S-858                 _______________________________________________

                                                   SENATE BILL NO. 3358

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Senators Warnke, Sellar, Hansen, Newhouse, Deccio, Johnson and Hayner

Read first time 1/28/85 and referred to Committee on Governmental Operations.

AN ACT Relating to auditing and auditing procedures; and adding new sections to chapter 43.09 RCW.

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

NEW SECTION. Sec. 1.  A new section is added to chapter 43.09 RCW to read as follows:

          With respect to all taxing districts, including but not limited to, all counties, cities, towns and other political subdivisions, municipal corporations and quasi-municipal corporations, however denominated, audits required of financial records by law may be performed either by the state auditor or the division of municipal corporations with the office of the state auditor if authorized by law or may be performed by a certified public accountant qualified to perform such audits under requirements set forth in this section.  If such an audit is performed by a certified public accountant, the state auditor shall be entitled to rely with acquittance on the resulting audit report rendered by the certified public accountant as long as the report is in the form and manner appropriate for such audits.  The form and manner for the audit report shall be in accordance with generally accepted auditing standards as prescribed by the American institute of certified public accountants or adopted by administrative rule by the state board of accountancy.  For audits performed by a certified public accountant, the state auditor may review, upon request, the working papers related to the audits prepared by the certified public accountant, provided that such request is received within twelve calendar months from the date of the certified public accountant's report on the audit.

NEW SECTION. Sec. 2.  A new section is added to chapter 43.09 RCW to read as follows:

          To be eligible to perform audits described in section 1 of this act, a certified public accountant or firm of certified public accountants shall be licensed and admitted to practice and actively practicing public accounting under the rules of the state board of accountancy and shall have filed an oath and bond with the state auditor.  The oath so required shall be in a form prescribed by the state board of accountancy with the advice and consent of the state auditor.  The intent of such an oath shall be to ensure that auditors are independent in fact and appearance, free from impairment by personal, external, and organizational relationships.  The bond required of a certified public accountant shall be in a form set by the state board of accountancy and in a sum of fifty thousand dollars per firm or sole practitioner or such other amount as shall be required by the state auditor.  Evidence of appropriate professional liability insurance in an amount exceeding this amount shall be acceptable in lieu of a bond.

NEW SECTION. Sec. 3.  A new section is added to chapter 43.09 RCW to read as follows:

          In the event a required audit is performed by a certified public accountant or firm under section 1 of this act, all reports related to that audit and rendered by the auditor, including reports of exceptions or identified discrepancies shall be forwarded to the state auditor for review.  If, in the opinion of the state auditor, an additional audit review is necessary by the state auditor's office for the fiscal period in question, the state auditor may order the same to be performed either by the state auditor's office or the certified public accountant having performed the original audit.  In the event the state auditor elects to have such additional work performed by state auditors, upon notice, the certified public accountant or firm thereof shall make available to the state auditor for review the work papers and documents used in such audit, or copies thereof at cost.