1     
GOVERNMENT ENTITY COMPLIANCE AMENDMENTS

2     
2023 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Ryan D. Wilcox

5     
Senate Sponsor: Luz Escamilla

6     

7     LONG TITLE
8     General Description:
9          This bill addresses public reporting relating to certain obligations of a government
10     actor.
11     Highlighted Provisions:
12          This bill:
13          ▸     requires the Office of Legislative Research and General Counsel to publicly post
14     certain information relating to:
15               •     reports required to be provided to a legislative committee; and
16               •     policies required to be adopted by a government actor;
17          ▸     requires the state auditor to publicly post certain information relating to policies
18     required to be adopted by a government actor; and
19          ▸     permits the state auditor to conduct an inquiry to determine whether a government
20     actor has complied with certain legal requirements imposed by recent legislation.
21     Money Appropriated in this Bill:
22          None
23     Other Special Clauses:
24          This bill provides a special effective date.
25     Utah Code Sections Affected:
26     AMENDS:
27          67-3-1, as last amended by Laws of Utah 2022, Chapter 307

28     ENACTS:
29          36-12-12.1, Utah Code Annotated 1953
30     

31     Be it enacted by the Legislature of the state of Utah:
32          Section 1. Section 36-12-12.1 is enacted to read:
33          36-12-12.1. Posting of required reports and policies -- Compliance.
34          The Office of Legislative Research and General Counsel shall maintain a page on the
35     Legislature's website that provides the following information:
36          (1) an annual list of all reports that a government entity, government official, or
37     government employee is required to submit to a committee of the Legislature, including for
38     each:
39          (a) a brief description of the report;
40          (b) the name of the committee to which submission is required;
41          (c) the report submission deadline;
42          (d) a citation to the law requiring the report;
43          (e) an indication regarding whether the report is timely submitted, submitted late, or
44     not submitted;
45          (f) an indication regarding whether the report contained the information required by
46     law; and
47          (g) a link to the report; and
48          (2) an annual list of each bill that becomes law that year that requires a government
49     entity, government official, or government employee to adopt a policy, including for each:
50          (a) the bill number and short title;
51          (b) a citation to the law requiring the policy;
52          (c) a brief description of the policy;
53          (d) a list of the government entities, government officials, or government employees
54     required to adopt the policy;
55          (e) the deadline for adopting the policy; and
56          (f) a link to the information described in Subsection 67-3-1(21).
57          Section 2. Section 67-3-1 is amended to read:
58          67-3-1. Functions and duties.

59          (1) (a) The state auditor is the auditor of public accounts and is independent of any
60     executive or administrative officers of the state.
61          (b) The state auditor is not limited in the selection of personnel or in the determination
62     of the reasonable and necessary expenses of the state auditor's office.
63          (2) The state auditor shall examine and certify annually in respect to each fiscal year,
64     financial statements showing:
65          (a) the condition of the state's finances;
66          (b) the revenues received or accrued;
67          (c) expenditures paid or accrued;
68          (d) the amount of unexpended or unencumbered balances of the appropriations to the
69     agencies, departments, divisions, commissions, and institutions; and
70          (e) the cash balances of the funds in the custody of the state treasurer.
71          (3) (a) The state auditor shall:
72          (i) audit each permanent fund, each special fund, the General Fund, and the accounts of
73     any department of state government or any independent agency or public corporation as the law
74     requires, as the auditor determines is necessary, or upon request of the governor or the
75     Legislature;
76          (ii) perform the audits in accordance with generally accepted auditing standards and
77     other auditing procedures as promulgated by recognized authoritative bodies; and
78          (iii) as the auditor determines is necessary, conduct the audits to determine:
79          (A) honesty and integrity in fiscal affairs;
80          (B) accuracy and reliability of financial statements;
81          (C) effectiveness and adequacy of financial controls; and
82          (D) compliance with the law.
83          (b) If any state entity receives federal funding, the state auditor shall ensure that the
84     audit is performed in accordance with federal audit requirements.
85          (c) (i) The costs of the federal compliance portion of the audit may be paid from an
86     appropriation to the state auditor from the General Fund.
87          (ii) If an appropriation is not provided, or if the federal government does not
88     specifically provide for payment of audit costs, the costs of the federal compliance portions of
89     the audit shall be allocated on the basis of the percentage that each state entity's federal funding

90     bears to the total federal funds received by the state.
91          (iii) The allocation shall be adjusted to reflect any reduced audit time required to audit
92     funds passed through the state to local governments and to reflect any reduction in audit time
93     obtained through the use of internal auditors working under the direction of the state auditor.
94          (4) (a) Except as provided in Subsection (4)(b), the state auditor shall, in addition to
95     financial audits, and as the auditor determines is necessary, conduct performance and special
96     purpose audits, examinations, and reviews of any entity that receives public funds, including a
97     determination of any or all of the following:
98          (i) the honesty and integrity of all the entity's fiscal affairs;
99          (ii) whether the entity's administrators have faithfully complied with legislative intent;
100          (iii) whether the entity's operations have been conducted in an efficient, effective, and
101     cost-efficient manner;
102          (iv) whether the entity's programs have been effective in accomplishing the intended
103     objectives; and
104          (v) whether the entity's management, control, and information systems are adequate,
105     effective, and secure.
106          (b) The auditor may not conduct performance and special purpose audits,
107     examinations, and reviews of any entity that receives public funds if the entity:
108          (i) has an elected auditor; and
109          (ii) has, within the entity's last budget year, had the entity's financial statements or
110     performance formally reviewed by another outside auditor.
111          (5) The state auditor:
112          (a) shall administer any oath or affirmation necessary to the performance of the duties
113     of the auditor's office; and
114          (b) may:
115          (i) subpoena witnesses and documents, whether electronic or otherwise; and
116          (ii) examine into any matter that the auditor considers necessary.
117          (6) The state auditor may require all persons who have had the disposition or
118     management of any property of this state or its political subdivisions to submit statements
119     regarding the property at the time and in the form that the auditor requires.
120          (7) The state auditor shall:

121          (a) except where otherwise provided by law, institute suits in Salt Lake County in
122     relation to the assessment, collection, and payment of revenues against:
123          (i) persons who by any means have become entrusted with public money or property
124     and have failed to pay over or deliver the money or property; and
125          (ii) all debtors of the state;
126          (b) collect and pay into the state treasury all fees received by the state auditor;
127          (c) perform the duties of a member of all boards of which the state auditor is a member
128     by the constitution or laws of the state, and any other duties that are prescribed by the
129     constitution and by law;
130          (d) stop the payment of the salary of any state official or state employee who:
131          (i) refuses to settle accounts or provide required statements about the custody and
132     disposition of public funds or other state property;
133          (ii) refuses, neglects, or ignores the instruction of the state auditor or any controlling
134     board or department head with respect to the manner of keeping prescribed accounts or funds;
135     or
136          (iii) fails to correct any delinquencies, improper procedures, and errors brought to the
137     official's or employee's attention;
138          (e) establish accounting systems, methods, and forms for public accounts in all taxing
139     or fee-assessing units of the state in the interest of uniformity, efficiency, and economy;
140          (f) superintend the contractual auditing of all state accounts;
141          (g) subject to Subsection (8)(a), withhold state allocated funds or the disbursement of
142     property taxes from a state or local taxing or fee-assessing unit, if necessary, to ensure that
143     officials and employees in those taxing units comply with state laws and procedures in the
144     budgeting, expenditures, and financial reporting of public funds;
145          (h) subject to Subsection (9), withhold the disbursement of tax money from any county,
146     if necessary, to ensure that officials and employees in the county comply with Section
147     59-2-303.1; and
148          (i) withhold state allocated funds or the disbursement of property taxes from a local
149     government entity or a limited purpose entity, as those terms are defined in Section 67-1a-15 if
150     the state auditor finds the withholding necessary to ensure that the entity registers and
151     maintains the entity's registration with the lieutenant governor, in accordance with Section

152     67-1a-15.
153          (8) (a) Except as otherwise provided by law, the state auditor may not withhold funds
154     under Subsection (7)(g) until a state or local taxing or fee-assessing unit has received formal
155     written notice of noncompliance from the auditor and has been given 60 days to make the
156     specified corrections.
157          (b) If, after receiving notice under Subsection (8)(a), a state or independent local
158     fee-assessing unit that exclusively assesses fees has not made corrections to comply with state
159     laws and procedures in the budgeting, expenditures, and financial reporting of public funds, the
160     state auditor:
161          (i) shall provide a recommended timeline for corrective actions;
162          (ii) may prohibit the state or local fee-assessing unit from accessing money held by the
163     state; and
164          (iii) may prohibit a state or local fee-assessing unit from accessing money held in an
165     account of a financial institution by filing an action in district court requesting an order of the
166     court to prohibit a financial institution from providing the fee-assessing unit access to an
167     account.
168          (c) The state auditor shall remove a limitation on accessing funds under Subsection
169     (8)(b) upon compliance with state laws and procedures in the budgeting, expenditures, and
170     financial reporting of public funds.
171          (d) If a local taxing or fee-assessing unit has not adopted a budget in compliance with
172     state law, the state auditor:
173          (i) shall provide notice to the taxing or fee-assessing unit of the unit's failure to
174     comply;
175          (ii) may prohibit the taxing or fee-assessing unit from accessing money held by the
176     state; and
177          (iii) may prohibit a taxing or fee-assessing unit from accessing money held in an
178     account of a financial institution by:
179          (A) contacting the taxing or fee-assessing unit's financial institution and requesting that
180     the institution prohibit access to the account; or
181          (B) filing an action in district court requesting an order of the court to prohibit a
182     financial institution from providing the taxing or fee-assessing unit access to an account.

183          (e) If the local taxing or fee-assessing unit adopts a budget in compliance with state
184     law, the state auditor shall eliminate a limitation on accessing funds described in Subsection
185     (8)(d).
186          (9) The state auditor may not withhold funds under Subsection (7)(h) until a county has
187     received formal written notice of noncompliance from the auditor and has been given 60 days
188     to make the specified corrections.
189          (10) (a) The state auditor may not withhold funds under Subsection (7)(i) until the state
190     auditor receives a notice of non-registration, as that term is defined in Section 67-1a-15.
191          (b) If the state auditor receives a notice of non-registration, the state auditor may
192     prohibit the local government entity or limited purpose entity, as those terms are defined in
193     Section 67-1a-15, from accessing:
194          (i) money held by the state; and
195          (ii) money held in an account of a financial institution by:
196          (A) contacting the entity's financial institution and requesting that the institution
197     prohibit access to the account; or
198          (B) filing an action in district court requesting an order of the court to prohibit a
199     financial institution from providing the entity access to an account.
200          (c) The state auditor shall remove the prohibition on accessing funds described in
201     Subsection (10)(b) if the state auditor received a notice of registration, as that term is defined in
202     Section 67-1a-15, from the lieutenant governor.
203          (11) Notwithstanding Subsection (7)(g), (7)(h), (7)(i), (8)(b), (8)(d), or (10)(b), the
204     state auditor:
205          (a) shall authorize a disbursement by a local government entity or limited purpose
206     entity, as those terms are defined in Section 67-1a-15, or a state or local taxing or fee-assessing
207     unit if the disbursement is necessary to:
208          (i) avoid a major disruption in the operations of the local government entity, limited
209     purpose entity, or state or local taxing or fee-assessing unit; or
210          (ii) meet debt service obligations; and
211          (b) may authorize a disbursement by a local government entity, limited purpose entity,
212     or state or local taxing or fee-assessing unit as the state auditor determines is appropriate.
213          (12) (a) The state auditor may seek relief under the Utah Rules of Civil Procedure to

214     take temporary custody of public funds if an action is necessary to protect public funds from
215     being improperly diverted from their intended public purpose.
216          (b) If the state auditor seeks relief under Subsection (12)(a):
217          (i) the state auditor is not required to exhaust the procedures in Subsection (7) or (8);
218     and
219          (ii) the state treasurer may hold the public funds in accordance with Section 67-4-1 if a
220     court orders the public funds to be protected from improper diversion from their public
221     purpose.
222          (13) The state auditor shall:
223          (a) establish audit guidelines and procedures for audits of local mental health and
224     substance abuse authorities and their contract providers, conducted pursuant to Title 17,
225     Chapter 43, Part 2, Local Substance Abuse Authorities, Title 17, Chapter 43, Part 3, Local
226     Mental Health Authorities, Title 51, Chapter 2a, Accounting Reports from Political
227     Subdivisions, Interlocal Organizations, and Other Local Entities Act, and Title 62A, Chapter
228     15, Substance Abuse and Mental Health Act; and
229          (b) ensure that those guidelines and procedures provide assurances to the state that:
230          (i) state and federal funds appropriated to local mental health authorities are used for
231     mental health purposes;
232          (ii) a private provider under an annual or otherwise ongoing contract to provide
233     comprehensive mental health programs or services for a local mental health authority is in
234     compliance with state and local contract requirements, and state and federal law;
235          (iii) state and federal funds appropriated to local substance abuse authorities are used
236     for substance abuse programs and services; and
237          (iv) a private provider under an annual or otherwise ongoing contract to provide
238     comprehensive substance abuse programs or services for a local substance abuse authority is in
239     compliance with state and local contract requirements, and state and federal law.
240          (14) (a) The state auditor may, in accordance with the auditor's responsibilities for
241     political subdivisions of the state as provided in Title 51, Chapter 2a, Accounting Reports from
242     Political Subdivisions, Interlocal Organizations, and Other Local Entities Act, initiate audits or
243     investigations of any political subdivision that are necessary to determine honesty and integrity
244     in fiscal affairs, accuracy and reliability of financial statements, effectiveness, and adequacy of

245     financial controls and compliance with the law.
246          (b) If the state auditor receives notice under Subsection 11-41-104(7) from the
247     Governor's Office of Economic Opportunity on or after July 1, 2024, the state auditor may
248     initiate an audit or investigation of the public entity subject to the notice to determine
249     compliance with Section 11-41-103.
250          (15) (a) The state auditor may not audit work that the state auditor performed before
251     becoming state auditor.
252          (b) If the state auditor has previously been a responsible official in state government
253     whose work has not yet been audited, the Legislature shall:
254          (i) designate how that work shall be audited; and
255          (ii) provide additional funding for those audits, if necessary.
256          (16) The state auditor shall:
257          (a) with the assistance, advice, and recommendations of an advisory committee
258     appointed by the state auditor from among local district boards of trustees, officers, and
259     employees and special service district boards, officers, and employees:
260          (i) prepare a Uniform Accounting Manual for Local Districts that:
261          (A) prescribes a uniform system of accounting and uniform budgeting and reporting
262     procedures for local districts under Title 17B, Limited Purpose Local Government Entities -
263     Local Districts, and special service districts under Title 17D, Chapter 1, Special Service
264     District Act;
265          (B) conforms with generally accepted accounting principles; and
266          (C) prescribes reasonable exceptions and modifications for smaller districts to the
267     uniform system of accounting, budgeting, and reporting;
268          (ii) maintain the manual under this Subsection (16)(a) so that the manual continues to
269     reflect generally accepted accounting principles;
270          (iii) conduct a continuing review and modification of procedures in order to improve
271     them;
272          (iv) prepare and supply each district with suitable budget and reporting forms; and
273          (v) (A) prepare instructional materials, conduct training programs, and render other
274     services considered necessary to assist local districts and special service districts in
275     implementing the uniform accounting, budgeting, and reporting procedures; and

276          (B) ensure that any training described in Subsection (16)(a)(v)(A) complies with Title
277     63G, Chapter 22, State Training and Certification Requirements; and
278          (b) continually analyze and evaluate the accounting, budgeting, and reporting practices
279     and experiences of specific local districts and special service districts selected by the state
280     auditor and make the information available to all districts.
281          (17) (a) The following records in the custody or control of the state auditor are
282     protected records under Title 63G, Chapter 2, Government Records Access and Management
283     Act:
284          (i) records that would disclose information relating to allegations of personal
285     misconduct, gross mismanagement, or illegal activity of a past or present governmental
286     employee if the information or allegation cannot be corroborated by the state auditor through
287     other documents or evidence, and the records relating to the allegation are not relied upon by
288     the state auditor in preparing a final audit report;
289          (ii) records and audit workpapers to the extent the workpapers would disclose the
290     identity of an individual who during the course of an audit, communicated the existence of any
291     waste of public funds, property, or manpower, or a violation or suspected violation of a law,
292     rule, or regulation adopted under the laws of this state, a political subdivision of the state, or
293     any recognized entity of the United States, if the information was disclosed on the condition
294     that the identity of the individual be protected;
295          (iii) before an audit is completed and the final audit report is released, records or drafts
296     circulated to an individual who is not an employee or head of a governmental entity for the
297     individual's response or information;
298          (iv) records that would disclose an outline or part of any audit survey plans or audit
299     program; and
300          (v) requests for audits, if disclosure would risk circumvention of an audit.
301          (b) The provisions of Subsections (17)(a)(i), (ii), and (iii) do not prohibit the disclosure
302     of records or information that relate to a violation of the law by a governmental entity or
303     employee to a government prosecutor or peace officer.
304          (c) The provisions of this Subsection (17) do not limit the authority otherwise given to
305     the state auditor to classify a document as public, private, controlled, or protected under Title
306     63G, Chapter 2, Government Records Access and Management Act.

307          (d) (i) As used in this Subsection (17)(d), "record dispute" means a dispute between the
308     state auditor and the subject of an audit performed by the state auditor as to whether the state
309     auditor may release a record, as defined in Section 63G-2-103, to the public that the state
310     auditor gained access to in the course of the state auditor's audit but which the subject of the
311     audit claims is not subject to disclosure under Title 63G, Chapter 2, Government Records
312     Access and Management Act.
313          (ii) The state auditor may submit a record dispute to the State Records Committee,
314     created in Section 63G-2-501, for a determination of whether the state auditor may, in
315     conjunction with the state auditor's release of an audit report, release to the public the record
316     that is the subject of the record dispute.
317          (iii) The state auditor or the subject of the audit may seek judicial review of a State
318     Records Committee determination under Subsection (17)(d)(ii), as provided in Section
319     63G-2-404.
320          (18) If the state auditor conducts an audit of an entity that the state auditor has
321     previously audited and finds that the entity has not implemented a recommendation made by
322     the state auditor in a previous audit, the state auditor shall notify the Legislative Management
323     Committee through the Legislative Management Committee's audit subcommittee that the
324     entity has not implemented that recommendation.
325          (19) The state auditor shall, with the advice and consent of the Senate, appoint the state
326     privacy officer described in Section 67-3-13.
327          (20) The state auditor shall report, or ensure that another government entity reports, on
328     the financial, operational, and performance metrics for the state system of higher education and
329     the state system of public education, including metrics in relation to students, programs, and
330     schools within those systems.
331          (21) The state auditor shall, based on the information posted by the Office of
332     Legislative Research and General Counsel under Subsection 36-12-12.1(2), for each policy,
333     track and post the following information on the state auditor's website:
334          (a) the information posted under Subsections 36-12-12.1(2)(a) through (e);
335          (b) an indication regarding whether the policy is timely adopted, adopted late, or not
336     adopted;
337          (c) an indication regarding whether the policy complies with the requirements

338     established by law for the policy; and
339          (d) a link to the policy.
340          (22) (a) A legislator may request that the state auditor conduct an inquiry to determine
341     whether a government entity, government official, or government employee has complied with
342     a legal obligation directly imposed, by statute, on the government entity, government official,
343     or government employee.
344          (b) The state auditor may, upon receiving a request under Subsection (22)(a), conduct
345     the inquiry requested.
346          (c) If the state auditor conducts the inquiry described in Subsection (22)(b), the state
347     auditor shall post the results of the inquiry on the state auditor's website.
348          (d) The state auditor may limit the inquiry described in this Subsection (22) to a simple
349     determination, without conducting an audit, regarding whether the obligation was fulfilled.
350          Section 3. Effective date.
351          This bill takes effect on July 1, 2023.