HOUSE DOCKET, NO. 6        FILED ON: 1/23/2017

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 6

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act improving the internal controls within state agencies.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1.  Section 9A of chapter 7A of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by deleting lines 9 through 14, the second paragraph.

SECTION 2.  Chapter 7A of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting, after section 19, the following new section:-

Section 20.  Notwithstanding any general or special law to the contrary, the comptroller, in consultation with the state auditor, shall publish regulations to establish reporting requirements as well as internal control standards which shall define the minimum level of quality acceptable for internal control systems in operation throughout the various state agencies and departments and shall constitute the criteria against which such internal control systems will be evaluated.  Internal control systems, the components of which should include an internal control plan, a risk assessment, policies, procedures and training requirements, for the various state agencies and departments of the Commonwealth shall be developed, documented and readily accessible in accordance with internal control guidelines established by the office of the comptroller.

Within each agency there shall be an official, equivalent in title or rank to an assistant or deputy to the department head, whose responsibility, in addition to his regularly assigned duties, shall be to ensure that the agency has written documentation of its internal control system on file. Said official shall, annually, or more often as conditions warrant, evaluate the effectiveness of the agency's internal control system and establish and implement changes necessary to ensure that: (1) the documentation of all internal control systems is readily available for examination by the comptroller, the secretary of administration and finance and the state auditor, (2) the results of audits and recommendations to improve departmental internal controls are promptly evaluated by the agency management, (3) timely and appropriate corrective actions are effected by the agency management in response to an audit and (4), all actions determined by the agency management as necessary to correct or otherwise resolve matters will be addressed by the agency in their budgetary request to the general court.

The comptroller shall prepare and update from time to time a training program, which the office shall publish on its official website, a program which shall provide a general introduction and training on the requirements of this section.

SECTION 3.  Chapter 11 of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting, after section 12, the following two new sections:- 

Section 12A.  In coordination with the comptroller of the commonwealth and regulations established pursuant to section 20 of chapter 7A, all unaccounted for variances, losses, shortages, intentional violation of general laws governing commonwealth financial system operations and controls,  or thefts of funds or property shall be immediately reported to the state auditor's office, who shall review the matter. Said auditor shall consider the materiality, risk, and nature of the matter reported, as well as the nature and extent of past reports involving the entity, to determine the level of review.  Should a formal review be initiated, said auditor shall report to appropriate management and law enforcement officials a determination of the amount involved and the internal control weakness that contributed to or caused the condition. Said auditor shall then make recommendations to the agency official overseeing the internal control system and other appropriate management officials. The recommendations of said auditor shall address the correction of the conditions found and the necessary internal control policies and procedures that must be modified.  The agency oversight official and the appropriate management officials shall immediately implement policies and procedures necessary to prevent a recurrence of the problems identified.

Section 12B.  A commonwealth authority defined in section 1 of Chapter 29 performing a public function that does not receive direct appropriations from the commonwealth, not otherwise subject to the jurisdiction of the comptroller, but subject to audit under section 12 of chapter 11, is required to comply with all the requirements of section 20 of chapter 7A. 

SECTION 4.  Section 5O of chapter 12 of the General Laws, as appearing in the 2012 official Edition, is hereby amended by deleting, in line 3, the words “chapter 647 of the acts of 1989” and inserting in place thereof the following words:-  section 20 of chapter 7A and section 12A of chapter 11