PRIOR PRINTER'S NO. 1594 PRINTER'S NO. 1838
No. 1365 Session of 1975
INTRODUCED BY MESSRS. SHELHAMER, WEIDNER, YAHNER, FRYER AND
R. W. WILT, JUNE 3, 1975
AS REPORTED FROM COMMITTEE ON LOCAL GOVERNMENT, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 25, 1975
AN ACT
1 Providing for the appointment of an independent auditor in
2 incorporated towns and establishing his THE powers and duties <--
3 OF THE INDEPENDENT AUDITOR AND ELECTED AUDITORS. <--
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Appointment of an Independent Auditor.--Any
7 incorporated town may provide by ordinance passed by a two-
8 thirds vote of the entire number of councilmen elected, for the
9 appointment of an independent auditor who shall be a certified
10 public accountant, registered in Pennsylvania, a firm of
11 certified public accountants so registered or a competent public
12 accountant or a competent firm of public accountants. Where such
13 an ordinance has been so adopted, an independent auditor shall
14 be appointed, annually, by resolution before the close of a
15 fiscal year, to make an independent examination of the
16 accounting records of the town for such fiscal year and such
17 independent auditor shall also perform the other duties and
18 exercise the powers as conferred upon him by this act. When an
1 independent auditor is appointed as herein provided, the office
2 of elected auditor is thereby abolished although the auditors
3 then in office shall continue to hold their office during the
4 term for which elected and the auditors shall not audit, settle,
5 or adjust the accounts audited by such independent auditor but
6 shall perform the other duties of their office.
7 Whenever any town has provided by ordinance for the audit of
8 its accounts by an appointed auditor, the town shall have the
9 right at any time to repeal said ordinance, and thereupon the
10 office of appointed auditor shall be abolished, as of the date
11 set in such ordinance and said town shall have the further right
12 at the next municipal election following the repeal of said
13 ordinance to elect three auditors, one for a term of two years,
14 one for a term of four years, and one for a term of six years,
15 from the first Monday of January succeeding such election, which
16 auditors so elected shall succeed the appointed auditor and
17 shall have and possess all the powers and perform all the duties
18 provided for by law for elected town auditors. If at any time
19 after the effective date of any such ordinance abolishing the
20 office of appointed auditor, there shall be a vacancy in the
21 office of elected auditor, council shall fill such vacancies in
22 the manner prescribed by law.
23 Section 2. General Powers and Duties of ELECTED AUDITORS AND <--
24 AN Independent Auditor.--(a) The AUDITORS OR THE independent <--
25 auditor shall annually examine, audit and settle all accounts
26 whatsoever in which the town is concerned and the audit OF THE <--
27 INDEPENDENT AUDITOR shall consist of an examination in
28 accordance with generally accepted auditing standards and shall
29 include such tests of the accounting records and such other
30 auditing procedures as he considers necessary in the
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1 circumstances.
2 (b) The AUDITORS OR THE independent auditor shall audit the <--
3 accounting records of the town for the fiscal year and shall
4 prepare a report on the examination which shall set forth:
5 (1) the scope of his THE examination; <--
6 (2) his AN opinion of the fairness of the presentation of <--
7 the financial statement of the town which shall show a complete
8 statement of the financial condition of the town, giving in
9 detail the actual indebtedness, the amount of the funded debt,
10 the amount of the floating debt thereof, the valuation of
11 taxable property therein, the assets of the town with the
12 character and value thereof, and the date of maturity of the
13 respective forms of funded debt thereof; and
14 (3) the amount of any balance or shortage or any expenditure
15 of any kind, or made in a manner, prohibited or not authorized
16 by a statute which came to his THE AUDITORS' attention during <--
17 the course of his THEIR examination and which, in his THE <--
18 AUDITORS' opinion, causes a financial loss to the town which
19 loss is material in relation to the receipts and disbursements
20 of the town, and such amount shall be a surcharge against any
21 officer against whom such balance or shortage shall appear.
22 (c) The amount of any balance or shortage, or of any
23 expenditure of a kind, or made in a manner, prohibited or not
24 authorized by statute, which causes a financial loss to the
25 town, shall be a surcharge against any officer against whom such
26 balance or shortage shall appear, or who by vote, act, or
27 neglect, has permitted or approved such expenditure, but no
28 elected or appointed official of a town shall be surcharged for
29 any act, error or omission in excess of the actual financial
30 loss sustained by the town, and any surcharge shall take into
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1 consideration as its basis the results of such act, error or
2 omission and the results had the procedure been strictly
3 according to law. The provisions hereof limiting the amount of
4 any surcharge shall not apply to cases involving fraud or
5 collusion on the part of officers, nor to any penalty enuring to
6 the benefit or payable to the Commonwealth.
7 (d) In any matter involving any financial transaction, any
8 official knowingly and wilfully acting contrary to law, or,
9 knowingly and wilfully failing to act as required by law, is
10 guilty of a misdemeanor, and on conviction thereof, may be
11 sentenced to a fine not exceeding $100, and his office may be
12 forthwith declared vacant as may seem meet and just to the court
13 passing sentence.
14 (e) It shall be the duty of the independent auditor <--
15 AUDITORS: <--
16 (1) To file a copy of the report with the secretary of the
17 town and the clerk of the court of the county and the Department
18 of Community Affairs not later than 90 days after the close of
19 the fiscal year.
20 (2) To publish within ten days thereafter, by advertisement
21 in at least one newspaper of general circulation in the town, a
22 concise financial statement setting forth the balance in the
23 treasury at the beginning of the fiscal year, all revenues
24 received during the fiscal year by major classifications, all
25 expenditures made during the fiscal year by major functions, and
26 the current resources and liabilities of the town at the end of
27 the fiscal year, the gross liability and net debt of the town,
28 the amount of the assessed valuation of the town, the assets of
29 the town with the character and value thereof, the date of the
30 last maturity of the respective forms of funded debt, and the
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1 assets in each sinking fund.
2 (f) The compensation of the independent auditor AUDITORS <--
3 shall be determined by council and paid out of town funds.
4 Section 3. Appeals from Report of Independent Auditor <--
5 AUDITORS.--Appeals may be taken from the settlement and audit of <--
6 the independent auditor AUDITORS as shown in the independent <--
7 auditor's report to the court of common pleas of the county, by
8 the same persons, in the same manner, within the same time,
9 subject to the same conditions and procedure, and with like
10 effect in every respect, as by law provided in the cases of
11 appeals from the settlement and audit of elected auditors UNDER <--
12 THE PROVISIONS OF THE ACT OF FEBRUARY 1, 1966 (1965 P.L.1656,
13 NO.581), KNOWN AS "THE BOROUGH CODE."
14 Section 4. Balances Due to be Entered as Judgments.--Any
15 balance, in any report of the independent auditor AUDITORS, <--
16 against any officer of the town, shall constitute a surcharge
17 against such officer, as fully as if expressly stated in said
18 report to be a surcharge, and the amount of any such balance,
19 and of any express surcharge, shall, if no appeal is taken, or
20 after an appeal has been finally determined, be entered by the
21 prothonotary as a judgment, against such officer and in favor of
22 the town, the clerk of the court shall certify the amount of
23 every balance or surcharge, contained in any such report, from
24 which no appeal has been taken within time herein provided, to
25 the court of common pleas, for entry thereof by the prothonotary
26 as a judgment. Any taxpayer of the town may enforce the
27 collection thereof, for the benefit of the town, by action or
28 execution, upon filing in the court of common pleas a bond, in
29 the sum of $500 with one or more sureties, conditioned to
30 indemnify the town from all costs which may accrue in the
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1 proceedings undertaken by such taxpayer, subject, however, to
2 all rights of appeal from the report of independent auditors <--
3 granted by this act. If any person or persons have been, or
4 shall be, surcharged for an illegal purchase, and no fraud or
5 collusion is shown and the surcharge is paid to the town, then
6 the articles purchased shall become the property of the person
7 or persons surcharged.
8 Section 5. Employment of Attorney, Compelling Attendance of
9 Witnesses, Administration of Oath, Penalties and Settlement of
10 Accounts.--(a) The independent auditor AUDITORS, with the <--
11 consent of the town council, may employ an attorney whenever the
12 same is deemed advisable by him and the compensation of such
13 attorney shall be determined by the town council and shall be
14 payable by the town out of the general funds of the town.
15 (b) The independent auditor AUDITORS of each town shall have <--
16 power to issue subpoenas to obtain the attendance of the
17 officers whose accounts he is required to adjust, their
18 executors and administrators, and of any persons whom it may be
19 necessary to examine as witnesses, and to compel their
20 attendance. If any person shall refuse or neglect to appear or
21 testify, the independent auditor shall petition the court of <--
22 common pleas of the county to issue a subpoena to such person
23 and to require him to appear and to testify before the court.
24 The court shall issue such subpoena if it deems the testimony
25 relevant to the issue.
26 (c) The independent auditor AUDITORS shall have power to <--
27 administer oaths and affirmations to all persons brought or
28 appearing before him THEM, whether accountants, witnesses, or <--
29 otherwise. All persons guilty of swearing or affirming falsely
30 on such examination shall be liable to the pains and penalties
19750H1365B1838 - 6 -
1 of perjury.
2 (d) If any person, appearing before such independent auditor <--
3 AUDITORS for examination, shall refuse to take such oath or <--
4 affirmation, or, after having been sworn or affirmed, shall
5 refuse to make answer to such questions as shall be put to him
6 by the independent auditor AUDITORS touching the accounts or the <--
7 official conduct of such public officers or any of them, then
8 the independent auditor AUDITORS may petition the court to issue <--
9 its subpoena as hereinbefore provided.
10 (e) Witnesses, other than officers of the town, attending
11 before the independent auditor AUDITORS and persons or officers <--
12 serving subpoenas shall be paid out of the town treasury, upon
13 orders drawn on the town treasury, pursuant to authorization by
14 the independent auditor, the same fees as are payable for <--
15 rendering similar services in civil proceedings before a
16 district justice, and the amount thereof shall be made a part of
17 the charge against any officer who shall be charged by the
18 independent auditor with any balance: Provided, that any such <--
19 costs shall have been incurred in establishing said balance.
20 Upon collection of any such costs from any officer, they shall
21 be repaid into the town treasury.
22 (f) If any person in possession of books, vouchers, or
23 papers, relative to public accounts before independent auditor <--
24 THE AUDITORS, shall refuse to produce the same or, if any <--
25 officer whose accounts are to be settled and adjusted by such
26 independent auditor AUDITORS refuses to attend or submit to <--
27 examination as is hereinbefore directed, the independent auditor <--
28 AUDITORS may proceed, by the examination of witnesses and other <--
29 evidence, to ascertain and settle as near as may be, the amount
30 of public money received by such officer and its application to
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1 public purposes or otherwise.
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