To amend sections 117.01, 117.10, 117.11, 117.12, and 117.13 of the Revised Code to make changes in the law governing the Auditor of State's audits of public offices and private persons who receive public funds.

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

Sec. 117.01. As used in this chapter:

(A) "Color of office" means actually, purportedly, or allegedly done under any law, ordinance, resolution, order, or other pretension to official right, power, or authority.

(B) "Public accountant" means any person who is authorized by Chapter 4701. of the Revised Code to use the designation of certified public accountant or who was registered prior to January 1, 1971 as a public accountant.

(C) "Public money" means any money received, collected by, or due a public official under color of office, as well as any money collected by any individual on behalf of a public office or as a purported representative or agent of the public office.

(D) "Public office" means any state agency, public institution, political subdivision, other organized body, office, agency, institution, or entity established by the laws of this state for the exercise of any function of government.

(E) "Public official" means any officer, employee, or duly authorized representative or agent of a public office.

(F) "State agency" means every organized body, office, agency, institution, or other entity established by the laws of the state for the exercise of any function of state government.

(G) "PERSON" HAS THE SAME MEANING AS IN SECTION 1.59 of the Revised Code.

(H) "AUDIT" MEANS ANY OF THE FOLLOWING:

(1) ANY EXAMINATION OR REVIEW OF THE STATE'S OR A PUBLIC OFFICE'S FINANCIAL STATEMENTS OR REPORTS;

(2) ANY EXAMINATION OR REVIEW OF RECORDS, DOCUMENTS, BOOKS, OR ANY OTHER EVIDENCE RELATING TO EITHER OF THE FOLLOWING:

(a) THE COLLECTION, RECEIPT, ACCOUNTING, USE, OR EXPENDITURE OF PUBLIC MONEY BY A PUBLIC OFFICE OR BY A PERSON;

(b) THE DETERMINATION BY THE AUDITOR OF STATE, AS REQUIRED BY SECTION 117.11 of the Revised Code, OF WHETHER A PUBLIC OFFICE HAS COMPLIED WITH ALL THE LAWS, RULES, ORDINANCES, OR ORDERS PERTAINING TO THE PUBLIC OFFICE.

(3) ANY OTHER TYPE OF EXAMINATION OR REVIEW OF A PUBLIC OFFICE OR OF A PERSON RECEIVING PUBLIC MONEY THAT IS CONDUCTED ACCORDING TO GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS ESTABLISHED BY RULE PURSUANT TO SECTION 117.19 of the Revised Code.

Sec. 117.10. (A) The auditor of state shall audit all public offices as provided in this chapter. The auditor of state also may audit the accounts of private institutions, associations, boards, and corporations ANY PERSON receiving public money for their use and may require of them annual reports in such form as the auditor of state prescribes. ANY PERSON RECEIVING PUBLIC MONEY SHALL DO BOTH OF THE FOLLOWING:

(1) KEEP CURRENT AND ACCURATE RECORDS OF THE RECEIPT AND USE OF THAT PUBLIC MONEY, EITHER BY MAINTAINING SEPERATE BANK ACCOUNTS FOR PUBLIC MONEY OR BY USING OTHER ACCOUNTING CONVENTIONS TYPICALLY USED IN A FUND ACCOUNTING SYSTEM AS MAY BE APPROVED BY THE AUDITOR OF STATE. THESE RECORDS ARE PUBLIC RECORDS UNDER SECTION 149.43 of the Revised Code AND ARE SUBJECT TO DIVISIONS (B) AND (C) OF THAT SECTION.

(2) PREPARE FINANCIAL STATEMENTS THAT REPORT SEPARATELY ON PUBLIC AND PRIVATE MONEY RECEIVED AND CONTAIN SUCH INFORMATION PERTAINING TO THE PUBLIC MONEY AS MAY BE PRESCRIBED BY THE AUDITOR OF STATE IN RULES ADOPTED PURSUANT TO SECTION 117.20 of the Revised Code.

(B) AUDITS OF PERSONS RECEIVING PUBLIC MONEY SHALL BE LIMITED TO AN EXAMINATION OR REVIEW OF THE PUBLIC MONEY RECEIVED UNLESS THE PUBLIC MONEY IS COMMINGLED WITH PRIVATE MONEY. IN THAT CASE, THE AUDITOR OF STATE MAY AUDIT ALL THE ACCOUNTS OF ANY PERSONS RECEIVING PUBLIC MONEY.

(C) The auditor of state may audit the accounts of any provider as defined in section 5111.06 of the Revised Code, if requested by the department of job and family services.

(D) If a public office has been audited by an agency of the United States government, the auditor of state may, if satisfied that the federal audit has been conducted according to principles and procedures not contrary to those of the auditor of state, use and adopt the federal audit and report in lieu of an audit by the auditor of state's own office.

(E) Within thirty days after the creation or dissolution or the winding up of the affairs of any public office, that public office shall notify the auditor of state in writing that this action has occurred.

Sec. 117.11. (A) Except as provided in THIS division (D) of this section, the auditor of state shall commence an audit of each public office not more than AT LEAST ONCE EVERY two FISCAL years from the release date of the last audit report of such public office. THE AUDITOR OF STATE SHALL AUDIT A PUBLIC OFFICE EACH FISCAL YEAR IF THAT PUBLIC OFFICE IS REQUIRED TO BE AUDITED ON AN ANNUAL BASIS PURSUANT TO "THE SINGLE AUDIT ACT OF 1984," 98 STAT. 2327, 31 U.S.C.A. 7501 ET SEQ., AS AMENDED. In the audit, inquiry shall be made into the methods, accuracy, and legality of the accounts, financial reports, records, files, and reports of the office, whether the laws, ordinances, and orders pertaining to the office have been observed, and whether the requirements and rules of the auditor of state have been complied with. Except where auditing standards or procedures dictate otherwise, each audit shall cover at least one fiscal year. IF A PUBLIC OFFICE IS AUDITED ONLY ONCE EVERY TWO FISCAL YEARS, THE AUDIT SHALL COVER BOTH FISCAL YEARS.

(B) IN ADDITION TO THE ANNUAL OR BIENNIAL AUDIT PROVIDED FOR IN DIVISION (A) OF THIS SECTION, THE AUDITOR OF STATE MAY CONDUCT AN AUDIT OF A PUBLIC OFFICE OR OF A PERSON RECEIVING PUBLIC MONEY AT ANY TIME WHEN SO REQUESTED BY THE PUBLIC OFFICE OR UPON THE AUDITOR OF STATE'S OWN INITIATIVE IF THE AUDITOR OF STATE HAS REASONABLE CAUSE TO BELIEVE THAT AN ADDITIONAL AUDIT IS IN THE PUBLIC INTREST.

(B)(C)(1) The auditor of state shall identify any public office in which the auditor of state will be unable to conduct an audit AT LEAST once every two FISCAL years as required by division (A) of this section and shall provide immediate written notice to the clerk of the legislative authority or governing board of the public office so identified. Within six months of the receipt of such notice, the legislative authority or governing board may engage an independent certified public accountant to conduct an audit pursuant to section 117.12 of the Revised Code.

(2) When the chief fiscal officer of a public office notifies the auditor of state that an audit is required at a time prior to the next regularly scheduled audit by the auditor of state, the auditor of state shall either cause an earlier audit to be made by the auditor of state or authorize the legislative authority or governing board of the public office to engage an independent certified public accountant to conduct the required audit. The scope of the audit shall be as authorized by the auditor of state.

(3) The auditor of state shall approve the scope of an audit under division (B)(C)(1) or (2) of this section as set forth in the contract for the proposed audit before the contract is executed on behalf of the public office that is to be audited. The independent accountant conducting an audit under division (B)(C)(1) or (2) of this section shall be paid by the public office.

(C)(D) If a uniform accounting network is established under section 117.101 of the Revised Code, the auditor of state or a certified public accountant employed pursuant to this section or section 115.56 of the Revised Code shall, to the extent practicable, utilize services offered by the network in order to conduct efficient and economical audits of public offices.

(D) The auditor of state may, by rule, provide for waiver of the two-year requirement of division (A) of this section with respect to:

(1) Public offices participating in a uniform accounting network established under section 117.101 of the Revised Code;

(2) Public offices that are not required by federal law to be audited in accordance with federal auditing standards.

The rules may provide for the application of specified audit procedures to such public offices in lieu of an audit in accordance with generally accepted government auditing standards.

(E) The auditor of state shall, in accordance with division (A)(3) of section 9.65 of the Revised Code and this section, audit an annuity program for volunteer fire fighters established by a political subdivision under section 9.65 of the Revised Code. As used in this section, "volunteer fire fighters" and "political subdivision" have the same meanings as in division (C) of section 9.65 of the Revised Code.

Sec. 117.12. Any public accountant engaged to perform an audit pursuant to division (B)(C) of section 117.11 of the Revised Code shall conduct the audit pursuant to the standards, procedures, and guidelines of the auditor of state for such audits. The auditor of state shall establish these standards, procedures, and guidelines by rule. The audit shall cover the period beginning with the termination date of the most recent audit conducted under this section or section 117.11 of the Revised Code and ending on the date specified by the auditor of state. The accountant shall inquire into the methods, accuracy, and legality of the accounts, records, files, and reports of the public office and shall note whether, in his THE ACCOUNTANT'S opinion, the laws, ordinances, and orders pertaining to the public office have been complied with. The accountant shall have no authority to make formal findings of illegality, malfeasance, or gross neglect under this division or section 117.23 of the Revised Code.

Sec. 117.13. (A) The costs of audits of state agencies shall be recovered by the auditor of state in the following manner:

(1) The costs of all audits of state agencies shall be paid to the auditor of state on statements rendered by the auditor of state. Money so received by the auditor of state shall be paid into the state treasury to the credit of the public audit expense fund--intrastate, which is hereby created, and shall be used to pay costs related to such audits. The costs of all annual and special audits of a state agency shall be charged to the state agency being audited. The costs of all biennial audits of a state agency shall be paid from money appropriated to the department of administrative services for that purpose. The costs of any assistant auditor, employee, or expert employed pursuant to section 117.09 of the Revised Code called upon to testify in any legal proceedings in regard to any audit, or called upon to review or discuss any matter related to any audit, may be charged to the state agency to which the audit relates.

(2) The auditor of state shall establish by rule rates to be charged to state agencies or to the department of administrative services for recovering the costs of audits of state agencies.

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

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

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

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

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

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

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

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

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

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

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

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

(D) If the auditor of state fails to receive payment for any amount due from a public office for services performed under this or any other section of the Revised Code, the auditor of state may seek payment through the office of budget and management. Upon certification by the auditor of state to the director of budget and management of any such amount due, the director shall withhold from the public office any amount available, up to and including the amount certified as due, from any funds under the director's control that belong to or are lawfully payable or due to the public office. The director shall promptly pay the amount withheld to the auditor of state. If the director determines that no funds due and payable to the public office are available or that insufficient amounts of such funds are available to cover the amount due, the director shall withhold and pay to the auditor of state the amounts available and, in the case of a local public office, certify the remaining amount to the county auditor of the county in which the local public office is located. The county auditor shall withhold from the local public office any amount available, up to and including the amount certified as due, from any funds under the county auditor's control and belonging to or lawfully payable or due to the local public office. The county auditor shall promptly pay any such amount withheld to the auditor of state.