New Jersey-2018-A1977-Introduced

An Act concerning municipal compliance audits and amending N.J.S.40A:5-4 and P.L.2007, c.52.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. N.J.S.40A:5-4 is amended to read as follows:

40A:5-4. a. The governing body of every local unit shall cause an annual audit of its books, accounts and financial transactions to be made and completed within six months after the close of its fiscal year. The governing body of every local unit may by resolution petition the Director of the Division of Local Government Services in the Department of Community Affairs for an extension to complete and file the annual audit with the division. Upon good cause being shown the director may grant an extension upon whatever terms or conditions he may deem reasonable. The determination of the director in the granting of an extension is final.

The governing body of every local unit shall employ a registered municipal accountant of New Jersey to prepare its annual audit or it shall enter into an agreement with the Director of the Division of Local Government Services for an annual audit to be made by qualified employees of the division. The director shall establish a fee based upon the time spent and other expenses incurred by qualified employees of the division when conducting the annual audit for a local unit. The local unit shall upon request for payment for audit services, forward a check to the director, payable to the State Treasurer.

b. Whenever, pursuant to statute or order of the Director of the Division of Local Government Services in the Department of Community Affairs, a performance audit is conducted of any municipality, a copy of the final report shall be submitted to the Office of the State Comptroller. If the final report includes specific findings and recommendations, the Office of the State Comptroller shall conduct a compliance audit to verify that the municipality has implemented a corrective action plan with respect to those findings and recommendations. The audit shall commence no sooner than 120 days following the submittal of the final report and shall be completed by the first anniversary of the report's submittal. The scope of the compliance audit shall be determined by the Office of the State Comptroller based upon the specific circumstances of the municipality.

c. The Director of the Division of Local Government Services shall refer findings that may constitute alleged criminal conduct to the Attorney General or other appropriate prosecutorial authority for further civil or administrative action with recommendations to initiate actions to recover monies, terminate contracts, or temporarily or permanently debar any person from contracting with or receiving funds from any unit of local government.

(cf: P.L.1991, c.216, s.1)

2. Section 5 of P.L.2007, c.52 (C.52:15C-5) is amended to read as follows:

5. a. (1) The Office of the State Comptroller shall be responsible for conducting, in accordance with section 8 of this act, routine, periodic and random audits of the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, units of local government and boards of education and for conducting assessments of the performance and management of programs of the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, units of local government and boards of education and the extent to which they are achieving their goals and objectives. The Office of the State Comptroller shall also serve as the office in which the Office of the State Inspector General, which shall be responsible for all the duties assigned pursuant to P.L.2005, c.119 (C.52:15B-1 et seq.), is allocated within the Department of the Treasury.

(2) The Office of the State Comptroller shall conduct compliance audits of any municipality for which it has received a copy of a final report if the Director of the Division of Local Government Services in the Department of Community Affairs has ordered a performance audit pursuant to subsection b. of N.J.S.40A:5-4.

b. (1) The State Comptroller shall establish the internal organizational structure of the office and the bureaus therein in a manner appropriate to carrying out the duties and functions, and fulfilling the responsibilities, of the office. The State Comptroller shall have the power to appoint, employ, promote, and remove such assistants, employees, and personnel as the State Comptroller deems necessary for the efficient and effective administration of the office. All such assistants, employees and personnel shall be deemed confidential employees for purposes of the "New Jersey Employer-Employee Relations Act," P.L.1941, c.100 (C.34:13A-1 et seq.) and shall serve in the unclassified service of the Civil Service.

(2) The Office of the State Inspector General shall be allocated within the Office of the State Comptroller, and the individual first appointed State Inspector General under P.L.2005, c.119, shall continue as State Inspector General for the first full term to which that individual was appointed pursuant to P.L.2005, c.119, and shall be eligible to serve in that position thereafter.

c. Within the limits of funds appropriated for such purposes, the State Comptroller may obtain the services of certified public accountants, qualified management consultants, and other professionals necessary to independently perform the duties and functions of the office.

(cf: P.L.2007, c.52, s.5)

3. This act shall take effect immediately.

STATEMENT

This bill would require the Office of the State Comptroller to conduct a compliance audit of a municipality to verify that it has implemented a corrective action plan following a performance audit. The compliance audit must begin no less than 120 days following the submittal of a copy of the performance audit to the Office of the State Comptroller and be completed within 12 months. The bill also requires the Director of the Division of Local Government Services in the Department of Community Affairs to refer findings that may constitute alleged criminal conduct to the Attorney General or other appropriate prosecutorial authority for further civil or administrative action.