A BILL TO BE ENTITLED
AN ACT to require financial audits of certain nonprofit corporations and all state offices, departments, and agencies and an annual submission of completed audits to the state auditor by units of local government and public authorities.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 5A of Chapter 147 of the General Statutes is amended by adding a new section to read:
"§ 147‑64.6E.  Required financial audits.
(a)	Principal State Department Requirement. – All principal offices and departments listed in G.S. 143A‑11 and G.S. 143B‑6 shall be subject to an annual financial audit.
(b)	Requirement for Other State Agencies. – State agencies not subject to the requirement set forth in subsection (a) of this section shall be subject to a biennial financial audit.
(c)	Nonprofit Corporation Requirement. – All nonprofit corporations that receive State funds, as defined in G.S. 143C‑1‑1, or local funds shall be subject to a quadrennial financial audit. This subsection shall not apply to nonprofit corporations that have dissolved or ceased operations at the time an audit under this subsection is required.
(d)	Local Government Requirement. – Each unit of local government and public authority subject to G.S. 159‑34 shall submit to the Auditor, the General Assembly, and the Governor any audit of its accounts completed in accordance with G.S. 159‑34. Audits submitted in accordance with this subsection shall be a public record.
(e)	Performance of Audits. – The State Auditor shall select independent certified public accountants to perform the audits required under subsections (a) through (c) of this section, and the audits shall be completed under the supervision of the Auditor. The results of the audits shall be submitted to the Auditor, the General Assembly, and the Governor and shall be a public record.
(f)	Timing. – To the extent possible, and to avoid duplication of efforts, the Auditor shall align the completion of audits required under subsections (a) and (b) of this section with the completion of the State's Comprehensive Annual Financial Report.
(g)	Contract. – Contracting for services under subsection (e) of this section shall be in accordance with Article 3 of Chapter 143 of the General Statutes. In addition, the following requirements shall be met:
(1)	The maximum length of any contract under this section shall be 10 years.
(2)	An independent certified public accountant shall not perform more than 10 consecutive financial audits for the same State office, department, or agency, or nonprofit corporation.
(h)	Costs. – Notwithstanding any provision of law to the contrary, the Auditor is authorized to charge and collect from each State office, department, or agency, and each nonprofit corporation, the actual costs of audit work required under subsections (a) through (c) of this section.
(i)	Discretionary Audits. – Audits performed under this section shall be in addition to any audit made at the discretion of the Auditor under G.S. 147‑64.6."
SECTION 2.  G.S. 147‑64.6(c)(2) reads as rewritten:
"(c)	The Auditor shall be responsible for the following acts and activities:
…
(2)	Except as otherwise provided in G.S. 147‑64.6E, financial and compliance audits may be made at the discretion of the Auditor without advance notice to the organization being audited. Audits of economy and efficiency and program results shall be discussed in advance with the prospective auditee unless an unannounced visit is essential to the audit."
SECTION 3.  This act becomes effective January 1, 2018.