Representative Kim Coleman proposes the following substitute bill:





Chief Sponsor: Kim Coleman

Senate Sponsor: ____________


9     General Description:
10          This bill enacts provisions relating to governmental nonprofit corporations.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms; and
14          ▸     provides that the Open and Public Meetings Act, the Government Records Access
15     and Management Act, and the Accounting Reports from Political Subdivisions,
16     Interlocal Organizations, and Other Local Entities apply to a governmental
17     nonprofit corporation.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          None
22     Utah Code Sections Affected:
23     AMENDS:
24          51-2a-102, as last amended by Laws of Utah 2015, Chapters 138 and 407
25          51-2a-403, as enacted by Laws of Utah 2004, Chapter 206

26     ENACTS:
27          16-6a-1801, Utah Code Annotated 1953
28          16-6a-1802, Utah Code Annotated 1953

30     Be it enacted by the Legislature of the state of Utah:
31          Section 1. Section 16-6a-1801 is enacted to read:
Part 18. Governmental Nonprofit Corporations

33          16-6a-1801. Definitions.
34          As used in this part:
35          (1) "Controlling interest" means a majority of the voting power on the board of
36     directors of the nonprofit corporation.
37          (2) "Governmental nonprofit corporation" means a nonprofit corporation in which one
38     or more governmental entities have a controlling interest.
39          (3) "Government entity" means the state, a county, municipality, local district, special
40     service district, school district, state institution of higher education, or any other political
41     subdivision or administrative unit of the state.
42          (4) "Municipality" means a city, town, or metro township.
43          Section 2. Section 16-6a-1802 is enacted to read:
44          16-6a-1802. Applicability of certain acts -- State auditor authority.
45          A governmental nonprofit corporation shall comply with:
46          (1) Title 52, Chapter 4, Open and Public Meetings Act;
47          (2) Title 63G, Chapter 2, Government Records Access and Management Act; and
48          (3) Title 51, Chapter 2a, Accounting Reports from Political Subdivisions, Interlocal
49     Organizations, and Other Local Entities Act.
50          Section 3. Section 51-2a-102 is amended to read:
51          51-2a-102. Definitions.
52          As used in this chapter:
53          (1) "Accounting reports" means an audit, a review, a compilation, or a fiscal report.
54          (2) "Audit" means an examination that:
55          (a) is performed in accordance with generally accepted government auditing standards,
56     or for a nonprofit [corporations described in Subsection (6)(f)] corporation or a governmental

57     nonprofit corporation, in accordance with generally accepted auditing standards; and
58          (b) conforms to the uniform classification of accounts established or approved by the
59     state auditor or any other classification of accounts established by any federal government
60     agency.
61          (3) "Audit report" means:
62          (a) the financial statements presented in conformity with generally accepted accounting
63     principles;
64          (b) the auditor's opinion on the financial statements;
65          (c) a statement by the auditor expressing positive assurance of compliance with state
66     fiscal laws identified by the state auditor;
67          (d) a copy of the auditor's letter to management that identifies any material weakness in
68     internal controls discovered by the auditor and other financial issues related to the expenditure
69     of funds received from federal, state, or local governments to be considered by management;
70     and
71          (e) management's response to the specific recommendations.
72          (4) "Compilation" means information presented in the form of financial statements
73     presented in conformity with generally accepted accounting principles that are the
74     representation of management without the accountant undertaking to express any assurances on
75     the statements.
76          (5) "Fiscal report" means providing information detailing revenues and expenditures of
77     all funds in a format prescribed by the state auditor.
78          (6) "Governing board" means:
79          (a) the governing board of each political subdivision;
80          (b) the governing board of each interlocal organization having the power to tax or to
81     expend public funds;
82          (c) the governing board of any local mental health authority established under the
83     authority of Title 62A, Chapter 15, Substance Abuse and Mental Health Act;
84          (d) the governing board of any substance abuse authority established under the
85     authority of Title 62A, Chapter 15, Substance Abuse and Mental Health Act;
86          (e) the governing board of any area agency established under the authority of Title
87     62A, Chapter 3, Aging and Adult Services;

88          (f) the [governing] board of directors of any nonprofit corporation that receives an
89     amount of money requiring an accounting report under Section 51-2a-201.5;
90          (g) the board of directors of a governmental nonprofit corporation;
91          [(g)] (h) the governing board of any other entity established by a local governmental
92     unit that receives tax exempt status for bonding or taxing purposes; and
93          [(h)] (i) in municipalities organized under an optional form of municipal government,
94     the municipal legislative body.
95          (7) "Governmental nonprofit corporation" means the same as that term is defined in
96     Section 16-6a-1801.
97          (8) "Nonprofit corporation" does not include a governmental nonprofit corporation.
98          [(7)] (9) "Review" means performing inquiry and analytical procedures that provide the
99     accountant with a reasonable basis for expressing limited assurance that there are no material
100     modifications that should be made to the financial statements for them to be in conformity with
101     generally accepted accounting principles.
102          Section 4. Section 51-2a-403 is amended to read:
103          51-2a-403. General Fund reimbursed for accounting report of nonappropriated
104     activities -- Amount of reimbursement.
105          (1) The General Fund shall be reimbursed by the entity for which an audit, review, or
106     compilation are in whole or in part performed, whenever the state auditor or legislative auditor
107     general is required by law or constitutional provision to perform that audit, review, or
108     compilation or cause that audit, review, or compilation to be made for any office, department,
109     division, board, agency, commission, council, authority, institution, hospital, school, college,
110     university, or other instrumentality of the state or any of its political subdivisions for
111     nonappropriated activities including associated students' accounts, auxiliary enterprise funds,
112     nonprofit corporations, governmental nonprofit corporations, contracts with the federal
113     government, federal grants-in-aid, and federal assistance programs.
114          (2) (a) The reimbursement amount shall be a pro rata share of that auditor's total cost,
115     based upon a time-spent factor.
116          (b) An audit includes an audit of state-appropriated funds.
117          (i) If state-appropriated funds are not involved in the accounting report, the
118     reimbursement may not be less than the average hourly cost of the operations of that auditor's

119     office nor more than the average rate attainable from certified public accounting firms
120     performing similar services for this state.
121          (ii) Reimbursement charges may be negotiated with that auditor's office within these
122     limitations.