To amend sections 117.13 and 131.02 and to enact sections 117.60 to 117.70 of the Revised Code to require the Auditor of State to perform recovery audits for overpayments made to vendors by certain state agencies and to permit the Auditor to contract with independent audit consultants to conduct those audits.

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

Sec. 117.13.  (A) The Except as otherwise provided for recovery audits under sections 117.63 to 117.69 of the Revised Code, 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 audits of a state agency shall be charged to the state agency being audited. 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 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 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, including, but not limited to, fines, fees, and costs, 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. (Amounts due include any amount due to an independent public accountant with whom the auditor has contracted to perform services, all costs and fees associated with participation in the uniform accounting network, and all costs associated with the auditor's provision of local government services.) 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.

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

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

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

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

(D) It was paid for state sales tax.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(a) The assessment or case number;

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

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

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

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

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

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

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

(1) Compromise the claim;

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

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

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

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

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

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

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

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

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

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

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

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

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