S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2365
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 18, 2017
                                ___________
 
 Introduced  by M. of A. GALEF -- read once and referred 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
 such  exemption  shall  [annually] certify to the commissioner that such
 school district meets the requirements set forth in this subdivision.

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

                                                            LBD02870-01-7

 A. 2365                             2
 
   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.
   §  2.  This act shall take effect on the first of July next succeeding
 the date on which it shall have become a law.