HB2677 - 541R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-393.01, Arizona Revised Statutes, is amended to read:

START_STATUTE15-393.01. Career technical education districts; annual report; performance and accountability

A. The department of education shall include each career technical education district in the department's annual achievement profiles required by section 15‑241. Subject to approval by the state board of education, the department of education shall develop specific criteria applicable to career technical education districts that may not be based solely on the criteria prescribed in the Carl D. Perkins vocational education act, as amended by the Carl D. Perkins vocational and applied technology education act amendments of 1990, as amended by the Carl D. Perkins vocational and technical education act of 1998, and shall include career technical education districts in the letter grade classification system prescribed in section 15‑241. The department shall include all of the following performance indicators in the annual achievement profiles and letter grade classification and provide a copy of the information to each career technical education district governing board:

1. The graduation rate of all students enrolled in a career and technical education program or course.

2. The completion rate for each program offered by the career technical education district.

3. Performance on assessments required pursuant to section 15‑391, paragraph 4, subdivision (b).

4. Postgraduation employment rates, postsecondary enrollment rates and military service rates for students who complete a career and technical education program.

B. A career technical education district is subject to the performance audits pursuant to section 41‑1279.03, subsection A, paragraph 9 8. The auditor general shall consider the differences and applicable laws for a career technical education district when conducting a performance audit for a career technical education district.

C. On or before December 31 of each year, the career and technical education division of the department of education shall submit a career technical education district annual report to the governor, the president of the senate and the speaker of the house of representatives and shall submit a copy of this report to the secretary of state. The career and technical education division of the department of education shall submit a copy of this report to the joint legislative budget committee for review. The annual report shall include the following:

1. The average daily membership of each career technical education district, including the average daily membership of each centralized campus, satellite campus and leased centralized campus as defined in section 15‑393.

2. The actual student count of each career technical education district, including the student count of each centralized campus, satellite campus and leased centralized campus as defined in section 15‑393.

3. The programs and corresponding courses offered by each career technical education district, including the location of each program and course.

4. For each career technical education district based on program or course location:

(a) The student enrollment of each program and corresponding course.

(b) The percentage of students who enrolled in the second year of each program and corresponding course relative to the number of students in the same cohort who enrolled in the first year of each program and corresponding course.

(c) The percentage of students who completed each program relative to the number of students in the same cohort who began the program.

5. The costs associated with each program offered by the career technical education district.

6. A listing of any programs or courses that were discontinued by review of the career and technical education division pursuant to section 15‑393, subsection V.

7. A listing of any programs or courses that were continued by review of the career and technical education division pursuant to section 15‑393, subsection V.

8. A listing of any programs or courses that were added by the career and technical education division.

9. For applicable school districts, the required maintenance of effort and how monies were used to supplement and not supplant base year career and technical education courses, including expenditures related to personnel, equipment and facilities.

10. Any other data or information deemed necessary by the department of education.

D. The office of the auditor general, in consultation with the department of education, shall develop and establish uniform cost reporting guidelines, policies and procedures for career technical education district programs. Any guideline, policy or procedure shall allow for the effective comparison of cost between career technical education district programs. END_STATUTE

Sec. 2. Section 28-6392, Arizona Revised Statutes, is amended to read:

START_STATUTE28-6392. County regional area road fund; distribution; repayment of misused monies; investment

A. Each month the state treasurer shall distribute the monies in the county's regional area road fund to the individual county and to the individual cities and towns in the county in the manner that is determined by the board of supervisors before the election and that is described in the publicity pamphlet for the election.

B. The jurisdiction receiving the revenues may only use the revenues for street and highway purposes or for transportation projects included in the regional transportation plan of the county as prepared by the county regional planning agency. If the auditor general reports to the department after conducting a performance audit pursuant to section 41‑1279.03, subsection A, paragraph 6 5 that a jurisdiction has not used revenues as provided in this subsection:

1. The department shall require the jurisdiction to directly repay the fund the full amount of the misused monies beginning immediately as a lump sum or in consecutive annual payments of at least ten percent of the full amount each fiscal year.

2. If the jurisdiction fails to timely and fully repay the fund as required by paragraph 1 of this subsection, the department shall notify the state treasurer who shall withhold the noncomplying jurisdiction's revenues until the noncomplying jurisdiction presents evidence that is satisfactory to the auditor general and that shows that the jurisdiction has spent monies for purposes prescribed in this subsection from another general revenue source equal to the amount of the revenues diverted from the uses prescribed in this subsection.

C. The state treasurer shall invest and divest monies in the county's regional area road fund as provided by section 35‑313, and monies earned from investment shall be credited to the fund. END_STATUTE

Sec. 3. Section 28-6533, Arizona Revised Statutes, is amended to read:

START_STATUTE28-6533. Arizona highway user revenue fund; reports

A. The officer collecting all highway user revenues, as defined in section 28‑6501 and in article IX, section 14, Constitution of Arizona, and all fees, penalties and fines collected under sections 28‑1101, 28‑1103, 28‑1105 and 28‑1521 shall transfer the revenues to the department. After the deduction of all exemptions and refunds and after taking actions required under subsection C of this section, the department shall immediately deposit, pursuant to sections 35‑146 and 35‑147, the revenues in a fund designated as the Arizona highway user revenue fund.

B. The revenues in the Arizona highway user revenue fund shall only be spent for the purposes prescribed in article IX, section 14, Constitution of Arizona. Counties and incorporated cities and towns shall not spend highway user revenue fund monies distributed to them pursuant to this article for enforcement of traffic laws or administration of traffic safety programs. If the auditor general reports to the state treasurer after conducting a performance audit pursuant to section 41‑1279.03, subsection A, paragraph 7 6 that a jurisdiction has not used revenues as required by this subsection, the state treasurer shall withhold the noncomplying jurisdiction's revenues until the noncomplying jurisdiction presents evidence that is satisfactory to the auditor general and that shows that the jurisdiction has spent monies for purposes prescribed in this subsection from another general revenue source equal to the amount of the revenues diverted from the uses prescribed in this subsection.

C. If there is any default, the department shall deduct all amounts required by law or any resolution authorizing the issuance of bonds of the board to be placed in the principal funds, interest funds, reserve funds or sinking funds or any other funds established to service bonds issued or to be issued by the board before the revenues are deposited in the Arizona highway user revenue fund.

D. A county receiving monies pursuant to section 28‑6538 shall publish an annual financial report for the prior fiscal year of funds received from motor vehicle fuel and use fuel taxes. The financial report shall contain budgeted and actual expenditures for the preceding fiscal year and shall be prepared and distributed by December 31 by the county.END_STATUTE

Sec. 4. Section 41-1278, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1278. Definitions

In this article, unless the context otherwise requires:

1. "Committee" means the joint legislative audit committee.

2. "Investigation" means an inquiry into specified acts or allegations of impropriety, malfeasance or nonfeasance in the obligation, expenditure, receipt or use of public funds of this state monies or into specified financial transactions or practices which that may involve such impropriety, malfeasance or nonfeasance.

3. "Performance audit" means an audit which that determines with regard to the purpose, functions and duties of the audited agency all one or more of the following:

(a) Whether the audited agency is managing or utilizing using its resources, including public funds monies of this state, personnel, property, equipment and space, in an economical and efficient manner.

(b) Causes of inefficiencies or uneconomical practices, including inadequacies in management information systems, internal and administrative procedures, organizational structure, use of resources, allocation of personnel, purchasing policies and equipment.

(d) Whether objectives established by the legislature or other authorizing body are being met.

4. "Special audit" means an audit of limited scope.

5. "Special research request" means research and analysis of issues or questions that are designated as a special research request by the committee, but does not include a performance audit, financial audit, compliance audit, procedural review, special audit, investigation or evaluation required by law.

6. "State agency" means all departments, agencies, boards, commissions, institutions and instrumentalities of this state. END_STATUTE

Sec. 5. Section 41-1279.02, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.02. Personnel; criminal history records

A. The auditor general may, with the approval of the committee, MAY appoint and prescribe the duties of such additional professional, technical, clerical and other employees, or contract for such services, necessary to administer the duties of the auditor general's office. The employees shall receive compensation as determined pursuant to section 38‑611 and serve at the pleasure of the auditor general.

B. The auditor general may obtain criminal history record information pursuant to section 41‑1750, subsection G from the department of public safety for the purpose of employment of personnel by the auditor general.

C. Information obtained pursuant to subsection B of this section shall not be disclosed by the auditor general except to members of the auditor general's staff PURSUANT TO THE REQUIREMENTS PRESCRIBED BY THE DEPARTMENT OF PUBLIC SAFETY AND solely for the purpose of employment of personnel by the auditor general. END_STATUTE

Sec. 6. Section 41-1279.03, Arizona Revised Statutes, as amended by Laws 2019, chapter 3, section 11, is amended to read:

START_STATUTE41-1279.03. Powers and duties

A. The auditor general shall:

1. Prepare an audit plan for approval by the committee and report to the committee the results of each audit and investigation and other reviews conducted by the auditor general.

2. Conduct or cause to be conducted at least biennial annual financial and compliance audits of financial transactions and accounts kept by or for all state agencies subject to the federal single audit act of 1984 (P.L. 98‑502) requirements. The audits shall be conducted in accordance with generally accepted governmental auditing standards and accordingly shall include tests of the accounting records and other auditing procedures as may be considered necessary in the circumstances. The audits shall include the issuance of suitable reports as required by the federal single audit act of 1984 (P.L. 98‑502) requirements so that the legislature, the federal government and others will be informed as to the adequacy of financial statements of the this state in compliance with generally accepted governmental accounting principles and to determine whether this state has complied with laws and regulations that may have a material effect on the financial statements and on major federal assistance programs.

3. Perform procedural reviews for all state agencies at times determined by the auditor general. These reviews may include evaluation of administrative and accounting internal controls and reports on these reviews.

4. Perform special research requests, special audits and related assignments as designated by the committee and conduct performance audits, special audits, special research requests and investigations of any state agency, whether created by the constitution or otherwise, as may be requested by the committee.

5. Annually on or before the fourth Monday of December, prepare a written report to the governor and to the committee that contains a summary of activities for the previous fiscal year.

6. 5. In the tenth fifth year and in each fifth year thereafter in which a transportation excise tax is in effect in a county as provided in section 42‑6106 or 42‑6107, conduct a performance audit that:

(a) Reviews past expenditures and future planned expenditures of the transportation excise revenues and determines the impact of the expenditures in solving transportation problems within the county and, for a transportation excise tax in effect in a county as provided in section 42‑6107, determines whether the expenditures of the transportation excise revenues comply with section 28‑6392, subsection B.

(b) Reviews projects completed to date and projects to be completed during the remaining years in which a transportation excise tax is in effect. Within six months after each review period, the auditor general shall present a report to the speaker of the house of representatives and the president of the senate detailing findings and making recommendations.

(c) Reviews, determines, reports and makes recommendations to the speaker of the house of representatives and the president of the senate whether the distribution of Arizona highway user revenues complies with title 28, chapter 18, article 2.

7. 6. If requested by the committee, conduct performance audits of counties and incorporated cities and towns receiving Arizona highway user revenue fund monies pursuant to title 28, chapter 18, article 2 to determine whether the monies are being spent as provided in section 28‑6533, subsection B.

8. 7. Perform special audits designated pursuant to law if the auditor general determines that there are adequate monies appropriated for the auditor general to complete the audit. If the auditor general determines the appropriated monies are inadequate, the auditor general shall notify the committee. Based on information provided by the auditor general, for any legislative measure that requires the auditor general to perform a special audit, the joint legislative budget committee staff shall notify all the members of the legislature as soon as practicable of the cost to conduct the special audit.

9. 8. Establish a schoolwide audit team in the office of the auditor general to conduct performance audits and monitor school districts to determine the percentage of every dollar spent in the classroom by the school district. Each school district shall prominently post on its website home page a copy of its profile pages that displays the percentage of every dollar spent in the classroom by that school district from the most recent status report issued by the auditor general pursuant to this paragraph. The performance audits shall determine whether school districts that receive monies from the Arizona English language learner fund established by section 15‑756.04 and the statewide compensatory instruction fund established by section 15‑756.11 comply with title 15, chapter 7, article 3.1. The auditor general shall determine, through random selection, the school districts to be audited each year, subject to review by the joint legislative audit committee. A school district that is subject to an audit pursuant to this paragraph shall notify the auditor general in writing whether the school district agrees or disagrees with the findings and recommendations of the audit and whether the school district will implement the findings and recommendations, implement modifications to the findings and recommendations or refuse to implement the findings and recommendations. The school district shall submit to the auditor general a written status report on the implementation of the audit findings and recommendations every six months for two years after at the request of the auditor general within the two-year period following the issuance of an audit conducted pursuant to this paragraph. The auditor general shall review the school district's progress toward implementing the findings and recommendations of the audit every six months after receipt of the district's status report for two years and provide status reports of these reviews to the joint legislative audit committee during this two-year period. The auditor general may review a school district's progress beyond this two‑year period for recommendations that have not yet been implemented by the school district. The auditor general shall provide a status report of these reviews to the joint legislative audit committee. The school district shall participate in any hearing scheduled during this review period by the joint legislative audit committee or by any other legislative committee designated by the joint legislative audit committee.

10. 9. Annually review per diem compensation and reimbursement of expenses for employees of this state and members of a state board, commission, council or advisory committee by judgmentally selecting samples and evaluating the propriety of per diem compensation and expense reimbursements.

B. The auditor general may:

1. Subject to approval by the committee, adopt rules necessary to administer the duties of the office.

2. Hire consultants to conduct the studies required by subsection A, paragraphs 6 5 and 7 6 of this section.

C. If approved by the committee, the auditor general may charge a reasonable fee for the cost of performing audits or providing accounting services for auditing federal funds, special audits or special services requested by political subdivisions of this state. Monies collected pursuant to this subsection shall be deposited in the audit services revolving fund.

D. The department of transportation, the county treasurer and the board of supervisors of a county that has approved a county transportation excise tax as provided in section 42‑6106 or 42‑6107 and the governing bodies of counties, cities and towns receiving Arizona highway user revenue fund monies shall cooperate with and provide necessary information to the auditor general or the auditor general's consultant.

E. The department of transportation or county treasurer shall reimburse the auditor general as follows, and the auditor general shall deposit the reimbursed monies in the audit services revolving fund:

1. For the cost of conducting the studies or hiring a consultant to conduct the studies required by subsection A, paragraph 6 5, subdivisions (a) and (b) of this section, from monies collected pursuant to a county transportation excise tax levied pursuant to section 42‑6106 or 42‑6107.

2. For the cost of conducting the studies or hiring a consultant pursuant to subsection A, paragraph 6 5, subdivision (c) and paragraph 7 6 of this section, from the Arizona highway user revenue fund.END_STATUTE

Sec. 7. Section 41-1279.04, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.04. Authority to examine records; violation; classification

A. The auditor general or the auditor general's authorized representatives, in the performance of official duties, shall have access to employees, and authority to examine, any and all books, accounts, reports, vouchers, correspondence files and other records, bank accounts, criminal history record information as defined in section 41‑1701 and in accordance with section 41-1750, money monies and other property of any state agency, board, commission, department, institution, program, advisory council or committee or political subdivision of this state, whether created by the constitution or otherwise, or such documents and property of a contractor relating to a contract with this state pursuant to the provisions of section 35‑214. It is the duty of any officer or employee of any such agency or political subdivision, having such records under the officer's or employee's control, to permit access to and examination of the records on the request of the auditor general or the auditor general's authorized representative.

B. For the purpose of complying with section 41‑1279.03, subsection A, paragraphs 4 and 9 8, the auditor general or the auditor general's authorized representative, in the performance of official duties, may attend executive sessions of the governing body of any state agency or school district in this state.

C. For the purpose of auditing the department of revenue, the auditor general and the auditor general's authorized representatives have access to state tax returns, except that a report of the auditor general shall not violate the confidentiality of state tax laws.

D. All officers of any state agency, board, commission, department, institution, program, advisory council or committee or political subdivision of this state shall afford reasonable and needed facilities for auditor general staff and make records available, in the form and at the time prescribed.

E. The attorney general shall supervise the prosecution of all offenders under this section.

D. F. Any officer or person who knowingly fails or refuses to permit such allow access and examination pursuant to this section or otherwise knowingly obstructs or misleads the auditor general in the execution of the auditor general's duties is guilty of a class 2 misdemeanor. END_STATUTE

Sec. 8. Section 41-1279.06, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.06. Audit services revolving fund; use; exemption from lapsing

A. There is established an The audit services revolving fund is established. The auditor general shall administer the fund. The fund consists of any monies received by the auditor general from:

1. State budget units for audits of federal funds required under federal law and federal rules and regulations.

2. State budget units and counties, community college districts and school districts for which the auditor general performs special audits, financial statement audits, audits of federal funds received under federal laws, rules and regulations or provides accounting services.

3. Counties for which the auditor general conducts a performance audit of the transportation excise tax as prescribed by section 41‑1279.03.

4. Any other source authorized by statute.

B. The auditor general shall use the fund monies for the purpose of conducting audits required under federal law, special audits or financial statement audits or accounting services requested by state budget units and counties, community college districts and school districts or to pay for certified public accountants to conduct such audits or provide such services.

C. Monies in the audit services revolving fund are exempt from the provisions of section 35‑190, relating to lapsing of appropriations. END_STATUTE

Sec. 9. Section 41-1279.07, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.07. Uniform expenditure reporting system; reports by counties, community college districts, cities and towns; certification and attestation; assistance by auditor general; violation; classification

A. The auditor general shall prescribe a uniform expenditure reporting system for all political subdivisions subject to the constitutional expenditure limitations prescribed by article IX, sections 20 and 21, Constitution of Arizona. The system shall include:

1. For counties:

(a) An annual expenditure limitation report that includes at least the following information:

(i) The expenditure limitation established for the reporting fiscal year by the economic estimates commission.

(ii) Total expenditures, by fund, for the reporting fiscal year.

(iii) Total exclusions from local revenues, as defined by article IX, section 20, Constitution of Arizona, by fund, for the reporting fiscal year.

(iv) Total amounts, by fund, of expenditures subject to the expenditure limitation for the reporting fiscal year.

(b) Annual financial statements prepared in accordance with generally accepted accounting principles.

(c) A reconciliation of the total expenditures reported within the financial statements to the total expenditures stated within the expenditure limitation report.

2. For community college districts:

(a) An annual budgeted expenditure limitation report that includes at least the following information:

(i) The expenditure limitation established for the reporting fiscal year by the economic estimates commission.

(ii) Total budgeted expenditures, by fund, for the reporting fiscal year.

(iii) Total exclusions from local revenues, as defined by article IX, section 21, Constitution of Arizona, by fund, for the reporting fiscal year.

(iv) Total amounts, by fund, of budgeted expenditures subject to the expenditure limitation for the reporting fiscal year.

(b) Annual financial statements prepared in accordance with generally accepted accounting principles.

(c) A reconciliation of the total expenditures reported within the financial statements to the total expenditures reported within the expenditure limitation report.

3. For cities and towns:

(a) An annual expenditure limitation report that includes at least the following information:

(i) The expenditure limitation established for the reporting fiscal year by the economic estimates commission and, if applicable, the voter approved alternative expenditure limitation.

(ii) Total expenditures, by fund, for the reporting fiscal year.

(iii) Total exclusions from local revenues, as defined by article IX, section 20, Constitution of Arizona, by fund, for the reporting fiscal year or, if applicable, the total exclusions from the voter approved alternative expenditure limitation.

(iv) Total amounts, by fund, of expenditures subject to the expenditure limitation for the reporting fiscal year.

(b) Financial statements prepared in accordance with generally accepted accounting principles.

(c) A reconciliation of the total expenditures reported within the financial statements to the total expenditures reported within the expenditure limitation report.

B. The auditor general shall provide detailed instructions for completion and submission of the reports described in subsection A of this section. The auditor general shall prescribe definitions for terms utilized used in and the form of the reports described in subsection A of this section. The reports described in subsection A of this section are required of counties and community college districts beginning with fiscal year 1981‑1982. The reports described in subsection A of this section are required of cities and towns beginning with the fiscal year the political subdivision is subject to the expenditure limitation. The annual reporting requirements also apply to political subdivisions subject to an alternative expenditure limitation enacted pursuant to article IX, section 20, subsection (9), Constitution of Arizona.

C. The reports described in subsection A of this section must be filed with the auditor general within nine months after the close of each fiscal year.

D. The auditor general or a certified public accountant performing the annual audit required pursuant to sections 41‑1279.21 and 9‑481 shall attest to the expenditure limitation reports and financial statements for counties, community college districts and cities. The certified public accountant performing the annual or biennial audit required pursuant to section 9‑481 shall attest to the expenditure limitation reports and financial statements for towns.

E. Each political subdivision shall provide to the auditor general by July 31 each year the name of the chief fiscal officer designated by the governing board of the political subdivision to submit the current fiscal year's expenditure limitation report. The political subdivision shall notify the auditor general of any changes of individuals designated to file the required reports. The designated chief fiscal officer shall certify to the accuracy of the annual expenditure limitation report.

F. The auditor general shall prescribe forms for the uniform reporting system and may provide assistance to individuals, certified public accountants or public accountants responsible for attesting to the expenditure limitation reports and financial statements.

G. A chief fiscal officer, designated pursuant to subsection E of this section, who subsequent to July 1, 1983 refuses to file the reports required by this section within the prescribed time periods or who intentionally files erroneous reports is guilty of a class 1 misdemeanor. A city or town exceeding the expenditure limitation prescribed or authorized pursuant to article IX, section 20, Constitution of Arizona, for any fiscal year, without authorization pursuant to such section, shall have the amount specified in subsection H of this section of its allocations of the state income tax, distributed pursuant to section 43‑206, withheld and redistributed to other cities and towns in the same manner as determined pursuant to that section, except that the population of the city or town exceeding the expenditure limitation shall not be included in the computation, and the city or town exceeding the expenditure limitation shall not be entitled to share in the redistribution. A community college district exceeding the expenditure limitation prescribed pursuant to article IX, section 21, Constitution of Arizona, for any fiscal year, without authorization pursuant to such section or section 15‑1471, shall have the amount specified in subsection H of this section of its allocations of state aid, distributed pursuant to section 15‑1466, withheld.

H. The auditor general shall hold a hearing to determine if any political subdivision has exceeded the expenditure limitations prescribed pursuant to article IX, sections 20 and 21, Constitution of Arizona. If a county has exceeded the expenditure limitations prescribed pursuant to article IX, section 20, Constitution of Arizona, without authorization pursuant to that section, the auditor general shall notify the board of supervisors of the county to reduce the allowable levy of primary property taxes of the county pursuant to section 42‑17051, subsection C. If any political subdivision other than a county has exceeded the expenditure limitations prescribed pursuant to article IX, sections 20 and 21, Constitution of Arizona, without authorization, the auditor general shall notify the state treasurer to withhold a portion of the political subdivision's allocations of the revenues described in subsection G of this section for the fiscal year subsequent to the auditor general's hearing as follows:

1. If the excess expenditures are less than five percent of the limitation, an amount equal to the excess expenditures.

2. If the excess expenditures are equal to or greater than five percent but less than ten percent of the limitation, or are less than five percent of the limitation but it is at least the second consecutive instance of excess expenditures, an amount equal to triple the excess expenditures.

3. If the excess expenditures are equal to or greater than ten percent of the limitation, an amount equal to five times the excess expenditures or one‑third of the allocation of the revenues described in subsection G of this section, whichever is less.

I. A county, city or town is not deemed to have exceeded the expenditure limitation if the county, city or town makes expenditures for capital improvements from utility revenues pursuant to title 9, chapter 5, article 3 or from excise taxes levied by the county, city or town for a specific purpose and the county, city or town repays the expenditure from the proceeds of bonds or other lawful long‑term obligations before the hearing required by subsection H of this section. END_STATUTE

Sec. 10. Heading change

The article heading of title 41, chapter 7, article 10.2, Arizona Revised Statutes, is changed from "POST AUDIT OF COUNTIES, COMMUNITY COLLEGE DISTRICTS AND SCHOOL DISTRICTS" to "POSTAUDIT OF COUNTIES, COMMUNITY COLLEGE DISTRICTS AND SCHOOL DISTRICTS".

Sec. 11. Section 41-1279.21, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1279.21. Powers and duties of auditor general relating to counties, school districts and community colleges

A. In addition to other powers and duties prescribed by law, the auditor general shall:

1. Conduct or cause to be conducted annual financial and compliance statement audits of financial transactions and accounts kept by or for all counties. For a county that is required to comply with the federal single audit requirements, audits shall include compliance audits of financial transactions and applicable accounts kept by or for the county. The audits shall be conducted in accordance with generally accepted governmental auditing standards and, accordingly, shall include tests of the accounting records and other auditing procedures as may be considered necessary under the circumstances. Each county shall provide financial information for inclusion in the annual audit that verifies that Arizona highway user revenue fund monies received by the county pursuant to title 28, chapter 18, article 2 and any other dedicated state transportation revenues received by the county are being used solely for the authorized transportation purposes.

2. Perform procedural reviews for school districts that are not required to comply with the federal single audit act of 1984 (P.L. 98‑502) requirements at times determined by the auditor general. These reviews may include evaluation of administrative and accounting internal controls and reports on such reviews.

3. Conduct or cause to be conducted annual financial statement audits of financial transactions and accounts kept by or for community college districts. For a community college district that is required to comply with the federal single audit requirements, audits shall include compliance audits of financial transactions and applicable accounts kept by or for the community college district. The audits shall be conducted in accordance with generally accepted governmental auditing standards and, accordingly, shall include tests of the accounting records and other auditing procedures as may be considered necessary under the circumstances.

4. Approve contracts for financial and compliance auditing services except if specific statutory authority is otherwise provided. The auditor general shall ensure that such contract audits are conducted in accordance with generally accepted governmental auditing standards and shall determine if such audits meet minimum audit standards prescribed by the auditor general. An audit shall not be accepted as meeting the requirements of this paragraph until it has been approved by the auditor general.

5. Order and enforce a correct and uniform system of accounting by county, community college district and school district officers and instruct them in the proper mode of keeping accounts of their offices.

6. Require of county treasurers and custodians of county, community college district or school district funds, as often as the auditor general deems necessary, a verified statement of their accounts.

7. Report to the committee and to the attorney general the refusal or neglect of any county, community college district or school district officer to conform to rules and regulations of the auditor general's office.

8. Report to the committee and to the governor the result of the auditor general's examinations of county, community college district and school district offices as often as required by public interest.

B. The auditor general may adopt rules providing for disapproving contracts, and suspending or debarring any contractor providing financial and compliance auditing services to a school district based upon on applicable standards similar to those adopted by this state under section 41‑2613.

C. Notwithstanding any other law, the disapproval of a contract or the suspension or debarment may be appealed to the superior court pursuant to title 12, chapter 7, article 6. END_STATUTE

Sec. 12. Repeal

Section 41-1279.22, Arizona Revised Statutes, is repealed.

Sec. 13. Section 41-2954, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2954. Committees of reference; performance review reports; hearings; recommendations; subpoena powers

A. Each standing committee of both legislative houses shall constitute a committee of reference in the committee's respective subject matter areas and the committee's respective house.

B. After receipt of the preliminary sunset review report, each committee of reference or each committee of reference meeting jointly shall hold at least one public hearing when the legislature is not in session or before the third Friday in January to receive testimony from the public and from the officials of the agency involved. The agency involved shall prepare a presentation for the first public meeting that addresses the elements of the written statement required by subsection F of this section.

C. Each committee of reference shall hold public hearings for the following purposes:

1. To determine the actual need of the agency to regulate or direct the particular activity.

2. To determine the extent to which the statutory requirements of the agency are necessary and are being met.

3. To receive testimony from the public as to the relationship of the agency with the public.

4. To receive testimony from the executive director or other head of the agency as to reasons for the continuation of the agency.

D. Each committee of reference shall consider but not be limited to the following factors in determining the need for continuation or termination of each agency:

1. The objective and purpose key statutory objectives and purposes in establishing the agency and the extent to which the objective and purpose are met by private enterprises in other states.

2. The extent to which the agency has met its statutory objective and purpose and the efficiency with which it has operated agency's effectiveness and efficiency in fulfilling its key statutory objectives and purposes.

3. The extent to which the agency serves the entire state rather than specific interests agency's key statutory objectives and purposes duplicate the objectives and purposes of other governmental agencies or private enterprises.

4. The extent to which rules adopted by the agency are consistent with the legislative mandate.

5. The extent to which the agency has encouraged input from the public before adopting its rules and the extent to which it has informed the public as to its actions and the expected impact on the public provided appropriate public access to records, meetings and rulemakings, including soliciting public input in making rules and decisions.

6. The extent to which the agency has been able to investigate and resolve investigated and resolved complaints that are within its jurisdiction.

7. The extent to which the attorney general or any other applicable agency of state government has the authority to prosecute actions under the enabling legislation level of regulation exercised by the agency is appropriate as compared to other states or best practices, or both.

8. The extent to which agencies have addressed deficiencies in their enabling statutes that prevent them from fulfilling their statutory mandate the agency has established safeguards against possible conflicts of interest.

9. The extent to which changes are necessary in the laws of for the agency to adequately comply with the factors listed in this subsection more efficiently and effectively fulfill its key statutory objectives and purposes or to eliminate statutory responsibilities that are no longer necessary.

10. The extent to which the termination of the agency would significantly affect the public health, safety or welfare.

11. The extent to which the level of regulation exercised by the agency compares to other states and is appropriate and whether less or more stringent levels of regulation would be appropriate.

12. The extent to which the agency has used private contractors in the performance of its duties as compared to other states and how more effective use of private contractors could be accomplished.

13. The extent to which the agency potentially creates unexpected negative consequences that might require additional review by the committee of reference, including increasing the price of goods, affecting the availability of services, limiting the abilities of individuals and businesses to operate efficiently and increasing the cost of government.

E. The committee of reference shall deliver the final sunset review report of its recommendations to the president of the senate, the speaker of the house of representatives, the governor, the auditor general and the affected agency on or before the third Friday in January. Such recommendations shall include one of the following:

1. That the state agency be continued.

2. That the state agency be revised or consolidated.

3. That the state agency be terminated pursuant to this chapter.

F. The final sunset review report by each committee of reference shall also include a written statement prepared by the agency involved that contains an assessment of:

1. An identification of the problem or the needs that the agency is intended to address.

2. A statement, to the extent practicable, in quantitative and qualitative terms, of the objectives of such agency and its anticipated accomplishments.

3. An identification of any other agencies having similar, conflicting or duplicate objectives, and an explanation of the manner in which the agency avoids duplication or conflict with other such agencies.

1. The extent to which the agency potentially creates unexpected negative consequences that may require additional review by the committee of reference, including increasing the price of goods, affecting the availability of services, limiting the abilities of individuals and businesses to operate efficiently and increasing the cost of government.

2. The extent to which the agency has addressed deficiencies in its enabling statutes.

4. 3. An assessment of The consequences of eliminating the agency or of consolidating it with another agency.

G. Each committee of reference shall oversee the preparation of any proposed legislation to implement the recommendations of that committee of reference and is responsible for the introduction of such legislation.

H. If an agency is continued, it is not necessary to reappoint any member of the governing board or commission of the agency. Such members are eligible to complete their original terms without reappointment or reconfirmation.

I. Each committee of reference shall have the power of legislative subpoena pursuant to chapter 7, article 4 of this title. END_STATUTE