HB540 By Representative Pringle RFD State Government Rd 1 20-APR-17

SYNOPSIS: This bill would substantially revise the provisions governing the operation of the Department of Examiners of Public Accounts.

This bill would revise the qualifications of the chief examiner of public accounts, revise the procedures for removal of the chief examiner, revise certain provisions relating to the salary of the chief examiner and certain staff and employees, revise the term of service, and require the chief examiner to appoint chief legal counsel.

This bill would also revise and clarify certain duties of the department.

This bill would also revise the composition of the Legislative Committee on Public Accounts beginning January 1, 2019.

Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless: it comes within one of a number of specified exceptions; it is approved by the affected entity; or the Legislature appropriates funds, or provides a local source of revenue, to the entity for the purpose.

The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the amendment. However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the amendment.

A BILL TO BE ENTITLED AN ACT

Relating to the Department of Examiners of Public Accounts; to add Chapter 5A to Title 41, Code of Alabama 1975, to substantially revise the provisions governing the operation of the office; to revise the qualifications of the chief examiner of Public Accounts; to revise the procedures for removal of the chief examiner; to revise certain provisions relating to the salary of the chief examiner and certain staff and employees; to revise the term of service of the chief examiner; to require the chief examiner to appoint chief legal counsel; to revise and clarify certain duties of the department; to provide penalties for false statements in audits; and to revise the composition of the Legislative Committee on Public Accounts at a certain time; and to repeal Chapter 5, Title 41, Code of Alabama 1975, the existing law governing the department; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. Chapter 5A is added to Title 41, Code of Alabama 1975, to read as follows:

Chapter 5A. Examiners of Public Accounts.

§41-5A-1.

(a) There is created the Department of Examiners of Public Accounts, composed of any divisions the chief examiner determines to be necessary.

(b) The offices of the department shall be located in Montgomery, but the department may conduct examinations and audits and establish offices throughout the state.

§41-5A-2.

(a) The affairs of the department shall be administered by a chief examiner, whose actions shall be supervised and controlled by a Legislative Committee on Public Accounts. The chief examiner shall be selected and appointed by the Legislative Committee on Public Accounts to serve for a term of five years and until a qualified successor is appointed.

(b)(1) Vacancies in the office of chief examiner arising from any cause shall be filled by the Legislative Committee on Public Accounts, the person so appointed to hold office for the unexpired term of the predecessor.

(2) The appointment of the chief examiner shall be subject to confirmation by the Senate at the first regular or special session of the Legislature held thereafter; provided, however, that this subsection does not affect the right or authority of the chief examiner to act pending confirmation or rejection.

(c) The chief examiner may be removed from office by joint resolution of the Legislature while in office.

§41-5A-3.

(a) The chief examiner shall be a certified public accountant licensed in this state and shall be selected with consideration of his or her training, experience, capacity, and fitness for the duties as executive and administrative head of the Department of Examiners of Public Accounts.

(b) The chief examiner is not eligible for appointment or election to any state, county, or municipal office, nor shall he or she be a member of a committee of any political party during the term for which he or she is appointed. Violation of this subsection shall automatically result in removal from the office of chief examiner.

§41-5A-4.

The chief examiner, before entering upon the duties of his or her office, shall take the oath prescribed by Article XVI, Section 279 of the Constitution of Alabama of 1901, and shall give bond for the faithful performance of his or her duties in the amount of one hundred thousand dollars ($100,000). The oath and the bond, which must be approved by the Legislative Committee on Public Accounts and paid for from funds available to the Department of Examiners of Public Accounts, shall be filed with the Secretary of State.

§41-5A-5.

(a) The chief examiner shall be the executive and administrative head of the department and shall have the power and duty to do all of the following subject to review and oversight by the Legislative Committee on Public Accounts:

(1) Exercise general supervision of and make regulations for the governance of the department.

(2) Prescribe uniform rules pertaining to investigations, examinations, audits, and departmental hearings.

(3) Supervise the fiscal affairs and responsibilities of the department.

(4) Appoint and remove the staff, officers, and employees of the department, subject to the Merit System Act and the rules issued pursuant thereto.

(5) Keep an accurate and complete record of all proceedings of the department, record and file all bonds, reports, and other documents and assume responsibility for the custody and preservation of all papers and documents of the department.

(6) Make recommendations and an annual report to the Governor and to the Legislative Committee on Public Accounts concerning the condition, operation, functioning, and findings of the department.

(7) Invoke any legal, equitable, or special remedy for the enforcement of orders or this chapter.

(8) Exercise any other power necessary to expedite the making of thorough and accurate audits of the accounts of all individuals or entities receiving or disbursing public funds.

(9) Examine and audit the books, accounts, and records of all state and county offices, officers, bureaus, authorities, boards, commissions, corporations, departments, and agencies.

(10) Prepare, except with respect to county boards of education, such bookkeeping, accounting, and reporting systems, procedures, records, and forms as may be necessary to install a uniform system of accounting and reporting in the various state and county offices.

(11) Report to the Legislative Committee on Public Accounts, the Governor, and the Contract Review Permanent Legislative Oversight Committee every expenditure or contract found to have been made in violation of law.

(12) Prepare, for use by the county boards of education, bookkeeping, accounting, and reporting systems, procedures, records, and forms necessary to the installation of a uniform system of accounting and reporting by the several county boards of education, install the bookkeeping, accounting, and reporting systems for the county boards of education, and exercise and maintain continuing supervision thereof.

(13) Prepare and furnish to the chairs of the county commissions of the several counties of the state a fiscal statement of each county, as of the end of each fiscal year, the statement showing receipts, disbursements, outstanding indebtedness, and securities owned of and by each of the several counties.

(b) All powers and duties vested in the chief examiner may be delegated to his or her appointed assistants, staff, deputies, and employees, but the chief examiner shall be responsible for their actions.

§41-5A-6.

(a) For the purposes of this section, the following words have the following meanings:

(1) CHIEF EXAMINER. The Chief Examiner of Public Accounts.

(2) OVERPAYMENT. Any payment of in excess of amounts due and includes failure to meet eligibility requirements, failure to identify third party liability where applicable, any payment for an ineligible good or service, any payment for a good or service not received, duplicate payments, invoice and pricing errors, failure to apply discounts, rebates or other allowances, failure to comply with contracts or purchasing agreements, or both, failure to provide adequate documentation or necessary signatures, or both, on documents, or any other inadvertent error resulting on overpayment.

(3) RECOVERY AUDIT. A financial management technique used to identify overpayments made by a state agency with respect to individuals, vendors, service providers, and other entities in connection with a payment activity.

(4) RECOVERY AUDITOR. A private contractor with recovery audit expertise.

(5) STATE AGENCY. A department, office, board, authority, commission, bureau, division, institution, state institution of higher education of this state, or any other state entity that makes payments of state funds.

(b) The chief examiner may contract with recovery auditors to conduct and perform recovery audits of payments made by state agencies to individuals, vendors, service providers, and other entities. Any audit conducted pursuant to this subsection of any payment made by a state agency to an electric utility regulated by the Public Service Commission is limited to the three-year period following the date of the payment to be audited. Overpayments between one state agency and another state agency are not subject to recovery under this section. Any contract shall be entered into in accordance with the purchasing provisions of the state. The contracts may provide for reasonable compensation for services provided under the contract, including compensation determined by the application of a specified percentage of the total amount recovered because of the recovery auditor's audit activities. In no event shall the compensation to a recovery auditor exceed 15 percent of the amount recovered because of the recovery auditor's audit activities. A recovery audit of a payment may not be made within 90 days of the date of the payment. No payment shall be due a recovery auditor from any payment identified as an overpayment until the overpayment has been recovered and credited to the special fund established in this section.

(c)(1) A state agency whose payments are being audited under a recovery contract pursuant to this section shall provide a recovery auditor with any payment-related information as determined by the chief examiner, including any confidential information that is necessary for the performance of the audit or the recovery audit of an overpayment, to the extent the agency is not prohibited from sharing the information under an agreement with another state or the federal government.

(2) A recovery audit shall be complementary to any other financial management process and shall not supplant any existing or future state audit or program integrity activity by a state agency.

(3) A recovery auditor acting under a contract authorized by this section, and each employee or agent of the recovery auditor, is subject to all prohibitions against the disclosure of confidential information obtained from the state in connection with the contract that applies to any official or employee of the applicable state agency. A recovery auditor acting under a contract authorized by this section or an employee or agent of the recovery auditor who discloses confidential information in violation of a prohibition made applicable to the recovery auditor under this section is subject to prosecution by the Attorney General in any court within this state.

(d) Recovery audits shall be performed on payments to individuals, vendors, service providers, and other entities made by each state agency as determined by the chief examiner. Notwithstanding the foregoing, the recovery audits provided for in this section shall not be performed on any entity, vendor, or service provider that is subject to audits under the federally mandated Recovery Audit Contractor Program adopted by the Alabama Medicaid Agency under Section 1902(a) (42) of the Social Security Act, as amended.

(e)(1) A special fund is established within the State Treasury for the deposit of all funds generated from recovery audits conducted pursuant to this section after payment to the Department of Examiners of Public Accounts for actual costs of time and effort devoted to the recovery audit as determined by the chief examiner and of any percentages due under the contract to perform the audit. Amounts due a federal agency by a state agency as a result of a recovery audit shall be disbursed from the fund after certification by the agency of the amount due and verification of the amount by the chief examiner. Any amounts recovered that were appropriated for funds constitutionally earmarked shall be appropriated in accordance with law. Any amounts remaining in the fund shall be subject to expenditure for any lawful purpose through appropriation by the Legislature.

(2) A state agency shall compute the amount of federal money due to be returned to the federal government from any federal money that is recovered through a recovery audit conducted under this section. The state agency shall compute the amount due in accordance with the rules of the federal program through which the agency received the federal money.

(f) Recovery audit reports shall be public records and released by the Department of Examiners of Public Accounts in accordance with normal report release procedures. Copies shall be available in electronic form on the department's website.

(g) If the entity audited by the recovery auditor disagrees with the results or report of the recovery audit, the entity may request arbitration of the dispute pursuant to Division 1 of Article 1 of Chapter 6 of Title 6. The compensation of the arbitrators and the cost of the arbitration shall be paid by the entity audited and the recovery auditor in amounts that are in proportion to the ruling of the arbitrators regarding the correctness of the recovery auditor's report on an overpayment.

§41-5A-7.

The Chief Examiner of Public Accounts, with the approval of the Legislative Committee on Public Accounts, may appoint an assistant chief examiner, who shall exercise any and all authority and perform any and all duties as the chief examiner may prescribe. The assistant chief examiner shall be selected because of his or her fitness and capacity and shall be a certified public accountant. The assistant chief examiner shall be exempt from the Merit System.

§41-5A-8.

(a) The salary of the Chief Examiner of Public Accounts shall be set by the Legislative Committee on Public Accounts.

(b) The salary of the assistant chief examiner shall be fixed by the chief examiner, with approval of the Legislative Committee on Public Accounts.

(c) The compensation for the chief examiner and the assistant chief examiner shall be paid out of funds appropriated to the Department of Examiners of Public Accounts and in the same manner as salaries of other officers and employees are paid.

§41-5A-9.

The employees of the department shall be members of the classified service of the Merit System unless otherwise specified by law.

§41-5A-10.

(a) The Attorney General and the district attorneys of the several circuits shall render to the chief examiner, without additional compensation, legal services as he or she may request.

(b) Whenever the legality of any payment or shortage is involved in an examination, the chief examiner shall submit the facts in writing to the Attorney General and request his or her opinion as to the applicable law. The Attorney General shall immediately provide a copy of each opinion affecting any state or county officer in the collection or disbursement of public funds to the officer affected, to the chief examiner, and to the Governor.

§41-5A-11.

(a) The Chief Examiner of Public Accounts, shall appoint a Chief Legal Counsel for the Department of Examiners of Public Accounts pursuant to Section 36-15-5.1(b).

(b) The chief legal counsel shall be of good character and qualified by training and experience to perform the duties of his or her office.

(c) The chief examiner may appoint not more than two assistant legal counsels for the department.

§41-5A-12.

(a) The books, records, vouchers, and accounts of every state and county office, officer, bureau, board, commission, corporation, institution, department, and agency shall be examined and audited at least once in every period of two years and more frequently or continuously if that is deemed necessary by the chief examiner or the Legislative Committee on Public Accounts. The books, records, vouchers, and accounts of municipal boards of education may be examined and audited upon request of the committee.

(b) Examinations and audits required under this chapter shall be made at the expense of the state.

(c) A person who knowingly makes any materially false, fictitious, or fraudulent statement or representation in any audit under this chapter shall be guilty of a Class C felony.

(d) No state or county office, officer, bureau, board, commission, corporation, institution, or agency subject to audit or examination under this section may contract for or arrange to have an audit or examination unless the audit or examination has been authorized and approved by the chief examiner. Any audit or examination that is authorized by the chief examiner is subject to review by the chief examiner prior to finalization of the audit and public release.

§41-5A-13.

The chief examiner shall compile and make available for distribution both of the following:

(1) The rules of the department.

(2) Other materials as the chief examiner deems relevant and suitable for the effective administration of this chapter.

§41-5A-14.

(a) The chief examiner may issue subpoenas to compel the attendance of witnesses and production of papers necessary as evidence in connection with a dispute, claim, examination, audit, or the administration of this chapter.

(b) In case a person refuses to comply with a subpoena, the chief examiner may invoke the aid of any circuit court with jurisdiction in order that the testimony or evidence be produced. Upon proper showing, the court shall issue a subpoena or order requiring the person to appear before the chief examiner or his or her representative and produce all evidence and give all testimony relating to the matter in issue.

(c) A person failing to comply with an order may be punished by the court for contempt.

§41-5A-15.

The chief examiner, assistant chief examiner, chief legal counsel, and deputy examiner may administer oaths, take depositions, and certify official acts.

§41-5A-16.

(a) There shall be a Legislative Committee on Public Accounts to exercise general supervision and control over the actions of the chief examiner and the Department of Examiners of Public Accounts.

(b)(1) The Legislative Committee on Public Accounts shall have 12 members. Five members shall be elected by the House of Representatives from its membership and five members shall be elected by the Senate from its membership. The President of the Senate shall be a member of the committee and the chairman of the committee. The Speaker of the House of Representatives shall be a member of the committee and the vice-chairman of the committee. Members of the committee shall be elected at the first regular session of each quadrennium and shall hold office, as long as they remain legislators, until their successors are elected.

(2) Beginning on January 1, 2019, the President Pro Tempore of the Senate shall replace the President of the Senate as a member of the committee. The President Pro Tempore of the Senate shall serve as chair of the committee.

(c) Vacancies shall be filled by the remaining members of the committee from members of the House of Representatives or the Senate, depending upon in which representation the vacancy occurs, until the next session of the Legislature, organizational, regular or special, at which time they shall be filled by the proper house.

§41-5A-17.

(a) The Legislative Committee on Public Accounts shall meet annually at the capital, at a time which it shall set by resolution for the purpose of receiving the report and recommendations of the chief examiner. The chief examiner shall attend the meetings and give evidence, make reports and perform duties as the committee may direct.

(b) Annual meetings of the committee may not be held for more than 10 days. Special meetings not exceeding 10 days in total during any year may be called by the chairman and must be called by him within 10 days after receipt of a written request by the chief examiner, a majority of the committee, or the Governor.

(c) Members of the committee shall be entitled to their legislative per diem, and travel expenses for each day they attend a meeting of the committee in accordance with Amendment 871 of the Constitution of Alabama of 1901.

§41-5A-18.

The Legislative Committee on Public Accounts shall report its findings and recommendations and concerning the work of the Department of Examiners of Public Accounts to the Senate and House of Representatives at each session of the Legislature and to the Governor.

§41-5A-19.

The department shall make a sworn report of its findings within a reasonable time after an audit is completed. The chief examiner shall certify one copy of each report to the circuit judge of the county in which the office examined is located. The judge shall refer to the report in his or her next oral charge to the grand jury. The report shall be entered in full upon the minutes of the court. The reports shall be public records and prima facie evidence of what they charge. Working papers used in the preparation of the reports shall be subject to and treated as being under Section 12-16-216, and shall be subject to review by a court of competent jurisdiction only. One copy of each report shall be certified to the Governor.

§41-5A-20.

The chief examiner shall keep a docket in which shall be entered, in favor of the state, county or municipality, as the case may be, cases against persons who have not properly and lawfully accounted for all sums of money coming into their hands as public officers, agents, or employees. If an amount found to be due the state, county, or other governmental unit or agency as a result of an examination or audit is not settled upon demand by the examiner, the chief examiner shall immediately issue notice to the person in default and require him or her to appear on a day certain and show cause why the amount due should not be paid. If the defaulting officer fails to settle or to show just cause why the amount due should not be collected, the chief examiner shall certify such facts and the amount due the state to the Attorney General, and the Attorney General shall bring a civil action in the name of the state against the officer and his or her bondsmen. If the amount due by the officer is in favor of the county or municipality, then the chief examiner shall certify to the district attorney of the circuit the amount or amounts so due, and the district attorney shall proceed to collect the amount by a civil action against the officer and his or her bondsmen.

§41-5A-21.

Every state and county officer shall keep the books, records, and accounts and make the reports of his or her office in accordance with such systems, procedures, and forms as may be prescribed by the chief examiner pursuant to this chapter. Any officer who fails or willfully refuses to comply with this section shall be liable for a penalty of up to two hundred fifty dollars ($250) for each week the failure or refusal continues. Penalties imposed and collected under this section shall be paid into the General Fund of the State Treasury.

§41-5A-22.

All moneys or funds received or collected by the Department of Examiners of Public Accounts in the form of fees, receipts, or income as a result of services rendered in connection with municipal audits shall be transferred by the department into the State Treasury to the credit of the General Fund. All moneys or funds received or collected by the Department of Examiners of Public Accounts from the federal government shall be deposited into a special fund in the State Treasury and these moneys and funds are hereby appropriated or reappropriated as necessary for the sole use of the Department of Examiners of Public Accounts.

Section 2. Chapter 5 of Title 41, Code of Alabama 1975, relating to the Department of Examiners of Public Accounts, is repealed.

Section 3. Although this bill would have as its purpose or effect the requirement of a new or increased expenditure of local funds, the bill is excluded from further requirements and application under Amendment 621, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, because the bill defines a new crime or amends the definition of an existing crime.

Section 4. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

Examiners of Public Accounts Department

Legislature

Audits

State Agencies

Counties

Code Repealed

Code Added