BILL REQ. #:  H-3602.1 

Read first time 01/25/12.   Referred to Committee on Education.

     AN ACT Relating to revising the schedule of audits of school districts; and amending RCW 43.09.260.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 43.09.260 and 2009 c 564 s 927 are each amended to read as follows:
     (1) The examination of the financial affairs of all local governments shall be made at such reasonable, periodic intervals as the state auditor shall determine, except as provided in subsection (3) of this section regarding school districts. However, an examination of the financial affairs of all local governments shall be made at least once in every three years, and an examination of individual local government health and welfare benefit plans and local government self-insurance programs shall be made at least once every two years.
     (2) During the 2009-2011 fiscal biennium, the state auditor shall conduct audits no more often than once every two years of local governments with annual general fund revenues of ten million dollars or less and no findings of impropriety for the three-year period immediately preceding the audit period. This subsection does not prohibit the state auditor from conducting audits: (a) To address suspected fraud or irregular conduct; (b) at the request of the local government governing body; or (c) as required by federal laws or regulations.
     (3)(a) Beginning in the 2012-13 school year, a school district is subject to an examination of its financial affairs at least once every three years, but more frequent periodic audits may occur only as provided in this subsection (3):
     (i) If the previous financial or accountability audit or audit assessment of the school district resulted in no findings of impropriety, the state auditor may not conduct an audit, but the school district shall apply for a full evaluation from the Baldrige performance excellence program or the Washington state quality award. The goal for the evaluation is for the school district to achieve an overall score of sixty percent. In the next succeeding school year, the state auditor may not conduct an audit.
     (ii) If the previous accountability audit or audit assessment of the school district resulted in findings of impropriety, the state auditor may conduct an audit, and the school district shall also apply for a full evaluation from the Baldrige performance excellence program or the Washington state quality award. However, in no case is a school district required to apply for a Baldrige or Washington state quality award evaluation more than once every two years.
     (b) This subsection (3) does not prohibit the state auditor from conducting audits: (i) To address suspected fraud or irregular conduct; (ii) at the request of the local government governing body; or (iii) as required by federal laws or regulations.
     (4) The term local governments for purposes of this chapter includes but is not limited to all counties, cities, and other political subdivisions, municipal corporations, and quasi-municipal corporations, however denominated.
     (((4))) (5) The state auditor shall establish a schedule to govern the auditing of local governments which shall include: A designation of the various classifications of local governments; a designation of the frequency for auditing each type of local government; and a description of events which cause a more frequent audit to be conducted.
     (((5))) (6) On every such examination, inquiry shall be made as to the financial condition and resources of the local government; whether the Constitution and laws of the state, the ordinances and orders of the local government, and the requirements of the state auditor have been properly complied with; and into the methods and accuracy of the accounts and reports.
     (((6))) (7) A report of such examination shall be made and filed in the office of state auditor, and one copy shall be transmitted to the local government. A copy of any report containing findings of noncompliance with state law shall be transmitted to the attorney general. If any such report discloses malfeasance, misfeasance, or nonfeasance in office on the part of any public officer or employee, within thirty days from the receipt of his or her copy of the report, the attorney general shall institute, in the proper county, such legal action as is proper in the premises by civil process and prosecute the same to final determination to carry into effect the findings of the examination.
     (((7))) (8) It shall be unlawful for any local government or the responsible head thereof, to make a settlement or compromise of any claim arising out of such malfeasance, misfeasance, or nonfeasance, or any action commenced therefor, or for any court to enter upon any compromise or settlement of such action, without the written approval and consent of the attorney general and the state auditor.