74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
Enrolled
House Bill 2086
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Secretary of State Bill
Bradbury)
CHAPTER ................
AN ACT
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. - }
Enrolled House Bill 2086 (HB 2086-INTRO) Page 1
{ - (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
Enrolled House Bill 2086 (HB 2086-INTRO) Page 2
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,
Enrolled House Bill 2086 (HB 2086-INTRO) Page 3
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. + }
----------
Passed by House February 13, 2007
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate April 24, 2007
...........................................................
President of Senate
Enrolled House Bill 2086 (HB 2086-INTRO) Page 4
Received by Governor:
......M.,............., 2007
Approved:
......M.,............., 2007
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2007
...........................................................
Secretary of State
Enrolled House Bill 2086 (HB 2086-INTRO) Page 5