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PRINTER'S NO. 3600
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2457
Session of
2018
INTRODUCED BY RYAN, CUTLER, GILLEN, GODSHALL, GROVE, PHILLIPS-
HILL, HILL-EVANS, IRVIN, JOZWIAK, MOUL, STAATS, WARD AND
WHEELAND, JUNE 5, 2018
REFERRED TO COMMITTEE ON STATE GOVERNMENT, JUNE 5, 2018
AN ACT
Providing for auditor qualifications for the Department of the
Auditor General, for new department employees, for current
department employees, for employee certification, for
forensic audits, for fraud audits and for committee
standards.
The General Assembly finds and declares as follows:
(1) Auditors employed by the Department of the Auditor
General should attain the proper professional certifications
necessary to conduct the various types of audits that the
position of auditor requires.
(2) Audits conducted by the Department of the Auditor
General should comply with the standards instituted by the
organizations governing the profession and should protect
taxpayer resources and ensure that audits conducted by the
Department of the Auditor General are of the highest quality
and benefit to the entities and programs audited.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
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This act shall be known and may be cited as the Auditor
General Employee Qualification Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Certified fraud examiner." An individual who has satisfied
the requirements of the Association of Certified Fraud Examiners
to become a certified fraud examiner.
"Certified internal auditor." An individual who has
satisfied the requirements of The Institute of Internal Auditors
to become a certified internal auditor.
"Certified public accountant." The term shall have the same
meaning as defined in the act of May 26, 1947 (P.L.318, No.140),
known as the CPA Law.
"Chartered Global Management Accountant." An individual who
meets the requirements of the Association of Certified Fraud
Examiners or the Chartered Institute of Management Accountants
to become a Chartered Global Management Accountant.
"Department." The Department of the Auditor General of the
Commonwealth.
"Financial audit." An examination of an entity's financial
records to determine and verify the accuracy and reliability of
the entity's records.
"Forensic audit." An examination of an entity's financial
information with the purposes of determining if the entity's
financial information is accurate and lawful.
"Fraud audit." An examination of an entity's financial
information for the purposes of proving or disproving whether
fraudulent activity has occurred.
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"Management letter." A written communication that states or
implies:
(1) Assurance as to the reliability of attested
information, compiled financial statements or assessments of
the status or performance of a State agency.
(2) The issuer of the written communication has special
knowledge or competence in accounting or auditing arising
from:
(i) The name or title of the issuer or individual
employed by or affiliated with the issuer indicating that
the individual is an accountant or auditor.
(ii) The contents of the written communication.
"Performance audit." A comprehensive evaluation or a
specific program or account of an entity, including:
(1) The effectiveness, efficiency and economy with which
resources are managed and consumed.
(2) Findings based on paragraph (1).
(3) Recommendations for improvement submitted in a
management letter.
"Qualified financial auditor." A certified public accountant
who has at least two years of auditing experience.
"Qualified forensic auditor." An individual who is a
certified public accountant and a certified fraud examiner.
"Qualified fraud auditor." A certified fraud examiner.
"Qualified performance auditor." A certified internal
auditor, certified fraud examiner, public accountant or
Chartered Global Management Accountant who possess a minimum of
five years of experience conducting performance audits or
operational audits of private or public entities.
"State agency." An office, department, authority, board or
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commission of the executive branch.
Section 3. Auditor qualifications.
Department employees conducting an audit shall be adequately
qualified to conduct the type of audit involved. Employees shall
possess the following qualifications:
(1) Employees conducting performance audits shall be
qualified performance auditors.
(2) Employees conducting financial audits shall be
qualified financial auditors.
(3) Employees conducting forensic audits shall be
qualified forensic auditors.
(4) Employees conducting fraud audits shall be qualified
fraud auditors.
Section 4. New department employees.
An employee hired by the department after the effective date
of this section may not conduct audits or participate in the
auditing process of audits for which the employee is not
qualified under section 3.
Section 5. Current department employees.
(a) General rule.-- A department employee hired prior to the
effective date of this section shall be permitted to continue
conducting the same type of audits which the employee conducted
prior to the effective date of this section for a period of five
years after the effective date of this section.
(b) Limitation.--After the conclusion of the five-year
period under subsection (a), the department employee may not
conduct or participate in an auditing process for which the
employee is not qualified under section 3.
Section 6. Employee certification.
(a) Department policy.--The department shall develop a
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policy encouraging an employee to obtain the proper
certification necessary to conduct an audit which the employee's
job requires. The policy shall:
(1) Direct an employee to the resources necessary to
obtain a certification under section 3.
(2) Include provisions that allow the department to
collaborate with an employee to ensure that the employee has
adequate time and resources to complete a certification
necessary to maintain the employee's employment.
(b) Financial incentives.--The department shall provide
financial incentives for an employee who becomes certified in
order to assist the employee with the cost of necessary
continued professional education.
Section 7. Forensic audits.
(a) Department forensic audits.--The department may perform
a forensic audit if any of the following occur:
(1) A forensic audit is requested by a State agency. The
department may appoint a qualified forensic auditor not
currently employed by the Commonwealth to perform the
forensic audit, and the requesting State agency shall be
responsible for the cost incurred by the performance of the
forensic audit.
(2) The department receives an indication when lawfully
performing an audit on an entity that sufficient records or
information are not available to complete the audit.
(3) A forensic audit is requested by the Governor, the
chairperson or minority chairperson of the Appropriations
Committee of the Senate or the chairperson or minority
chairperson of the Appropriations Committee of the House of
Representatives.
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(b) Forensic audit results.--
(1) The department shall provide the results of a
forensic audit to the Governor, the chairperson and minority
chairperson of the Appropriations Committee of the Senate and
the chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(2) If the results contain evidence of suspected
criminal activity, the department shall provide the results
to the Office of Attorney General.
Section 8. Fraud audits.
(a) Department fraud audits.--The department may perform a
fraud audit if any of the following occur:
(1) A fraud audit is requested by a State agency. If
requested by a State agency, the department may appoint a
qualified fraud auditor not currently employed by the
Commonwealth to perform the fraud audit, and the requesting
State agency shall be responsible for the cost incurred in
the performance of the fraud audit.
(2) The department receives an indication when lawfully
performing an audit on an entity that fraudulent activity or
other criminal activity may have occurred.
(3) A forensic audit is requested by the Governor, the
chairperson or minority chairperson of the Appropriations
Committee of the Senate or the chairperson or minority
chairperson of the Appropriations Committee of the House of
Representatives.
(b) Fraud audit results.--
(1) The Department shall provide the results of a fraud
audit to the Governor, the chairperson or minority
chairperson of the Appropriations Committee of the Senate and
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the chairperson or minority chairperson of the Appropriations
Committee of the House of Representatives.
(2) If the results contain evidence of suspected
criminal activity, the department shall provide the results
to the Office of Attorney General.
Section 9. Committee standards.
When conducting audits, the department shall strive to meet
the standards and best practices specified by the Committee of
Sponsoring Organizations of the Treadway Commission.
Section 10. Construction.
Nothing in this act shall be construed to prohibit the
department from performing its obligations under the laws of
this Commonwealth.
Section 11. Effective date.
This act shall take effect in 60 days.
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