§ 5-11-1-27 — Local governmental internal controls; personnel training; violations; reporting misappropriations

(a) As used in this section, "legislative body"
has the meaning set forth in IC 36-1-2-9.
(b) As used in this section, "material" means a significant or
consequential amount, as determined by the state examiner and
approved by the audit committee.
(c) As used in this section, "personnel" means an officer or
employee of a political subdivision whose official duties include
receiving, processing, depositing, disbursing, or otherwise having
access to funds that belong to the federal government, state
government, a political subdivision, or another governmental entity.
(d) As used in this section, "political subdivision" has the meaning
set forth in IC 5-11-10.5-1.
(e) In the compliance guidelines authorized under section 24 of this
chapter, the state board of accounts shall define and the audit
committee shall approve not later than November 1, 2015, the
acceptable minimum level of internal control standards and internal
control procedures for internal control systems of political
subdivisions, including the following:
(1) Control environment.
(2) Risk assessment.
(3) Control activities.
(4) Information and communication.
(5) Monitoring.
The internal control standards and procedures shall be developed to
promote government accountability and transparency.
(f) Not later than November 1, 2015, the state board of accounts
shall develop or designate approved personnel training materials as
approved by the audit committee, to implement this section.
(g) After June 30, 2016, the legislative body of a political
subdivision shall ensure that:
(1) the internal control standards and procedures developed under
subsection (e) are adopted by the political subdivision; and
(2) personnel receive training concerning the internal control
standards and procedures adopted by the political subdivision.
(h) After June 30, 2016, the fiscal officer of a political subdivision
shall certify in writing that:
(1) the minimum internal control standards and procedures
defined under subsection (e) have been adopted by the political
subdivision; and
(2) personnel, who are not otherwise on leave status, have
received training as required by subsection (g)(2).
The certification shall be filed with the state board of accounts at the
same time as the annual financial report required by section 4(a) of this
chapter is filed. The certification shall be filed electronically in the
manner prescribed under IC 5-14-3.8-7.
(i) After June 30, 2016, if the state board of accounts finds during
an audit of a political subdivision that:
(1) the political subdivision has not adopted the internal control
standards and procedures required under subsection (g)(1); or
(2) personnel of the political subdivision have not received the
training required under subsection (g)(2);
the state board of accounts shall issue a comment in its examination
report for the political subdivision. If, during a subsequent audit, the
state board of accounts finds a violation described in subdivision (1) or
(2) has not been corrected, the political subdivision has sixty (60) days
after the date the state board of accounts notifies the political
subdivision of its findings to correct the violation. If a violation is not
corrected within the required period, the state board of accounts shall
forward the information to the department of local government finance.
(j) All erroneous or irregular material variances, losses, shortages,
or thefts of political subdivision funds or property shall be reported
immediately to the state board of accounts. For all material variances,
losses, shortages, or thefts, the state board of accounts shall:
(1) determine the amount of funds involved and report the amount
to the appropriate government and law enforcement officials;
(2) determine the internal control weakness that contributed to or
caused the condition; and
(3) make written recommendations to the appropriate legislative
body or appropriate official overseeing the internal control system
addressing:
(A) the method of correcting the condition; and
(B) the necessary internal control policies and internal control
procedures that must be modified to prevent a recurrence of the
condition.
(k) The legislative body or the appropriate official overseeing the
internal control system shall immediately implement the policies and
procedures recommended by the state board of accounts under
subsection (j)(3)(B).
(l) A public officer who has actual knowledge of or reasonable
cause to believe that there has been a misappropriation of public funds
or assets of the public office, including:
(1) information obtained as a result of a police report;
(2) an internal audit finding; or
(3) another source indicating that a misappropriation has
occurred;
shall immediately send written notice of the misappropriation to the
state board of accounts and the prosecuting attorney serving in the area
governed by the political subdivision.
(m) If the attorney general institutes civil proceedings related to this
section or under IC 5-11-5-1, the attorney general shall seek, in
addition to the recovery of any funds misappropriated, diverted, or
unaccounted for, restitution of:
(1) costs incurred by the state board of accounts; and
(2) all costs and reasonable attorney's fees incurred by the
attorney general;
in connection with the civil proceedings.

Legislative History

As added by P.L.117-2011, SEC.2. Amended by P.L.184-2015, SEC.6.