Chapter 184 Oregon Laws 2007
AN ACT
HB 2086
Relating to municipal corporation audits; creating new provisions; and
amending ORS 297.425, 297.465, 297.466 and 297.475.
Be It Enacted by the People of
the State of Oregon:
SECTION 1.
ORS 297.425 is amended to read:
297.425. (1) Except as
provided in ORS 297.435, the accounts and fiscal affairs of every municipal
corporation shall be audited and reviewed at least once each calendar or fiscal
year, and more often if considered advisable by the governing body or managing
or executive officer of the municipal corporation. The audits and reviews shall
be made by accountants pursuant to contracts entered into by the governing
body, or managing or executive officer, and accountants, or by the Secretary of
State pursuant to a duly adopted ordinance or resolution[, a copy of which shall be furnished to the Secretary of State]. Upon
request of the Secretary of State, the governing body, or managing or executive
officer, shall provide the secretary with a copy of the contract entered into
or an ordinance or resolution adopted under this section.
[(2) Municipal corporations may enter into contracts, or by ordinance or
resolution request the Secretary of State, to develop or revise and install
accounting systems.]
[(3)] (2) All contracts for conducting audits and reviews [or for developing or revising and installing
accounting systems] shall be in a form prescribed or approved by the
Secretary of State. [A copy of each
completed contract shall be furnished the Secretary of State.]
[(4)(a)] (3) The compensation for audits and reviews
performed by accountants shall be as agreed upon between the governing body, or
managing or executive officer of the municipal corporation, and the accountant,
and shall be paid in the same manner as other claims against the municipal
corporation are paid.
[(b) The compensation for installation of accounting systems performed
by parties under subsection (2) of this section, other than the Secretary of
State, shall be as agreed upon between the governing body, or managing or
executive officer of the municipal corporation, and the other party, and shall
be paid in the same manner as other claims against the municipal corporation
are paid.]
[(5)] (4) All expenses and costs incurred by the Secretary of
State in conducting audits and reviews[,
and installing accounting systems] for municipal corporations shall be
borne by the municipal corporation for which a particular audit[,] or review [or installation] is made. The expenses
and costs shall be paid to the Secretary of State in the same manner as other
claims against the municipal corporation are paid.
[(6)] (5) Audits and reviews required by this section shall
inquire into:
(a) The principles of
accounting and methods followed by the municipal corporation in recording,
summarizing and reporting its financial transactions and financial condition;
(b) The accuracy and
legality of the transactions, accounts, records, files and financial reports of
the officers and employees of the municipal corporation as they relate to its
fiscal affairs; and
(c) Compliance with
requirements, orders and regulations of other public officials which pertain to
the financial condition or financial operations of the municipal corporation.
SECTION 2.
ORS 297.465 is amended to read:
297.465. (1) The
Secretary of State, in cooperation with the Oregon Board of Accountancy, and in
consultation with the Oregon Society of Certified Public Accountants, shall
prescribe the minimum standards for conducting audits of municipal
corporations, preparing the resulting audit reports and expressing opinions
upon the financial condition and results of operation for the period under
audit. The expression of opinion shall be signed by the accountant signing the
contract, or in the case of a partnership or professional corporation, by a
partner or stockholder who is an accountant as defined in ORS 297.405, who has
personally conducted the audit to an extent satisfactory to the Secretary of
State and to the municipal corporation.
(2) The municipal
corporation shall be furnished with a written audit report, containing a signed
expression of opinion, in the form prescribed by the Secretary of State. A copy
of the audit report shall be furnished to each person who was a member of the
governing body at the end of the calendar or fiscal year and to each member of
the current governing body. Other copies shall be furnished the municipal
corporation as are requested by the chairperson of the governing body or the
managing or executive officer. The accountant shall furnish the audit report to
the municipal corporation within six months after the close of the calendar or
fiscal year under audit, except that the Secretary of State, for good cause
shown, may grant to the accountant a reasonable extension of time.
(3) The municipal
corporation shall file one copy of its audit report with the Secretary of
State. The report shall be subject to review by the Secretary of State, who may
also require submission of the [working
papers] supporting documentation and audit programs of the
accountant. If an audit, audit report or expression of opinion is found by the
Secretary of State not to be in accordance with the prescribed standards, the
Secretary of State shall request compliance. If the accountant fails to comply
with the request, the Secretary of State shall so report to the Oregon Board of
Accountancy, which thereupon may remove or suspend the name of the accountant
from the roster required by ORS 297.670.
(4) Audit reports or
financial statements filed with the Secretary of State as required by ORS
297.405 to 297.555 shall include the names, mailing addresses and titles of the
officers and members of the governing board of the municipal corporation. The
report or statement of a special district shall include the name of its
registered agent and the address of its registered office as provided by ORS
198.335 to 198.365.
SECTION 3.
ORS 297.466 is amended to read:
297.466. (1) In
performing an audit and review required under ORS 297.425, the accountant under
contract with the municipal corporation or the Secretary of State, whoever
performs the audit and review, shall determine if the municipal corporation
has, or has not, followed generally accepted [governmental] accounting principles in reporting its financial
condition and operations, established appropriate accounting systems and
internal controls and substantially complied with legal requirements in
conducting its financial affairs. The determination shall either be included in
the signed expression of opinion or otherwise disclosed in the audit report
required under ORS 297.465.
(2) Upon receipt of an
audit report under ORS 297.465 the governing body of a county or city shall
determine the measures it considers necessary to correct any deficiencies
disclosed in the report. The governing body shall adopt a resolution setting
forth the corrective measures it proposes and the period of time estimated to
complete them.
(3) Within 30 days after
a county or city files a copy of its audit report with the Secretary of State
under ORS 297.465 a copy of the resolution prepared under subsection (2) of
this section shall also be filed. Upon receipt of the audit report and the
resolution, the Secretary of State shall either acknowledge the city or county’s
plans to correct deficiencies cited in the audit report or notify the county or
city of those deficiencies which, if not corrected, could result in withholding
of funds under this section. At the request of the governing body of the city
or county the Secretary of State shall make suggestions for correcting those
deficiencies. If the governing body of the county or city does not agree with
the notification by the Secretary of State, it shall be granted an opportunity
for a conference regarding the notification, audit determinations or corrective
measures to be taken.
(4) If the Secretary of
State concurs with determinations made under subsection (1) of this section in
two successive audits and reviews of the same county or city, and determines
that the governing body of the county or city has not taken adequate action to
correct the deficiencies cited in the notifications given under subsection (3)
of this section, the Secretary of State may certify these facts to the State
Treasurer, the Director of the Department of Revenue, the Director of
Transportation and the Director of the Oregon Department of Administrative
Services. The certificate of the Secretary of State shall only be issued after
notice, opportunity to be heard and hearing pursuant to the provisions of ORS
chapter 183, governing contested cases. The hearing shall be held within the
jurisdiction of the county or city.
(5) Upon receipt of a
certificate from the Secretary of State under subsection (4) of this section,
the State Treasurer, the Director of the Department of Revenue, the Director of
Transportation and the Director of the Oregon Department of Administrative
Services shall withhold from distribution to the county or city 10 percent of
the moneys otherwise to be distributed to it under ORS 221.770, 323.455,
366.762 to 366.768, 366.785 to 366.820, 471.805 and 471.810. The moneys
withheld shall be disbursed to the county or city only after the officer
responsible for disbursement has received notice from the Secretary of State
that the governing body of the county or city has taken action to follow
generally accepted [governmental]
accounting principles in reporting financial condition and operations and
establish appropriate accounting systems and internal controls and will
substantially comply with legal requirements in conducting its financial
affairs.
(6) The Secretary of
State [shall] may not issue a
certificate under subsection (4) of this section for failure to follow
generally accepted [governmental]
accounting principles if a county or city has followed accounting practices
authorized by state law.
(7) As used in this
section, “generally accepted [governmental]
accounting principles” means those accounting principles sanctioned by
recognized authoritative bodies such as the [National Council on Governmental Accounting] Governmental
Accounting Standards Board, the American Institute of Certified Public
Accountants, the Financial Accounting Standards Board or their successors.
SECTION 4.
ORS 297.475 is amended to read:
297.475. Whenever any
municipal corporation has made a request to the Secretary of State, pursuant to
ORS 297.425, for the audit of its accounts and fiscal affairs, [or for the installation of accounting
systems, or both,] the municipal corporation may cancel that request by
ordinance or resolution adopted and furnished to the Secretary of State at
least 90 days prior to the end of a calendar or fiscal year.
SECTION 5. (1)
The amendments to ORS 297.425 and 297.475 by sections 1 and 4 of this 2007 Act
do not apply to requests for development or revision and installation of
accounting systems made to the Secretary of State prior to the effective date
of this 2007 Act.
(2) The amendments to
ORS 297.465 and 297.466 by sections 2 and 3 of this 2007 Act apply to municipal
audits commenced prior to, on and after the effective date of this 2007 Act.
Approved by the Governor May 30, 2007
Filed in the office of Secretary of State May 31, 2007
Effective date January 1, 2008
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