North Carolina § 147-64 - 6. Duties and responsibilities.

§ 147-64. 6. Duties and responsibilities.

It is the policy of the General Assembly to provide for the auditing of State agencies by the impartial, independent State Auditor. The duties of the Auditor are independently to examine into and make findings of fact on whether State agencies: Have established adequate operating and administrative procedures and practices; systems of accounting, reporting and auditing; and other necessary elements of legislative or management control. Are providing financial and other reports which disclose fairly, consistently, fully, and promptly all information needed to show the nature and scope of programs and activities and have established bases for evaluating the results of such programs and operations. Are promptly collecting, depositing, and properly accounting for all revenues and receipts arising from their activities. Are conducting programs and activities and expending funds made available in a faithful, efficient, and economical manner in compliance with and in furtherance of applicable laws and regulations of the State, and, if applicable, federal law and regulation. Are determining that the authorized activities or programs effectively serve the intent and purpose of the General Assembly and, if applicable, federal law and regulation. Are adhering to statutory requirements that include conditions precedent, classifications, and similar eligibility or qualifying standards to assure that statutory intent is carried out while the requirements are in effect. The Auditor is responsible for the following acts and activities: Audits made or caused to be made by the Auditor shall be conducted in accordance with generally accepted auditing standards as prescribed by the American Institute of Certified Public Accountants, the United States General Accounting Office, or other professionally recognized accounting standards-setting bodies. Financial and compliance audits may be made at the discretion of the Auditor without advance notice to the organization being audited. Audits of economy and efficiency and program results shall be discussed in advance with the prospective auditee unless an unannounced visit is essential to the audit. The Auditor, on the Auditor's own initiative and as often as the Auditor deems necessary, or as requested by the Governor or the General Assembly, shall, to the extent deemed practicable and consistent with the Auditor's overall responsibility as contained in this act, make or cause to be made audits of all or any part of the activities of the State agencies. Each agency or department receiving a financial statement audit by the Auditor under this subdivision shall prepare a financial statement and supplementary information in the format required by the Auditor. Financial statements and supplementary information prepared as required by this subdivision shall be completed and submitted to the Auditor not later than 60 days after the deadline for the agency's or department's Comprehensive Annual Financial Report submission as established by the State Controller. The Auditor, at the Auditor's own discretion, may, in selecting audit areas and in evaluating current audit activity, consider and utilize, in whole or in part, the relevant audit coverage and applicable reports of the audit staffs of the various State agencies, independent contractors, and federal agencies. The Auditor shall coordinate, to the extent deemed practicable, the auditing conducted within the State to meet the needs of all governmental bodies. The Auditor is authorized to contract with federal audit agencies, or any governmental agency, on a cost reimbursable basis, for the Auditor to perform audits of federal grants and programs administered by the State Departments and institutions in accordance with agreements negotiated between the Auditor and the contracting federal audit agencies or any governmental agency. In instances where the grantee State agency shall subgrant these federal funds to local governments, regional councils of government and other local groups or private or semiprivate institutions or agencies, the Auditor shall have the authority to examine the books and records of these subgrantees to the extent necessary to determine eligibility and proper use in accordance with State and federal laws and regulations. The Auditor is authorized and directed in the Auditor's reports of audits or reports of special investigations to make any comments, suggestions, or recommendations the Auditor deems appropriate concerning any aspect of such agency's activities and operations. The Auditor may charge and collect from each examining and licensing board the actual cost of each audit of such board. Costs collected under this subdivision shall be based on the actual expense incurred by the Auditor's office in making such audit and the affected agency shall be entitled to an itemized statement of such costs. Amounts collected under this subdivision shall be deposited into the general fund as nontax revenue. The Auditor shall examine as often as may be deemed necessary the accounts kept by the Treasurer, and if the Auditor discovers any irregularity or deficiency therein, unless the same be rectified or explained to his satisfaction, report the same forthwith in writing to the General Assembly, with copy of such report to the Governor and Attorney General. In addition to regular audits, the Auditor shall check the treasury records at the time a Treasurer assumes office (not to succeed himself or herself), and therein charge the Treasurer with the balance in the treasury, and shall check the Treasurer's records at the time the Treasurer leaves office to determine that the accounts are in order. The Auditor may examine the accounts and records of any bank or financial institution relating to transactions with the State Treasurer, or with any State agency, or the Auditor may require banks doing business with the State to furnish the Auditor information relating to transactions with the State or State agencies. The Auditor may, as often as the Auditor deems advisable, conduct a detailed review of the bookkeeping and accounting systems in use in the various State agencies which are supported partially or entirely from State funds. Such examinations will be for the purpose of evaluating the adequacy of systems in use by these agencies and institutions. In instances where the Auditor determines that existing systems are outmoded, inefficient, or otherwise inadequate, the Auditor shall recommend changes to the State Controller. The State Controller shall prescribe and supervise the installation of such changes, as provided in G.S. 143B-426.39(2). The Auditor shall, through appropriate tests, satisfy himself or herself concerning the propriety of the data presented in the Comprehensive Annual Financial Report and shall express the appropriate auditor's opinion in accordance with generally accepted auditing standards. The Auditor shall provide a report to the Governor and Attorney General, and other appropriate officials, of such facts as are in the Auditor's possession which pertain to the apparent violation of penal statutes or apparent instances of malfeasance, misfeasance, or nonfeasance by an officer or employee. At the conclusion of an audit, the Auditor or the Auditor's designated representative shall discuss the audit with the official whose office is subject to audit and submit necessary underlying facts developed for all findings and recommendations which may be included in the audit report. On audits of economy and efficiency and program results, the auditee's written response shall be included in the final report if received within 15 to 30 days from receipt of the draft report. The length of time shall be determined by the Auditor and shall be commensurate with the number and complexity of the findings. The Auditor shall notify the General Assembly, the Governor, the Chief Executive Officer of each agency audited, and other persons as the Auditor deems appropriate that an audit report has been published, its subject and title, and the locations, including State libraries, at which the report is available. The Auditor shall then distribute copies of the report only to those who request a report. The copies shall be in written or electronic form, as requested. He shall also file a copy of the audit report in the Auditor's office, which will be a permanent public record. In addition, the Auditor may publish on his or her Web site any reports from audits of State agencies not directly conducted by the Auditor. Nothing in this subsection shall be construed as authorizing or permitting the publication of information whose disclosure is otherwise prohibited by law. It is not the intent of the audit function, nor shall it be so construed, to infringe upon or deprive the General Assembly and the executive or judicial branches of State government of any rights, powers, or duties vested in or imposed upon them by statute or the Constitution. The Auditor shall be responsible for receiving reports of allegations of the improper governmental activities as provided in G.S. 147-64.6B. The Auditor shall adopt policies and procedures necessary to provide for the investigation or referral of these allegations. Repealed by Session Laws 2009-136, s. 2, effective June 19, 2009. Repealed by Session Laws 2010-31, s. 6.15(b), effective July 1, 2010. Whenever the Auditor believes that information received or collected by the Auditor may be evidence of a violation of any of the provisions of Chapter 138A of the General Statutes, Chapter 120C of the General Statutes, or Article 14 of Chapter 120 of the General Statutes, the Auditor shall report that information to the State Ethics Commission and the Secretary of State as appropriate. The Auditor shall be bound by interpretations issued by the State Ethics Commission as to whether or not any information reported by the Auditor under this subdivision involves or may involve a violation of Chapter 138A of the General Statutes, Chapter 120C of the General Statutes, or Article 14 of Chapter 120 of the General Statutes. Nothing in this subdivision shall be construed to limit the Auditor's authority under subdivision (1) of this subsection. Whenever the Auditor believes that information received or collected by the Auditor may be evidence of criminal misconduct, the Auditor shall report that information to either the State Bureau of Investigation or the District Attorney for the county where the alleged misconduct occurred. Nothing in this subdivision shall be construed to limit the Auditor's authority under subdivision (1) of this subsection. If an audit undertaken by the Auditor results in a finding that a private person or entity has received public funds as a result of fraud, misrepresentation, or other deceptive acts or practices while doing business with the State or a political subdivision thereof, the Auditor shall submit a detailed written report of the finding, and any additional necessary supporting documentation, to the State Purchasing Officer or the appropriate political subdivision official, as applicable. A report submitted under this subsection may include a recommendation that the private person or entity be debarred from doing business with the State or a political subdivision thereof. Verification audits for compliance with statutory requirements, with or without advance notice to the organization or State agency being audited, which may be initiated at the discretion of the Auditor or as requested by the Governor or General Assembly. Reports and Work Papers. - The Auditor shall maintain for 10 years a complete file of all audit reports and reports of other examinations, investigations, surveys, and reviews issued under the Auditor's authority. Audit work papers and other evidence and related supportive material directly pertaining to the work of the Auditor's office shall be retained according to an agreement between the Auditor and State Archives. To promote intergovernmental cooperation and avoid unnecessary duplication of audit effort, and notwithstanding the provisions of G.S. 126-24, pertinent work papers and other supportive material related to an audit or investigation made pursuant to this section may be, at the discretion of the Auditor and unless otherwise prohibited by law, made available for inspection by duly authorized representatives of the State and federal government who desire access to and inspection of the records in connection with some matter officially before them, including criminal investigations. Access to Records. - The Auditor may examine the accounts and records of any organization or State agency relating to a verification audit for compliance with a statutory condition precedent, classification, or other similar eligibility or qualifying standard. The Auditor shall charge and collect from the contracting federal audit agencies, or any governmental agencies, the actual cost of all the audits of the grants and programs contracted by him to do. Amounts collected under these arrangements shall be deposited in the State Treasury and be budgeted in the Department of State Auditor and shall be available to hire sufficient personnel to perform these contracted audits and to pay for related travel, supplies and other necessary expenses. Except as provided in this section, or upon an order issued in Wake County Superior Court upon 10 days' notice and hearing finding that access is necessary to a proper administration of justice, audit work papers and related supportive material shall be kept confidential, including any interpretations, advisory opinions, or other information or materials furnished to or by the State Ethics Commission under this section. History (1983, c. 913, s. 2; 1985 (Reg. Sess., 1986), c. 1024, ss. 24, 25; 1987, c. 738, s. 62; 1989, c. 236, s. 2; 1999-188, s. 2; 2001-142, s. 2; 2001-424, ss. 9.1(a), 15.2(c); 2002-126, s. 27.2(b); 2002-159, s. 48; 2004-129, s. 46; 2008-215, ss. 1(a), 2, 3; 2009-136, s. 2; 2010-31, s. 6.15(b); 2010-194, s. 27; 2014-100, ss. 25.2, 25.3; 2015-241, s. 25.1(b); 2015-268, s. 7.4; 2017-6, s. 3; 2018-5, s. 27.1; 2018-146, ss. 3.1(a), (b), 6.1; 2019-19, ss. 2, 3; 2020-78, s. 18.1.) Re-recodification; Technical and Conforming Changes. - Session Laws 2017-6, s. 3, provides, in part: "The Revisor of Statutes shall recodify Chapter 138A of the General Statutes, Chapter 120C of the General Statutes, as well as Chapter 163 of the General Statutes, as amended by this act, into a new Chapter 163A of the General Statutes to be entitled 'Elections and Ethics Enforcement Act,' as enacted by Section 4 of this act. The Revisor may also recodify into the new Chapter 163A of the General Statutes other existing statutory laws relating to elections and ethics enforcement that are located elsewhere in the General Statutes as the Revisor deems appropriate." The Revisor was further authorized to make technical and conforming changes to catchlines, internal citations, and other references throughout the General Statutes to effectuate this recodification. Pursuant to this authority, the Revisor substituted "Bipartisan State Board of Elections and Ethics Enforcement" for "State Ethics Commission" twice in subdivision (c)(19) and in subsection (d); and substituted "Subchapter II of Chapter 163 A of the General Statutes" for "Chapter 138A of the General Statutes, Chapter 120C of the General Statutes" twice in subdivision (c)(19). Session Laws 2018-146, ss. 3.1(a), (b), and 6.1, repealed Session Laws 2017-6, s. 3, and authorized the Revisor of Statutes to re-recodify Chapter 163A into Chapters 163, 138A, and 120C and to revert the changes made by the Revisor pursuant to Session Laws 2017-6, s. 3. Pursuant to this authority, the Revisor of Statutes reverted the changes to the references in subdivision (c)(19) and subsection (d). Editor's Note. - The reference in subdivision (c)(3) of this section to "this act" refers to Session Laws 1983, c. 913, which enacted this Article and made other changes in the General Statutes. Session Laws 1985 (Reg. Sess., 1986), c. 1024, s. 25 purported to rewrite "G.S. 147-64.6(11)." At the direction of the Revisor of Statutes, the amendment was effectuated in subdivision (c)(11). Session Laws 2010-31, s. 6.15(b), effective July 1, 2010, repealed former subdivision (c)(18). Session Laws 2010-194, s. 27, added two sentences to subdivision (c)(18), effective October 1, 2010. Had the amendment by Session Laws 2010-194, s. 27, taken effect, the last two sentences of subdivision (c)(18) would have read: "However, the Auditor shall: (i) submit all proposed statewide and agency term contracts for supplies, materials, printing, equipment, and contractual services that exceed one million dollars ($1,000,000) authorized by this subdivision to the Attorney General or the Attorney General's designee for review as provided in G.S. 114-8.3; and (ii) include in all proposed contracts to be awarded by the Auditor under this subdivision a standard clause which provides that the Auditor may audit the records of the contractor during the term of the contract to verify accounts and data affecting fees and performance. The Auditor shall not award a cost plus percentage of cost agreement or contract for any purpose." Session Laws 2012-87, s. 1, provides: "The State Auditor shall conduct an investigative audit of the Roanoke Island Commission, which is a State commission that receives State funds. As part of its investigation, the Auditor shall carefully examine all funds that have been received by Friends of Elizabeth II, Inc., (Friends) from the Roanoke Island Commission or any other State entity, regardless of the characterization by any party of the nature of a transfer, and determine the following: "(1) The balance of such funds still held by the Friends. "(2) The interest earned on such funds and the rate of interest on such funds, both as of the time of the audit and over the period in which the Friends have held such funds. "(3) The expenditure of funds received by the Friends from the Roanoke Island Commission or any other State entity. "(4) Whether such funds have been used by the Friends for the purposes for which they were transferred. "(5) Whether such funds were properly transferred by State entities to the Friends in accordance with the law. "(6) Whether the use of such funds has been properly reported in accordance with the law. "The Auditor shall make recommendations based on the Auditor's findings and shall publish a report describing all issues investigated, a summary of the contents of documents examined and interviews conducted, all other findings, and the recommendations. "As part of its audit, the Auditor shall also review any memorandums of agreement, or similar arrangements, between the Roanoke Island Commission and the Friends and shall make recommendations as to what should be included in such an agreement between the Roanoke Island Commission and the Friends." Session Laws 2015-241, s. 25.1(c), as amended by Session Laws 2015-268, s. 7.4, provides: "This section becomes effective October 1, 2015, and the requirement to submit a report applies to audits conducted or undertaken on or after that date. Nothing in this subsection shall be construed as prohibiting the State Auditor or an internal auditor from submitting a report detailing fraud, misrepresentation, or other deceptive acts or practices found during an audit conducted prior to the effective date of this section." Session Laws 2015-241, s. 1.1, provides: "This act shall be known as 'The Current Operations and Capital Improvements Appropriations Act of 2015.'" Session Laws 2015-241, s. 33.6, is a severability clause. Session Laws 2020-78, s. 22.1, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2019-2021 fiscal biennium, the textual provisions of this act apply only to the 2019-2021 fiscal biennium." Session Laws 2020-78, s. 22.3, is a severability clause. Effect of Amendments. - Session Laws 2004-129, s. 46, effective July 1, 2004, in subdivision (b)(18), substituted "G.S. 147-33.111(a)" for "G.S. 147-33.82(d)(1) or (2)" in the second sentence, and substituted "G.S. 147-33.111(c)" for "G.S. 147-33.82(d)(3)" in the fifth sentence. Session Laws 2008-215, ss. 1(a), 2, and 3, effective August 15, 2008, rewrote subdivision (c)(16); added subdivision (c)(19); and in subsection (d), substituted "the Auditor's" for "his" twice, and rewrote the second paragraph. See Editor's note for applicability. Session Laws 2009-136, s. 2, effective June 19, 2009, deleted subdivision (c)(17), which read: "The Auditor or the Auditor's designee, in conjunction with the State Controller and the State Budget Officer or their designees, shall handle the resolution of fee disputes between the Office of Information Technology Services and the State agencies receiving information technology services from the Office." Session Laws 2010-31, s. 6.15(b), effective July 1, 2010, repealed former subdivision (c)(18), which read: "The Auditor shall, after consultation and in coordination with the State Chief Information Officer, assess, confirm, and report on the security practices of information technology systems. If an agency has adopted standards pursuant to G.S. 147-33.111(a), the audit shall be in accordance with those standards. The Auditor's assessment of information security practices shall include an assessment of network vulnerability. The Auditor may conduct network penetration or any similar procedure as the Auditor may deem necessary. The Auditor may enter into a contract with a State agency under G.S. 147-33.111(c) for an assessment of network vulnerability, including network penetration or any similar procedure. Any contract with the Auditor for the assessment and testing shall be on a cost-reimbursement basis. The Auditor may investigate reported information technology security breaches, cyber attacks, and cyber fraud in State government. The Auditor shall issue public reports on the general results of the reviews undertaken pursuant to this subdivision but may provide agencies with detailed reports of the security issues identified pursuant to this subdivision which shall not be disclosed as provided in G.S. 132-6.1(c). The Auditor shall provide the State Chief Information Officer with detailed reports of the security issues identified pursuant to this subdivision. For the purposes of this subdivision only, the Auditor is exempt from the provisions of Article 3 of Chapter 143 of the General Statutes in retaining contractors." Session Laws 2014-100, s. 25.2, effective July 1, 2014, in subsection (c), made gender neutral changes throughout, substituted "the Auditor" for "he" or similar language throughout subdivisions (c)(3), (c)(4), (c)(6), (c)(9), (c)(10), (c)(12), and (c)(13), substituted "may" for "shall" in subdivision (c)(7), in subdivision (c)(8), substituted "the Auditor" for "he" in the first sentence, and substituted "the Treasurer" for "him" and "he" in the last sentence, and rewrote the former last sentence as the present last three sentences in subdivision (c)(14). Session Laws 2014-100, s. 25.3, effective July 1, 2014, added subdivision (c)(20). Session Laws 2015-241, s. 25.1(b), effective October 1, 2015, added subdivision (c)(21). For applicability, see editor's note. Session Laws 2018-5, s. 27.1, effective July 1, 2018, added the last two sentences in subdivision (c)(3). Session Laws 2019-19, ss. 2, 3, effective June 3, 2019, substituted "Auditor is" for "Auditor shall be" in the introductory paragraph of subsection (c); in subdivision (c)(13), inserted "15 to" near the end of the second sentence, and added the last sentence; and in subsection (d), substituted "an audit or investigation made pursuant to this section" for "issued audit reports" and made a stylistic change. Session Laws 2020-78, s. 18.1, effective July 1, 2020, added subdivision (b)(6); substituted "is responsible" for "shall be responsible" in the introductory paragraph of subsection (c); added subdivision (c)(22); and added subsection (e). Opinions of Attorney General Persons Present at Meetings - Members of the Information Resources Management Commission, or their delegates, who are representatives of other agencies may be present at the committee meeting during which information will be reported about audits of the security practices of information technology systems in specific agencies. See opinion of Attorney General to Beverly Eaves Perdue, Lieutenant Governor, 2002 N.C.A.G. 28 (11/8/02). If the procedures for delegation of duties have been followed, then the designated subordinate of an ex officio member may participate in the full activities of the Information Resources Management Commission and its committees; this includes the right to vote and to participate in closed sessions. See opinion of Attorney General to Beverly Eaves Perdue, Lieutenant Governor, 2002 N.C.A.G. 28 (11/8/02). A volunteer Information Protection and Privacy Committee member is not an official member of the Information Resources Management Commission or an official delegate of an IRMC member; therefore, volunteers are not representatives of a State agency as contemplated in subdivision (c)(18) of this section and should not attend closed meetings. See opinion of Attorney General to Beverly Eaves Perdue, Lieutenant Governor, 2002 N.C.A.G. 28 (11/8/02). Confidentiality of security systems the presence of representatives Members of the Information Resources Management Commission, or their delegates, at committee meetings during which information will be reported about audits of the security practices of information technology systems in specific agencies does not waive the confidentiality of the security features of the systems under G.S. 132-6.1(c). See opinion of Attorney General to Beverly Eaves Perdue, Lieutenant Governor, 2002 N.C.A.G. 28 (11/8/02).