Third Substitute H.B. 283
7 LONG TITLE
8 General Description:
9 This bill addresses nonprofit entity receipt of state money.
10 Highlighted Provisions:
11 This bill:
12 . defines terms;
13 . addresses audits of nonprofit entities;
14 . requires written agreements for grants to nonprofit entities;
15 . enacts the Nonprofit Entity Receipt of State Money Act, including:
16 . defining terms;
17 . imposing requirements on a nonprofit entity's receipt of state money; and
18 . authorizing a state entity to seek return of state money if the nonprofit entity
19 fails to comply with the requirements; and
20 . makes technical changes.
21 Money Appropriated in this Bill:
23 Other Special Clauses:
25 Utah Code Sections Affected:
27 51-2a-102 , as last amended by Laws of Utah 2007, Chapter 170
29 51-2a-204 , Utah Code Annotated 1953
30 63J-9-101 , Utah Code Annotated 1953
31 63J-9-102 , Utah Code Annotated 1953
32 63J-9-201 , Utah Code Annotated 1953
33 63J-9-202 , Utah Code Annotated 1953
35 Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 51-2a-102 is amended to read:
37 51-2a-102. Definitions.
38 As used in this chapter:
39 (1) "Accounting reports" means an audit, a review, a compilation, or a fiscal report.
40 (2) "Audit" means an examination that:
41 (a) analyzes the accounts of all officers of the entity having responsibility for the care,
42 management, collection, or disbursement of money belonging to it or appropriated by law or
43 otherwise acquired for its use or benefit;
44 (b) is performed in accordance with generally accepted government auditing standards,
45 or for nonprofit corporations described in Subsection (6)(f), in accordance with generally
46 accepted auditing standards; and
47 (c) conforms to the uniform classification of accounts established or approved by the
48 state auditor or any other classification of accounts established by any federal government
50 (3) "Audit report" means:
51 (a) the financial statements presented in conformity with generally accepted accounting
53 (b) the auditor's opinion on the financial statements;
54 (c) a statement by the auditor expressing positive assurance of compliance with state
55 fiscal laws identified by the state auditor;
56 (d) a copy of the auditor's letter to management that identifies any material weakness in
57 internal controls discovered by the auditor and other financial issues related to the expenditure
58 of funds received from federal, state, or local governments to be considered by management;
60 (e) management's response to the specific recommendations.
61 (4) "Compilation" means information presented in the form of financial statements
62 presented in conformity with generally accepted accounting principles that are the
63 representation of management without the accountant undertaking to express any assurances on
64 the statements.
65 (5) "Fiscal report" means providing information detailing revenues and expenditures of
66 all funds using forms provided by the state auditor.
67 (6) "Governing board" means:
68 (a) the governing board of each political subdivision;
69 (b) the governing board of each interlocal organization having the power to tax or to
70 expend public funds;
71 (c) the governing board of any local mental health authority established under the
72 authority of Title 62A, Chapter 15, Substance Abuse and Mental Health Act;
73 (d) the governing board of any substance abuse authority established under the
74 authority of Title 62A, Chapter 15, Substance Abuse and Mental Health Act;
75 (e) the governing board of any area agency established under the authority of Title
76 62A, Chapter 3, Aging and Adult Services;
77 (f) the governing board of any nonprofit corporation that receives:
78 (i) at least 50% of its funds from federal, state, and local government entities through
79 contracts; or
80 (ii) an amount from state entities that is equal to or exceeds the amount specified in
81 Subsection 51-2a-201 (1) that would require an audit to be made by a competent certified public
83 (g) the governing board of any other entity established by a local governmental unit
84 that receives tax exempt status for bonding or taxing purposes; and
85 (h) in municipalities organized under an optional form of municipal government, the
86 municipal legislative body.
87 (7) "Review" means performing inquiry and analytical procedures that provide the
88 accountant with a reasonable basis for expressing limited assurance that there are no material
89 modifications that should be made to the financial statements for them to be in conformity with
90 generally accepted accounting principles.
91 (8) "State entity" means a department, commission, board, council, agency, institution,
92 officer, corporation, fund, division, office, committee, authority, laboratory, library, unit,
93 bureau, panel, or other administrative unit of the state.
94 Section 2. Section 51-2a-204 is enacted to read:
95 51-2a-204. Grants to nonprofit corporations -- Reporting to the state auditor.
96 (1) A state entity that grants money to a nonprofit corporation shall enter into a written
97 agreement with the nonprofit corporation that requires the nonprofit corporation to:
98 (a) disclose whether:
99 (i) it met or exceeded the requirements listed in Subsection 51-2a-102 (6)(f) in the
100 previous fiscal year of the nonprofit corporation; and
101 (ii) it anticipates meeting or exceeding the requirements listed in Subsection
102 51-2a-102 (6)(f) in the fiscal year the grant is issued; and
103 (b) comply with the requirements of Title 63J, Chapter 9, Nonprofit Entity Receipt of
104 State Money Act.
105 (2) If the nonprofit corporation discloses to the state entity that it meets or exceeds the
106 requirements listed in Subsection 51-2a-102 (6)(f) as described in Subsection (1), the state
107 entity shall notify the state auditor.
108 Section 3. Section 63J-9-101 is enacted to read:
111 63J-9-101. Title.
112 This chapter is known as the "Nonprofit Entity Receipt of State Money Act."
113 Section 4. Section 63J-9-102 is enacted to read:
114 63J-9-102. Definitions.
115 As used in this chapter:
116 (1) "Bylaws" means the one or more codes of rules, other than the articles of
117 incorporation, adopted for the regulation or management of the affairs of a nonprofit entity
118 irrespective of the one or more names by which the codes of rules are designated.
119 (2) "Nonprofit entity" means an entity that:
120 (a) is operated primarily for a scientific purpose, educational purpose, religious
121 purpose, charitable purpose, or similar purpose in the public interest;
122 (b) is not organized primarily for profit; and
123 (c) no part of the net earnings of which inures to the benefit of any private shareholder
124 or individual holding an interest in the entity.
125 (3) "State entity" means a department, commission, board, council, agency, institution,
126 officer, corporation, fund, division, office, committee, authority, laboratory, library, unit,
127 bureau, panel, or other administrative unit of the state.
128 (4) "State money" means money that is owned, held, or administered by a state entity
129 and derived from state fee or tax revenues.
130 Section 5. Section 63J-9-201 is enacted to read:
132 63J-9-201. Conditions for providing state grant money to a nonprofit entity.
133 A state entity may not provide a nonprofit entity state money through a grant, including
134 a pass-through funding grant, unless:
135 (1) the state entity enters into a written agreement with the nonprofit entity;
136 (2) the written agreement described in Subsection (1) requires the nonprofit entity to
137 provide the state entity an itemized report at least annually detailing the expenditure of the state
138 money; and
139 (3) at the time of receipt of the state money the nonprofit entity has:
140 (a) bylaws that provide for:
141 (i) the financial oversight of the state money; and
142 (ii) compliance with state laws related to the state money;
143 (b) procedures for the governing board of the nonprofit entity to designate an
144 administrator who manages the state money; and
145 (c) procedures for the governing board to dismiss the administrator described by
146 Subsection (3)(b).
147 Section 6. Section 63J-9-202 is enacted to read:
148 63J-9-202. Nonprofit entity's return of state money.
149 The state entity that provides a nonprofit entity state money in accordance with Section
150 63J-9-201 may require the nonprofit entity to return to the state entity an amount of money that
151 is equal to the state money that is expended in violation of Section 63J-9-201 if the nonprofit
152 entity fails to comply with the written agreement, bylaws, and procedures required by Section
153 63J-9-201 during the time period that the nonprofit entity holds or expends the state money.
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