H.B. 471
GENERAL ASSEMBLY OF NORTH CAROLINA
Mar 23, 2023
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH40261-MU-26
Short Title: State Auditor/Info. Systems/Corrective Action. (Public)
Sponsors: Representative Cleveland.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO PROVIDE THAT THE STATE AUDITOR MAY AUDIT INFORMATION
3 SYSTEMS, TO DIRECT THE STATE AUDITOR TO PROVIDE RECOMMENDATIONS
4 ON CORRECTIVE ACTION TO UNDERPERFORMING STATE AGENCIES, AND TO
5 MAKE OTHER AMENDMENTS RELATING TO THE OFFICE OF THE STATE
6 AUDITOR.
7 The General Assembly of North Carolina enacts:
8 SECTION 1. G.S. 93B-4 reads as rewritten:
9 "§ 93B-4. Audit of Occupational Licensing Boards; occupational licensing boards by the
10 State Auditor; payment of costs.
11 (a) The State Auditor shall audit occupational licensing boards from time to time to
12 ensure their proper operation. The books, records, and operations of each occupational licensing
13 board shall be subject to the oversight of audit by the State Auditor pursuant to Article 5A of
14 Chapter 147 of the General Statutes. In accordance with G.S. 147-64.7(b), the State Auditor may
15 contract with independent professionals to meet the requirements of this section.
16 (b) Each occupational licensing board with a budget of at least fifty thousand dollars
17 ($50,000) shall conduct an annual financial audit of its operations and may provide a copy to the
18 State Auditor."
19 SECTION 2. G.S. 147-64.4 reads as rewritten:
20 "§ 147-64.4. Definitions.
21 The following definitions apply in this Article:
22 …
23 (2a) Audit. – An independent review or examination of State agency organizations,
24 programs, activities, and functions. The purpose of an audit is to help ensure
25 full accountability and assist State agency officials and employees in carrying
26 out their responsibilities. The elements of an audit are as follows:
27 …
28 c1. Information systems: to evaluate risks relevant to information systems
29 assets and assess controls in place to reduce or mitigate these risks; to
30 verify systems and applications are appropriate for agency needs, are
31 efficient, and are adequately controlled to ensure valid, reliable, and
32 timely operations.
33 d. An audit may include all three four elements or only one or two. fewer.
34 It is not intended or desirable that every audit include all three. four.
35 Economy and efficiency and program result audits should shall be
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 General Assembly Of North Carolina Session 2023
1 selected when their use will meet the needs of expected users of audit
2 results.
3 …
4 (4) State agency. – Any department, political subdivision, institution, board,
5 commission, committee, division, bureau, officer, official official, or any
6 other entity for which the State has oversight responsibility, including but not
7 limited to, any university, mental or specialty hospital, community college, or
8 clerk of court."
9 SECTION 3. G.S. 147-64.6 reads as rewritten:
10 "§ 147-64.6. Duties and responsibilities.
11 (a) General Duty. – It is the policy of the General Assembly to provide for the auditing
12 and investigation of State agencies by the impartial, independent State Auditor.
13 (b) Areas of Examination. – The duties of the Auditor are independently to examine into
14 and make findings of fact on whether State agencies have done or are doing all of the following:
15 …
16 (6a) Are developing, maintaining, and operating information systems, including
17 hardware, software, network communications, and data, in compliance with
18 applicable laws, rules, and best practices and maintaining appropriate levels
19 of data confidentiality, integrity, and availability within those systems.
20 …
21 (c) Responsibilities. – The Auditor is responsible for the following acts and activities:
22 …
23 (5) The Auditor may contract with federal audit agencies, or any governmental
24 agency, on a cost reimbursable basis, for the Auditor to perform audits of
25 federal grants and programs administered by State agencies in accordance
26 with agreements negotiated between the Auditor and the contracting federal
27 audit agencies or any governmental agency. In instances where the grantee
28 State agency subgrants these federal funds to local governments, regional
29 councils of government, and other local groups or private or semiprivate
30 institutions or agencies, the Auditor may examine the books and records of
31 these subgrantees to the extent necessary to determine eligibility and proper
32 use in accordance with State and federal laws.
33 The Auditor shall charge and collect from the contracting federal audit
34 agencies, or any governmental agencies, the actual cost of all the audits of the
35 grants and programs contracted by the Auditor to do. Amounts collected under
36 these arrangements shall be deposited in the State Treasury and be budgeted
37 in the Department of State Auditor and shall be available to hire sufficient
38 personnel to perform these contracted audits and to pay for related travel,
39 supplies, and other necessary expenses.
40 …
41 (14) The Auditor shall notify the General Assembly, the Governor, the Chief
42 Executive Officer of each agency audited, and other persons as the Auditor
43 deems appropriate that an audit report has been published, its subject and title,
44 and the locations, including State libraries, at which the report is available.
45 The Auditor shall then distribute copies of the report only to those who request
46 a report. The copies shall be in written or electronic form, as requested. The
47 Auditor shall also file a an electronic copy of the audit report in the Auditor's
48 office, which will office that shall be a permanent public record. In addition,
49 the Auditor may publish on his or her Web site website any reports from audits
50 of State agencies not directly conducted by the Auditor. If the report is the
51 result of an investigation of a unit of local government subject to Article 3 of
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1 Chapter 159 of the General Statutes, the Auditor shall notify the Local
2 Government Commission that a report has been published with respect to that
3 unit of local government. Nothing in this subsection shall be construed as
4 authorizing or permitting authorizes the publication of information whose
5 disclosure is otherwise prohibited by law.
6 …
7 (d) Reports and Work Papers. –
8 (1) The Auditor shall maintain for 10 years a complete file of all audit reports and
9 reports of other examinations, investigations, surveys, and reviews issued
10 under the Auditor's authority. Audit reports, work papers papers, and other
11 evidence and related supportive material directly pertaining to the work of the
12 Auditor's office shall be retained according to an agreement between the
13 Auditor and State Archives.
14 (2) Work papers and related supportive material maintained by the Auditor's
15 office in its audit files are not public records under Chapter 132 of the General
16 Statutes and shall be kept confidential.
17 (3) To promote intergovernmental cooperation and avoid unnecessary duplication
18 of audit effort, and notwithstanding the provisions of Notwithstanding
19 G.S. 126-24, pertinent work papers and other supportive material related to an
20 audit or investigation made pursuant to this section may be, at the discretion
21 of the Auditor and unless otherwise prohibited by law, made available for
22 inspection by duly authorized representatives of the State and federal
23 government who desire access to and inspection of the records in connection
24 with some matter officially before them, including criminal investigations.
25 Except as provided in this section, or upon an order issued in Wake County Superior Court
26 upon 10 days' notice and hearing finding that access is necessary to a proper administration of
27 justice, audit work papers and related supportive material are confidential, including any
28 interpretations, advisory opinions, or other information or materials furnished to or by the State
29 Ethics Commission under this section.
30 …."
31 SECTION 4. Article 5A of Chapter 147 of the General Statutes is amended by
32 adding a new section to read:
33 "§ 147-64.6E. Corrective action.
34 (a) If the Auditor finds that a State agency is not adhering to one of the practices listed in
35 G.S. 147-64.6(b), the Auditor shall include, as part of the audit report, one or more
36 recommendations to the State agency to correct the deficiencies. One year after receiving the
37 recommendations, the State agency shall submit a progress report to the Joint Legislative
38 Oversight Committee on General Government and the Office of the State Auditor so they may
39 determine whether the State agency has made significant progress in correcting the identified
40 deficiencies in a timely manner.
41 (b) If the Joint Legislative Oversight Committee on General Government finds that the
42 State agency has failed to make significant progress in correcting the deficiencies in a timely
43 manner, the Committee may direct the State agency to appear before a legislative committee to
44 provide information regarding the deficiencies and corrective action taken by the State agency."
45 SECTION 5.(a) G.S. 147-64.7A reads as rewritten:
46 "§ 147-64.7A. Obstruction of audit.
47 Any person who shall that (i) willfully make or cause makes or causes to be made to the State
48 Auditor or his the State Auditor's designated representatives any false, misleading, or unfounded
49 report for the purpose of interfering that interferes with the performance of any audit, special
50 review, or investigation, or to hinder or obstruct investigation or (ii) hinders or obstructs the State
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1 Auditor or the State Auditor's designated representatives in the performance of their duties, shall
2 be statutory duties is guilty of a Class 2 misdemeanor."
3 SECTION 5.(b) This section becomes effective December 1, 2023, and applies to
4 offenses committed on or after that date.
5 SECTION 6. Except as otherwise provided, this act becomes effective October 1,
6 2023.
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Statutes affected:
Filed: 93B-4, 147-64.4, 147-64.6, 147-64.7A
Edition 1: 93B-4, 147-64.4, 147-64.6, 147-64.7A
Edition 2: 93B-4, 147-64.4, 147-64.6, 147-64.7A
Edition 3: 93B-4, 147-64.4, 147-64.6, 147-64.7A