As Reported by the Senate State and Local Government and Veterans Affairs Committee

129th General Assembly
Regular Session
2011-2012
Sub. S. B. No. 4


Senator Schaffer 

Cosponsors: Senators Daniels, Hughes, LaRose, Brown, Turner 

A BILL
To amend section 117.13 and to enact sections 117.46, 1
117.461, 117.47, 117.471, and 117.472 of the 2
Revised Code to require performance auditing by 3
the Auditor of State of a minimum of four state 4
agencies each biennium, to establish the Leverage 5
for Efficiency, Accountability, and Performance 6
Fund, and to make an appropriation.7


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

       Section 1. That section 117.13 be amended and sections 8
117.46, 117.461, 117.47, 117.471, and 117.472 of the Revised Code 9
be enacted to read as follows:10

       Sec. 117.13.  (A) TheExcept as otherwise provided in section 11
117.472 of the Revised Code, the costs of audits of state agencies 12
shall be recovered by the auditor of state in the following 13
manner:14

       (1) The costs of all audits of state agencies shall be paid 15
to the auditor of state on statements rendered by the auditor of 16
state. Money so received by the auditor of state shall be paid 17
into the state treasury to the credit of the public audit expense 18
fund--intrastate, which is hereby created, and shall be used to 19
pay costs related to such audits. The costs of audits of a state 20
agency shall be charged to the state agency being audited. The 21
costs of any assistant auditor, employee, or expert employed 22
pursuant to section 117.09 of the Revised Code called upon to 23
testify in any legal proceedings in regard to any audit, or called 24
upon to review or discuss any matter related to any audit, may be 25
charged to the state agency to which the audit relates.26

       (2) The auditor of state shall establish by rule rates to be 27
charged to state agencies for recovering the costs of audits of 28
state agencies.29

       (B) As used in this division, "government auditing standards" 30
means the government auditing standards published by the 31
comptroller general of the United States general accounting 32
office.33

       (1) Except as provided in divisions (B)(2) and (3) of this 34
section, any costs of an audit of a private institution, 35
association, board, or corporation receiving public money for its 36
use shall be charged to the public office providing the public 37
money in the same manner as costs of an audit of the public 38
office.39

       (2) If an audit of a private child placing agency or private 40
noncustodial agency receiving public money from a public children 41
services agency for providing child welfare or child protection 42
services sets forth that money has been illegally expended, 43
converted, misappropriated, or is unaccounted for, the costs of 44
the audit shall be charged to the agency being audited in the same 45
manner as costs of an audit of a public office, unless the 46
findings are inconsequential, as defined by government auditing 47
standards.48

       (3) If such an audit does not set forth that money has been 49
illegally expended, converted, misappropriated, or is unaccounted 50
for or sets forth findings that are inconsequential, as defined by 51
government auditing standards, the costs of the audit shall be 52
charged as follows:53

       (a) One-third of the costs to the agency being audited;54

       (b) One-third of the costs to the public children services 55
agency that provided the public money to the agency being audited;56

       (c) One-third of the costs to the department of job and 57
family services.58

       (C) TheExcept as otherwise provided in section 117.472 of 59
the Revised Code, the costs of audits of local public offices 60
shall be recovered by the auditor of state in the following 61
manner:62

       (1) The total amount of compensation paid assistant auditors 63
of state, their expenses, the cost of employees assigned to assist 64
the assistant auditors of state, the cost of experts employed 65
pursuant to section 117.09 of the Revised Code, and the cost of 66
typing, reviewing, and copying reports shall be borne by the 67
public office to which such assistant auditors of state are so 68
assigned, except that annual vacation and sick leave of assistant 69
auditors of state, employees, and typists shall be financed from 70
the general revenue fund. The necessary traveling and hotel 71
expenses of the deputy inspectors and supervisors of public 72
offices shall be paid from the state treasury. Assistant auditors 73
of state shall be compensated by the taxing district or other 74
public office audited for activities undertaken pursuant to 75
division (B) of section 117.18 and section 117.24 of the Revised 76
Code. The costs of any assistant auditor, employee, or expert 77
employed pursuant to section 117.09 of the Revised Code called 78
upon to testify in any legal proceedings in regard to any audit, 79
or called upon to review or discuss any matter related to any 80
audit, may be charged to the public office to which the audit 81
relates.82

       (2) The auditor of state shall certify the amount of such 83
compensation, expenses, cost of experts, reviewing, copying, and 84
typing to the fiscal officer of the local public office audited. 85
The fiscal officer of the local public office shall forthwith draw 86
a warrant upon the general fund or other appropriate funds of the 87
local public office to the order of the auditor of state; 88
provided, that the auditor of state is authorized to negotiate 89
with any local public office and, upon agreement between the 90
auditor of state and the local public office, may adopt a schedule 91
for payment of the amount due under this section. Money so 92
received by the auditor of state shall be paid into the state 93
treasury to the credit of the public audit expense fund--local 94
government, which is hereby created, and shall be used to pay the 95
compensation, expense, cost of experts and employees, reviewing, 96
copying, and typing of reports.97

       (3) At the conclusion of each audit, or analysis and report 98
made pursuant to section 117.24 of the Revised Code, the auditor 99
of state shall furnish the fiscal officer of the local public 100
office audited a statement showing the total cost of the audit, or 101
of the audit and the analysis and report, and the percentage of 102
the total cost chargeable to each fund audited. The fiscal officer 103
may distribute such total cost to each fund audited in accordance 104
with its percentage of the total cost.105

       (4) The auditor of state shall provide each local public 106
office a statement or certification of the amount due from the 107
public office for services performed by the auditor of state under 108
this or any other section of the Revised Code, as well as the date 109
upon which payment is due to the auditor of state. Any local 110
public office that does not pay the amount due to the auditor of 111
state by that date may be assessed by the auditor of state for 112
interest from the date upon which the payment is due at the rate 113
per annum prescribed by section 5703.47 of the Revised Code. All 114
interest charges assessed by the auditor of state may be collected 115
in the same manner as audit costs pursuant to division (D) of this 116
section.117

       (D) If the auditor of state fails to receive payment for any 118
amount due, including, but not limited to, fines, fees, and costs, 119
from a public office for services performed under this or any 120
other section of the Revised Code, the auditor of state may seek 121
payment through the office of budget and management. (Amounts due 122
include any amount due to an independent public accountant with 123
whom the auditor has contracted to perform services, all costs and 124
fees associated with participation in the uniform accounting 125
network, and all costs associated with the auditor's provision of 126
local government services.) Upon certification by the auditor of 127
state to the director of budget and management of any such amount 128
due, the director shall withhold from the public office any amount 129
available, up to and including the amount certified as due, from 130
any funds under the director's control that belong to or are 131
lawfully payable or due to the public office. The director shall 132
promptly pay the amount withheld to the auditor of state. If the 133
director determines that no funds due and payable to the public 134
office are available or that insufficient amounts of such funds 135
are available to cover the amount due, the director shall withhold 136
and pay to the auditor of state the amounts available and, in the 137
case of a local public office, certify the remaining amount to the 138
county auditor of the county in which the local public office is 139
located. The county auditor shall withhold from the local public 140
office any amount available, up to and including the amount 141
certified as due, from any funds under the county auditor's 142
control and belonging to or lawfully payable or due to the local 143
public office. The county auditor shall promptly pay any such 144
amount withheld to the auditor of state.145

       Sec. 117.46.  Each biennium the auditor of state shall 146
conduct a performance audit of a minimum of four state agencies. 147
At least two of the audits shall be of agencies selected from a 148
list comprised of the administrative departments listed in section 149
121.02 of the Revised Code and the department of education and at 150
least two of the audits shall be of other state agencies.151

       The auditor of state shall select each agency to be audited 152
and shall determine whether to audit the entire agency or a 153
portion of the agency by auditing one or more programs, offices, 154
boards, councils, or other entities within that agency. The 155
auditor of state shall make the selection and determination in 156
consultation with the governor, the speaker and minority leader of 157
the house of representatives, and president and minority leader of 158
the senate.159

        An audit of a portion of an agency shall be considered an 160
audit of one agency. The authority to audit a portion of an agency 161
in no way limits the auditor's ability to audit an entire agency 162
if it is in the best interest of the state.163

       The auditor of state shall submit a report of each completed 164
audit to the governor, speaker and minority leader of the house of 165
representatives, president and minority leader of the senate, and 166
inspector general. The report shall be submitted within thirty 167
days of the completion of the audit.168

       Sec. 117.461. If an agency does not fully implement 169
performance audit recommendations within one year after an audit 170
is completed, the agency shall do both of the following:171

        (A) File a report explaining why the agency has not 172
implemented the recommendations with the governor, auditor of 173
state, speaker and minority leader of the house of 174
representatives, and president and minority leader of the senate;175

        (B) Provide testimony explaining why the agency has not 176
implemented the recommendations to the house of representatives 177
and senate committees dealing primarily with the programs and 178
activities of the agency.179

       Sec. 117.47. There is hereby created in the state treasury 180
the leverage for efficiency, accountability, and performance fund. 181
The auditor of state shall use the fund to make loans to state 182
agencies and local public offices requesting loans under section 183
117.471 of the Revised Code and to pay for costs incurred by the 184
auditor of state for conducting performance audits. The fund shall 185
consist of money appropriated to it plus the repayments of 186
principal and interest on loans made from the fund. Interest 187
earned on money in the fund shall be credited to the fund. 188

       Sec. 117.471.  A state agency or local public office may 189
apply for a loan from the fund created in section 117.47 of the 190
Revised Code to pay the auditor of state for a performance audit. 191
The auditor of state shall oversee the application and approval 192
process for a loan. If the local public office seeking a loan 193
under this section is the office of a county elected official, the 194
local public office applying for the loan must obtain prior 195
approval from the board of county commissioners of the county in 196
which the local public office is located. This approval is 197
required to ensure that the county office being audited and the 198
board of county commissioners are notified that the costs of the 199
loan must be repaid.200

       The interest rate on a loan from the fund shall be calculated 201
at the same rate as the average of the average monthly yields for 202
the state treasury asset reserve fund for the duration of the 203
loan. Interest shall accrue on a loan from the date the audit is 204
completed until the date the loan is repaid.205

       Rates charged for performance audits of state agencies shall 206
be determined in accordance with division (A)(2) of section 117.13 207
of the Revised Code. Rates charged for performance audits of local 208
public offices shall be determined in accordance with division 209
(C)(1) of section 117.13 of the Revised Code. 210

       Sec. 117.472.  The auditor of state shall provide each state 211
agency receiving a loan from the fund created in section 117.47 of 212
the Revised Code with a statement of the amount of the loan plus 213
interest due. The statement shall include the percentage of total 214
cost chargeable to each fund subject to the performance audit, as 215
well as the date upon which payment is due to the auditor of 216
state, which shall be one year following the date the performance 217
audit is completed. If the state agency has not repaid the auditor 218
of state by the payment deadline established under this section, 219
the auditor of state shall certify to the director of budget and 220
management the amount of the loan plus interest due. The director 221
shall withhold from the agency the amount certified from funds 222
under the director's control that belong to or are lawfully 223
payable or due to the agency and that may be used to repay the 224
loan. The director shall promptly pay the amount withheld to the 225
auditor of state. If the director determines that no funds due and 226
payable to the agency are available or that insufficient amounts 227
of such funds are available, the director shall withhold and pay 228
to the auditor of state the amounts available and shall continue 229
to withhold funds and pay the auditor of state until the full 230
amount due to the auditor of state is paid.231

       The auditor of state shall provide each local public office 232
receiving a loan from the fund created in section 117.47 of the 233
Revised Code with a statement of the amount of the loan plus 234
interest due from the office. The statement shall include the 235
percentage of total cost chargeable to each fund subject to the 236
performance audit, as well as the date upon which payment is due 237
to the auditor of state, which shall be one year following the 238
date the performance audit is completed. If a local public office 239
has not repaid the auditor of state by the payment deadline 240
established under this section, the auditor of state shall certify 241
to the county auditor the amount of the loan plus interest due. 242
The county auditor shall withhold from the local public office the 243
amount certified from funds under the county auditor's control 244
that belong to or are lawfully payable or due to the local public 245
office and that may be used to repay the loan. The county auditor 246
shall promptly pay the amount withheld to the auditor of state. If 247
the county auditor determines that no funds due and payable to the 248
local public office are available or that insufficient amounts of 249
such funds are available, the county auditor shall withhold and 250
pay to the auditor of state the amounts available and shall 251
continue to withhold funds and pay the auditor of state until the 252
full amount due to the auditor of state is paid.253

       All moneys received from the director of budget and 254
management or a county auditor for repayment of loans and interest 255
under this section shall be paid into the state treasury to the 256
credit of the leverage for efficiency, accountability, and 257
performance fund created in section 117.47 of the Revised Code.258

       Section 2. That existing section 117.13 of the Revised Code 259
is hereby repealed.260

       Section 3.  Section 117.46 of the Revised Code as enacted by 261
this act does not imply that the Auditor of State currently has no 262
performance audit authority under Chapter 117. of the Revised 263
Code.264

       Section 4.  Notwithstanding section 117.101 of the Revised 265
Code, on the effective date of this act or as soon as possible 266
thereafter, the Director of Budget and Management shall transfer 267
$1,500,000 cash from the Uniform Accounting Network Fund (Fund 268
6750) to the Leverage for Efficiency, Accountability, and 269
Performance Fund (Fund 5JZ0) established under section 117.47 of 270
the Revised Code. Moneys within Fund 5JZ0 shall be used in 271
accordance with sections 117.47 and 117.471 of the Revised Code. 272
When cash balances in Fund 5JZ0 exceed the amount originally 273
transferred pursuant to this section, the Director of Budget and 274
Management shall transfer the excess amounts to Fund 6750 until 275
the $1,500,000 originally transferred has been repaid.276

       Section 5.  All items in this section are hereby appropriated 277
as designated out of any moneys in the state treasury to the 278
credit of the Leverage for Efficiency, Accountability, and 279
Performance Fund (Fund 5JZ0). For all appropriations made in this 280
act, those in the first column are for fiscal year 2010 and those 281
in the second column are for fiscal year 2011. The appropriations 282
made in this act are in addition to any other appropriations made 283
for the FY 2010-2011 biennium.284

Appropriations

AUD Auditor of State
285

Auditor of State Fund Group286

5JZ0 070606 LEAP Revolving Loans $ 0 $ 1,500,000 287
TOTAL AUD Auditor of State Fund Group $ 0 $ 1,500,000 288
TOTAL ALL BUDGET FUND GROUPS $ 0 $ 1,500,000 289

       LEAP REVOLVING LOANS290

       The foregoing appropriation item 070606, LEAP Revolving 291
Loans, shall be used to advance the costs of performance audits to 292
state agencies and local public offices who have applied to and 293
been approved by the Auditor of State for receipt of these funds 294
pursuant to section 117.471 of the Revised Code.295

       Within the limits set forth in this act, the Director of 296
Budget and Management shall establish accounts indicating the 297
source and amount of funds for each appropriation made in this 298
act, and shall determine the form and manner in which 299
appropriation accounts shall be maintained. Expenditures from 300
appropriations contained in this act shall be accounted for as 301
though made in Am. Sub. H.B. 1 of the 128th General Assembly.302

       The appropriations made in this act are subject to all 303
provisions of Am. Sub. H.B. 1 of the 128th General Assembly that 304
are generally applicable to such appropriations.305

       Section 6. Sections 1, 2, 3, 4, 5, and 6 of this act are not 306
subject to the referendum because they are or they relate to an 307
appropriation for current expenses within the meaning of Ohio 308
Constitution, Article II, Section 1d, and section 1.471 of the 309
Revised Code, and therefore those sections take effect immediately 310
when this act becomes law.311