by section	339
5703.47 of the Revised Code.	340

(E) The attorney general and the chief officer of the agency	341
reporting a claim, acting together, may do any of the following if	342
such action is in the best interests of the state:	343

(1) Compromise the claim;

344

(2) Extend for a reasonable period the time for payment of	345
the claim by agreeing to accept monthly or other periodic	346
payments. The agreement may require security for payment of the	347
claim.	348

(3) Add fees to recover the cost of processing checks or	349
other draft instruments returned for insufficient funds and the	350
cost of providing electronic payment options.	351

(F)(1) Except as provided in division (F)(2) of this section,	352
if the attorney general finds, after investigation, that any claim	353
due and owing to the state is uncollectible, the attorney general,	354
with the consent of the chief officer of the agency reporting the	355
claim, may do the following:	356

(a) Sell, convey, or otherwise transfer the claim to one or	357
more private entities for collection;	358

(b) Cancel the claim or cause it to be canceled.

359

(2) The attorney general shall cancel or cause to be canceled	360
an unsatisfied claim on the date that is forty years after the	361
date the claim is certified.	362

(3) No initial action shall be commenced to collect any tax	363
payable to the state that is administered by the tax commissioner,	364
whether or not such tax is subject to division (B) of this	365
section, or any penalty, interest, or additional charge on such	366
tax, after the expiration of the period ending on the later of the	367
dates specified in divisions (F)(3)(a) and (b) of this section,	368
provided that such period shall be extended by the period of any	369
stay to such collection or by any other period to which the	370
parties mutually agree. If the initial action in aid of execution	371
is commenced before the later of the dates specified in divisions	372
(F)(3)(a) and (b) of this section, any and all subsequent actions	373
may be pursued in aid of execution of judgment for as long as the	374
debt exists.	375

(a) Seven years after the assessment of the tax, penalty,	376
interest, or additional charge is issued.	377

(b) Four years after the assessment of the tax, penalty,	378
interest, or additional charge becomes final. For the purposes of	379
division (F)(3)(b) of this section, the assessment becomes final	380
at the latest of the following: upon expiration of the period to	381
petition for reassessment, or if applicable, to appeal a final	382
determination of the commissioner or decision of the board of tax	383
appeals or a court, or, if applicable, upon decision of the United	384
States supreme court.	385

For the purposes of division (F)(3) of this section, an	386
initial action to collect a tax debt is commenced at the time when	387
any action, including any action in aid of execution on a	388
judgment, commences after a certified copy of the tax	389
commissioner's entry making an assessment final has been filed in	390
the office of the clerk of court of common pleas in the county in	391
which the taxpayer resides or has its principal place of business	392
in this state, or in the office of the clerk of court of common	393
pleas of Franklin county, as provided in section 5739.13, 5741.14,	394
5747.13, or 5751.09 of the Revised Code or in any other applicable	395
law requiring such a filing. If an assessment has not been issued	396
and there is no time limitation on the issuance of an assessment	397
under applicable law, an action to collect a tax debt commences	398
when the action is filed in the courts of this state to collect	399
the liability.	400

(4) If information contained in a claim that is sold,	401
conveyed, or transferred to a private entity pursuant to this	402
section is confidential pursuant to federal law or a section of	403
the Revised Code that implements a federal law governing	404
confidentiality, such information remains subject to that law	405
during and following the sale, conveyance, or transfer.	406

(G) Except as provided in section 117.69 of the Revised Code,	407
this section does not apply to overpayments discovered and	408
collected by an overpayment-recovery-audit consultant under	409
contract with the auditor of state pursuant to section 117.62 of	410
the Revised Code.	411

Section 2. That existing sections 117.13 and 131.02 of the	412
Revised Code are hereby repealed.	413