PRINTER'S NO. 2421
No. 1857 Session of 1984
INTRODUCED BY LIVENGOOD, MANDERINO AND HUTCHINSON, JANUARY 25,
1984
REFERRED TO COMMITTEE ON FINANCE, JANUARY 25, 1984
AN ACT
1 Amending the act of the April 9, 1929 (P.L.343, No.176),
2 entitled "An act relating to the finances of the State
3 government; providing for the settlement, assessment,
4 collection, and lien of taxes, bonus, and all other accounts
5 due the Commonwealth, the collection and recovery of fees and
6 other money or property due or belonging to the Commonwealth,
7 or any agency thereof, including escheated property and the
8 proceeds of its sale, the custody and disbursement or other
9 disposition of funds and securities belonging to or in the
10 possession of the Commonwealth, and the settlement of claims
11 against the Commonwealth, the resettlement of accounts and
12 appeals to the courts, refunds of moneys erroneously paid to
13 the Commonwealth, auditing the accounts of the Commonwealth
14 and all agencies thereof, of all public officers collecting
15 moneys payable to the Commonwealth, or any agency thereof,
16 and all receipts of appropriations from the Commonwealth and
17 imposing penalties; affecting every department, board,
18 commission, and officer of the State government, every
19 political subdivision of the State, and certain officers of
20 such subdivisions, every person, association, and corporation
21 required to pay, assess, or collect taxes, or to make returns
22 or reports under the laws imposing taxes for State purposes,
23 or to pay license fees or other moneys to the Commonwealth,
24 or any agency thereof, every State depository and every
25 debtor or creditor of the Commonwealth," further providing
26 for audits.
27 The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
29 Section 1. Section 402 of the act of April 9, 1929 (P.L.343,
1 No.176), known as The Fiscal Code, amended May 31, 1957
2 (P.L.237, No.115) and March 18, 1971 (P.L.109, No.4), is amended
3 to read:
4 Section 402. Audits of Affairs of Departments, Boards and
5 Commissions.--Except as may otherwise be provided by law it
6 shall be the duty of the Department of the Auditor General to
7 make all audits of transactions after their occurrence, which
8 may be necessary, in connection with the administration of the
9 financial affairs of the government of this Commonwealth, with
10 the exception of those of the Department of the Auditor General.
11 It shall be the duty of the Governor to cause such audits to be
12 made of the affairs of the Department of the Auditor General.
13 [At least one audit shall be made each year of the affairs of
14 every department, board, and commission of the executive branch
15 of the government, and all collections made by departments,
16 boards, or commissions, and the accounts of every State
17 institution, shall be audited quarterly.]
18 Special audits of the affairs of all departments, boards,
19 commissions, or officers, may be made whenever they may, in the
20 judgment of the Auditor General, appear necessary, and shall be
21 made whenever the Governor shall call upon the Auditor General
22 to make them.
23 Copies of all audits made by the Department of the Auditor
24 General shall be promptly submitted to the Governor.
25 Unless the Department of the Auditor General shall fail or
26 refuse to make [annual, quarterly, or special] audits, as
27 hereinabove required, it shall be unlawful for any other
28 administrative department, any independent administrative board
29 or commission, or any departmental administrative or advisory
30 board or commission, to expend any money appropriated to it by
19840H1857B2421 - 2 -
1 the General Assembly for any audit of its affairs, or, in the
2 case of departments, of any boards or commissions connected with
3 them, except for the reimbursement of the General Fund for
4 audits made by the Department of the Auditor General as provided
5 by law, or for the payment of the compensation and expenses of
6 such auditors as are regularly employed as part of the
7 administrative staffs of such departments, boards, or
8 commissions, respectively.
9 Section 2. The act is amended by adding sections to read:
10 Section 403.1. Types of Audits; Scope.--(a) Whenever the
11 Department of the Auditor General is authorized by law to audit
12 any person, association, corporation or any department, board,
13 commission or agency of government, the department shall have
14 the power to conduct financial, compliance or economy and
15 efficiency audits and may combine elements of each as
16 appropriate under the circumstances.
17 (b) For purposes of this article, the following terms shall
18 have the meanings given to them in this subsection:
19 "Compliance audit" means an audit to determine whether the
20 person or entity has complied with laws and regulations that may
21 have a material effect upon its financial statements.
22 "Economy and efficiency audit" means an audit to determine;
23 (i) whether the person or entity is managing and utilizing its
24 resources economically and efficiently; (ii) the causes of
25 inefficiencies or uneconomical practices; and (iii) whether the
26 person or entity has complied with laws and regulations
27 concerning matters of economy and efficiency.
28 "Financial audit" means an audit to determine whether the
29 financial statements of an audited person or entity present
30 fairly the financial position and the results of financial
19840H1857B2421 - 3 -
1 operations in accordance with generally accepted accounting
2 principles.
3 Section 403.2. Federal Funds.--Unless otherwise provided by
4 law, whenever audits are required for any use of Federal funds,
5 such audits shall be conducted by the Department of the Auditor
6 General.
7 Section 403.3. Civil Litigation; Improper Expenditures.--
8 Whenever in the performance of its duties, the Department of the
9 Auditor General shall determine that an appropriation of money
10 payable out of any fund in the State Treasury, or any portion of
11 any State tax, has been expended, or a contract or other
12 agreement has been made for the expenditure of the same, or any
13 person, association, corporation, or public agency has received
14 any money, for any purpose other than that for which it was
15 appropriated, paid, or received, the department shall forthwith
16 notify the Governor, State Treasurer and the Attorney General.
17 If the Governor or State Treasurer or the Attorney General
18 refuses or fails to initiate appropriate action within sixty
19 (60) days of receiving notification from the Department of the
20 Auditor General, the department shall initiate an appropriate
21 action at law or equity to enjoin the expenditure of such money,
22 and to cause such money to be recovered and paid to the State
23 Treasurer.
24 Section 403.4. Audits of Public Utilities.--The Department
25 of the Auditor General shall have the power, and its duty shall
26 be, to perform economy and efficiency audits of utilities
27 regulated by the Public Utility Commission. The audits may be
28 made whenever they may, in the judgment of the Auditor General,
29 appear necessary. The department shall give priority
30 consideration to requests from the Public Utility Commission for
19840H1857B2421 - 4 -
1 audits of utilities seeking rate increases.
2 Section 1603. Subpoena Power of Auditor General.--(a)
3 Whenever the Auditor General shall deem it necessary in the
4 performance of his duties, he shall have the power, by subpoena,
5 to require the attendance and testimony of witnesses and the
6 production of documentary or other tangible evidence involving
7 any entity funded or financially aided by the Commonwealth and
8 all departments, boards, commissions, agencies,
9 instrumentalities, authorities and institutions of the
10 Commonwealth. Such subpoena shall be signed by the Auditor
11 General or his deputy, and be under the Seal of the Department
12 of the Auditor General, and may be served by any person
13 authorized to serve subpoenas under the laws of the
14 Commonwealth.
15 (b) Any witness who refuses to obey a subpoena issued under
16 this section, or who refuses to be sworn or affirmed, or to
17 testify or to produce documentary or other tangible evidence, or
18 who is guilty of any contempt after summons to appear, may be
19 punished as for contempt of court, and for this purpose any
20 application may be made by the Auditor General to the
21 Commonwealth Court or to any court of common pleas within whose
22 territorial jurisdiction the offense was committed.
23 (c) Whenever the Auditor General shall have reason to
24 believe that documentary or other tangible evidence is in danger
25 of being removed, secreted, destroyed or becoming otherwise
26 unavailable for examination, he shall have the power to make
27 application, ex parte, either before or after service of a
28 subpoena to the Commonwealth Court or to any court of common
29 pleas within whose territorial jurisdiction said evidence is
30 located for a protective order to impound such evidence on the
19840H1857B2421 - 5 -
1 custody of said court. The application shall set forth the
2 reasons for the Auditor General's belief. The court, upon
3 issuing said protective order, shall also adopt such measures
4 and issue such other orders as may be necessary to insure
5 compliance with the subpoena.
6 (d) The several courts set forth in subsections (b) and (c)
7 are hereby given jurisdiction for the purposes set forth in this
8 section.
9 Section 3. This act shall take effect in 60 days.
A18L72RZ/19840H1857B2421 - 6 -