S T A T E   O F   N E W   Y O R K
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                                  4556

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             April 12, 2011
                               ___________

Introduced  by  Sen.  RANZENHOFER -- read twice and ordered printed, and
  when printed to be committed to the Committee on Education

AN ACT to amend the education law, in relation to making internal  audit
  functions  optional  by  school districts unless an audit by the comp-
  troller reveals deficiencies

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Subdivisions 1, 2 and 7 of section 2116-b of the education
law, as added by chapter 263 of the laws of 2005, are amended and a  new
subdivision 8 is added to read as follows:
  1.  No  later  than July first, two thousand six, each school district
shall establish an internal audit function to be in operation  no  later
than  the  following December thirty-first. Such function shall include:
(a) development of a risk assessment of district  operations,  including
but  not  limited  to, a review of financial policies and procedures and
the testing and evaluation of district internal controls; (b) [an  annu-
al]  A review and update of such risk assessment; and (c) preparation of
reports[, at least annually or more frequently as the trustees or  board
of  education  may  direct,]  which  analyze significant risk assessment
findings, recommend changes  for  strengthening  controls  and  reducing
identified  risks,  and  specify  timeframes  for implementation of such
recommendations.
  2. School districts of less than eight teachers, school districts with
actual general fund expenditures totaling less than five million dollars
in the previous school year, or school districts with actual  enrollment
of less than three hundred students in the previous school year shall be
exempt   from  this  requirement.  Any  school  district  claiming  such
exemption shall [annually] certify to the commissioner that such  school
district meets the requirements set forth in this subdivision.
  7.  Nothing  in  this section shall be construed as requiring a school
district in any city with a population of one hundred twenty-five  thou-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10627-01-1
              

S. 4556                             2

sand  or  more  to replace or modify an existing internal audit function
where such function already exists by special or local law, so  long  as
the  superintendent  of the district [annually] certifies to the commis-
sioner  that  the  existing internal audit function meets or exceeds the
requirements of this section.
  8.  NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO  THE  CONTRARY,  THE
INTERNAL  AUDIT  FUNCTION  ESTABLISHED PURSUANT TO THIS SECTION SHALL BE
OPTIONAL BY ALL SCHOOL DISTRICTS UNLESS THE COMPTROLLER FINDS  DEFICIEN-
CIES  IN  THE  AUDIT  PERFORMED  PURSUANT TO SECTION THIRTY-THREE OF THE
GENERAL MUNICIPAL LAW. IF DEFICIENCIES ARE  FOUND  BY  THE  COMPTROLLER,
SCHOOL DISTRICTS SHALL PERFORM BI-ANNUAL INTERNAL AUDITS UNTIL THE COMP-
TROLLER CONDUCTS ANOTHER AUDIT OF SUCH SCHOOL DISTRICT.
  S  2.  This act shall take effect on the first of July next succeeding
the date on which it shall have become a law.