WHEREAS, the General Assembly finds and declares that audits of local government programs, functions, activities, and organizations are an integral part of the administrative process of local government and are essential in providing accountability for its performance; and

WHEREAS, the functions of an auditor are particularly important in the public sector, as the checks on poor performance traditionally found in the private sector are not a major threat to public sector organizations; and

WHEREAS, government officials throughout the country have realized that an independent oversight function is particularly important because of the unique relationship that government auditors have with their primary stakeholders, i.e. the taxpayers; and

WHEREAS, the taxpayers of the State of Delaware deserve to know that their scarce tax dollars are being protected by audit functions which operate with reasonable independence from the supervisory chain and that those audit functions ensure compliance with a generally accepted norm for governmental accounting practices; and

WHEREAS, while the Delaware Code currently does provide for a County Auditor for New Castle County who must be properly qualified and carry out audits of local accounts, books, and records, it is unclear as to the level of independence of its functions or whether its audits ensure compliance with a generally accepted norm for governmental accounting practices;

NOW, THERFORE:

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Title 9 of the Delaware Code by transferring § 1401 through § 1409 thereof from their current position in Chapter 13 thereof to a new Chapter 14 within Title 9 entitled: “CHAPTER 14. THE COUNTY AUDITOR.”.

Section 2. Amend § 1401, Title 9 of the Delaware Code, by striking subsection (a) thereof and by substituting in lieu thereof the following:

“(a) There is established, within the Government of New Castle County, the Office of the County Auditor the administrator and head of which shall be known as the County Auditor. The County Auditor shall be appointed by the County Council and may be removed prior to the expiration of his or her term of appointment only for good cause shown and by an affirmative vote of 2/3 of the members thereof. The County Auditor shall serve a term of 4 years, beginning on the date of his or her appointment by the County Council. The incumbent County Auditor shall hold over in office after the expiration of his or her term of office, and shall continue to exercise the duties of County Auditor, until his or her successor is appointed by the County Council.”

Section 3. Amend § 1401(b), Title 9 of the Delaware Code, by adding thereto a new sentence as follows:

“The functions and duties of the County Auditor shall be conducted in accordance with the most recent General Auditing Standards promulgated by the United States General Accounting Office.”

Section 4. Amend § 1401, Title 9 of the Delaware Code, by adding thereto the following new subsection:

“(d) The County Auditor shall not be actively involved in partisan political activities or the political affairs of New Castle County.”

Section 5. Amend Title 9 of the Delaware Code, by striking § 1402 thereof in its entirety and by substituting in lieu thereof the following:

“§ 1402. Budget; Assistant County Auditors; Contract Auditors.

(a) The County Auditor shall be provided with a separate budget sufficient to carry out the responsibilities and functions of this Chapter and any other responsibilities or functions which are by law assigned to, or required of, the County Auditor.

(b) The County Auditor may appoint, employ, and remove such employees, personnel, and Assistant County Auditors as deemed necessary for the efficient and effective administration of this chapter, subject to available resources.

(c) Notwithstanding any other provision of law governing the procurement of services by County Government or the officers thereof to the contrary, the County Auditor may, subject to available resources, freely obtain the services of Certified Public Accountants, qualified management consultants, or other professional experts necessary to perform his or her duties; provided, however, that no conflicts of interest exist between or among those with whom the County Auditor contracts and any area of county government that might hinder the performance of the services sought.

(d) Any Assistant County Auditor who shall perform any auditing duties shall be a qualified accountant, a graduate of a college or university with a degree in accounting, or shall have otherwise received such training and experience as to provide an equivalent level of expertise.”

Section 6. Amend Title 9 of the Delaware Code by striking § 1403 thereof in its entirety and by substituting in lieu thereof the following:

“§ 1403. Certification of Annual Financial Report of Chief Financial Officer.

(a) The County Auditor shall have a qualified accounting firm conduct an audit of the annual financial report of the Chief Financial Officer and append thereto a certificate which shall state whether, in the opinion of the accounting firm, the financial statements in the financial report:

(1) contain a proper record of the County’s financial transactions for the year;

(2) properly reflect the current assets, liabilities, and funded debt of the County as of the close of the fiscal year; and

(3) comply with Generally Accepted Principals of Governmental Accounting.

(b) Should there be any qualifications or exceptions to any portion of the annual financial report of the Chief Financial Officer, they shall be stated by the accounting firm in an explicit manner in the certification appended to the audit conducted pursuant to subsection (a) of this section.”

Section 7. Amend Title 9 of the Delaware Code by striking § 1404 thereof in its entirety and by substituting in lieu thereof the following:

“§ 1404. Annual Audits and the Audit Committee.

(a) The County Auditor shall oversee, coordinate, and monitor an annual audit of the accounts, books, and records of all offices, departments, and boards that reflect transactions involving financial activities and affairs of the County.

(b) At the beginning of each calendar year, the County Council shall establish, and appoint all members to, an Audit Committee which shall:

(1) Consist of one member of the County Council and 6 other individuals, who are not employees of or under contract with New Castle County, and who have no conflicts of interest with the administration or management of county government, at least 2 of whom are Certified Public Accountants each with not less than 3 years of experience in auditing governmental accounts or functions;

(2) Meet at least on a quarterly basis to consult with the County Auditor regarding:

a. the establishment of an audit schedule for the coming year,

b. the progress of ongoing audits,

c. any necessary follow-ups to audits completed during the previous 12 months,

d. and any special needs expressed by the auditor or the Chief Financial Officer;

(3) Work throughout the year to assure the maximum coordination between and among the work of the County Auditor and the needs of the Chief Financial Officer, the County Council, and any external auditors who may have been employed under the authority of the County Auditor;

(4) Recommend to the County Council a salary schedule for the County Auditor.

(c) At the beginning of each calendar year, the County Auditor shall submit to the Audit Committee a one to five year audit schedule for review and comment. The schedule shall include a proposed plan for auditing departments, offices, boards, activities, subcontractors, agencies, and instrumentalities of the county for the period. The schedule may be amended during the period after consultation with the Audit Committee.

(d) Annual audits may either be complete, or in such lesser degree as the County Auditor shall find acceptable to enable him or her to express opinions concerning whether such transactions are in compliance with Generally Accepted Principals of Governmental Accounting as well as the appropriate ordinances, rules and regulations of the County Council, and laws governing such transactions.

(e) Annual audits shall be completed, and a report thereupon produced, not later than the end of the sixth month following the completion of the fiscal year in which such transactions shall have occurred. Prior to the issuance of the audit report pursuant to this subsection, a final draft thereof shall be submitted to the audit committee for review and comment regarding factual content before it is released. The County Auditor shall make the final decision regarding all matters, facts, and opinions contained in the report.”

Section 8. Amend § 1407, Title 9 of the Delaware Code, by redesignating the existing language thereof as subsection (a) and by adding thereto a new subsection as follows:

“(b) In addition to any special examination or audit conducted pursuant to subsection (a) of this section, the County Auditor may make, or may cause to be made by a qualified accounting firm, a special examination of any financial transaction or matter if he or she has reasonable grounds to believe that any unauthorized, illegal, irregular, or unsound practice is being employed in association with the transaction or matter. If the County Auditor makes or causes a to be made a special examination pursuant to this subsection, the County Auditor shall promptly report thereupon to the County Executive and the County Council.”

Section 9. Amend Title 9 of the Delaware Code, by striking § 1408 thereof in its entirety and by substituting in lieu thereof the following:

“§ 1408. Access to records, facilities, property, equipment, etc.

(a) All officers and employees of New Castle County, and all departments, offices, boards, activities, subcontractors, agencies, and instrumentalities thereof which are the subject of an audit by the County Auditor, shall furnish the County Auditor with unrestricted access to employees, information, and records (including automated data) within their custody regarding powers, duties, activities, organization, property, financial transactions, contracts, and methods of business required by the Auditor to conduct an audit or otherwise perform his or her audit duties. In addition, the County Auditor shall be given complete access to all property, equipment, facilities, data, and documents within the custody or control of the person or entity subject to the audit. The County Auditor may photograph, photocopy, or otherwise record anything he or she feels is necessary to accomplish the purposes of the audit.

(b) If the County Auditor is at any time denied or restricted in his or her access to information described in subsection (a) of this section, the County Auditor may initiate a search to be made and exhibits to be taken from any book, paper, or record of or relating to any officer, employee, department, office, board, activity, subcontractor, agency, or instrumentality which is the subject of an audit by the County Auditor, except as otherwise provided by statute.

(c) The County Auditor shall not publicly disclose any information received during an audit that is considered confidential or proprietary in nature, or has been specifically identified as such by a federal, state, or local law or regulation. Information received by the County Auditor during an audit, to the extent it is not included or referenced in the report prepared by the County Auditor pursuant to § 1405 of this title, shall be exempt from public disclosure under the Freedom of Information Act (29 Del. C. Chap. 100), unless such information was subject to public disclosure in its original form.

(d) For the purposes of this section only, ‘County Auditor’ includes any Assistant County Auditor, employee of the County Auditor, or agent of the County Auditor who is undertaking an audit at the direction or under the authority of the County Auditor.”

Section 10. Amend Title 9 of the Delaware Code, by inserting therein a new section as follows:

“§ 1410. Quality Assurance Reviews.

(a) The Audit Committee shall conduct quality assurance review of the activities and functions of the Office of the County Auditor. Such review shall take place not less than 3 nor more than 5 years from the date of the last such quality assurance review.

(b) The Audit Committee shall utilize guidelines endorsed by the National Association of Local Government Auditors in conducting the quality assurance review. In addition to those guidelines, the Audit Committee shall determine whether the activities and functions of the Office of the County Auditor are undertaken in compliance with the most recent General Auditing Standards promulgated by the United States General Accounting Office and shall examine functional standards employed by the Office, including:

(1) general standards such as staff qualifications, due professional care, and overall quality assurance;

(2) fieldwork standards such as planning, supervision, and audit evidence; and

(3) reporting standards such as report content, presentation, and timeliness.

(c) The Audit Committee shall complete its review within a time frame established by the County Council and shall prepare a report of its findings and recommendations no later than the end of the sixth month following the completion of the quality assurance review.

(d) A copy of the Audit Committee’s Quality Review Report shall be furnished to each member of County Council and to the County Executive and shall be made available to the public.

(e) The County Council shall reimburse the Committee for reasonable costs incurred in the conduct of the Quality Review and the preparation of the Quality Review Report.”

Section 11. The provisions of this Act shall become effective on January 1, 2005. The term of office of the individual currently holding the position of New Castle County Auditor shall expire on July 1, 2005. The New Castle County Council shall appoint a County Auditor pursuant to the provisions of this Act no later than August 1, 2005. The New Castle County Council shall appoint subsequent County Auditors every 4 years thereafter. County Council may in its discretion re-appoint an incumbent County Auditor.

Section 12. If any provision of this Act or the application thereof to any person, thing or circumstances, is held invalid, such invalidity shall not affect the provisions of this Act that can be given effect without the invalid provisions or application, and to this end the provisions of this Act are declared to be severable.

SPONSOR:	Rep. Lavelle & Sen. Sokola;
	Reps. Hudson, Smith, Valihura; Sens. Copeland, Sorenson