S 0673 General Bill, By Branton, Passailaigue, McGill and Wilson
 A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY REENTITLING
 CHAPTER 7, TITLE 11, RELATING TO THE STATE AUDITOR AS "AUDITS" AND DESIGNATING
 SECTIONS 11-7-10 THROUGH 11-7-30 AS ARTICLE 1 ENTITLED "STATE AUDITOR"; AND TO
 AMEND THE 1976 CODE BY ADDING ARTICLE 3 IN THE RETITLED CHAPTER SO AS TO
 PROVIDE FOR THE GOVERNANCE OF THE INTERNAL AUDITING FUNCTIONS OF STATE
 AGENCIES AND THE ESTABLISHMENT OF THE OFFICE OF INSPECTOR GENERAL WITHIN THE
 STATE BUDGET AND CONTROL BOARD AS A REVIEWING ENTITY OF INTERNAL AUDITING
 FUNCTIONS FOR AGENCIES THAT HAVE INTERNAL AUDITING AND PROVIDING THAT FUNCTION
 TO AGENCIES WITHOUT INTERNAL AUDITING FUNCTIONS, TO PROVIDE FOR THE
 APPOINTMENT OF THE INSPECTOR GENERAL BY THE STATE BUDGET AND CONTROL BOARD
 WITH THE ADVICE AND CONSENT OF THE SENATE, TO PROVIDE THE RELATIONSHIP AND
 LINES OF COMMUNICATION BETWEEN THE INSPECTOR GENERAL AND AGENCY INTERNAL
 AUDITORS, TO PROVIDE THAT THE OFFICE OF INSPECTOR GENERAL SHALL CONSULT WITH
 THE OFFICE OF HUMAN RESOURCES OF THE STATE BUDGET AND CONTROL BOARD TO DEVISE
 A STANDARDIZED GRADE AND COMPENSATION PLAN FOR INTERNAL AUDITORS, AND
 COORDINATE CONTINUING EDUCATION FOR STATE AGENCY INTERNAL AUDITORS, AND TO
 PROVIDE A JULY 1, 2002, EFFECTIVE DATE FOR THIS ACT.

   05/08/01  Senate Introduced and read first time SJ-5
   05/08/01  Senate Referred to Committee on Finance SJ-5

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY REENTITLING CHAPTER 7, TITLE 11, RELATING TO THE STATE AUDITOR AS "AUDITS" AND DESIGNATING SECTIONS 11-7-10 THROUGH 11-7-30 AS ARTICLE 1 ENTITLED "STATE AUDITOR"; AND TO AMEND THE 1976 CODE BY ADDING ARTICLE 3 IN THE RETITLED CHAPTER SO AS TO PROVIDE FOR THE GOVERNANCE OF THE INTERNAL AUDITING FUNCTIONS OF STATE AGENCIES AND THE ESTABLISHMENT OF THE OFFICE OF INSPECTOR GENERAL WITHIN THE STATE BUDGET AND CONTROL BOARD AS A REVIEWING ENTITY OF INTERNAL AUDITING FUNCTIONS FOR AGENCIES THAT HAVE INTERNAL AUDITING AND PROVIDING THAT FUNCTION TO AGENCIES WITHOUT INTERNAL AUDITING FUNCTIONS, TO PROVIDE FOR THE APPOINTMENT OF THE INSPECTOR GENERAL BY THE STATE BUDGET AND CONTROL BOARD WITH THE ADVICE AND CONSENT OF THE SENATE, TO PROVIDE THE RELATIONSHIP AND LINES OF COMMUNICATION BETWEEN THE INSPECTOR GENERAL AND AGENCY INTERNAL AUDITORS, TO PROVIDE THAT THE OFFICE OF INSPECTOR GENERAL SHALL CONSULT WITH THE OFFICE OF HUMAN RESOURCES OF THE STATE BUDGET AND CONTROL BOARD TO DEVISE A STANDARDIZED GRADE AND COMPENSATION PLAN FOR INTERNAL AUDITORS, AND COORDINATE CONTINUING EDUCATION FOR STATE AGENCY INTERNAL AUDITORS, AND TO PROVIDE A JULY 1, 2002, EFFECTIVE DATE FOR THIS ACT.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Chapter 7, Title 11 of the 1976 Code is reentitled "Audits" and Sections 11-7-10 through 11-7-30 are designated Article 1, entitled "State Auditor".

SECTION 2. Chapter 7, Title 11 of the 1976 Code is amended by adding:

"Article 3

Section 11-7-310. In a state agency having an internal audit function, that function or office shall report directly to an audit committee of the agency governing board. In the case of cabinet agencies, an audit committee is established consisting, ex officio, of all cabinet agency directors. An office of internal audit in a cabinet agency shall report directly to this committee. The audit committees must meet as frequently as necessary to review audit plans and the results of audits conducted. Audit standards applicable to internal audits must be the standards available through the Institute of Internal Auditors or the State Auditor.

Section 11-7-320. There is established within the State Budget and Control Board the Office of Inspector General. The inspector general is appointed by the board with the advice and consent of the Senate and the person appointed reports directly to the board. The inspector general shall:

(1) oversee and coordinate a state government-wide audit program. This audit program must not conflict or overlap with the independent financial audits or agreed upon procedure audits conducted by the State Auditor or his designee;

(2) Receive reports from internal audit units when the director of such a unit determines that the appropriate audit committee has not taken action to address an issue developed in the internal audit process;

(3) receive copies of the annual reports of agency internal audits;

(4) maintain the 'hotline' available for the public to report perceived irregularities;

(5) refer significant matters reported to it or otherwise discovered to the specific agency office of internal audit for action;

(6) from its own staff of auditors and applying internal audit standards, periodically review agencies without the internal audit function.

Section 11-7-330. A business communication between the Office of the Inspector General and the director of the internal audit unit of an agency may not be the basis of any disciplinary or other adverse personnel action taken against an agency audit director.

Section 11-7-340. The Office of Inspector General shall maintain a database of all significant audit issues and devise an annual plan to address weaknesses. If the Inspector General determines that specific areas within an agency need additional attention, the Inspector General shall communicate through the audit committee to the office of internal audits of the agency requesting assistance in the matter. The office of internal audits must address the matters within a reasonable time given other priorities set by agency management.

Section 11-7-350. The Office of Inspector General, through regular review, shall ensure the maintenance of a standardized grade and compensation plan for agency internal auditors, coordinating through the Office of Human Resources of the State Budget and Control Board. The Office of Human Resources shall assist state agencies in establishing or maintaining adequate internal audit positions, or both, as suggested by this plan. Under these guidelines, the agency director, with the approval of the appropriate audit committee, may employ the agency's audit director.

Section 11-7-360. The Office of Inspector General shall coordinate a continuing education plan for all state internal auditors and provide forums for sharing information."

SECTION 3. This act takes effect July 1, 2002.