Senate Bill No. 561–Committee on Government Affairs

 

(On Behalf of Department of Administration—Internal Audits)

 

March 26, 2001

____________

 

Referred to Committee on Government Affairs

 

SUMMARY—Makes various changes concerning division of internal audits of department of administration. (BDR 31‑392)

 

FISCAL NOTE:    Effect on Local Government: No.

                                 Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to public financial administration; requiring the chief of the division of internal audits of the department of administration to appoint a manager of internal controls; establishing the qualifications of the manager of internal controls; exempting certain governmental agencies from certain provisions concerning audits, reviews, training and assistance provided by the division of internal audits; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1.  Chapter 353A of NRS is hereby amended by adding

1-2  thereto a new section to read as follows:

1-3    1.  The manager of internal controls appointed pursuant to NRS

1-4  353A.045 must:

1-5    (a) Be a certified public accountant licensed by this state or a public

1-6  accountant qualified pursuant to chapter 628 of NRS to practice public

1-7  accounting in this state; and

1-8    (b) Have at least 4 years of progressively responsible experience in

1-9  professional auditing and performing internal audits or postaudits. The

1-10  experience must include, without limitation, the performance of audits of

1-11  governmental entities or of private business organizations, whether or

1-12  not organized for profit.

1-13    2.  The manager of internal controls is in the unclassified service of

1-14  this state and serves at the pleasure of the chief.

1-15    3.  The chief shall establish the powers and duties of the manager of

1-16  internal controls.

 

 

2-1    Sec. 2.  NRS 353A.020 is hereby amended to read as follows:

2-2    353A.020  1.  The director, in consultation with the committee and

2-3  legislative auditor, shall adopt a uniform system of internal accounting and

2-4  administrative control for agencies. The elements of the system must

2-5  include, without limitation:

2-6    (a) A plan of organization which provides for a segregation of duties

2-7  appropriate to safeguard the assets of the agency;

2-8    (b) A plan which limits access to assets of the agency to persons who

2-9  need the assets to perform their assigned duties;

2-10    (c) Procedures for authorizations and recordkeeping which effectively

2-11  control accounting of assets, liabilities, revenues and expenses;

2-12    (d) A system of practices to be followed in the performance of the

2-13  duties and functions of each agency; and

2-14    (e) An effective system of internal review.

2-15    2.  The director, in consultation with the committee and legislative

2-16  auditor, may modify the system whenever he considers it necessary.

2-17    3.  Each agency shall develop written procedures to carry out the

2-18  system of internal accounting and administrative control adopted pursuant

2-19  to this section.

2-20    4.  For the purposes of this section, “agency” does not include:

2-21    (a) A board [or commission] created by the provisions of chapters 623

2-22  to [625,] 625A, inclusive, 628 , 630 to 640A, inclusive, 641 to 644,

2-23  inclusive, 654 and 656 of NRS.

2-24    (b) The University and Community College System of Nevada.

2-25    (c) The public employees’ retirement system.

2-26    (d) The housing division of the department of business and industry.

2-27    (e) The Colorado River Commission.

2-28    Sec. 3.  NRS 353A.025 is hereby amended to read as follows:

2-29    353A.025  1.  The head of each agency shall periodically review the

2-30  agency’s system of internal accounting and administrative control to

2-31  determine whether it is in compliance with the uniform system of internal

2-32  accounting and administrative control for agencies adopted pursuant to

2-33  subsection 1 of NRS 353A.020.

2-34    2.  On or before July 1 of each even-numbered year, the head of each

2-35  agency shall report to the director whether the agency’s system of internal

2-36  accounting and administrative control is in compliance with the uniform

2-37  system adopted pursuant to subsection 1 of NRS 353A.020. The reports

2-38  must be made available for inspection by the members of the legislature.

2-39    3.  For the purposes of this section, “agency” does not include:

2-40    (a) A board [or commission] created by the provisions of chapters 623

2-41  to [625,] 625A, inclusive, 628 , 630 to 640A, inclusive, 641 to 644,

2-42  inclusive, 654 and 656 of NRS.

2-43    (b) The University and Community College System of Nevada.

2-44    (c) The public employees’ retirement system.

2-45    (d) The housing division of the department of business and industry.

2-46    (e) The Colorado River Commission.

2-47    4.  The director shall, on or before the first Monday in February of each

2-48  odd-numbered year, submit a report on the status of internal accounting

2-49  and administrative controls in agencies to the:

3-1    (a) Director of the legislative counsel bureau for transmittal to the:

3-2       (1) Senate standing committee on finance; and

3-3       (2) Assembly standing committee on ways and means;

3-4    (b) Governor; and

3-5    (c) Legislative auditor.

3-6    5.  The report submitted by the director pursuant to subsection 4 must

3-7  include, without limitation:

3-8    (a) The identification of each agency that has not complied with the

3-9  requirements of subsections 1 and 2;

3-10    (b) The identification of each agency that does not have an effective

3-11  method for reviewing its system of internal accounting and administrative

3-12  control; and

3-13    (c) The identification of each agency that has weaknesses in its system

3-14  of internal accounting and administrative control, and the extent and types

3-15  of such weaknesses.

3-16    Sec. 4.  NRS 353A.031 is hereby amended to read as follows:

3-17    353A.031  As used in NRS 353A.031 to 353A.100, inclusive, and

3-18  section 1 of this act, unless the context otherwise requires, the words and

3-19  terms defined in NRS 353A.034 and 353A.036 have the meanings ascribed

3-20  to them in those sections.

3-21    Sec. 5.  NRS 353A.045 is hereby amended to read as follows:

3-22    353A.045  1.  The chief [of the division shall:

3-23    1.] shall:

3-24    (a) Report to the director.

3-25    [2.] (b) Develop long-term and annual work plans to be based on the

3-26  results of periodic documented risk assessments. The annual work plan

3-27  must:

3-28       [(a)] (1) List the agencies to which the division will provide training

3-29  and assistance; and

3-30       [(b)] (2) Be submitted to the director for approval.

3-31    [3.] (c) Provide a copy of the approved annual work plan to the

3-32  legislative auditor.

3-33    [4.] (d) In consultation with the director, prepare a plan for auditing

3-34  executive branch agencies for each fiscal year and present the plan to the

3-35  committee for its review and approval. Each plan for auditing must:

3-36       [(a)] (1) State the agencies which will be audited, the proposed scope

3-37  and assignment of those audits and the related resources which will be used

3-38  for those audits; and

3-39       [(b)] (2) Ensure that the internal accounting, administrative controls

3-40  and financial management of each agency are reviewed periodically.

3-41    [5.] (e) Perform the audits of the programs and activities of the

3-42  agencies in accordance with the plan approved pursuant to subsection 5 of

3-43  NRS 353A.038 and prepare audit reports of his findings.

3-44    [6.] (f) Review each agency that is audited pursuant to [subsection 5]

3-45  paragraph (e) and advise those agencies concerning internal accounting,

3-46  administrative controls and financial management.

3-47    [7.] (g) Submit to each agency that is audited pursuant to [subsection 5]

3-48  paragraph (e) analyses, appraisals and recommendations concerning:

4-1       [(a)] (1) The adequacy of the internal accounting and administrative

4-2  controls of the agency; and

4-3       [(b)] (2) The efficiency and effectiveness of the management of the

4-4  agency.

4-5    [8.] (h) Report any possible abuses, illegal actions, errors, omissions

4-6  and conflicts of interest of which the division becomes aware during the

4-7  performance of an audit.

4-8    [9.] (i) Adopt the standards of the Institute of Internal Auditors for

4-9  conducting and reporting on audits.

4-10    [10.] (j) Consult with the legislative auditor concerning the plan for

4-11  auditing and the scope of audits to avoid duplication of effort and undue

4-12  disruption of the functions of agencies that are audited pursuant to

4-13  [subsection 5.] paragraph (e).

4-14    (k) Appoint a manager of internal controls.

4-15    2.  For the purposes of this section, “agency” does not include:

4-16    (a) A board created by the provisions of chapters 623 to 625A,

4-17  inclusive, 628, 630 to 640A, inclusive, 641 to 644, inclusive, 654 and 656

4-18  of NRS.

4-19    (b) The University and Community College System of Nevada.

4-20    (c) The public employees’ retirement system.

4-21    (d) The housing division of the department of business and industry.

4-22    (e) The Colorado River Commission.

4-23    Sec. 6.  This act becomes effective on July 1, 2001.

 

4-24  H