HB 1603 2003
1	A bill to be entitled
2	An act relating to local government accountability;
3	amending s. 11.40, F.S.; revising duties of the
4	Legislative Auditing Committee; amending s. 11.45, F.S.;
5	revising reporting requirements of the Auditor General;
6	amending s. 61.181, F.S.; correcting a cross reference;
7	amending s. 75.05, F.S.; deleting a requirement for an
8	independent special district to submit a copy of a
9	complaint to the Division of Bond Finance of the State
10	Board of Administration; amending s. 112.625, F.S.;
11	revising the definition of "governmental entity" to
12	include counties and district school boards; amending s.
13	112.63, F.S.; providing for additional information to be
14	provided to the Department of Management Services in
15	actuarial reports with regard to retirement systems and
16	plans and providing procedures therefor; providing for
17	notification of the Department of Revenue and the
18	Department of Financial Services in cases of noncompliance
19	and authorizing the withholding of certain funds;
20	requiring the Department of Management Services to notify
21	the Department of Community Affairs in the case of
22	affected special districts; amending s. 130.04, F.S.;
23	revising provisions governing notice of bids and
24	disposition of bonds; amending s. 132.02, F.S.; revising
25	provisions relating to the authorization to issue refund
26	bonds; amending s. 132.09, F.S.; revising provisions
27	relating to the notice of sale, bids, and awards and
28	private sale of bonds; amending s. 163.05, F.S.; revising
29	provisions governing the Small County Technical Assistance
30	Program; amending s. 166.121, F.S.; revising provisions
31	governing the issuance of bonds by a municipality;
32	amending s. 166.241, F.S.; providing a municipal budget
33	amendment process and requirements; amending s. 189.4044,
34	F.S.; revising special procedures for determination of
35	inactive special districts; amending s. 189.412, F.S.;
36	revising duties of the Special District Information
37	Program of the Department of Community Affairs; amending
38	s. 189.418, F.S.; revising reporting requirements of newly
39	created special districts; authorizing the governing body
40	of a special district to amend its budget; amending s.
41	189.419, F.S.; revising provisions relating to the failure
42	of special districts to file required reports; amending s.
43	189.421, F.S.; revising provisions governing the failure
44	of special districts to disclose financial reports;
45	providing for extension of time for the filing of said
46	reports; providing remedies for noncompliance; providing
47	for attorney's fees and costs; amending s. 189.428, F.S.;
48	revising provisions governing the special district
49	oversight review process; amending s. 189.439, F.S.;
50	revising provisions governing the issuance of bonds by
51	special districts; amending s. 215.981, F.S.; exempting
52	state agency direct-support organizations and citizen
53	support organizations meeting specified expense levels
54	from audit requirements; amending s. 218.075, F.S.;
55	revising provisions governing the reduction or waiver of
56	permit processing fees for certain counties; amending s.
57	218.32, F.S., relating to annual financial reports;
58	requiring the Department of Financial Services to notify
59	the Speaker of the House of Representatives and the
60	President of the Senate of any municipality that has not
61	had financial activity for a specified period of time;
62	providing that such notice is sufficient to initiate
63	dissolution procedures; amending s. 218.321, F.S.;
64	correcting a cross reference; amending s. 218.36, F.S.;
65	revising reporting requirements for boards of county
66	commissioners relating to the failure of a county officer
67	to comply with the provisions of the section; amending s.
68	218.369, F.S.; revising the definition of "unit of local
69	government" to include district school boards; renaming
70	pt. V of ch. 218, F.S., as "Local Governmental Entity and
71	District School Board Financial Emergencies"; amending s.
72	218.50, F.S.; renaming ss. 218.50-218.504, F.S., as the
73	"Local Governmental Entity and District School Board Act";
74	amending s. 218.501, F.S.; revising the stated purposes of
75	pt. V of ch. 218, F.S.; amending s. 218.502, F.S.;
76	revising the definition of "local governmental entity";
77	amending s. 218.503, F.S.; revising provisions governing
78	the determination of financial emergency for local
79	governments and district school boards; amending s.
80	218.504, F.S.; revising provisions relating to the
81	authority of the Governor and authorizing the Commissioner
82	of Education to terminate all state actions pursuant to
83	ss. 218.50-218.504, F.S.; repealing ch. 131, F.S.,
84	consisting of ss. 131.01, 131.02, 131.03, 131.04, 131.05,
85	and 131.06, F.S., relating to refunding bonds of counties,
86	municipalities, and special districts; repealing s.
87	132.10, F.S., relating to minimum sale price of bonds;
88	repealing s. 165.052, F.S., relating to special
89	dissolution procedures for municipalities; repealing s.
90	189.409, F.S., relating to determination of financial
91	emergencies of special districts; repealing s. 189.422,
92	F.S., relating to actions of the Department of Community
93	Affairs and special districts; repealing s. 200.0684,
94	F.S., relating to an annual compliance report of the
95	Department of Community Affairs regarding special
96	districts; repealing s. 218.37(1)(h), F.S., relating to
97	the requirement that the Division of Bond Finance use a
98	served copy of the complaint for bond validation to verify
99	compliance by special districts with the requirements in
100	s. 218.38, F.S.; transferring a position from the
101	Executive Office of the Governor to the Department of
102	Financial Services; providing an effective date.
103
104	Be It Enacted by the Legislature of the State of Florida:
105
106	Section 1. Paragraphs (a) and (b) of subsection (5) of
107	section 11.40, Florida Statutes, are amended to read:
108	11.40 Legislative Auditing Committee.--
109	(5) Following notification by the Auditor General, the
110	Department of Financial ServicesBanking and Finance, or the
111	Division of Bond Finance of the State Board of Administration of
112	the failure of a local governmental entity, district school
113	board, charter school, or charter technical career center to
114	comply with the applicable provisions within s. 11.45(5)-(7), s.
115	218.32(1), or s. 218.38, the Legislative Auditing Committee may
116	schedule a hearing. If a hearing is scheduled, the committee
117	shall determine if the entity should be subject to further state
118	action. If the committee determines that the entity should be
119	subject to further state action, the committee shall:
120	(a) In the case of a local governmental entity or district
121	school board, directrequestthe Department of Revenue and the
122	Department of Financial ServicesBanking and Financeto withhold
123	any funds not pledged for bond debt service satisfaction which
124	are payable to such entity until the entity complies with the
125	law. The committee, in its request,shall specify the date such
126	action shall begin, and the directiverequestmust be received
127	by the Department of Revenue and the Department of Financial
128	Services Banking and Finance30 days before the date of the
129	distribution mandated by law. The Department of Revenue and the
130	Department of Financial ServicesBanking and Financeare
131	authorized to implement the provisions of this paragraph.
132	(b) In the case of a special district, notify the
133	Department of Community Affairs that the special district has
134	failed to comply with the law. Upon receipt of notification, the
135	Department of Community Affairs shall proceed pursuant to the
136	provisions specified in s.ss. 189.421 and 189.422.
137	Section 2. Subsection (5), paragraph (e) of subsection
138	(7), and subsection (8) of section 11.45, Florida Statutes, are
139	amended to read:
140	11.45 Definitions; duties; authorities; reports; rules.--
141	(5) PETITION FOR AN AUDIT BY THE AUDITOR GENERAL.--The
142	Legislative Auditing Committee shall direct the Auditor General
143	to make ana financialaudit of any municipality whenever
144	petitioned to do so by at least 20 percent of the electors of
145	that municipality. The supervisor of elections of the county in
146	which the municipality is located shall certify whether or not
147	the petition contains the signatures of at least 20 percent of
148	the electors of the municipality. After the completion of the
149	audit, the Auditor General shall determine whether the
150	municipality has the fiscal resources necessary to pay the cost
151	of the audit. The municipality shall pay the cost of the audit
152	within 90 days after the Auditor General's determination that
153	the municipality has the available resources. If the
154	municipality fails to pay the cost of the audit, the Department
155	of Revenue shall, upon certification of the Auditor General,
156	withhold from that portion of the distribution pursuant to s.
157	212.20(6)(d)6. which is distributable to such municipality, a
158	sum sufficient to pay the cost of the audit and shall deposit
159	that sum into the General Revenue Fund of the state.
160	(7) AUDITOR GENERAL REPORTING REQUIREMENTS.--
161	(e) The Auditor General shall notify the Governor or the
162	Commissioner of Education, as appropriate,and the Legislative
163	Auditing Committee of any audit report reviewed by the Auditor
164	General pursuant to paragraph (b) thatwhichcontains a
165	statement that athelocal governmental entity or district
166	school board has met one or more of the conditions specifiedis
167	in a state of financial emergency as providedin s. 218.503. If
168	the Auditor General requests a clarification regarding
169	information included in an audit report to determine whether a
170	local governmental entity or district school board has met one
171	or more of the conditions specified in s. 218.503is in a state
172	of financial emergency, the requested clarification must be
173	provided within 45 days after the date of the request. If the
174	local governmental entity or district school board does not
175	comply with the Auditor General's request, the Auditor General
176	shall notify the Legislative Auditing Committee. If, after
177	obtaining the requested clarification, the Auditor General
178	determines that the local governmental entity or district school
179	board has met one or more of the conditions specified in s.
180	218.503is in a state of financial emergency, he or she shall
181	notify the Governor or the Commissioner of Education, as
182	appropriate,and the Legislative Auditing Committee.
183	(8) RULES OF THE AUDITOR GENERAL.--The Auditor General, in
184	consultation with the Board of Accountancy, shall adopt rules
185	for the form and conduct of all financialaudits performed by
186	independent certified public accountants pursuant to ss.
187	215.981, 218.39, 1001.453, 1004.28, and 1004.70. The rules for
188	audits of local governmental entities and district school boards
189	must include, but are not limited to, requirements for the
190	reporting of information necessary to carry out the purposes of
191	the Local Governmental Entity and District School Board
192	GovernmentFinancial Emergencies Act as stated in s. 218.501.
193	Section 3. Subsection (10) of section 61.181, Florida
194	Statutes, is amended to read:
195	61.181 Depository for alimony transactions, support,
196	maintenance, and support payments; fees.--
197	(10) Compliance with the requirements of this section
198	shall be included as part of the annual county audit required
199	pursuant to s. 218.3911.45.
200	Section 4. Subsection (3) of section 75.05, Florida
201	Statutes, is amended to read:
202	75.05 Order and service.--
203	(3) In the case of independent special districts as
204	defined in s. 218.31(7), a copy of the complaint shall be served
205	on the Division of Bond Finance of the State Board of
206	Administration.Notwithstanding any other provision of law,
207	whether a general law or special act, validation of bonds to be
208	issued by a special district, other than a community development
209	district established pursuant to chapter 190, as provided in s.
210	190.016(12), is not mandatory, but is at the option of the
211	issuer. However, the validation of bonds issued by such
212	community development districts shall not be required on
213	refunding issues.
214	Section 5. Subsection (5) of section 112.625, Florida
215	Statutes, is amended to read:
216	112.625 Definitions.--As used in this act:
217	(5) "Governmental entity" means the state, for the Florida
218	Retirement System, and the county, municipality,orspecial
219	district, or district school boardwhich is the employer of the
220	member of a local retirement system or plan.
221	Section 6. Subsection (4) of section 112.63, Florida
222	Statutes, is amended to read:
223	112.63 Actuarial reports and statements of actuarial
224	impact; review.--
225	(4) Upon receipt, pursuant to subsection (2), of an
226	actuarial report, or upon receipt, pursuant to subsection (3),
227	of a statement of actuarial impact, the Department of Management
228	Services shall acknowledge such receipt, but shall only review
229	and comment on each retirement system's or plan's actuarial
230	valuations at least on a triennial basis. If the department
231	finds that the actuarial valuation is not complete, accurate, or
232	based on reasonable assumptions or otherwise fails to satisfy
233	the requirements of this part, the department requires
234	additional information necessary to complete its review of the
235	actuarial valuation of a system or plan or information necessary
236	to satisfy the duties of the department pursuant to s.
237	112.665(1), or ifthe department does not receive the actuarial
238	report or statement of actuarial impact, the department shall
239	notify the administrator of the affected retirement system or
240	plan and the affected governmental entitylocal governmentand
241	request appropriate adjustment, the additional information, or
242	the required report or statement. The notification shall inform
243	the administrator of the affected retirement system or plan and
244	the affected governmental entity of the consequences for failure
245	to comply with the requirements of this subsection. If, after a
246	reasonable period of time, a satisfactory adjustment is not made
247	or the report, statement, or additional information is not
248	provided, the department may notify the Department of Revenue
249	and the Department of Financial Services of such noncompliance,
250	in which case the Department of Revenue and the Department of
251	Financial Services shall withhold any funds not pledged for bond
252	debt service satisfaction that are payable to the affected
253	governmental entity until the adjustment is made or the report,
254	statement, or additional information is provided to the
255	department. The department shall specify the date such action is
256	to begin and notification by the department must be received by
257	the Department of Revenue, the Department of Financial Services,
258	and the affected governmental entity 30 days before the date the
259	action is to begin.
260	(a) Within 21 days after receipt of the notice,the
261	affected governmental entitylocal government or the department
262	may petition for a hearing under the provisions of ss. 120.569
263	and 120.57 with the Department of Management Services. The
264	Department of Revenue and the Department of Financial Services
265	shall not be parties to any such hearing but may request to
266	intervene if requested by the Department of Management Services
267	or if either the Department of Revenue or the Department of
268	Financial Services determines its interests may be adversely
269	affected by the hearing. If the administrative law judge
270	recommends in favor of the department, the department shall
271	perform an actuarial review or prepare the statement of
272	actuarial impact, or collect the requested information. The cost
273	to the department of performing such actuarial review,or
274	preparing such statement, or collecting the requested
275	information shall be charged to the affectedgovernmental entity
276	of which the employees are covered by the retirement system or
277	plan. If payment of such costs is not received by the department
278	within 60 days after receipt by the affectedgovernmental entity
279	of the request for payment, the department shall certify to the
280	Department of Revenue and the Department of Financial Services
281	Comptroller the amount due, and the Department of Revenue and
282	the Department of Financial ServicesComptrollershall pay such
283	amount to the Department of Management Services from any funds
284	not pledged for bond debt service satisfaction that arepayable
285	to the affectedgovernmental entity of which the employees are
286	covered by the retirement system or plan. If the administrative
287	law judge recommends in favor of the affected governmental
288	entitylocal retirement systemand the department performs an
289	actuarial review, prepares the statement of actuarial impact, or
290	collects the requested information,the cost to the department
291	of performing the actuarial review, preparing the statement, or
292	collecting the requested informationshall be paid by the
293	Department of Management Services.
294	(b) In the case of an affected special district, the
295	Department of Management Services shall also notify the
296	Department of Community Affairs. Upon receipt of notification,
297	the Department of Community Affairs shall proceed pursuant to
298	the provisions of s. 189.421 with regard to the special
299	district.
300	Section 7. Section 130.04, Florida Statutes, is amended to
301	read:
302	130.04 SaleNotice for bids and dispositionof bonds.--In
303	case the issuing of bonds shall be authorized by the result of
304	such election, the county commissioners shall sell the bonds in
305	the manner provided in s. 218.385cause notice to be given by
306	publication in a newspaper published in the county, or in some
307	newspaper published in the same judicial circuit, if there be
308	none published in the county, that they will receive bids for
309	the purchase of county bonds at the clerk's office, on a date
310	not less than 10 days nor more than 60 days from the first
311	publication of such notice. The notice shall specify the amount
312	of bonds offered for sale, the rate of interest, and the time
313	when principal and installments of interest shall be due and
314	payable. Any and all bids shall be rejected if the
315	commissioners shall deem it to the best interest for the county
316	so to do, and they may cause a new notice to be given in like
317	manner inviting other bids for said bonds; provided, that when
318	the rate of interest on said bonds exceeds 5 percent per annum,
319	said bonds shall not be sold for less than 95 cents on the
320	dollar, but when any bonds have heretofore been provided for by
321	election, and the rate of interest is 5 percent per annum, or
322	less, that in such cases the county commissioners may accept
323	less than 95 cents upon the dollar, in the sale of said bonds,
324	or for any portion of said bonds not already sold; provided,
325	however, no bonds shall be sold for less than 90 cents on the
326	dollar.
327	Section 8. Subsection (1) of section 132.02, Florida
328	Statutes, is amended to read:
329	132.02 Taxing units may refund obligations.--
330	(1) Each county, municipality,city, town, special road
331	and bridge district, special tax school district, orandother
332	taxing districtdistrictsin this state, herein sometimes called
333	a unit, may issue, pursuant to a resolution or resolutions of
334	the governing body thereof (meaning thereby the board or body
335	vested with the power of determining the amount of tax levies
336	required for taxing the taxable property of such unit for the
337	purpose of such unit) and either with or without the approval of
338	such bonds at an election, except as may be required by the
339	Constitution of the state, bonds of such unit for the purpose of
340	refunding any or all bonds, coupons, or interest on any such
341	bonds, or coupons or paving certificates of indebtedness or
342	interest on any such paving certificates of indebtedness,now or
343	hereafter outstanding, or any other funded debt, all of which
344	are herein referred to as bonds, whether such unit created such
345	indebtedness or has assumed, or may become liable therefor, and
346	whether indebtedness to be refunded has matured or to thereafter
347	become matured.
348	Section 9. Section 132.09, Florida Statutes, is amended to
349	read:
350	132.09 Sale of bondsNotice of sale; bids and award;
351	private sale.--When sold, the refunding bonds (except as
352	otherwise expressly provided) shall be sold in the manner
353	provided in s. 218.385pursuant to the terms of a notice of sale
354	which shall be published at least twice. The first publication
355	to be not less than 7 days before the date fixed for the sale
356	and to be published in a newspaper published in the unit, or if
357	no newspaper is published in the unit, then in a newspaper
358	published in the county, or if no newspaper is published in the
359	county, then in a newspaper published in Tallahassee, and in the
360	discretion of the governing body of the unit may be published in
361	a financial newspaper in the City of New York. Such notices
362	shall state the time and place and when and where sealed bids
363	will be received, shall state the amount of bonds, their dates,
364	maturities, denominations and interest rate or rates (which may
365	be a maximum rate), interest payment dates, an outline of the
366	terms, if any, on which they are redeemable or become payable
367	before maturity, the amount which must be deposited with the bid
368	to secure its performance if accepted, and such other pertinent
369	information as the governing body of the unit may determine.
370	The notice of sale may require the bidders to fix the interest
371	rate or rates that the bonds are to bear subject to the terms of
372	the notice and the maximum rate permitted by this chapter. The
373	award of the bonds shall be made by the governing body of the
374	unit to the bidder making the most advantageous bid which shall
375	be determined by the governing body in its absolute and
376	uncontrolled discretion. The right to reject all bids shall be
377	reserved to the governing body of the unit. If no bids are
378	received at such public sale, or if all bids are rejected, the
379	bonds may be sold without notice at private sale at any time
380	within one year thereafter, but such bonds shall not be sold at
381	private sale on terms less favorable to the unit than were
382	contained in the best bid at the prior public sale.
383	Section 10. Paragraph (a) of subsection (2) of section
384	163.05, Florida Statutes, is amended to read:
385	163.05 Small County Technical Assistance Program.--
386	(2) Recognizing the findings in subsection (1), the
387	Legislature declares that:
388	(a) The financial difficultiesfiscal emergencies
389	confronting small counties require an investment that will
390	facilitate efforts to improve the productivity and efficiency of
391	small counties' structures and operating procedures.
392	Section 11. Subsection (2) of section 166.121, Florida
393	Statutes, is amended to read:
394	166.121 Issuance of bonds.--
395	(2) The governing body of a municipality shall determine
396	the terms and manner of sale and distribution or other
397	disposition of any and all bonds it may issue, consistent with
398	the provisions of s. 218.385,and shall have any and all powers
399	necessary or convenient to such disposition.
400	Section 12. Section 166.241, Florida Statutes, is amended
401	to read:
402	166.241 Fiscal years, financial reports, appropriations,
403	and budgets, and budget amendments.--
404	(1) Each municipality shall report its finances annually
405	as provided by general law.
406	(1)(2)Each municipality shall make provision for
407	establishing a fiscal year beginning October 1 of each year and
408	ending September 30 of the following year.
409	(2)(3)The governing body of each municipality shall adopt
410	a budget each fiscal year. The budget must be adopted by
411	ordinance unless otherwise specified in the respective
412	municipality's charter, except that municipalities required to
413	establish millage pursuant to chapter 200 shall adopt the budget
414	by resolution or ordinance in the manner specified in s.
415	200.065(2). The amount available from taxation and other
416	sources, including amounts carried over from prior fiscal years,
417	must equal the total appropriations for expenditures and
418	reserves. The budget must regulate expenditures of the
419	municipality, and it is unlawful for any officer of a municipal
420	government to expend or contract for expenditures in any fiscal
421	year except in pursuance of budgeted appropriations.
422	(3) The governing body of each municipality at any time
423	within a fiscal year or within up to 60 days following the end
424	of the fiscal year may amend a budget for that year as follows:
425	(a) Appropriations for expenditures within a fund may be
426	decreased or increased by motion recorded in the minutes,
427	provided that the total of the appropriations of the fund is not
428	changed.
429	(b) The governing body may establish procedures by which
430	the designated budget officer may authorize certain budget
431	amendments within a department, provided that the total of the
432	appropriations of the department is not changed.
433	(c) If a budget amendment is required for a purpose not
434	specifically authorized in paragraph (a) or paragraph (b), the
435	budget amendment must be adopted in the same manner as the
436	original budget unless otherwise specified in the charter of the
437	respective municipality.
438	Section 13. Section 189.4044, Florida Statutes, is amended
439	to read:
440	189.4044 Special procedures for inactive districts.--
441	(1) The department shall declare inactive any special
442	district in this state by documenting the followingfiling a
443	report with the Speaker of the House of Representatives and the
444	President of the Senate which shows that such special district
445	is no longer active. The inactive status of the special
446	district must be based upon a finding:
447	(a) ThatThe special district meets one of the following
448	criteria:
449	1. The registered agent of the district, the chair of the
450	governing body of the district, or the governing body of the
451	appropriate local general-purpose government notifies the
452	department in writing that thedistrict has taken no action for
453	2 or morecalendaryears;
454	2. Following an inquiry from the department, the
455	registered agent of the district, the chair of the governing
456	body of the district, or the governing body of the appropriate
457	local general-purpose government notifies the department in
458	writing thatthe district has not had a governing board or a
459	sufficient number of governing board members to constitute a
460	quorum for 2 or more years or the registered agent of the
461	district, the chair of the governing body of the district, or
462	the governing body of the appropriate local general-purpose
463	government fails to respond to the department's inquiry within
464	21 days; or18 or more months;
465	3. The department determines, pursuant to s. 189.421, that
466	the district has failed to file or make a good faith effort to
467	file any of the reports listed in s. 189.419.; or
468	4. The district has failed, for 2 consecutive fiscal
469	years, to pay fees assessed by the Special District Information
470	Program pursuant to this chapter.
471	(b) The department, special district, or local general-
472	purpose government publishedThat a notice of theproposed
473	declaration of inactive statushas been published once a week
474	for 2 weeks in a newspaper of general circulation inwithinthe
475	county or municipality in whichwhereinthe territory of the
476	special district is located and sent a copy of such notice by
477	certified mail to the registered agent or chair of the board, if
478	any. Such notice shall include, statingthe name of said special
479	district, the law under which it was organized and operating, a
480	general description of the territory included in said special
481	district, and a statementstating that any objections must be
482	filed pursuant to chapter 120 within 21 days after the
483	publication dateto the proposed declaration or to any claims
484	against the assets of said special district shall be filed not
485	later than 60 days following the date of last publication with
486	the department; and
487	(c) Twenty-oneThat 60 days have elapsed from the last
488	publication date of the notice of proposed declaration of
489	inactive status and no administrative appeals weresustained
490	objections have beenfiled.
491	(2) If any special district is declared inactive pursuant
492	to this section, the property or assets of the special district
493	are subject to legal process for payment of any debts of the
494	district. After the payment of all the debts of said inactive
495	special district, the remainder of its property or assets shall
496	escheat to the county or municipality wherein located. If,
497	however, it shall be necessary, in order to pay any such debt,
498	to levy any tax or taxes on the property in the territory or
499	limits of the inactive special district, the same may be
500	assessed and levied by order of the local general-purpose
501	government wherein the same is situated and shall be assessed by
502	the county property appraiser and collected by the county tax
503	collector.
504	(3) In the case of a district created by special act of
505	the Legislature, the department shall send a notice of
506	declaration of inactive status tonotifythe Speaker of the
507	House of Representatives and the President of the Senate. The
508	notice of declaration of inactive status shall referenceof each
509	knownspecial act creating or amending the charter of any
510	special district declared to be inactive under this section.
511	The declaration of inactive status shall be sufficient notice as
512	required by s. 10, Art. III of the State Constitution to
513	authorize the Legislature to repeal any special laws so
514	reported. In the case of a district created by one or more local
515	general-purpose governments, the department shall send a notice
516	of declaration of inactive status to the chair of the governing
517	body of each local general-purpose government that created the
518	district. In the case of a district created by interlocal
519	agreement, the department shall send a notice of declaration of
520	inactive status to the chair of the governing body of each local
521	general-purpose government that entered into the interlocal
522	agreement.
523	(4) The entity that createda special district declared
524	inactive under this section must dissolve the special district
525	be dissolved by repealingrepeal of its enabling laws or by
526	other appropriate means.
527	Section 14. Subsection (1) of section 189.412, Florida
528	Statutes, is amended, and subsection (8) is added to said
529	section, to read:
530	189.412 Special District Information Program; duties and
531	responsibilities.--The Special District Information Program of
532	the Department of Community Affairs is created and has the
533	following special duties:
534	(1) The collection and maintenance of special district
535	noncompliancecompliance status reports from the Department of
536	Management ServicesAuditor General, the Department of Financial
537	ServicesBanking and Finance, the Division of Bond Finance of
538	the State Board of Administration, and the Auditor Generalthe
539	Department of Management Services, the Department of Revenue,
540	and the Commission on Ethics for the reporting required in ss.
541	112.3144, 112.3145, 112.3148, 112.3149, 112.63, 200.068,218.32,
542	218.38, and 218.39, and 280.17 and chapter 121 and from state
543	agencies administering programs that distribute money to special
544	districts. The noncompliancespecial district compliance status
545	reports must list thoseconsist of a list of special districts
546	used in that state agency and a list of which special districts
547	that did not comply with the statutory reporting requirements
548	statutorily required by that agency.
549	(8) Providing assistance to local general-purpose
550	governments and certain state agencies in collecting delinquent
551	reports or information, helping special districts comply with
552	reporting requirements, declaring special districts inactive
553	when appropriate, and, when directed by the Legislative Auditing
554	Committee, initiating enforcement provisions as provided in ss.
555	189.4044, 189.419, and 189.421.
556	Section 15. Subsections (1) and (2) of section 189.418,
557	Florida Statutes, are amended, subsection (5) is renumbered as
558	subsection (6), present subsection (6) is renumbered as
559	subsection (7) and amended, and a new subsection (5) is added to
560	said section, to read:
561	189.418 Reports; budgets; audits.--
562	(1) When a new special district is created, the district
563	must forward to the department, within 30 days after the
564	adoption of the special act, rule, ordinance, resolution, or
565	other document that provides for the creation of the district, a
566	copy of the document and a written statement that includes a
567	reference to the status of the special district as dependent or
568	independent and the basis for such classification. In addition
569	to the document or documents that create the district, the
570	district must also submit a map of the district, showing any
571	municipal boundaries that cross the district's boundaries, and
572	any county lines if the district is located in more than one
573	county. The department must notify the local government or
574	other entity and the district within 30 days after receipt of
575	the document or documents that create the district as to whether
576	the district has been determined to be dependent or independent.
577	(2) Any amendment, modification, or update of the document
578	by which the district was created, including changes in
579	boundaries, must be filed with the department within 30 days
580	after adoption. The department may initiate proceedings against
581	special districts as provided in s.ss. 189.421 and 189.422for
582	failure to file the information required by this subsection.
583	(5) The governing body of each special district at any
584	time within a fiscal year or within up to 60 days following the
585	end of the fiscal year may amend a budget for that year. The
586	budget amendment must be adopted by resolution.
587	(7)(6)All reports or information required to be filed
588	with a local governing authority under ss. 189.415, 189.416, and
589	189.417, 218.32, and 218.39and this section shall:
590	(a) When the local governing authority is a county, be
591	filed with the clerk of the board of county commissioners.
592	(b) When the district is a multicounty district, be filed
593	with the clerk of the county commission in each county.
594	(c) When the local governing authority is a municipality,
595	be filed at the place designated by the municipal governing
596	body.
597	Section 16. Section 189.419, Florida Statutes, is amended
598	to read:
599	189.419 Effect of failure to file certain reports or
600	information.--
601	(1) If a special district fails to file the reports or
602	information required under s. 189.415, s. 189.416, ors.
603	189.417, s. 189.418, s. 218.32, or s. 218.39 and a description
604	of all new bonds as provided in s. 218.38(1)with the local
605	governing authority, the person authorized to receive and read
606	the reports or information shall notify the district's
607	registered agent and the appropriate local governing authority
608	or authorities. If requested by the districtAt any time, the
609	governing authority shallmay grant an extension of time of up
610	to 30 days for filing the required reports or information,
611	except that an extension may not exceed 30 days.
612	(2) If at any time the local governing authority or
613	authorities or the board of county commissioners determines that
614	there has been an unjustified failure to file the reports or
615	information described in subsection (1), it may notifypetition
616	the department and the department may proceed pursuant to
617	initiate proceedings against the special district in the manner
618	provided ins. 189.421.
619	(3) If a special district fails to file the reports or
620	information required under s. 112.63,s. 218.32, s. 218.38, or
621	s. 218.39 with the appropriate state agency, the agency shall
622	notify the department, and the department shall proceed pursuant
623	to s. 189.421may initiate proceedings against the special
624	district in the manner provided in s. 189.421 or assess fines of
625	not more than $25, with an aggregate total not to exceed $50,
626	when formal inquiries do not resolve the noncompliance.
627	Section 17. Section 189.421, Florida Statutes, is amended
628	to read:
629	(Substantial rewording of section. See
630	s. 189.421, F.S., for present text.)
631	189.421 Failure of district to disclose financial
632	reports.--
633	(1) When notified pursuant to s. 189.419, the department
634	shall attempt to assist a special district to comply with its
635	financial reporting requirements by sending a certified letter
636	to the special district, and a copy of the letter to the chair
637	of the governing body of the local general-purpose government,
638	which includes the following: a description of the required
639	report, including statutory submission deadlines, a contact
640	telephone number for technical assistance to help the special
641	district comply, a 60-day extension of time for filing the
642	required report with the appropriate entity, the address where
643	the report must be filed, and an explanation of the penalties
644	for noncompliance. The department may grant an additional 30-
645	day extension of time if requested to do so in writing by the
646	special district. The department shall notify the appropriate
647	entity of the new extension of time. In the case of a special
648	district that did not timely file the reports or information
649	required by s. 218.38, the department shall send a certified
650	technical assistance letter to the special district that
651	summarizes the requirements and encourages the special district
652	to take steps to prevent the noncompliance from reoccurring.
653	(2) Failure of a special district to comply with the
654	financial reporting requirements after the procedures of
655	subsection (1) are exhausted shall be deemed final action of the
656	special district. The financial reporting requirements are
657	hereby declared to be essential requirements of law. Remedy for
658	noncompliance shall be by writ of certiorari as set forth in
659	subsection (3).
660	(3) Pursuant to s. 11.40(5)(b), the Legislative Auditing
661	Committee shall notify the department of those districts that
662	failed to file the required report. Within 30 days after
663	receiving this notice or within 30 days after the extension date
664	provided in subsection (1), whichever occurs later, the
665	department shall proceed as follows: notwithstanding the
666	provisions of chapter 120, the department shall file a petition
667	for writ of certiorari with the circuit court. Venue for all
668	actions pursuant to this subsection shall be in Leon County.
669	The court shall award the prevailing party attorney's fees and
670	costs in all cases filed pursuant to this section unless
671	affirmatively waived by all parties. A writ of certiorari shall
672	be issued unless a respondent establishes that the notification
673	of the Legislative Auditing Committee was issued as a result of
674	material error. Proceedings under this subsection shall
675	otherwise be governed by the Rules of Appellate Procedure.
676	Section 18. Subsection (5) of section 189.428, Florida
677	Statutes, is amended to read:
678	189.428 Special districts; oversight review process.--
679	(5) Those conducting the oversight review process shall,
680	at a minimum, consider the listed criteria for evaluating the
681	special district, but may also consider any additional factors
682	relating to the district and its performance. If any of the
683	listed criteria doesdonot apply to the special district being
684	reviewed, ittheyneed not be considered. The criteria to be
685	considered by the reviewer include:
686	(a) The degree to which the service or services offered by
687	the special district are essential or contribute to the well-
688	being of the community.
689	(b) The extent of continuing need for the service or
690	services currently provided by the special district.
691	(c) The extent of municipal annexation or incorporation
692	activity occurring or likely to occur within the boundaries of
693	the special district and its impact on the delivery of services
694	by the special district.
695	(d) Whether there is a less costly alternative method of
696	delivering the service or services that would adequately provide
697	the district residents with the services provided by the
698	district.
699	(e) Whether transfer of the responsibility for delivery of
700	the service or services to an entity other than the special
701	district being reviewed could be accomplished without
702	jeopardizing the district's existing contracts, bonds, or
703	outstanding indebtedness.
704	(f) Whether the Auditor General has notified the
705	Legislative Auditing Committee that the special district's audit
706	report, reviewed pursuant to s. 11.45(7), indicates that the
707	district has met any of the conditions specified in s.
708	218.503(1) or thata deteriorating financial condition exists
709	that may cause a condition described in s. 218.503(1) to occur
710	if actions are not taken to address such condition.
711	(g) Whether the Auditor General has determined that the
712	special district is in a state of financial emergency as
713	provided in s. 218.503(1), and has notified the Governor and the
714	Legislative Auditing Committee.
715	(g)(h)Whether the district is inactive according to the
716	official list of special districts, and whether the district is
717	meeting and discharging its responsibilities as required by its
718	charter, as well as projected increases or decreases in district
719	activity.
720	(h)(i)Whether the special district has failed to comply
721	with any of the reporting requirements in this chapter,
722	including preparation of the public facilities report.
723	(i)(j)Whether the special district has designated a
724	registered office and agent as required by s. 189.416, and has
725	complied with all open public records and meeting requirements.
726	Section 19. Paragraph (a) of subsection (1) of section
727	189.439, Florida Statutes, is amended to read:
728	189.439 Bonds.--
729	(1) AUTHORIZATION AND FORM OF BONDS.--
730	(a) The authority may issue and sell bonds for any purpose
731	for which the authority has the power to expend money,
732	including, without limitation, the power to obtain working
733	capital loans to finance the costs of any project and to refund
734	any bonds or other indebtedness at the time outstanding at or
735	before maturity. Bonds may be sold in the manner provided in s.
736	218.385 andby public or negotiated sale after advertisement, if
737	any, as the board considers advisable. Bondsmay be authorized
738	by resolution of the board.
739	Section 20. Section 215.981, Florida Statutes, is amended
740	to read:
741	215.981 Audits of state agency direct-support
742	organizations and citizen support organizations.--
743	(1) Each direct-support organization and each citizen
744	support organization, created or authorized pursuant to law, and
745	created, approved, or administered by a state agency, other than
746	a university, district board of trustees of a community college,
747	or district school board, shall provide for an annual financial
748	audit of its accounts and records to be conducted by an
749	independent certified public accountant in accordance with rules
750	adopted by the Auditor General pursuant to s. 11.45(8) and the
751	state agency that created, approved, or administers the direct-
752	support organization or citizen support organization. The audit
753	report shall be submitted within 9 months after the end of the
754	fiscal year to the Auditor General and to the state agency
755	responsible for creation, administration, or approval of the
756	direct-support organization or citizen support organization,
757	whenever the organization's expenditures and expenses exceed
758	$100,000. Such state agency, the Auditor General, and the Office
759	of Program Policy Analysis and Government Accountability shall
760	have the authority to require and receive from the organization
761	or from the independent auditor any records relative to the
762	operation of the organization.
763	(2) Notwithstanding the provisions of subsection (1), and
764	for the 2002-2003 fiscal year only, citizen support
765	organizations for the Department of Environmental Protection
766	that are not for profit and that have annual expenditures of
767	less than $100,000 are not required to have an independent
768	audit. This subsection expires July 1, 2003.
769	Section 21. Subsection (3) of section 218.075, Florida
770	Statutes, is amended to read:
771	218.075 Reduction or waiver of permit processing
772	fees.--Notwithstanding any other provision of law, the
773	Department of Environmental Protection and the water management
774	districts shall reduce or waive permit processing fees for
775	counties with a population of 50,000 or less on April 1, 1994,
776	until such counties exceed a population of 75,000 and
777	municipalities with a population of 25,000 or less, or any
778	county or municipality not included within a metropolitan
779	statistical area. Fee reductions or waivers shall be approved on
780	the basis of fiscal hardship or environmental need for a
781	particular project or activity. The governing body must certify
782	that the cost of the permit processing fee is a fiscal hardship
783	due to one of the following factors:
784	(3) Any condition specified in s. 218.503(1), that results
785	in the county or municipality being indeterminesa state of
786	financial emergency;
787
788	The permit applicant must be the governing body of a county or
789	municipality or a third party under contract with a county or
790	municipality and the project for which the fee reduction or
791	waiver is sought must serve a public purpose. If a permit
792	processing fee is reduced, the total fee shall not exceed $100.
793	Section 22. Subsection (3) is added to section 218.32,
794	Florida Statutes, to read:
795	218.32 Annual financial reports; local governmental
796	entities.--
797	(3) The department shall notify the President of the
798	Senate and the Speaker of the House of Representatives of any
799	municipality that has not had financial activity for the last 4
800	fiscal years. Such notice shall be sufficient to initiate
801	dissolution procedures described in s. 165.051(1)(a). Any
802	special law authorizing the incorporation or creation of said
803	municipality shall be included within the notification.
804	Section 23. Subsection (2) of section 218.321, Florida
805	Statutes, is amended to read:
806	218.321 Annual financial statements; local governmental
807	entities.--
808	(2) Each local governmental entity that is not required to
809	provide for an audit report in accordance with s. 218.39
810	11.45(3)(a)5. must complete its financial statements no later
811	than 12 months after the end of the fiscal year.
812	Section 24. Subsection (3) of section 218.36, Florida
813	Statutes, is amended to read:
814	218.36 County officers; record and report of fees and
815	disposition of same.--
816	(3) The board of county commissioners mayshall, on the
817	32nd day following the close of the fiscal year,notify the
818	Governor of the failure of any county officer to comply with the
819	provisions of this section. Such notification shall specify the
820	name of the officer and the office held by him or her at the
821	time of such failure and shall subject said officer to
822	suspension from office at the Governor's discretion.
823	Section 25. Section 218.369, Florida Statutes, is amended
824	to read:
825	218.369 Definitions applicable to ss. 218.37-218.386.--As
826	used in this section and in ss. 218.37, 218.38, 218.385, and
827	218.386, the term "unit of local government," except where
828	exception is made, means a county, municipality, special
829	district, district school board,local agency, authority, or
830	consolidated city-county government or any other local
831	governmental body or public body corporate and politic
832	authorized or created by general or special law and granted the
833	power to issue general obligation or revenue bonds; and the
834	words "general obligation or revenue bonds" shall be interpreted
835	to include within their scope general obligation bonds, revenue
836	bonds, special assessment bonds, limited revenue bonds, special
837	obligation bonds, debentures, and other similar instruments, but
838	not bond anticipation notes.
839	Section 26. Part V of chapter 218, Florida Statutes,
840	entitled "Financial Emergencies" is renamed "Local Governmental
841	Entity and District School Board Financial Emergencies."
842	Section 27. Section 218.50, Florida Statutes, is amended
843	to read:
844	218.50 Popular nameShort title.--Sections 218.50-218.504
845	shall be known by the popular nameas the "Local Governmental
846	Entity and District School BoardGovernmentFinancial
847	Emergencies Act."
848	Section 28. Section 218.501, Florida Statutes, is amended
849	to read:
850	218.501 Purposes.--The purposes of ss. 218.50-218.504 are:
851	(1) To promotepreserve and protect the fiscal
852	responsibilitysolvency of local governmental entities and
853	district school boards.
854	(2) To assist local governmental entities and district
855	school boardsin providing essential services without
856	interruption and in meeting their financial obligations.
857	(3) To assist local governmental entities and district
858	school boardsthrough the improvement of local financial
859	management procedures.
860	Section 29. Section 218.502, Florida Statutes, is amended
861	to read:
862	218.502 Definition.--As used in ss. 218.50-218.504, the
863	term "local governmental entity" means a county, municipality,
864	or special district, or district school board.
865	Section 30. Section 218.503, Florida Statutes, is amended
866	to read:
867	218.503 Determination of financial emergency.--
868	(1) A Local governmental entities and district school
869	boards shall be subject to review and oversight by the Governor
870	or the Commissioner of Educationentity is in a state of
871	financial emergency when any oneof the following conditions
872	occurs:
873	(a) Failure within the same fiscal year in which due to
874	pay short-term loans from banks or failure to make bond debt
875	service or other long-term debt payments when due, as a result
876	of a lack of funds.
877	(b) Failure to pay uncontested claims from creditors
878	within 90 days after the claim is presented, as a result of a
879	lack of funds.
880	(c)(b)Failure to transfer at the appropriate time, due to
881	lack of funds:
882	1. Taxes withheld on the income of employees; or
883	2. Employer and employee contributions for:
884	a. Federal social security; or
885	b. Any pension, retirement, or benefit plan of an
886	employee.
887	(d)(c)Failure for one pay period to pay, due to lack of
888	funds:
889	1. Wages and salaries owed to employees; or
890	2. Retirement benefits owed to former employees.
891	(e)(d)An unreserved or total fund balance or retained
892	earnings deficit, or unrestricted or total net assets deficit,
893	as reported on the balance sheet or statement of net assets on
894	the general purpose or fund financial statements,for which
895	sufficient resources of the local governmental entity, as
896	reported on the balance sheet or statement of net assets on the
897	general purpose or fund financial statements,are not available
898	to cover the deficit for 2 successive years. Resources available
899	to cover reported deficits include net assets that are not
900	otherwise restricted by federal, state, or local laws, bond
901	covenants, contractual agreements, or other legal constraints.
902	Fixed or capital assets the disposal of which would impair the
903	ability of a local governmental entity to carry out its
904	functions are not considered resources available to cover
905	reported deficits.
906	(e) Noncompliance of the local government retirement
907	system with actuarial conditions provided by law.
908	(2) A local governmental entity shall notify the Governor
909	and the Legislative Auditing Committee, and a district school
910	board shall notify the Commissioner of Education and the
911	Legislative Auditing Committee,when one or more of the
912	conditions specified in subsection (1) have occurred or will
913	occur if action is not taken to assist the local governmental
914	entity or district school board. In addition, any state agency
915	must, within 30 days after a determination that one or more of
916	the conditions specified in subsection (1) have occurred or will
917	occur if action is not taken to assist the local governmental
918	entity or district school boardthe identification of the
919	financial emergency, notify the Governor or the Commissioner of
920	Education, as appropriate,and the Legislative Auditing
921	Committee when one or more of the conditions specified in
922	subsection (1) have occurred or will occur if action is not
923	taken to assist a local governmental entity.
924	(3) Upon notification that one or more of the conditions
925	in subsection (1) exist, the Governor or his or her designee
926	shall contact the local governmental entity or the Commissioner
927	of Education or his or her designee shall contact the district
928	school boardto determine what actions have been taken by the
929	local governmental entity or the district school boardto
930	resolve the conditionfinancial emergency. The Governor or the
931	Commissioner of Education, as appropriate, shall determine
932	whether the local governmental entity or the district school
933	board needs state assistance to resolve the condition. If state
934	assistance is needed, the local governmental entity or district
935	school board is considered to be in a state of financial
936	emergency. The Governor or the Commissioner of Education, as
937	appropriate,has the authority to implement measures as set
938	forth in ss. 218.50-218.504 to assist the local governmental
939	entity or district school board in resolvingresolvethe
940	financial emergency. Such measures may include, but are not
941	limited to:
942	(a) Requiring approval of the local governmental entity's
943	budget by the Governor or approval of the district school
944	board's budget by the Commissioner of Education.
945	(b) Authorizing a state loan to athelocal governmental
946	entity and providing for repayment of same.
947	(c) Prohibiting a local governmental entity or district
948	school boardfrom issuing bonds, notes, certificates of
949	indebtedness, or any other form of debt until such time as it is
950	no longer subject to this section.
951	(d) Making such inspections and reviews of records,
952	information, reports, and assets of the local governmental
953	entity or district school board. The appropriate local officials
954	shall cooperate in such, in which inspections and reviews the
955	appropriate local officials shall cooperate.
956	(e) Consulting with the officials and auditorsof the
957	local governmental entity or the district school boardand the
958	appropriate state officialsagencyregarding any steps necessary
959	to bring the books of account, accounting systems, financial
960	procedures, and reports into compliance with state requirements.
961	(f) Providing technical assistance to the local
962	governmental entity or the district school board.
963	(g)1. Establishing a financial emergencyemergenciesboard
964	to oversee the activities of the local governmental entity or
965	the district school board. If a financial emergencyThe board,
966	ifis established for a local governmental entity, shall be
967	appointed by the Governor shall appoint board members and select
968	a chair. If a financial emergency board is established for a
969	district school board, the State Board of Education shall
970	appoint board members and select a chair.The Governor shall
971	select a chair and such other officers as are necessary. The
972	financial emergencyboard shall adopt such rules as are
973	necessary for conducting board business. The board may:
974	a. Make such reviews of records, reports, and assets of
975	the local governmental entity or the district school boardas
976	are needed.
977	b. Consult with the officials and auditorsof the local
978	governmental entity or the district school board and the
979	appropriate state officials regarding any steps necessary to
980	bring the books of account, accounting systems, financial
981	procedures, and reports of the local governmental entity or the
982	district school boardinto compliance with state requirements.
983	c. Review the operations, management, efficiency,
984	productivity, and financing of functions and operations of the
985	local governmental entity or district school board.
986	2. The recommendations and reports made by the financial
987	emergency board must be submitted to the Governor for local
988	governmental entities or to the Commissioner of Education and
989	the State Board of Education for district school boards for
990	appropriate action.
991	(h) Requiring and approving a plan, to be prepared by
992	officials ofthe appropriate state agency in conjunction with
993	the local governmental entity or the district school board in
994	consultation with the appropriate state officials, prescribing
995	actions that will cause the local governmental entity or
996	district school boardto no longer be subject to this section.
997	The plan must include, but need not be limited to:
998	1. Provision for payment in full of obligations outlined
999	in subsection (1), designated as priority items, that are
1000	currentlyall payments due or willto come due on debt
1001	obligations, pension payments, and all payments and charges
1002	imposed or mandated by federal or state law and for all
1003	judgments and past due accounts, as priority items of
1004	expenditures.
1005	2. Establishment of a basis ofpriority budgeting or zero-
1006	based budgeting in order, so as to eliminate low-priorityitems
1007	that are not affordable.
1008	3. The prohibition of a level of operations which can be
1009	sustained only with nonrecurring revenues.
1010	(4) ADuring the financial emergency period, thelocal
1011	governmental entity or district school boardmay not seek
1012	application of laws under the bankruptcy provisions of the
1013	United States Constitution except with the prior approval of the
1014	Governor for local governmental entities or the Commissioner of
1015	Education for district school boards.
1016	(5)(a) The governing authority of any municipality having
1017	a resident population of 300,000 or more on or after April 1,
1018	1999, which has been declared in a state of financial emergency
1019	pursuant to this section may impose a discretionary per-vehicle
1020	surcharge of up to 20 percent on the gross revenues of the sale,
1021	lease, or rental of space at parking facilities within the
1022	municipality which are open for use to the general public.
1023	(b) A municipal governing authority that imposes the
1024	surcharge authorized by this subsection may use the proceeds of
1025	such surcharge for the following purposes only:
1026	1. No less than 60 percent and no more than 80 percent of
1027	the surcharge proceeds shall be used by the governing authority
1028	to reduce its ad valorem tax millage rate or to reduce or
1029	eliminate non-ad valorem assessments.
1030	2. A portion of the balance of the surcharge proceeds
1031	shall be used by the governing authority to increase its budget
1032	reserves; however, the governing authority shall not reduce the
1033	amount it allocates for budget reserves from other sources below
1034	the amount allocated for reserves in the fiscal year prior to
1035	the year in which the surcharge is initially imposed. When a 15-
1036	percent budget reserve is achieved, based on the average gross
1037	revenue for the most recent 3 prior fiscal years, the remaining
1038	proceeds from this subparagraph shall be used for the payment of
1039	annual debt service related to outstanding obligations backed or
1040	secured by a covenant to budget and appropriate from non-ad
1041	valorem revenues.
1042	(c) This subsection expires June 30, 2006.
1043	Section 31. Section 218.504, Florida Statutes, is amended
1044	to read:
1045	218.504 Cessation of state action.--The Governor or the
1046	Commissioner of Education, as appropriate,has the authority to
1047	terminate all state actions pursuant to ss. 218.50-218.504.
1048	Cessation of state action must not occur until the Governor or
1049	the Commissioner of Education, as appropriate,has determined
1050	that:
1051	(1) The local governmental entity or district school
1052	board:
1053	(a) Has established and is operating an effective
1054	financial accounting and reporting system.
1055	(b) Has resolvedcorrected or eliminated the fiscal
1056	emergency conditions outlined in s. 218.503(1).
1057	(2) None of theNo new fiscal emergency conditions
1058	outlined in s. 218.503(1) existsexist.
1059	Section 32. Chapter 131, Florida Statutes, consisting of
1060	sections 131.01, 131.02, 131.03, 131.04, 131.05, and 131.06,
1061	Florida Statutes, is repealed.
1062	Section 33. Section 132.10, Florida Statutes, is repealed.
1063	Section 34. Section 165.052, Florida Statutes, is
1064	repealed.
1065	Section 35. Section 189.409, Florida Statutes, is
1066	repealed.
1067	Section 36. Section 189.422, Florida Statutes, is
1068	repealed.
1069	Section 37. Section 200.0684, Florida Statutes, is
1070	repealed.
1071	Section 38. Paragraph (h) of subsection (1) of section
1072	218.37, Florida Statutes, is repealed.
1073	Section 39. Section 215.195, Florida Statutes, is amended
1074	to read:
1075	215.195 Agency deposits relating to the Statewide Cost
1076	Allocation Plan.--
1077	(1) APPLICATION FOR ALLOCABLE STATEWIDE OVERHEAD.--Each
1078	state agency, and the judicial branch, making application for
1079	federal grant or contract funds shall, in accordance with the
1080	Statewide Cost Allocation Plan (SWCAP), include in its
1081	application a prorated share of the cost of services provided by
1082	state central service agencies which are reimbursable to the
1083	state pursuant to the provisions of Office of Management and
1084	Budget Circular A-87. Preparation of the Statewide Cost
1085	Allocation Plan and coordination thereof with all applicable
1086	parties is the responsibility of the Department of Financial
1087	Services. The Department of Financial Services shall ensure that
1088	the SWCAP presents the most favorable allocation of central
1089	services cost allowable to the state by the Federal Government.
1090	(2) DEPOSIT OF OVERHEAD IN THE GENERAL REVENUE FUND.--If
1091	an application for federal grant or contract funds is approved,
1092	the state agency or judicial branch receiving the federal grant
1093	or contract shall identify that portion representing
1094	reimbursement of allocable statewide overhead and deposit that
1095	amount into the General Revenue Fund unallocated as directed by
1096	the Department of Financial ServicesExecutive Office of the
1097	Governor. The Department of Financial Services shall be
1098	responsible for monitoring agency compliance with this section.
1099	Section 40. Section 215.97, Florida Statutes, is amended
1100	to read:
1101	215.97 Florida Single Audit Act.--
1102	(1) The purposes of the section are to:
1103	(a) Establish uniform state audit requirements for state
1104	financial assistance provided by state agencies to nonstate
1105	entities to carry out state projects.
1106	(b) Promote sound financial management, including
1107	effective internal controls, with respect to state financial
1108	assistance administered by nonstate entities.
1109	(c) Promote audit economy and efficiency by relying to the
1110	extent possible on already required audits of federal financial
1111	assistance provided to nonstate entities.
1112	(d) Provide for identification of state financial
1113	assistance transactions in the appropriations act, state
1114	accounting records, and recipient organization records.
1115	(e) Promote improved coordination and cooperation within
1116	and between affected state agencies providing state financial
1117	assistance and nonstate entities receiving state assistance.
1118	(f) Ensure, to the maximum extent possible, that state
1119	agencies monitor, use, and followup on audits of state financial
1120	assistance provided to nonstate entities.
1121	(2) Definitions; as used in this section, the term:
1122	(a) "Audit threshold" means the threshold amount used to
1123	determineto use in determiningwhen a state single audit of a
1124	nonstate entity shall be conducted in accordance with this
1125	section. Each nonstate entity that expends a total amount of
1126	state financial assistance equal to or in excess of $300,000 in
1127	any fiscal year of such nonstate entity shall be required to
1128	have a state single audit for such fiscal year in accordance
1129	with the requirements of this section. Every 2 years the Auditor
1130	General, after consulting with the Executive Office of the
1131	Governor, the Department of Financial ServicesComptroller, and
1132	all state awarding agencies that provide state financial
1133	assistance to nonstate entities, shall review the threshold
1134	amount for requiring audits under this section and may adjust
1135	such thresholddollar amount consistent with the purposes
1136	purposeof this section.
1137	(b) "Auditing standards" means the auditing standards as
1138	stated in the rules of the Auditor General as applicable to for-
1139	profit organizations, nonprofit organizations, or local
1140	governmental entities.
1141	(c) "Catalog of State Financial Assistance" means a
1142	comprehensive listing of state projects. The Catalog of State
1143	Financial Assistance shall be issued by the Department of
1144	Financial ServicesExecutive Office of the Governorafter
1145	conferring with the Comptroller and all state awarding agencies
1146	that provide state financial assistance to nonstate entities.
1147	The Catalog of State Financial Assistance shall include for each
1148	listed state project: the responsible state awardingagency;
1149	standard state project number identifier; official title; legal
1150	authorization; and description of the state project, including
1151	objectives, restrictions, application and awarding procedures,
1152	and other relevant information determined necessary.
1153	(d) "Coordinating agency" means the state awarding agency
1154	that provides the predominant amount of state financial
1155	assistance expended by a recipient, as determined by the
1156	recipient's Schedule of Expenditures of State Financial
1157	Assistance. To provide continuity, the determination of the
1158	predominant amount of state financial assistance shall be based
1159	upon state financial assistance expended in the recipient's
1160	fiscal years ending in 2003, 2006, and 2009, and every third
1161	year thereafter.
1162	(e)(d)"Financial reporting package" means the nonstate
1163	entities' financial statements, Schedule of Expenditures of
1164	State Financial Assistance, auditor's reports, management
1165	letter, auditee's written responses or corrective action plan,
1166	correspondence on followup of prior years' corrective actions
1167	taken, and such other information determined by the Auditor
1168	General to be necessary and consistent with the purposes of this
1169	section.
1170	(f)(e)"Federal financial assistance" means financial
1171	assistance from federal sources passed through the state and
1172	provided to nonstate organizationsentitiesto carry out a
1173	federal program. "Federal financial assistance" includes all
1174	types of federal assistance as defined in applicable United
1175	States Office of Management and Budget circulars.
1176	(g)(f)"For-profit organization" means any organization or
1177	sole proprietor thatbutis not a local governmental entity or a
1178	nonprofit organization.
1179	(h)(g)"Independent auditor" means an external state or
1180	local governmentalgovernmentauditor or a certified public
1181	accountant who meets the independence standards.
1182	(i)(h)"Internal control over state projects" means a
1183	process, effected by a nonstateanentity's management and other
1184	personnel, designed to provide reasonable assurance regarding
1185	the achievement of objectives in the following categories:
1186	1. Effectiveness and efficiency of operations.
1187	2. Reliability of financial operations.
1188	3. Compliance with applicable laws and regulations.
1189	(j)(i) "Local governmental entity" means a county agency,
1190	municipality, or special district or any other entity (other
1191	than a district school board, charter school,orcommunity
1192	college, or public university), however styled, which
1193	independently exercises any type of governmental function within
1194	the state.
1195	(k)(j)"Major state project" means any state project
1196	meeting the criteria as stated in the rules of the Department of
1197	Financial ServicesExecutive Office of the Governor. Such
1198	criteria shall be established after consultation with allthe
1199	Comptroller and appropriate state awarding agencies that provide
1200	state financial assistanceand shall consider the amount of
1201	state project expenditures andorexpenses or inherent risks.
1202	Each major state project shall be audited in accordance with the
1203	requirements of this section.
1204	(l)(k)"Nonprofit organization" means any corporation,
1205	trust, association, cooperative, or other organization that:
1206	1. Is operated primarily for scientific, educational
1207	service, charitable, or similar purpose in the public interest;
1208	2. Is not organized primarily for profit;
1209	3. Uses net proceeds to maintain, improve, or expand the
1210	operations of the organization; and
1211	4. Has no part of its income or profit distributable to
1212	its members, directors, or officers.
1213	(m)(l)"Nonstate entity" means a local governmental
1214	entity, nonprofit organization, or for-profit organization that
1215	receives state financial assistanceresources.
1216	(n) "Nonstate organization" means a local governmental
1217	entity, nonprofit organization, or for-profit organization that
1218	receives state resources.
1219	(o)(m)"Recipient" means a nonstate entity that receives
1220	state financial assistance directly from a state awarding
1221	agency.
1222	(p)(n) "Schedule of Expenditures ofState Financial
1223	Assistance" means a document prepared in accordance with the
1224	rules of the Department of Financial ServicesComptrollerand
1225	included in each financial reporting package required by this
1226	section.
1227	(q)(o) "State awarding agency" means athe state agency,
1228	as defined in s. 216.011, that providesprovidedstate financial
1229	assistance to athenonstate entity.
1230	(r)(p) "State financial assistance" means financial
1231	assistance fromstate resources, not including federal financial
1232	assistance and state matching on federal programs, provided to a
1233	nonstate entityentitiesto carry out a state project. "State
1234	financial assistance" shall include theincludes alltypes of
1235	state resourcesassistance as stated in the rules of the
1236	Department of Financial ServicesExecutive Office of the
1237	Governor established in consultation with allthe Comptroller
1238	and appropriate state awarding agencies that provide state
1239	financial assistance. It includes State financial assistance may
1240	be provided directly by state awarding agencies or indirectly by
1241	nonstate entitiesrecipients of state awards or subrecipients.
1242	State financial assistanceItdoes not include procurement
1243	contracts used to buy goods or services from vendors and. Audits
1244	of such procurement contracts with vendors are outside of the
1245	scope of this section. Also, audits of contracts to operate
1246	state-ownedstate-government-ownedand contractor-operated
1247	facilities are excluded from the audit requirements of this
1248	section.
1249	(s)(q) "State matching" means state resources provided to
1250	a nonstate entityentities to be usedto meet federal financial
1251	participation matching requirements of federal programs.
1252	(t) "State program" means a set of special purpose
1253	activities undertaken to realize identifiable goals and
1254	objectives in order to achieve a state agency's mission and
1255	legislative intent requiring accountability for state resources.
1256	(u)(r) "State project" means a state program that provides
1257	all state financial assistance to a nonstate organization and
1258	that must beentity assigned a singlestate project number
1259	identifier in the Catalog of State Financial Assistance.
1260	(v)(s)"State Projects Compliance Supplement" means a
1261	document issued by the Department of Financial Services
1262	Executive Office of the Governor, in consultation with the
1263	Comptroller and all state awarding agencies that provide state
1264	financial assistance. The State Projects Compliance Supplement
1265	shall identify state projects, the significant compliance
1266	requirements, eligibility requirements, matching requirements,
1267	suggested audit procedures, and other relevant information
1268	determined necessary.
1269	(w)(t)"State project-specific audit" means an audit of
1270	one state project performed in accordance with the requirements
1271	of subsection (10)(9).
1272	(x)(u)"State single audit" means an audit of a nonstate
1273	entity's financial statements and state financial assistance.
1274	Such audits shall be conducted in accordance with the auditing
1275	standards as stated in the rules of the Auditor General.
1276	(y)(v)"Subrecipient" means a nonstate entity that
1277	receives state financial assistance through another nonstate
1278	entity.
1279	(z)(w)"Vendor" means a dealer, distributor, merchant, or
1280	other seller providing goods or services that are required for
1281	the conduct of a state project. These goods or services may be
1282	for an organization's own use or for the use of beneficiaries of
1283	the state project.
1284	(3) The Executive Office of the Governor shall be
1285	responsible for notifying the Department of Financial Services
1286	of any actions during the budgetary process that impact the
1287	Catalog of State Financial Assistance.:
1288	(a) Upon conferring with the Comptroller and all state
1289	awarding agencies, adopt rules necessary to provide appropriate
1290	guidance to state awarding agencies, recipients and
1291	subrecipients, and independent auditors of state financial
1292	assistance relating to the requirements of this section,
1293	including:
1294	1. The types or classes of financial assistance considered
1295	to be state financial assistance which would be subject to the
1296	requirements of this section. This would include guidance to
1297	assist in identifying when the state agency or recipient has
1298	contracted with a vendor rather than with a recipient or
1299	subrecipient.
1300	2. The criteria for identifying a major state project.
1301	3. The criteria for selecting state projects for audits
1302	based on inherent risk.
1303	(b) Be responsible for coordinating the initial
1304	preparation and subsequent revisions of the Catalog of State
1305	Financial Assistance after consultation with the Comptroller and
1306	all state awarding agencies.
1307	(c) Be responsible for coordinating the initial
1308	preparation and subsequent revisions of the State Projects
1309	Compliance Supplement, after consultation with the Comptroller
1310	and all state awarding agencies.
1311	(4) The Department of Financial ServicesComptroller
1312	shall:
1313	(a) Upon conferring with the Executive Office of the
1314	Governor and all state awarding agencies, adopt rules necessary
1315	to provide appropriate guidance to state awarding agencies,
1316	nonstate entities, and independent auditors of state financial
1317	assistance relating to the requirements of this section,
1318	including:
1319	1. The types or classes of state resources considered to
1320	be state financial assistance that would be subject to the
1321	requirements of this section. This would include guidance to
1322	assist in identifying when the state awarding agency or a
1323	nonstate entity has contracted with a vendor rather than with a
1324	recipient or subrecipient.
1325	2. The criteria for identifying a major state project.
1326	3. The criteria for selecting state projects for audits
1327	based on inherent risk.
1328	(b) Be responsible for coordinating revisions to the
1329	Catalog of State Financial Assistance after consultation with
1330	the Executive Office of the Governor and all state awarding
1331	agencies.
1332	(c) Be responsible for coordinating with the Executive
1333	Office of the Governor actions affecting the budgetary process
1334	under paragraph (b).
1335	(d) Be responsible for coordinating revisions to the State
1336	Projects Compliance Supplement, after consultation with the
1337	Executive Office of the Governor and all state awarding
1338	agencies.
1339	(e)(a)Make enhancements to the state's accounting system
1340	to provide for the:
1341	1. Recording of state financial assistance and federal
1342	financial assistance appropriations and expenditures within the
1343	state awarding agencies' operating funds.
1344	2. Recording of state project number identifiers, as
1345	provided in the Catalog of State Financial Assistance, for state
1346	financial assistance.
1347	3. Establishment and recording of an identification code
1348	for each financial transaction, including state awarding
1349	agencies' disbursements of state financial assistance and
1350	federal financial assistance, as to the corresponding type or
1351	organization that is party to the transaction(e.g., other
1352	governmental agencies, nonprofit organizations, and for-profit
1353	organizations), and disbursements of federal financial
1354	assistance, as to whether the party to the transaction is or is
1355	not a nonstate entityrecipient or subrecipient.
1356	(f)(b)Upon conferring with the Executive Office of the
1357	Governor and all state awarding agencies, adopt rules necessary
1358	to provide appropriate guidance to state awarding agencies,
1359	nonstate entitiesrecipients and subrecipients, and independent
1360	auditors of state financial assistance relating to the format
1361	for the Schedule of Expenditures ofState Financial Assistance.
1362	(g)(c)Perform any inspections, reviews, investigations,
1363	or audits of state financial assistance considered necessary in
1364	carrying out the Department of Financial Services's
1365	Comptroller'slegal responsibilities for state financial
1366	assistance or to comply with the requirements of this section.
1367	(5) Each state awarding agency shall:
1368	(a) Provide to eacharecipient information needed by the
1369	recipient to comply with the requirements of this section,
1370	including:
1371	1. The audit and accountability requirements for state
1372	projects as stated in this section and applicable rules of the
1373	Executive Office of the Governor, rules of the Department of
1374	Financial ServicesComptroller,and rules of the Auditor
1375	General.
1376	2. Information from the Catalog of State Financial
1377	Assistance, including the standard state project number
1378	identifier; official title; legal authorization; and description
1379	of the state project including objectives, restrictions, and
1380	other relevant information determined necessary.
1381	3. Information from the State Projects Compliance
1382	Supplement, including the significant compliance requirements,
1383	eligibility requirements, matching requirements, suggested audit
1384	procedures, and other relevant information determined necessary.
1385	(b) Require the recipient, as a condition of receiving
1386	state financial assistance, to allow the state awarding agency,
1387	the Department of Financial ServicesComptroller, and the
1388	Auditor General access to the recipient's records and the
1389	recipient's independent auditor's working papers as necessary
1390	for complying with the requirements of this section.
1391	(c) Notify the recipient that this section does not limit
1392	the authority of the state awarding agency to conduct or arrange
1393	for the conduct of additional audits or evaluations of state
1394	financial assistance or limit the authority of any state
1395	awardingagency inspector general, the Auditor General, or any
1396	other state official.
1397	(d) Be provided one copy of each financial reporting
1398	package prepared in accordance with the requirement of this
1399	section.
1400	(e) Review the recipient'srecipientfinancial reporting
1401	package, including the management letters and corrective action
1402	plans, to the extent necessary to determine whether timely and
1403	appropriate corrective action has been taken with respect to
1404	audit findings and recommendations pertaining to state financial
1405	assistance that are specific toprovided by the state awarding
1406	agency.
1407	(f) Designate within the state awarding agency a division,
1408	bureau, or other organizational unit that will be responsible
1409	for reviewing financial reporting packages pursuant to paragraph
1410	(e).
1411
1412	If the state awarding agency is not the coordinating agency as
1413	defined in paragraph (2)(d), the state awarding agency's
1414	designated division, bureau, or other organizational unit shall
1415	communicate to the coordinating agency the state awarding
1416	agency's approval of the recipient's corrective action plan with
1417	respect to findings and recommendations that are not specific to
1418	the state awarding agency.
1419	(6) Each coordinating agency shall:
1420	(a) Review the recipient's financial reporting package,
1421	including the management letter and corrective action plan, to
1422	identify audit findings and recommendations that affect state
1423	financial assistance that are not specific to a particular state
1424	awarding agency.
1425	(b) For any such findings and recommendations determine:
1426	1. Whether timely and appropriate corrective action has
1427	been taken.
1428	2. Promptly inform the state awarding agency's contact, as
1429	designated pursuant to paragraph (5)(f), of actions taken by the
1430	recipient to comply with the approved corrective action plan.
1431	(c) Maintain records of followup actions taken for the use
1432	of any succeeding coordinating agency.
1433	(7)(6)As a condition of receiving state financial
1434	assistance, each nonstate entityrecipientthat provides state
1435	financial assistance to a subrecipient shall:
1436	(a) Provide to eachasubrecipient information needed by
1437	the subrecipient to comply with the requirements of this
1438	section, including:
1439	1. Identification of the state awarding agency.
1440	2. The audit and accountability requirements for state
1441	projects as stated in this section and applicable rules of the
1442	Executive Office of the Governor, rules of the Department of
1443	Financial ServicesComptroller,and rules of the Auditor
1444	General.
1445	3. Information from the Catalog of State Financial
1446	Assistance, including the standard state project number
1447	identifier; official title; legal authorization; and description
1448	of the state project, including objectives, restrictions, and
1449	other relevant information.
1450	4. Information from the State Projects Compliance
1451	Supplement including the significant compliance requirements,
1452	eligibility requirements, matching requirements, and suggested
1453	audit procedures, and other relevant information determined
1454	necessary.
1455	(b) Review the financial reporting package of the
1456	subrecipient audit reports, including the management letter and
1457	corrective action planletters, to the extent necessary to
1458	determine whether timely and appropriate corrective action has
1459	been taken with respect to audit findings and recommendations
1460	pertaining to state financial assistance provided by athe state
1461	awarding agency or nonstate entity.
1462	(c) Perform such other procedures as specified in terms
1463	and conditions of the written agreement with the state awarding
1464	agency or nonstate entityincluding any required monitoring of
1465	the subrecipient's use of state financial assistance through
1466	onsite visits, limited scope audits, or other specified
1467	procedures.
1468	(d) Require subrecipients, as a condition of receiving
1469	state financial assistance, to permit the independent auditor of
1470	the nonstate entityrecipient, the state awarding agency, the
1471	Department of Financial ServicesComptroller, and the Auditor
1472	General access to the subrecipient's records and the
1473	subrecipient's independent auditor's working papers as necessary
1474	to comply with the requirements of this section.
1475	(8)(7)Each recipient or subrecipient of state financial
1476	assistance shall comply with the following:
1477	(a) Each nonstate entity that receives state financial
1478	assistance and meets theaudit threshold requirements, in any
1479	fiscal year of the nonstate entity, as stated in the rules of
1480	the Auditor General, shall have a state single audit conducted
1481	for such fiscal year in accordance with the requirements of this
1482	act and with additional requirements established in rules of the
1483	Executive Office of the Governor, rules of the Department of
1484	Financial ServicesComptroller,and rules of the Auditor
1485	General. If only one state project is involved in a nonstate
1486	entity's fiscal year, the nonstate entity may elect to have only
1487	a state project-specific audit of the state project for that
1488	fiscal year.
1489	(b) Each nonstate entity that receives state financial
1490	assistance and does not meet the auditthreshold requirements,
1491	in any fiscal year of the nonstate entity, as stated in this law
1492	or the rules of the Auditor General is exempt for such fiscal
1493	year from the state single audit requirements of this section.
1494	However, such nonstate entity must meet terms and conditions
1495	specified in the written agreement with the state awarding
1496	agency or nonstate entity.
1497	(c) Regardless of the amount of thestate financial
1498	assistance, the provisions of this section do not exempt a
1499	nonstate entity from compliance with provisions of law relating
1500	to maintaining records concerning state financial assistance to
1501	such nonstate entity or allowing access and examination of those
1502	records by the state awarding agency, nonstate entity, the
1503	Department of Financial ServicesComptroller, or the Auditor
1504	General.
1505	(d) Audits conducted pursuant to this section shall be
1506	performed annually.
1507	(e) Audits conducted pursuant to this section shall be
1508	conducted by independent auditors in accordance with auditing
1509	standards as stated in rules of the Auditor General.
1510	(f) Upon completion of the audit as required by this
1511	section, a copy of the recipient's financial reporting package
1512	shall be filed with the state awarding agency and the Auditor
1513	General. Upon completion of the audit as required by this
1514	section, a copy of the subrecipient's financial reporting
1515	package shall be filed with the nonstate entityrecipientthat
1516	provided the state financial assistance and the Auditor General.
1517	The financial reporting package shall be filed in accordance
1518	with the rules of the Auditor General.
1519	(g) All financial reporting packages prepared pursuant to
1520	the requirements of this section shall be available for public
1521	inspection.
1522	(h) If an audit conducted pursuant to this section
1523	discloses any significant audit findings relating to state
1524	financial assistance, including material noncompliance with
1525	individual state project compliance requirements or reportable
1526	conditions in internal controls of the nonstate entity, the
1527	nonstate entity shall submit as part of the financial reporting
1528	audit package to the state awarding agency or nonstate entitya
1529	plan for corrective action to eliminate such audit findings or a
1530	statement describing the reasons that corrective action is not
1531	necessary.
1532	(i) An audit conducted in accordance with this section is
1533	in addition to any audit of federal awards required by the
1534	federal Single Audit Act and other federal laws and regulations.
1535	To the extent that such federally required audits provide the
1536	state awarding agency or nonstate entitywith information it
1537	requires to carry out its responsibilities under state law or
1538	other guidance, thea state awarding agency or nonstate entity
1539	shall rely upon and use that information.
1540	(j) Unless prohibited by law, the costscostof audits
1541	pursuant to this section areisallowable charges to state
1542	projects. However, any charges to state projects should be
1543	limited to those incremental costs incurred as a result of the
1544	audit requirements of this section in relation to other audit
1545	requirements. The nonstate entity should allocate such
1546	incremental costs to all state projects for which it expended
1547	state financial assistance.
1548	(k) Audit costs may not be charged to state projects when
1549	audits required by this section have not been made or have been
1550	made but not in accordance with this section. If a nonstate
1551	entity fails to have an audit conducted consistent with this
1552	section, a state awarding agency or nonstate entityagenciesmay
1553	take appropriate corrective action to enforce compliance.
1554	(l) This section does not prohibit the state awarding
1555	agency or nonstate entityfrom including terms and conditions in
1556	the written agreement which require additional assurances that
1557	state financial assistance meets the applicable requirements of
1558	laws, regulations, and other compliance rules.
1559	(m) A state awarding agency or nonstate entity that
1560	provides state financial assistance to nonstate entities and
1561	conducts or arranges for audits of state financial assistance
1562	that are in addition to the audits conducted under this act,
1563	including audits of nonstate entities that do not meet the audit
1564	threshold requirements,shall, consistent with other applicable
1565	law, arrange for funding the full cost of such additional
1566	audits.
1567	(9)(8)The independent auditor when conducting a state
1568	single audit of a nonstate entityrecipients or subrecipients
1569	shall:
1570	(a) Determine whether the nonstate entity's financial
1571	statements are presented fairly in all material respects in
1572	conformity with generally accepted accounting principles.
1573	(b) Determine whether state financial assistance shown on
1574	the Schedule of Expenditures ofState Financial Assistance is
1575	presented fairly in all material respects in relation to the
1576	nonstate entity's financial statements taken as a whole.
1577	(c) With respect to internal controls pertaining to each
1578	major state project:
1579	1. Obtain an understanding of internal controls;
1580	2. Assess control risk;
1581	3. Perform tests of controls unless the controls are
1582	deemed to be ineffective; and
1583	4. Determine whether the nonstate entity has internal
1584	controls in place to provide reasonable assurance of compliance
1585	with the provisions of laws and rules pertaining to state
1586	financial assistance that have a material effect on each major
1587	state project.
1588	(d) Determine whether each major state project complied
1589	with the provisions of laws, rules, and guidelines as identified
1590	in the State Projects Compliance Supplement, or otherwise
1591	identified by the state awarding agency, which have a material
1592	effect on each major state project. When major state projects
1593	are less than 50 percent of the nonstate entity's total
1594	expenditures for all state financial assistance, the auditor
1595	shall select and test additional state projects as major state
1596	projects as necessary to achieve audit coverage of at least 50
1597	percent of the expenditures for all state financial assistance
1598	provided to the nonstate entity. Additional state projects
1599	needed to meet the 50-percent requirement may be selected on an
1600	inherent risk basis as stated in the rules of the Department of
1601	Financial ServicesExecutive Office of the Governor.
1602	(e) Report on the results of any audit conducted pursuant
1603	to this section in accordance with the rules of the Executive
1604	Office of the Governor, rules of the Department of Financial
1605	ServicesComptroller, and rules of the Auditor General.
1606	Financial reporting packagesAudit reportsshall include
1607	summaries of the auditor's results regarding the nonstate
1608	entity's financial statements; Schedule of Expenditures ofState
1609	Financial Assistance; internal controls; and compliance with
1610	laws, rules, and guidelines.
1611	(f) Issue a management letter as prescribed in the rules
1612	of the Auditor General.
1613	(g) Upon notification by the nonstate entity, make
1614	available the working papers relating to the audit conducted
1615	pursuant to the requirements of this section to the state
1616	awarding agency, the Department of Financial Services
1617	Comptroller, or the Auditor General for review or copying.
1618	(10)(9)The independent auditor, when conducting a state
1619	project-specific audit of a nonstate entityrecipients or
1620	subrecipients, shall:
1621	(a) Determine whether the nonstate entity's Schedule of
1622	Expenditures ofState Financial Assistance is presented fairly
1623	in all material respects in conformity with stated accounting
1624	policies.
1625	(b) Obtain an understanding of internal controlscontrol
1626	and perform tests of internal controlscontrolover the state
1627	project consistent with the requirements of a major state
1628	project.
1629	(c) Determine whether or not the auditee has complied with
1630	applicable provisions of laws, rules, and guidelines as
1631	identified in the State Projects Compliance Supplement, or
1632	otherwise identified by the state awarding agency, which could
1633	have a direct and material effect on the state project.
1634	(d) Report on the results of theastate project-specific
1635	audit consistent with the requirements of the state single audit
1636	and issue a management letter as prescribed in the rules of the
1637	Auditor General.
1638	(e) Upon notification by the nonstate entity, make
1639	available the working papers relating to the audit conducted
1640	pursuant to the requirements of this section to the state
1641	awarding agency, the Department of Financial Services
1642	Comptroller, or the Auditor General for review or copying.
1643	(11)(10)The Auditor General shall:
1644	(a) Have the authority to audit state financial assistance
1645	provided to any nonstate entity when determined necessary by the
1646	Auditor General or when directed by the Legislative Auditing
1647	Committee.
1648	(b) Adopt rules that state the auditing standards that
1649	independent auditors are to follow for audits of nonstate
1650	entities required by this section.
1651	(c) Adopt rules that describe the contents and the filing
1652	deadlines for the financial reporting package.
1653	(d) Provide technical advice upon request of the
1654	Department of Financial ServicesComptroller, Executive Office
1655	of the Governor, and state awardingagencies relating to
1656	financial reporting and audit responsibilities contained in this
1657	section.
1658	(e) Be provided one copy of each financial reporting
1659	package prepared in accordance with the requirements of this
1660	section.
1661	(f) Perform ongoing reviews of a sample of financial
1662	reporting packages filed pursuant to the requirements of this
1663	section to determine compliance with the reporting requirements
1664	of this section and applicable rules of the Executive Office of
1665	the Governor, rules of the Department of Financial Services
1666	Comptroller,and rules of the Auditor General.
1667	Section 41. Effective July 1, 2003, one full-time
1668	equivalent position is transferred from the Executive Office of
1669	the Governor to the Department of Financial Services.
1670	Section 42. This act shall take effect upon becoming a
1671	law.