HB2703 - 552R

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

Section 1. 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. "Election integrity audit" means an audit of limited scope for the purpose of ensuring the accuracy and reliability of specific elections processes, including review of preelection and postelection activities.

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

3. 4. "Performance audit" means an audit which that determines with regard to the purpose, functions and duties of the audited agency all 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. 5. "Special audit" means an audit of limited scope.

5. 6. "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. 7. "State agency" means all departments, agencies, boards, commissions, institutions and instrumentalities of this state. END_STATUTE

Sec. 2. Repeal

Section 41-1279.03, Arizona Revised Statutes, as amended by Laws 2021, chapter 405, section 25, is repealed.

Sec. 3. 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. In the tenth 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. 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. 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.

9. 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. 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.

11. Perform election INTEGRITY audits as PRESCRIBEd in section 41-1279.08.

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 and 7 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 TRANSPORTATION excise tax RECIPIENT 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 the transportation excise tax recipient 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, 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, subdivision (c) and paragraph 7 of this section, from the Arizona highway user revenue fund. END_STATUTE

Sec. 4. 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 performing 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 shall allow 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, The auditor general or the auditor general's authorized representative, in the performance of performing official duties, may attend executive sessions of the governing body of any state agency or school district entity in this state that is subject to title 38, chapter 3, article 3.1.

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. For the purpose of election integrity audits, the auditor general and the auditor general's authorized representatives shall have access to both of the following:

1. Any personnel and data from the county recorder's office and any county elections department, the department of transportation and the secretary of state, which shall include access to electronic data or any such data and property from a third party, that the auditor general deems necessary to perform the duties prescribed in section 41-1279.08, including voter registration data. This data shall be provided in the manner and format prescribed by the auditor general.

2. Polling places, voting centers and central counting centers.

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

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

G. THE ATTORNEY GENERAL SHALL SUPERVISE THE PROSECUTION OF ALL OFFENDERS UNDER THIS SECTION.END_STATUTE

Sec. 5. Title 41, chapter 7, article 10.1, Arizona Revised Statutes, is amended by adding section 41-1279.08, to read:

START_STATUTE41-1279.08. Auditor general; election integrity audits; duties

A. THE AUDITOR GENERAL SHALL ESTABLISH AN AUDIT TEAM TO PERFORM ELECTION INTEGRITY AUDITS OF COUNTY RECORDER OFFICES AND county ELECTIONS DEPARTMENTS.

B. Each election cycle, tHE AUDITOR GENERAL SHALL CHOOSE THROUGH RANDOM SELECTION TWO COUNTIES THAT HAVE A POPULATION OF LESS THAN ONE MILLION PERSONS AND PERFORM AN ELECTION INTEGRITY AUDIT on those counties.

C. THE AUDITOR GENERAL SHALL PERFORM AN ELECTION INTEGRITY AUDIT OF EACH COUNTY WITH A POPULATION of ONE MILLION or more PERSONS EACH ELECTION CYCLE.

D. THE AUDITOR GENERAL MAY MAKE RECOMMENDATIONS TO THE COUNTIES, the SECRETARY OF STATE AND the LEGISLATURE TO ADDRESS FINDINGS IDENTIFIED IN THE ELECTION INTEGRITY AUDITS.

E. A COUNTY SUBJECT TO AN ELECTION INTEGRITY AUDIT PURSUANT TO THIS SECTION SHALL NOTIFY THE AUDITOR GENERAL IN WRITING WHETHER THE COUNTY AGREES OR DISAGREES WITH THE FINDINGS OF THE ELECTION INTEGRITY AUDIT AND WHETHER THE COUNTY WILL IMPLEMENT THE RECOMMENDATIONS, IMPLEMENT MODIFICATIONS TO THE RECOMMENDATIONS OR REFUSE TO IMPLEMENT THE RECOMMENDATIONS. THE COUNTY SHALL SUBMIT TO THE AUDITOR GENERAL WRITTEN STATUS REPORTS ON THE IMPLEMENTATION OF THE ELECTION INTEGRITY AUDIT RECOMMENDATIONS AT THE REQUEST OF THE AUDITOR GENERAL WITHIN THE TWO-YEAR PERIOD FOLLOWING THE ISSUANCE OF THE ELECTION INTEGRITY AUDIT PURSUANT TO THIS SECTION. THE AUDITOR GENERAL SHALL REVIEW THE COUNTY'S PROGRESS TOWARD IMPLEMENTING THE RECOMMENDATIONS OF THE ELECTION INTEGRITY AUDIT FOR UP TO TWO YEARS. THE AUDITOR GENERAL MAY REVIEW THE COUNTY'S PROGRESS BEYOND THIS TWO-YEAR PERIOD FOR RECOMMENDATIONS THAT HAVE NOT YET BEEN IMPLEMENTED.

F. THE AUDITOR GENERAL SHALL REPORT ANY ELECTION INTEGRITY AUDIT FINDINGS AND RECOMMENDATIONS AND THE STATUS OF A COUNTY'S PROGRESS TOWARDS IMPLEMENTING RECOMMENDATIONS TO THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, THE JOINT LEGISLATIVE AUDIT COMMITTEE, THE GOVERNOR and THE SECRETARY OF STATE. The joint legislative audit committee shall forward to the attorney general for investigation and possible prosecution information regarding a county that fails or refuses to implement significant recommendations from the auditor general.

G. A COUNTY SUBJECT TO AN ELECTION INTEGRITY AUDIT SHALL POST THE AUDIT REPORT AND STATUS REPORT OF PROGRESS TOWARD IMPLEMENTING RECOMMENDATIONS ON ITS WEBSITE AND SHALL PARTICIPATE IN ANY HEARING RELATED TO THE ELECTION INTEGRITY AUDIT SCHEDULED BY THE JOINT LEGISLATIVE AUDIT COMMITTEE OR BY ANY OTHER LEGISLATIVE COMMITTEE DESIGNATED BY THE JOINT LEGISLATIVE AUDIT COMMITTEE. END_STATUTE

Sec. 6. Delayed repeal

Section 41-1279.08, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2029.

Sec. 7. Appropriation; auditor general; exemption

A. The sum of $____________ is appropriated from the state general fund in fiscal year 2022-2023 to the auditor general for the purposes of this act.

B. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.

Sec. 8. Effective date

Sections 1 through 6 of this act are effective from and after December 31, 2022.