S.B. No. 1569

relating to audits of state agency expenditures to recover overpayments and lost discounts. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subtitle C, Title 10, Government Code, is amended by adding Chapter 2115 to read as follows:
Sec. 2115.001. DEFINITIONS. In this chapter: (1) "Overpayment" includes a duplicate payment made to a vendor for a single invoice and a payment made to a vendor: (A) when an available discount from the vendor was not applied; (B) for a late payment penalty that was improperly applied by the vendor; (C) for shipping costs that were computed incorrectly or incorrectly included in an invoice; (D) for state sales tax; or (E) for a good or service the vendor did not provide. (2) "State agency" means a department, commission, board, office, or other agency, including a university system or an institution of higher education other than a public junior college, that: (A) is in the executive branch of state government; (B) is created by statute; and (C) does not have statutory geographical boundaries limited to a part of the state. Sec. 2115.002. CONTRACT CONSULTANTS FOR RECOVERY AUDITS FOR CERTAIN OVERPAYMENTS. (a) The comptroller shall contract with one or more consultants to conduct recovery audits of payments made by state agencies to vendors. The audits must be designed to detect and recover overpayments to the vendors and to recommend improved state agency accounting operations. (b) A contract under this section: (1) may provide for reasonable compensation for services provided under the contract, including compensation determined by the application of a specified percentage of the total amount recovered because of the consultant's audit activities or recommendations as a fee for services; (2) may permit or require the consultant to pursue a judicial action in a court inside or outside this state to recover an overpaid amount; and (3) to allow time for the performance of existing state payment auditing procedures, may not allow a recovery audit of a payment during the 180-day period after the date the payment was made. (c) The comptroller or a state agency whose payments are being audited may provide a person acting under a contract authorized by this section with any confidential information in the custody of the comptroller or state agency that is necessary for the performance of the audit or the recovery of an overpayment, to the extent the comptroller and state agency are not prohibited from sharing the information under an agreement with another state or the federal government. A person acting under a contract authorized by this section, and each employee or agent of the person, is subject to all prohibitions against the disclosure of confidential information obtained from the state in connection with the contract that apply to the comptroller or applicable state agency or an employee of the comptroller or applicable state agency. A person acting under a contract authorized by this section or an employee or agent of the person who discloses confidential information in violation of a prohibition made applicable to the person under this subsection is subject to the same sanctions and penalties that would apply to the comptroller or applicable state agency or an employee of the comptroller or applicable state agency for that disclosure. Sec. 2115.003. STATE AGENCIES SUBJECT TO MANDATORY RECOVERY AUDITS. (a) The comptroller shall require that recovery audits be performed on the payments to vendors made by each state agency that has total expenditures during a state fiscal biennium in an amount that exceeds $100 million. Each state agency described by this subsection shall provide the recovery audit consultant with all information necessary for the audit. (b) The comptroller may exempt from the mandatory recovery audit process a state agency that has a low proportion of its expenditures made to vendors, according to criteria the comptroller adopts by rule after consideration of the likely costs and benefits of performing recovery audits for agencies that make relatively few or small payments to vendors. Sec. 2115.004. PAYMENT TO CONTRACTORS. (a) A state agency shall pay, from recovered money appropriated for the purpose, the recovery audit consultant responsible for obtaining for the agency a reimbursement from a vendor. (b) A state agency shall expend or return to the federal government any federal money that is recovered through a recovery audit conducted under this chapter. The state agency shall expend or return the federal money in accordance with the rules of the federal program through which the agency received the federal money. Sec. 2115.005. FORWARDING REPORTS. (a) The comptroller shall provide copies, including electronic form copies, of any reports received from a consultant contracting under Section 2115.002 to: (1) the governor; (2) the state auditor's office; and (3) the Legislative Budget Board. (b) The comptroller shall provide the copies required by Subsection (a) not later than the seventh day after the date the comptroller receives the consultant's report. (c) Not later than January 1 of each odd-numbered year, the comptroller shall issue a report to the legislature summarizing the contents of all reports received under this chapter during the state fiscal biennium ending August 31 of the previous year. SECTION 2. The comptroller of public accounts shall adopt rules under Chapter 2115, Government Code, as added by this Act, in a timely manner so that the comptroller may begin contracting with a consultant under that chapter not later than January 1, 2006. SECTION 3. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2005.
______________________________ ______________________________ President of the Senate Speaker of the House
I hereby certify that S.B. No. 1569 passed the Senate on April 28, 2005, by the following vote: Yeas 31, Nays 0. ______________________________ Secretary of the Senate I hereby certify that S.B. No. 1569 passed the House on May 25, 2005, by the following vote: Yeas 144, Nays 0, two present not voting. ______________________________ Chief Clerk of the House Approved: ______________________________ Date ______________________________ Governor