§ 5-11-5-1 — Examination reports; exit conferences; disclosure of examination results; attorney general actions

Indiana § 5-11-5-1

• Jurisdiction: Indiana
• Title 5: STATE AND LOCAL ADMINISTRATION
• Art. 11: ACCOUNTING FOR PUBLIC FUNDS
• Ch. 5: Reports of Examinations by State Board of Accounts

Text

(a) Whenever an examination is made under this
article, a report of the examination shall be made. The report must
include a list of findings and shall be signed and verified by the
examiner making the examination. A finding that is critical of an
examined entity must be based upon one (1) of the following:
(1) Failure of the entity to observe a uniform compliance
guideline established under IC 5-11-1-24(a).
(2) Failure of the entity to comply with a specific law.
A report that includes a finding that is critical of an examined entity
must designate the uniform compliance guideline or the specific law
upon which the finding is based. Except as provided in subsection (g),
the state board of accounts may issue confidential management letters,
based on professional auditing standards, to an audited entity (as
defined in section 1.5(a) of this chapter) in a situation involving
noncompliance that does not result in the establishment of a corrective
action plan but that must be brought to the attention of the audited
entity's governing body. If issues addressed in the confidential
management letter become part of a finding in the subsequent audit
period, it shall be noted in the public report. The state examiner shall
file one (1) copy of the report with the entity examined, one (1) copy
in an electronic format on a public website, and one (1) copy in an
electronic format under IC 5-14-6 with the legislative services agency,
as staff to the audit committee and the general assembly. A report is
open to public inspection at all reasonable times after it is filed. If an
examination discloses malfeasance, misfeasance, or nonfeasance in
office or of any officer or employee, a copy of the report, signed and
verified, shall be placed by the state examiner with the attorney general
and the inspector general. The attorney general shall diligently institute
and prosecute civil proceedings against the persons or entities charged
in such report, or upon the officer's or employee's official bond, or both,
and against any other proper person that will secure to the state or to
the proper municipality the recovery of any funds misappropriated,
diverted, or unaccounted for.
(b) Before an examination report is signed, verified, and filed as
required by subsection (a), the officer or the chief executive officer of
the state office, municipality, or entity examined must have an
opportunity to review the report and to file with the state examiner a
written response to that report. If a written response is filed, it becomes
a part of the examination report that is signed, verified, and filed as
required by subsection (a). As part of the review of the examination
report, the state examiner shall hold a gathering of the officer or chief
executive officer of the state office, municipality, or entity examined,
any employees or agents of the state office, municipality, or entity
examined who are requested to attend by the officer or chief executive
officer of the state office, municipality, or entity examined, and the
members of the legislative and fiscal bodies of the municipality or
entity examined. Such a gathering is referred to as an "exit conference"
for purposes of this subsection. The following apply to an exit
conference:
(1) All information discussed and materials presented or delivered
by any person during an exit conference are confidential and may
not be discussed or shared publicly until the earliest of the
occurrences set forth in subsection (g). However, the information
discussed and materials presented or delivered during an exit
conference may be shared with an officer, employee, consultant,
adviser, or attorney of the officer or chief executive officer of the
state office, municipality, or entity examined who was not present
at the exit conference. An individual with whom information and
materials are shared must maintain the confidentiality of the
information and materials as provided in this subdivision until the
earliest of the occurrences set forth in subsection (g).
(2) An individual attending an exit conference may not
electronically record the exit conference.
(3) If a majority of a governing body (as defined in IC 5-14-1.5-2(b)) is present during an exit conference, or any
conference initiated by the state examiner to discuss an
examination status, the governing body shall be considered in an
executive session under IC 5-14-1.5. However, the governing
body has no obligation to give notice as prescribed by IC 5-14-1.5-5 when it participates in the exit conference or any
conference initiated by the state examiner to discuss an
examination status.
(4) If the state examiner determines after the exit conference that
additional actions must be undertaken by a deputy examiner, field
examiner, or private examiner with respect to information
discussed or materials presented at the exit conference, the state
examiner may call for an additional exit conference to be held.
(c) If an examination report shows or discloses the commission of
a crime by any person, it is the duty of the state examiner to transmit
and present the examination report to the prosecuting attorney of the
county in which the crime was committed. The state examiner shall
furnish to the prosecuting attorney all evidence at the state examiner's
command necessary in the investigation and prosecution of the crime.
(d) If, during an examination under this article, a deputy examiner,
field examiner, or private examiner acting as an agent of the state
examiner determines that the following conditions are satisfied, the
examiner shall report the determination to the state examiner:
(1) A substantial amount of public funds has been
misappropriated or diverted.
(2) The deputy examiner, field examiner, or private examiner
acting as an agent of the state examiner has a reasonable belief
that the malfeasance or misfeasance that resulted in the
misappropriation or diversion of the public funds was committed
by the officer or an employee of the office or entity.
(e) After receiving a preliminary report under subsection (d), the
state examiner may provide a copy of the report to the attorney general.
The attorney general may institute and prosecute civil proceedings
against the persons or entities charged in such report, or upon the
officer's or employee's official bond, or both, and against any other
proper person that will secure to the state or to the proper municipality
the recovery of any funds misappropriated, diverted, or unaccounted
for.
(f) In an action under subsection (e), the attorney general may attach
the defendant's property under IC 34-25-2.
(g) Except as permitted in this section, the information and materials
that are part of an exit conference under subsection (b), and the results
of an examination or investigation, including a preliminary report
under subsection (d), are confidential until the occurrence of the
earliest of the following:
(1) The final report is made public under subsection (a).
(2) The attorney general institutes an action under subsection (e)
on the basis of the preliminary report.
(3) The results of an examination or investigation are published
by direction of the state examiner or any court.
(h) Except as permitted in this section, an individual, a public
agency (as defined in IC 5-14-3-2), a public employee, a public official,
or an employee or officer of a contractor or subcontractor of a public
agency that knowingly or intentionally discloses information in
violation of subsection (b) or (g), regardless of whether the information
is received orally or by any other means, is subject to the following:
(1) A public agency (as defined in IC 5-14-3-2), a public
employee, a public official, or an employee or officer of a
contractor or subcontractor of a public agency commits a Class A
infraction under IC 5-14-3-10.
(2) If the disclosure is by a person who is not described in
subdivision (1), the person commits a Class A infraction.
(i) Unless in accordance with a judicial order or as otherwise
provided in this section, the state board of accounts or its employees,
former employees, counsel, or agents, or any other person may not
divulge the examination workpapers and investigation records of a
deputy examiner, a field examiner, or a private examiner acting as an
agent of the state examiner, except to:
(1) employees and members of the state board of accounts;
(2) the audit committee;
(3) law enforcement officers, the attorney general, a prosecuting
attorney, or any other legal representative of the state in any
action with respect to the misappropriation or diversion of public
funds;
(4) an authorized representative of the United States;
(5) a successor examiner or auditor, in accordance with applicable
professional auditing standards; or
(6) another individual for any other factor that constitutes good
cause as set forth in criteria established by the state examiner and
approved by the audit committee.
(j) An individual described in subsection (i)(3) or (i)(4) who
receives examination workpapers and investigation records described
in subsection (i) may divulge the workpapers and records in any action
with respect to the misappropriation or diversion of public funds.
Formerly: Acts 1917, c.115, s.1. As amended by Acts 1980,
P.L.30, SEC.16; P.L.3-1986, SEC.18; P.L.39-1996, SEC.5;
P.L.28-2004, SEC.57; P.L.176-2009, SEC.4; P.L.126-2012, SEC.17;
P.L.136-2012, SEC.3; P.L.104-2014, SEC.4; P.L.181-2015, SEC.19;
P.L.188-2016, SEC.5; P.L.209-2019, SEC.4; P.L.157-2020, SEC.13;
P.L.59-2023, SEC.12; P.L.78-2024, SEC.2.