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H.B. 380 Enrolled
AN ACT RELATING TO STATE OFFICERS AND EMPLOYEES; CHANGING THE AUDIT
REQUIREMENTS IN SOME PROGRAMS; DELETING THE AUDIT
REQUIREMENTS IN OTHER PROGRAMS; CHANGING SOME PROVISIONS
RELATING TO WHO APPOINTS AN OUTSIDE AUDITOR; ADDING A PROVISION
CLASSIFYING CERTAIN AUDIT RECORDS AS PROTECTED; AND PROVIDING
AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
31A-3-101, as last amended by Chapter 204, Laws of Utah 1986
32A-1-113, as renumbered and amended by Chapter 23, Laws of Utah 1990
51-2-3, as last amended by Chapter 235, Laws of Utah 1989
51-7-13, as last amended by Chapter 263, Laws of Utah 1995
63-38-7, as enacted by Chapter 207, Laws of Utah 1969
64-13a-12, as enacted by Chapter 201, Laws of Utah 1985
67-3-1, as last amended by Chapter 271, Laws of Utah 1995
32A-1-114, as renumbered and amended by Chapter 23, Laws of Utah 1990
53A-13-207, as enacted by Chapter 2, Laws of Utah 1988
67-3-9, as enacted by Chapter 323, Laws of Utah 1990
71-9-4, as last amended by Chapter 110, Laws of Utah 1994
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-3-101 is amended to read:
31A-3-101. General finance provisions.
(1) The department's expenses shall be paid from the General Fund. Department
expenditures shall conform to the Legislature's appropriation adopted under Title 63, Chapter 38,
Budgetary Procedures Act.
(2) Except as provided in Sections 31A-3-301 and 31A-2-206, or as otherwise specifically
provided in this title, all monies collected by the commissioner shall be deposited without deduction
in the General Fund. [
Section 2. Section 32A-1-113 is amended to read:
32A-1-113. Department expenditures and revenues -- Liquor Control Fund -- Exempt
from Division of Finance -- Annual audits.
(1) (a) All money received by the department in the administration of this title, except as
otherwise provided, together with all property acquired, administered, possessed, or received by the
department, is the property of the state. Money received in the administration of this title shall be
paid to the department and transferred into the state treasury to the credit of the Liquor Control Fund.
(b) All expenses, debts, and liabilities incurred by the department in connection with the
administration of this title shall be paid from the Liquor Control Fund.
(c) The fiscal officers of the department shall transfer annually from the Liquor Control Fund
to the General Fund a sum equal to the amount of net profit earned from the sale of liquor since the
preceding transfer of funds. The transfer shall be made within 90 days of the end of the department's
fiscal year on June 30.
(2) (a) Deposits made by the department shall be made to banks designated as state
depositories and reported to the state treasurer at the end of each day.
(b) Any member of the commission and any employee of the department is not personally
liable for any loss caused by the default or failure of depositories.
(c) All funds deposited in any bank or trust company are entitled to the same priority of
payment as other public funds of the state.
(3) All expenditures necessary for the administration of this title, including the payment of
all salaries, premiums, if any, on bonds of the commissioners, the director, and the department staff
in all cases where bonds are required, and all other expenditures incurred in establishing, operating,
and maintaining state stores and package agencies and in the administration of this title, shall be paid
by warrants [
(4) If the cash balance of the Liquor Control Fund is not adequate to cover the warrants
drawn against it by the state treasurer, the cash resources of the General Fund may be utilized to the
extent necessary. However, at no time may the fund equity of the Liquor Control Fund fall below
(5) When any check issued in payment of any fees or costs authorized or required by this
title is returned to the department as dishonored, the department may assess a service charge in an
amount set by commission rule against the person on whose behalf the check was tendered.
(6) The laws that govern the Division of Finance and prescribe the general powers and duties
of the Division of Finance are not applicable to the Department of Alcoholic Beverage Control in
the purchase and sale of alcoholic products.
(7) The accounts of the department shall be audited annually by the state auditor or by any
other person, firm, or corporation the [
submitted to members of the Legislature and the council not later than January 1 following the close
of the fiscal year for which the report is made.
Section 3. Section 51-2-3 is amended to read:
51-2-3. Audit reports -- Contents -- Preservation.
(1) (a) Audit reports shall include:
(i) the financial statements;
(ii) the auditor's opinion on the financial statements;
(iii) a statement by the auditor expressing positive assurance of compliance with state fiscal
laws identified by the state auditor;
(iv) a copy of the auditor's letter to management that identifies any material weakness in
internal controls discovered by the auditor and other financial issues related to the expenditure of
funds received from federal, state, or local governments to be considered by management; and
(v) management's response to the specific recommendations.
(b) In addition to the items required by Subsection (1) (a), audit reports of political
subdivisions receiving direct federal financial assistance shall include:
(i) compliance reports;
(ii) internal control reports; and
(iii) any other reports required by the federal government.
(2) (a) The governing body of each political subdivision and each interlocal organization or
other local entity required to be audited shall:
(i) file and preserve all audit reports; and
(ii) file copies of all audit reports with the state auditor.
(b) The governing body of each school district shall also file copies of the audit reports
affecting school districts in the office of the superintendent of public instruction.
(3) Copies of the audit reports are open to inspection during regular office hours by any
interested persons, wherever the audit reports are filed.
(4) The state auditor shall have access to all audit workpapers created under this chapter.
Section 4. Section 51-7-13 is amended to read:
51-7-13. Funds of member institutions of state system of higher education --
Authorized deposits or investments -- Release of restrictions on gifts.
(1) The provisions of this section apply to all funds of member institutions of the state
system of higher education that are not transferred to the state treasurer under Section 51-7-4.
(2) (a) (i) Except as provided in Subsection (ii), the following funds shall be invested
according to rules established by the council:
(A) all funds acquired by gift, devise, or bequest or by federal or private grant; and
(B) the corpus of funds functioning as endowments.
(ii) Notwithstanding Subsection (2)(a)(i), if the terms of a gift or grant require particular
investments, the funds shall be invested according to those terms.
(b) Proceeds of general obligation bond issues and all funds pledged or otherwise dedicated
to the payment of interest and principal of general obligation bonds issued by or for the benefit of
the institution shall be invested according to the requirements of:
(i) Section 51-7-11 and the rules of the council; or
(ii) the terms of the borrowing instruments applicable to those bonds and funds if those terms
are more restrictive than Section 51-7-11.
(c) (i) The public treasurer shall invest the proceeds of bonds other than general obligation
bonds issued by or for the benefit of the institution and all funds pledged or otherwise dedicated to
the payment of interest and principal of bonds other than general obligation bonds according to the
terms of the borrowing instruments applicable to those bonds.
(ii) If no provisions governing investment of bond proceeds or pledged or dedicated funds
are contained in the borrowing instruments applicable to those bonds or funds, the public treasurer
shall comply with the requirements of Section 51-7-11 in investing those proceeds and funds.
(d) All other funds in the custody or control of any of those institutions shall be invested as
provided in Section 51-7-11 and the rules of the council.
(3) (a) Each institution shall make monthly reports detailing the deposit and investment of
funds in its custody or control to its institutional council and the State Board of Regents.
(b) The state auditor [
investment program of each institution.
(c) The State Board of Regents shall:
(i) require whatever internal controls and supervision are necessary to ensure the appropriate
safekeeping, investment, and accounting for all funds of these institutions; and
(ii) submit annually to the governor and the Legislature a summary report of all investments
by institutions under its jurisdiction.
(4) (a) The State Board of Regents may release, in whole or in part, a restriction imposed
by the applicable gift instrument on the investment of a fund held by a member institution by
obtaining the written consent of the donor.
(b) (i) If written consent of the donor cannot be obtained because the donor is dead, disabled,
unavailable, or cannot be identified, the State Board of Regents may apply in the name of the
institution to the district court of the district in which the institution is located for a release from the
(ii) If, after notice and opportunity to be heard, the court finds that the restriction is obsolete,
inappropriate, or impracticable, it may by order release the restriction in whole or in part.
Section 5. Section 63-38-7 is amended to read:
63-38-7. Cash funds -- Petty cash, application for -- Cash advances -- Revolving fund
established by law excepted.
the commission, department, or agency requesting [
shall apply in writing to the state fiscal officer, setting [
it to the governor with his recommendations, and the governor may establish [
funds from moneys in the state treasury.
revolving funds for state institutions of higher education, permit advances to be made from
allotments to [
balances to facilitate an orderly management of institutional affairs. [
make reports as required by the state fiscal officer for the expenditure of funds included in [
Section 6. Section 64-13a-12 is amended to read:
64-13a-12. Audit of financial statements.
The financial statements of the fund [
by another person, firm, or corporation [
report of the auditor[
on or before January 1 next following the close of the fiscal year for which the report is made.
Section 7. Section 67-3-1 is amended to read:
67-3-1. Functions and duties.
(1) (a) The state auditor shall be the auditor of public accounts and as such shall be
independent of any executive or administrative officers of the state.
(b) He is not limited [
personnel or in the determination of the reasonable and necessary expenses of his office.
(2) The state auditor [
(a) Examine and certify annually in respect to each fiscal year, financial statements showing
the condition of the state's finances, the revenues received or accrued, expenditures paid or accrued,
and the amount of unexpended or unencumbered balances of the appropriations to the agencies,
departments, divisions, commissions, and institutions and the cash balances of the funds in the
custody of the state treasurer. The Division of Finance shall prepare the foregoing financial
statements and other reports in accordance with legal requirements and generally-accepted
accounting principles for the state auditor's examination and certification, as requested and not later
than 60 days following such requests or the end of each fiscal year. The auditor shall file the
statements with the governor and the Legislature.
(b) (i) Audit each permanent fund, each special fund, the General Fund, and the accounts of
any department of state government or any independent agency or public corporation on a regular
basis as the auditor shall determine necessary or upon request of the governor or the Legislature.
These audits are to be performed in accordance with generally accepted auditing standards and other
auditing procedures as promulgated by recognized authoritative bodies. The audits shall be
conducted to determine honesty and integrity in fiscal affairs, accuracy and reliability of financial
statements, effectiveness and adequacy of financial controls, and compliance with the law, as the
auditor shall determine necessary.
(ii) In the event that any state entity[
receives federal funding, the audit shall be performed in accordance with federal audit requirements
under the direction of the state auditor. The costs of the federal compliance portion of the audit may
be paid from an appropriation to the state auditor from the General Fund. If an appropriation is not
provided, or if the federal government does not specifically provide for payment of audit costs, the
costs of the federal compliance portions of the audit shall be allocated [
to the total federal funds received by the state. The allocation shall be adjusted to reflect any reduced
audit time required to audit funds passed through the state to local governments and to reflect any
reduction in audit time obtained through the use of internal auditors working under the direction of
the state auditor.
(c) Present to the governor on October 1st of each year and to the Legislature on the first day
of each annual general session, a statement of his appropriation expenditures segregated as to cost
of salaries, travel, office and other expenses, and capital outlay for equipment, together with his
recommendations as to new legislation and a complete record of the accomplishments of his office
for the preceding year [
(d) Issue subpoenas requiring any person who has had financial transactions with the state
to appear before him and to answer under oath, orally or in writing, as to any facts concerning these
transactions; and for the purpose of obtaining any such facts the state auditor is empowered to
(e) Require, in his discretion, all persons who have had the disposition or management of
any property of this state to render statements regarding it to him, and each of these persons must
render the statements at such times and in such form as the auditor may require.
institute suits in relation to the assessment, collection, and payment of its revenues against persons
who by any means have become entrusted with public monies or property and have failed to pay
over or deliver the same and against all debtors of the state, all of which suits of the courts of the
county in which the seat of government may be located shall have jurisdiction without regard to the
residence of the defendants.
(g) Authenticate with his official seal all copies of papers issued from his office as he
(h) Collect and pay into the state treasury all fees received by him.
(i) Perform the duties of a member of all boards of which he is or may be made a member
by the constitution or laws of the state, and such other duties as are prescribed by the constitution
and by law.
(j) Stop the payment of the salary of any state official or state employee who refuses to settle
his accounts or render such statements as may be required with respect to the custody and disposition
of public funds or other state property or who refuses, neglects, or ignores the instruction of the state
auditor or any controlling board or department head with respect to the manner of keeping prescribed
accounts or funds or who fails to correct any delinquencies, improper procedures, and errors brought
to his attention.
(k) Establish accounting systems, methods, and forms for public accounts in all taxing units
of the state in the interest of uniformity, efficiency, and economy.
(l) Superintend the contractual auditing of all state accounts.
(m) Withhold state allocated funds or the disbursement of property taxes from any state
taxing unit, if necessary, to ensure that officials and employees in those taxing units of the state
comply with state laws and procedures in the budgeting, expenditures, and financial reporting of
public funds. Except as otherwise specified in the law, funds may not be withheld until a taxing unit
has received formal written notice of noncompliance from the auditor and has been given 60 days
to make the specified corrections.
(n) Withhold the disbursement of tax monies from any county, if necessary, to ensure that
officials and employees in the county comply with Section 59-2-303.1. For purposes of this
subsection, funds may not be withheld until a county has received formal written notice of
noncompliance from the auditor and has been given 60 days to make the specified corrections.
(3) The state auditor may not audit work he performed before becoming state auditor. In the
event that the state auditor has previously been a responsible official in state government whose
work has not yet been audited, the Legislature shall designate how such work shall be audited and
shall provide additional funding for such audits, if necessary.
(4) The following records in the custody or control of the state auditor shall be protected
records under Title 63, Chapter 2, Government Records Access and Management Act:
(a) records that would disclose information relating to allegations of personal misconduct,
gross mismanagement, or illegal activity of a past or present governmental employee if the
information or allegation cannot be corroborated by the state auditor through other documents or
evidence, and the records relating to the allegation are not relied upon by the state auditor in
preparing a final audit report;
(b) records and audit workpapers to the extent they would disclose the identity of a person
who during the course of an audit, communicated the existence of any waste of public funds,
property, or manpower, or a violation or suspected violation of a law, rule, or regulation adopted
under the laws of this state, a political subdivision of the state, or any recognized entity of the United
States, if the information was disclosed on the condition that the identity of the person be protected;
(c) prior to the time that an audit is completed and the final audit report is released, records
or drafts circulated to a person who is not an employee or head of a governmental entity for their
response or information;
(d) records that would disclose an outline or part of any audit survey plans or audit program;
(e) requests for audits, if disclosure would risk circumvention of an audit;
(f) the provisions of Subsections (a), (b), and (c) do not prohibit the disclosure of records
or information that relate to a violation of the law by a governmental entity or employee to a
government prosecutor or peace officer; and
(g) the provisions of this section do not limit the authority otherwise given to the state
auditor to classify a document as public, private, controlled, or protected under Title 63, Chapter 2,
Government Records Access and Management Act.
Section 8. Repealer.
This act repeals:
Section 32A-1-114, City, Incorporated Town, and County Liquor Control Fund.
Section 53A-13-207, Allotment accounts established from driver education tax.
Section 67-3-9, Audit of independent agencies.
Section 71-9-4, Audit of contracting organization -- Report.
Section 9. Effective date.
This act takes effect on July 1, 1997.
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