CHAPTER 139
FORMERLY
HOUSE SUBSTITUTE NO. 1 FOR
HOUSE BILL NO. 55
AS AMENDED BY
HOUSE AMENDMENT NO. 1
AN ACT TO AMEND TITLE 9 OF THE DELAWARE CODE RELATING TO THE COUNTY AUDITOR.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :
WHEREAS, the General Assembly finds and declares that audits of local government programs, functions, activities, and organizations are an integral part of the administrative process of local government and are essential in providing accountability for its performance; and
WHEREAS, the functions of an auditor are particularly important in the public sector, as the checks on poor performance traditionally found in the private sector are not a major threat to public sector organizations; and
WHEREAS, government officials throughout the country have realized that an independent oversight function is particularly important because of the unique relationship that government auditors have with their primary stakeholders, i.e. the taxpayers; and
WHEREAS, the taxpayers of the State of Delaware deserve to know that their scarce tax dollars are being protected by audit functions which operate with reasonable independence from the supervisory chain and that those audit functions ensure compliance with a generally accepted norm for governmental accounting practices; and
WHEREAS, while the Delaware Code currently does provide for a County Auditor for New Castle County who must be properly qualified and carry out audits of local accounts, books, and records, it is unclear as to the level of independence of its functions or whether its audits ensure compliance with a generally accepted norm for governmental accounting practices;
NOW, THERFORE:
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Chapter 13, Title 9 of the Delaware Code, by striking § 1401 through § 1409 thereof in their entirety.
Section 2. Amend Title 9 of the Delaware Code by inserting therein a new Chapter as follows:
“CHAPTER 14. THE COUNTY AUDITOR.
§ 1401. Selection, qualification, term, compensation and removal of the County Auditor
(a) There is established, within the Government of New Castle County, the Office of the County Auditor the administrator and head of which shall be known as the County Auditor. The County Auditor shall be appointed by the County Council and may be removed at will by an affirmative vote of 2/3 of the members thereof.
(b) The County Auditor shall be a certified public accountant and shall hold a bachelor’s degree in accounting or related field of study. The functions and duties of the County Auditor shall be conducted in accordance with the most recent General Auditing Standards promulgated by the United States Accountability Office.
(c) The annual salary of the County Auditor shall be determined by the County Council after consideration of the Audit Committee’s recommendation.
(d) The County Auditor shall not be actively involved in partisan political activities or the political affairs of New Castle County. The term "partisan-political activity" shall include but is not limited to, running for public office, serving as a party committee-person, working at a polling place on Election Day, performing volunteer work in a political campaign, soliciting contributions for political campaigns, and soliciting contributions for a political action committee or organization, but shall not include registering and voting in any election, expressing an opinion as an individual privately and publicly on political subjects and candidates, or involvement in non-partisan or public community organizations or professional groups.
§ 1402. Budget; Assistant County Auditors; Contract Auditors.
(a) County Council by ordinance may establish positions to serve as assistants to the County Auditor after consideration of the Audit Committee’s recommendation.
(b) Notwithstanding any other provision of law governing the procurement of services by County Government or the officers thereof to the contrary, the County Auditor may, subject to available resources, freely obtain the services of Certified Public Accountants, qualified management consultants, or other professional experts necessary to perform his or her duties; provided, however, that no conflicts of interest exist between or among those with whom the County Auditor contracts and any area of county government that might hinder the performance of the services sought.
(c) Any Assistant County Auditor who shall perform any auditing duties shall be a qualified accountant, a graduate of a college or university with a degree in accounting, or shall have otherwise received such training and experience as to provide an equivalent level of expertise with auditing experience preferred. Other assistants shall be qualified as set forth in job descriptions approved by County Council after consideration of the Audit Committee’s recommendation.
§ 1403. Certification of Annual Financial Report of Chief Financial Officer.
(a) The County Auditor shall have a qualified accounting firm conduct an audit of the annual financial report of the Chief Financial Officer and append thereto a certificate which shall state whether, in the opinion of the accounting firm, the financial statements in the financial report:
(1) contain a proper record of the County’s financial transactions for the year;
(2) properly reflect the current assets, liabilities, and funded debt of the County as of the close of the fiscal year; and
(3) comply with Generally Accepted Principals of Governmental Accounting.
(a) Should there be any qualifications or exceptions to any portion of the annual financial report of the Chief Financial Officer, they shall be stated by the accounting firm in an explicit manner in the certification appended to the audit conducted pursuant to subsection (a) of this section.
(b) A final draft of the report of qualifications or exceptions shall be provided to the Chief Financial Officer for review and comment regarding factual content before it is finalized and released. The Chief Financial Officer may respond in writing and specify agreement or disagreement with the findings and the reasons therefore. Written responses must be received within thirty (30) days from the date of the final draft and shall be included in the final report. Alternatively, a revised final report may be issued incorporating suggested and accepted corrections. The absence of response within thirty (30) days will be noted in the final report.
§ 1404. Annual Audits and the Audit Committee.
(a) The County Auditor shall oversee, coordinate, and monitor an annual audit of the accounts, books, and records of all offices, departments, and boards that reflect transactions involving financial activities and financial affairs of the County.
(b) At the beginning of each calendar year, the County Council shall establish, and appoint all members to, an Audit Committee which shall:
(1) Consist of five (5) members all of whom possess the technical skills necessary to oversee the technical and complex financial reporting and audit process.
(2) Meet at least on a quarterly basis to consult with the County Auditor regarding:
a. the establishment of an audit schedule for the coming year,
b. the progress of ongoing audits,
c. any necessary follow-ups to audits completed during the previous 12 months,
d. and any special needs expressed by the auditor or the Chief Financial Officer;
(1) Work throughout the year to assure the maximum coordination between and among the work of the County Auditor and the needs of the Chief Financial Officer, the County Council, and any external auditors who may have been employed under the authority of the County Auditor;
(2) Recommend to the County Council a salary schedule for the County Auditor.
(a) Annual audits may either be complete, or in such lesser degree as the County Auditor shall find acceptable to enable him or her to express opinions concerning whether such transactions are in compliance with Generally Accepted Principals of Governmental Accounting as well as the appropriate ordinances, rules and regulations of the County Council, and other laws governing such transactions.
(b) Annual audits shall be completed, and a report thereupon produced, not later than the end of the sixth month following the completion of the fiscal year in which such transactions shall have occurred. Prior to the issuance of the audit report pursuant to this subsection, a final draft thereof shall be submitted to the audit committee for review and comment regarding factual content before it is released. The County Auditor shall make the final decision regarding all matters, facts, and opinions contained in the report.
(c) A final draft of the report shall be provided to the head of any affected office, department or board, the County Council President, the County Executive, the Chief Financial Officer, and the Audit Committee for review and comment regarding factual content before the report is finalized and released. Written responses must be received within thirty (30) days from the date of the final draft and shall be included in the final report. Alternatively, a revised final report may be issued incorporating suggested and accepted corrections. The absence of response within thirty (30) days will be noted in the final report.
§ 1405. Reports of the County Auditor; audit follow up.
(a) Copies of the reports concerning each audit or examination shall immediately upon preparation thereof be filed with the Audit Committee, the County Executive, the Chief Administrative Officer, the Chief Financial Officer and the Clerk of County Council, except as set forth in (b) below.
(b) If during an audit the County Auditor shall at any time discover an unauthorized, illegal, irregular, or unsound financial practice that could affect the governmental entity, the County Auditor shall report the financial irregularities to the County Council, the County Executive, the Chief Administrative Officer and the Audit Committee. If a member of Council, the County Executive or the Chief Administrative Officer is believed to be a party to an unauthorized, illegal, irregular or unsound financial practice, the County Auditor shall report the acts directly to the Audit Committee or the head of the branch of government unaffected by the report if a member of the Audit Committee is believed to be a party to the suspected irregularity. If it appears that the act is criminal in nature, the County Auditor shall immediately notify the County Attorney in addition to those previously cited; if an Ethics Code violation is suspected, the County Auditor shall immediately notify the Ethics Commission.
(c) The County Auditor, after consultation with the Audit Committee, shall from time to time make such recommendations as he or she shall deem appropriate to any office, department or board for improvement in the management of the financial affairs of the County. Copies of such recommendations shall be filed with the County Executive and the County Council.
(d) The County Auditor shall follow-up on audit recommendations as possible to determine whether corrective measures have been implemented and may request period status reports regarding actions taken to address deficiencies and recommendations. Such will be reviewed by the Audit Committee for report to Council and the County Executive.
§ 1406. Assistance to County Council
The County Auditor shall provide such assistance to the County Council as the County Council may require of him or her through request of a majority of Council or in the job description in any matter before it, including but not limited to any measure relating to the appropriation of funds by the County Council.
§ 1407. Audit schedule; special examinations or audits; risk assessment review.
(a) Prior to the beginning of each fiscal year, the County Auditor shall submit an annual audit plan to the Audit Committee for review and comment. The plan shall include the proposed schedule for auditing departments, offices, boards, activities, agencies and subcontractors for the period. The plan and schedule may be amended during the period after consultation with the Audit Committee. The schedule and any amendments shall be provided to the Council and the County Executive.
(b) When directed by the County Executive, County Council, or the County Auditor’s own initiative, and upon approval of the audit committee, the County Auditor may make, or may cause to be made by a qualified accounting firm, a special examination of any financial transaction or matter if he or she has reasonable grounds to believe that any unauthorized, illegal, irregular, or unsound practice is being employed in association with the transaction or matter. The annual audit plan shall be amended to include any special audits that are approved by the Audit Committee. The revised audit plan shall be distributed to Council, the County Executive and the Chief Administrative Officer unless the Audit Committee determines that distribution to one of these entities would jeopardize the effectiveness of the special audit. If the County Auditor receives information regarding alleged financial improprieties and believes that disclosure to the Audit Committee would jeopardize or compromise the audit, the County Auditor may process but must advise the Audit Committee of the time commitment; the schedule still must be revised to reflect the addition of a confidential County Auditor-initiated audit and the revised schedule must reflect appropriate time parameters.
(c) The County Auditor will perform or have performed an annual risk assessment of the County focusing on key financial and business risks, controls, key performance indicators, and critical success factors as deemed appropriate by the Audit Committee and/or County Council.
§ 1408. Access to records, property and employees; required contract provisions for access.
(a) All officers and employees of New Castle County, and all departments, offices, boards, activities, subcontractors, agencies, and instrumentalities thereof which are the subject of an audit by the County Auditor, shall furnish the County Auditor with unrestricted access to employees, information, and records (including automated data) within their custody regarding powers, duties, activities, organization, property, financial transactions, contracts, and methods of business required by the Auditor to conduct an audit or otherwise perform his or her audit duties. In addition, the County Auditor shall be given complete access to all property, equipment, facilities, data, and documents within the custody or control of the person or entity subject to the audit. The County Auditor may photograph, photocopy, or otherwise record anything he or she feels is necessary to accomplish the purposes of the audit. All contracts with outside contractors and subcontractors shall provide for access by the County Auditor to all financial and performance related records, property and equipment purchased in whole or part with County funds.
(b) If the County Auditor is at any time denied or restricted in his or her access to information described in subsection (a) of this section, the County Auditor may initiate a search to be made and exhibits to be taken from any book, paper, or record of or relating to any officer, employee, department, office, board, activity, subcontractor, agency, or instrumentality which is the subject of an audit by the County Auditor, except as otherwise provided by statute.
(c) The County Auditor shall not publicly disclose any information received during an audit that is considered confidential or proprietary in nature, or has been specifically identified as such by a federal, state, or local law or regulation. Information received by the County Auditor during an audit, to the extent it is not included or referenced in the report prepared by the County Auditor pursuant to § 1405 of this title, shall be exempt from public disclosure under the Freedom of Information Act (29 Del. C. Chap. 100), unless such information was subject to public disclosure in its original form.
(d) For the purposes of this section only, ‘County Auditor’ includes any Assistant County Auditor, employee of the County Auditor, or agent of the County Auditor who is undertaking an audit at the direction or under the authority of the County Auditor.
§ 1409. Annual External Audit.
At the close of each fiscal year, the County Council, in accordance with County procurement laws and upon advice from the Audit Committee, shall cause a person or persons, certified by the laws of the State to practice accounting and not an employee of the County, to make a post-audit of the financial affairs of the offices, agencies, departments and boards of the County and of the procedures and practices of the County Auditor.
§ 1410. Quality Assurance Reviews.
(a) The Audit Committee shall conduct quality assurance review of the activities and functions of the Office of the County Auditor. Such review shall take place every three (3) years from the date of the last such quality assurance review.
(b) The Audit Committee shall utilize guidelines endorsed by the National Association of Local Government Auditors in conducting the quality assurance review. In addition to those guidelines, the Audit Committee shall determine whether the activities and functions of the Office of the County Auditor are undertaken in compliance with the most recent General Auditing Standards promulgated by the United States Accountability Office and shall examine functional standards employed by the Office, including:
(1) General standards such as staff qualifications, due professional care, and overall quality assurance;
(2) Fieldwork standards such as planning, supervision, and audit evidence; and
(3) Reporting standards such as report content, presentation, and timeliness.
(a) The Audit Committee shall complete its review within a time frame established by the County Council and shall prepare a report of its findings and recommendations no later than the end of the sixth month following the completion of the quality assurance review.
(b) A copy of the Audit Committee’s Quality Review Report shall be furnished to each member of County Council and to the County Executive and shall be made available to the public.
(c) The County Council shall reimburse the Committee for reasonable costs incurred in the conduct of the Quality Review and the preparation of the Quality Review Report.”.
Section 3. The provisions of this Act shall become effective on January 1, 2006.
Section 4. If any provision of this Act or the application thereof to any person, thing or circumstances, is held invalid, such invalidity shall not affect the provisions of this Act that can be given effect without the invalid provisions or application, and to this end the provisions of this Act are declared to be severable.