2015 -- H 5883

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LC001735

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PUBLIC FINANCE

     

     Introduced By: Representatives Shekarchi, Casey, Kennedy, Canario, and Williams

     Date Introduced: March 13, 2015

     Referred To: House Finance

     (Administration)

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 35-14-2 of the General Laws in Chapter 35-14 entitled "Financial

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Integrity and Accountability" is hereby amended to read as follows:

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     35-14-2. Policy. -- (a) The legislature hereby finds that:

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      (1) Fraud and errors in state programs are more likely to occur from a lack of effective

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systems of internal accounting and administrative control in the sufficient internal control

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structures at state agencies;

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      (2) Effective systems of internal accounting and administrative control structures provide

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the basic foundation upon which a structure of public accountability must be built;

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      (3) Effective systems of internal accounting and administrative control are necessary to

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assure that state assets and funds are adequately safeguarded, as well as to produce reliable

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financial information for the state; An entity's system of internal control structures consists of

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policies and procedures designed to provide management with reasonable assurance that the

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agency achieves its objectives and goals including:

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     (i) Reliability of financial reporting;

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     (ii) Compliance with applicable laws and regulations; and

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     (iii) Effectiveness and efficiency of operations.

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      (4) Systems of internal accounting and administrative Internal control structures are

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necessarily dynamic and must be continuously evaluated and, where necessary, improved; and

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      (5) Reports regarding addressing the adequacy of the system of internal accounting and

 

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administrative control structure of each state agency are necessary to enable the executive branch,

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the legislature, and the public to evaluate the agency's performance of its public responsibilities

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and accountability.

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      (b) The legislature declares that:

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      (1) Each The management of each state agency must maintain effective systems of

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internal accounting and administrative control as an integral part of its management practices; is

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responsible for establishing and maintaining an adequate internal control structure, and policies

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and procedures for financial reporting;

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      (2) The systems of internal accounting and administrative control of each Each state

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agency shall perform an assessment and produce a report on the effectiveness of the internal

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control structure and procedures for financial reporting; be evaluated on an ongoing basis and,

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when detected, weaknesses must be promptly corrected; and

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      (3) All levels of management of the state agencies must be involved in assessing and

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strengthening the systems of internal accounting and administrative control structures to

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minimize fraud, errors, abuse, and waste of government funds.

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     SECTION 2. Section 35-20-2 of the General Laws in Chapter 35-20 entitled "Public

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Corporation Financial Integrity and Accountability" is hereby amended to read as follows:

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     35-20-2. Policy. -- (a) The legislature hereby finds that:

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      (1) Fraud and errors in public and quasi-public programs are more likely to occur from a

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lack of effective systems of internal accounting and administrative control sufficient internal

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control structures in the state authorized public corporations.

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      (2) Effective systems of internal accounting and administrative control structures provide

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the basic foundation upon which a structure of public accountability must be built.

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      (3) Effective systems of internal accounting and administrative control are necessary to

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assure that public and quasi-public state assets and funds are adequately safeguarded, as well as to

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produce reliable financial information for the state. An entity's system of internal control

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structures consists of policies and procedures designed to provide management with reasonable

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assurance that the agency achieves its objectives and goals including:

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     (i) Reliability of financial reporting;

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     (ii) Compliance with applicable laws and regulations; and

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     (iii) Effectiveness and efficiency of operations.

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     (4) Systems of internal accounting and administrative Internal control structures are

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necessarily dynamic and must be continuously evaluated and, where necessary, improved.

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      (5) Reports regarding addressing the adequacy of the system of internal accounting and

 

LC001735 - Page 2 of 4

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administrative internal control structure of each public corporation are necessary to enable the

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executive branch, the legislature, and the public to evaluate the corporation's performance of its

3

public and quasi-public responsibilities and accountability.

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      (b) The legislature declares that:

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      (1) Each The management of each public corporation must maintain effective systems of

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internal accounting and administrative control as an integral part of its management practices. is

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responsible for establishing and maintaining an adequate internal control structure, and policies

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and procedures for financial reporting.

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      (2) The systems of internal accounting and administrative control of each state agency

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shall be evaluated on an ongoing basis Each public corporation shall perform an assessment and

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produce a report on the effectiveness of the internal control structure and procedures for financial

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reporting and, when detected, control weaknesses must be promptly corrected.

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      (3) All levels of management of the public corporation must be involved in assessing and

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strengthening the systems of internal accounting and administrative control structures to

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minimize fraud, errors, abuse, and waste of public and quasi-public funds.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC FINANCE

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     This act would require state agencies and public corporations to establish and maintain

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adequate internal control structures, and financial reporting policies and procedures, in order to

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reduce fraud and errors in state programs.

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     This act would take effect upon passage.

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