PRINTER'S NO. 1594
No. 1365 Session of 1975
INTRODUCED BY SHELHAMER, WEIDNER, YAHNER, FRYER AND R. W. WILT,
JUNE 3, 1975
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, JUNE 4, 1975
AN ACT
1 Providing for the appointment of an independent auditor in
2 incorporated towns and establishing his powers and duties.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Appointment of an Independent Auditor.--Any
6 incorporated town may provide by ordinance passed by a two-
7 thirds vote of the entire number of councilmen elected, for the
8 appointment of an independent auditor who shall be a certified
9 public accountant, registered in Pennsylvania, a firm of
10 certified public accountants so registered or a competent public
11 accountant or a competent firm of public accountants. Where such
12 an ordinance has been so adopted, an independent auditor shall
13 be appointed, annually, by resolution before the close of a
14 fiscal year, to make an independent examination of the
15 accounting records of the town for such fiscal year and such
16 independent auditor shall also perform the other duties and
17 exercise the powers as conferred upon him by this act. When an
18 independent auditor is appointed as herein provided, the office
1 of elected auditor is thereby abolished although the auditors
2 then in office shall continue to hold their office during the
3 term for which elected and the auditors shall not audit, settle,
4 or adjust the accounts audited by such independent auditor but
5 shall perform the other duties of their office.
6 Whenever any town has provided by ordinance for the audit of
7 its accounts by an appointed auditor, the town shall have the
8 right at any time to repeal said ordinance, and thereupon the
9 office of appointed auditor shall be abolished, as of the date
10 set in such ordinance and said town shall have the further right
11 at the next municipal election following the repeal of said
12 ordinance to elect three auditors, one for a term of two years,
13 one for a term of four years, and one for a term of six years,
14 from the first Monday of January succeeding such election, which
15 auditors so elected shall succeed the appointed auditor and
16 shall have and possess all the powers and perform all the duties
17 provided for by law for elected town auditors. If at any time
18 after the effective date of any such ordinance abolishing the
19 office of appointed auditor, there shall be a vacancy in the
20 office of elected auditor, council shall fill such vacancies in
21 the manner prescribed by law.
22 Section 2. General Powers and Duties of Independent
23 Auditor.--(a) The independent auditor shall annually examine,
24 audit and settle all accounts whatsoever in which the town is
25 concerned and the audit shall consist of an examination in
26 accordance with generally accepted auditing standards and shall
27 include such tests of the accounting records and such other
28 auditing procedures as he considers necessary in the
29 circumstances.
30 (b) The independent auditor shall audit the accounting
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1 records of the town for the fiscal year and shall prepare a
2 report on the examination which shall set forth:
3 (1) the scope of his examination;
4 (2) his opinion of the fairness of the presentation of the
5 financial statement of the town which shall show a complete
6 statement of the financial condition of the town, giving in
7 detail the actual indebtedness, the amount of the funded debt,
8 the amount of the floating debt thereof, the valuation of
9 taxable property therein, the assets of the town with the
10 character and value thereof, and the date of maturity of the
11 respective forms of funded debt thereof; and
12 (3) the amount of any balance or shortage or any expenditure
13 of any kind, or made in a manner, prohibited or not authorized
14 by a statute which came to his attention during the course of
15 his examination and which, in his opinion, causes a financial
16 loss to the town which loss is material in relation to the
17 receipts and disbursements of the town, and such amount shall be
18 a surcharge against any officer against whom such balance or
19 shortage shall appear.
20 (c) The amount of any balance or shortage, or of any
21 expenditure of a kind, or made in a manner, prohibited or not
22 authorized by statute, which causes a financial loss to the
23 town, shall be a surcharge against any officer against whom such
24 balance or shortage shall appear, or who by vote, act, or
25 neglect, has permitted or approved such expenditure, but no
26 elected or appointed official of a town shall be surcharged for
27 any act, error or omission in excess of the actual financial
28 loss sustained by the town, and any surcharge shall take into
29 consideration as its basis the results of such act, error or
30 omission and the results had the procedure been strictly
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1 according to law. The provisions hereof limiting the amount of
2 any surcharge shall not apply to cases involving fraud or
3 collusion on the part of officers, nor to any penalty enuring to
4 the benefit or payable to the Commonwealth.
5 (d) In any matter involving any financial transaction, any
6 official knowingly and wilfully acting contrary to law, or,
7 knowingly and wilfully failing to act as required by law, is
8 guilty of a misdemeanor, and on conviction thereof, may be
9 sentenced to a fine not exceeding $100, and his office may be
10 forthwith declared vacant as may seem meet and just to the court
11 passing sentence.
12 (e) It shall be the duty of the independent auditor:
13 (1) To file a copy of the report with the secretary of the
14 town and the clerk of the court of the county and the Department
15 of Community Affairs not later than 90 days after the close of
16 the fiscal year.
17 (2) To publish within ten days thereafter, by advertisement
18 in at least one newspaper of general circulation in the town, a
19 concise financial statement setting forth the balance in the
20 treasury at the beginning of the fiscal year, all revenues
21 received during the fiscal year by major classifications, all
22 expenditures made during the fiscal year by major functions, and
23 the current resources and liabilities of the town at the end of
24 the fiscal year, the gross liability and net debt of the town,
25 the amount of the assessed valuation of the town, the assets of
26 the town with the character and value thereof, the date of the
27 last maturity of the respective forms of funded debt, and the
28 assets in each sinking fund.
29 (f) The compensation of the independent auditor shall be
30 determined by council and paid out of town funds.
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1 Section 3. Appeals from Report of Independent Auditor.--
2 Appeals may be taken from the settlement and audit of the
3 independent auditor as shown in the independent auditor's report
4 to the court of common pleas of the county, by the same persons,
5 in the same manner, within the same time, subject to the same
6 conditions and procedure, and with like effect in every respect,
7 as by law provided in the cases of appeals from the settlement
8 and audit of elected auditors.
9 Section 4. Balances Due to be Entered as Judgments.--Any
10 balance, in any report of the independent auditor, against any
11 officer of the town, shall constitute a surcharge against such
12 officer, as fully as if expressly stated in said report to be a
13 surcharge, and the amount of any such balance, and of any
14 express surcharge, shall, if no appeal is taken, or after an
15 appeal has been finally determined, be entered by the
16 prothonotary as a judgment, against such officer and in favor of
17 the town, the clerk of the court shall certify the amount of
18 every balance or surcharge, contained in any such report, from
19 which no appeal has been taken within time herein provided, to
20 the court of common pleas, for entry thereof by the prothonotary
21 as a judgment. Any taxpayer of the town may enforce the
22 collection thereof, for the benefit of the town, by action or
23 execution, upon filing in the court of common pleas a bond, in
24 the sum of $500 with one or more sureties, conditioned to
25 indemnify the town from all costs which may accrue in the
26 proceedings undertaken by such taxpayer, subject, however, to
27 all rights of appeal from the report of independent auditors
28 granted by this act. If any person or persons have been, or
29 shall be, surcharged for an illegal purchase, and no fraud or
30 collusion is shown and the surcharge is paid to the town, then
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1 the articles purchased shall become the property of the person
2 or persons surcharged.
3 Section 5. Employment of Attorney, Compelling Attendance of
4 Witnesses, Administration of Oath, Penalties and Settlement of
5 Accounts.--(a) The independent auditor, with the consent of the
6 town council, may employ an attorney whenever the same is deemed
7 advisable by him and the compensation of such attorney shall be
8 determined by the town council and shall be payable by the town
9 out of the general funds of the town.
10 (b) The independent auditor of each town shall have power to
11 issue subpoenas to obtain the attendance of the officers whose
12 accounts he is required to adjust, their executors and
13 administrators, and of any persons whom it may be necessary to
14 examine as witnesses, and to compel their attendance. If any
15 person shall refuse or neglect to appear or testify, the
16 independent auditor shall petition the court of common pleas of
17 the county to issue a subpoena to such person and to require him
18 to appear and to testify before the court. The court shall issue
19 such subpoena if it deems the testimony relevant to the issue.
20 (c) The independent auditor shall have power to administer
21 oaths and affirmations to all persons brought or appearing
22 before him, whether accountants, witnesses, or otherwise. All
23 persons guilty of swearing or affirming falsely on such
24 examination shall be liable to the pains and penalties of
25 perjury.
26 (d) If any person, appearing before such independent auditor
27 for examination, shall refuse to take such oath or affirmation,
28 or, after having been sworn or affirmed, shall refuse to make
29 answer to such questions as shall be put to him by the
30 independent auditor touching the accounts or the official
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1 conduct of such public officers or any of them, then the
2 independent auditor may petition the court to issue its subpoena
3 as hereinbefore provided.
4 (e) Witnesses, other than officers of the town, attending
5 before the independent auditor and persons or officers serving
6 subpoenas shall be paid out of the town treasury, upon orders
7 drawn on the town treasury, pursuant to authorization by the
8 independent auditor, the same fees as are payable for rendering
9 similar services in civil proceedings before a district justice,
10 and the amount thereof shall be made a part of the charge
11 against any officer who shall be charged by the independent
12 auditor with any balance: Provided, that any such costs shall
13 have been incurred in establishing said balance. Upon collection
14 of any such costs from any officer, they shall be repaid into
15 the town treasury.
16 (f) If any person in possession of books, vouchers, or
17 papers, relative to public accounts before independent auditor,
18 shall refuse to produce the same or, if any officer whose
19 accounts are to be settled and adjusted by such independent
20 auditor refuses to attend or submit to examination as is
21 hereinbefore directed, the independent auditor may proceed, by
22 the examination of witnesses and other evidence, to ascertain
23 and settle as near as may be, the amount of public money
24 received by such officer and its application to public purposes
25 or otherwise.
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