S T A T E   O F   N E W   Y O R K
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                                  1052

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 8, 2015
                               ___________

Introduced  by  Sens. RANZENHOFER, DeFRANCISCO, GALLIVAN, SEWARD -- 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,  subdivisions  1 and 7 as added by chapter 263 of the laws of 2005,
and subdivision 2 as amended by section 4 of part A of chapter 57 of the
laws of 2013, 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 one thousand five hundred students in the previous school
year shall be exempt from this requirement. Any school district claiming

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02084-01-5

              

S. 1052                             2

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-
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 BIENNIAL 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.