Title: STATE OF OKLAHOMA
Author: Oklahoma House of Reps
Last saved by: Windows User

ENGROSSED HOUSE
BILL NO. 2304	By:	Hilliard and Murphey of the House

				and

		Anderson of the Senate

An Act relating to public finance; creating the Recovery Audits for Government Overpayments of Tax Dollars Act; declaring intent; defining terms; authorizing contracts for recovery audits; providing for confidential information; making state agencies subject to recovery audits; providing for payment to consultants; providing for recovery audit reports; authorizing the adoption of certain rules; providing for codification; and providing an effective date.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.201 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  This act shall be known and may be cited as the “Recovery Audits for Government Overpayments of Tax Dollars Act”.
B.  The Legislature finds that overpayments are a serious problem for state agencies given the magnitude and complexity of state operations.  Overpayments waste tax dollars and detract from the efficiency and effectiveness of state operations by diverting resources from their intended uses.  An overpayment occurs when an individual, vendor or other entity receives a government payment in error or in excess of the legal amount entitled.  In order to improve the economy and efficiency of government operations, the state shall contract for recovery audits to recoup any overpayments made of state or federal tax dollars.  The Legislature recognizes that recovery audits are a nationally recognized best practice for disbursements management and will provide insight for improving operational efficiency and internal controls in the state’s disbursement of tax dollars.  Additionally, recovery audits will not cost the state any resources as the contractor’s costs are deducted from any dollars recovered, making the recovery audits self-funding.
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.202 of Title 62, unless there is created a duplication in numbering, reads as follows:
As used in the Recovery Audits for Government Overpayments of Tax Dollars Act:
1.  “Auditor” means the State Auditor and Inspector;
2.  “Consultant” means a private contractor with recovery audit expertise;
3.  “Director” means the Director of the Office of State Finance;
4.  “Overpayment” includes:
a.	failure to meet eligibility requirements, 
b.	duplicate payments,
c.	invoice and pricing errors,
d.	failure to apply discounts, rebates, or other allowances, 
e.	failure to comply with purchasing agreements, and
f.	any other inadvertent errors resulting in overpayments;
5.  “Recovery audit” means a financial management technique used to identify overpayments made by a state agency with respect to individuals, vendors, and other entities in connection with a payment activity; 
6.  “Shall” means the obligation or duty to do and does not mean discretionary or has the option; and
7.  “State agency” means a department, office, board, commission, bureau, division, institution, or institution of higher education.  This includes individual state agencies and programs, as well as those programs and activities that cross agency lines.  State agency includes all elective offices in the Executive Branch of government and the Legislature.
SECTION 3.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.203 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  The State Auditor and Inspector may contract with private consultants to conduct recovery audits of payments made by state agencies to individuals, vendors, and other entities.
B.  A contract under this section:
1.  May provide for reasonable compensation for services provided under the contract, including compensation determined by the application of a specified percentage of the total amount recovered because of the consultant’s audit activities;
2.  May permit or require the consultant to pursue a judicial action in a court inside or outside this state to recover an overpaid amount; and
3.  To allow time for the performance of existing state payment auditing procedures, may not allow a recovery audit of a payment during the ninety-day period after the date the payment was made. 
C.  The Auditor or a state agency whose payments are being audited shall provide a person acting under a contract authorized by this section with any confidential information in the custody of the Auditor or state agency that is necessary for the performance of the audit or the recovery audit of an overpayment, to the extent the Auditor and state agency are not prohibited from sharing the information under an agreement with another state or the federal government.  A person acting under a contract authorized by this section, and each employee or agent of the person, is subject to all prohibitions against the disclosure of confidential information obtained from the state in connection with the contract that apply to the Auditor or applicable state agency or an employee of the Auditor or applicable state agency.  A person acting under a contract authorized by this section or an employee or agent of the person who discloses confidential information in violation of a prohibition made applicable to the person under this subsection is subject to prosecution for a gross misdemeanor.
SECTION 4.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.204 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  The State Auditor and Inspector may require that recovery audits be performed on the payments to individuals, vendors, and other entities made by each state agency that has total expenditures during a state fiscal biennium in an amount that exceeds Fifty Million Dollars ($50,000,000.00).  Each state agency described by this subsection shall provide the recovery audit consultant with all information necessary for the audit.
B.  In addition, the Auditor may require recovery audits for any state agency that receives an audit finding by the Auditor for internal control weaknesses concerning agency payments and contracts.  Each state agency described by this subsection shall provide the recovery audit consultant with all information necessary for the audit.
C.  The Auditor may exempt from mandatory recovery audit process a state agency that has a low proportion of its expenditures made to individuals, vendors, and other entities, according to criteria the Auditor adopts after consideration of the likely costs and benefits of performing recovery audits for agencies that make relatively few or small payments to vendors. 
D.  The Auditor shall provide the Director of the Office of State Finance, the Senate Appropriations Committee, and the House of Representatives Appropriations and Budget Committee with a report by December 31 of each year detailing any exemptions from subsections A and B of this section.
SECTION 5.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.205 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  The State Auditor and Inspector shall adopt reasonable compensation for services provided under recovery audit contracts based on a specified percentage of the total amount recovered because of a consultant’s audit activities.
B.  A state agency shall expend or return to the federal government any federal money that is recovered through a recovery audit conducted under the Recovery Audits for Government Overpayments of Tax Dollars Act.  The state agency shall expend or return the federal money in accordance with the rules of the federal program through which the agency received the federal money.
SECTION 6.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.206 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  The State Auditor and Inspector shall provide copies, including electronic form copies, of any reports received from a consultant contracting under the Recovery Audits for Government Overpayments of Tax Dollars Act to:
1.  The Governor;
2.  The Director of the Office of State Finance; and 
3.  The House and Senate Appropriations and Budget Committees Chairs. 
B.  The Auditor shall provide the copies required by subsection A of this section not later than seven (7) business days after the date the Auditor receives the consultant’s report. 
C.  Not later than December 31 of each year, the Auditor shall issue a report to the Legislature summarizing the contents of all reports received under the Recovery Audits for Government Overpayments of Tax Dollars Act during the past fiscal year.  This report shall also be posted on the Office of State Finance website.
SECTION 7.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 34.207 of Title 62, unless there is created a duplication in numbering, reads as follows:
The State Auditor and Inspector shall adopt rules necessary to implement the Recovery Audits for Government Overpayments of Tax Dollars Act in a timely manner so that the Auditor may begin contracting with consultants under this act not later than January 1, 2013.
SECTION 8.  This act shall become effective November 1, 2012.
Passed the House of Representatives the 12th day of March, 2012.

	
Presiding Officer of the House of
	Representatives

Passed the Senate the ____ day of __________, 2012.

	
Presiding Officer of the Senate

ENGR. H. B. NO. 2304	Page