HB3666 - Relating to the program of internal auditing conducted by state agencies.

  89R18207 CS-D     By: King, Capriglione, Noble H.B. No. 3666       A BILL TO BE ENTITLED   AN ACT   relating to the program of internal auditing conducted by state   agencies.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 2102.002, Government Code, is amended to   read as follows:          Sec. 2102.002.  PURPOSE. The purpose of this chapter is to   establish guidelines for a program of internal auditing to assist   agency administrators and governing boards by furnishing   independent analyses, appraisals, and recommendations about the   adequacy and effectiveness of a state agency's systems of internal   control policies and procedures and the quality of performance in   carrying out assigned responsibilities.   The purpose of internal   auditing is to strengthen an organization's ability to create,   protect, and sustain value by providing agency administrators,   management, and governing boards with independent, risk-based, and   objective assurance, advice, insight, and foresight [ Internal   auditing is defined as an independent, objective assurance and   consulting activity designed to add value and improve an   organization's operations. It helps an organization accomplish its   objectives by bringing a systematic, disciplined approach to   evaluate and improve the effectiveness of risk management, control,   and governance processes ].          SECTION 2.  Section 2102.003, Government Code, is amended by   adding Subdivision (1-a) to read as follows:                 (1-a)     "Advisory services" means consulting and   related client service activities, the nature and scope of which   are agreed upon with the client and are intended to add value and   improve an organization's operations without providing assurance   or taking on management responsibilities. Advisory services   include counsel, facilitation, and training.          SECTION 3.  Section 2102.005(a), Government Code, is amended   to read as follows:          (a)  A state agency shall conduct a program of internal   auditing that includes:                (1)  an annual audit plan that is prepared using risk   assessment techniques and that identifies the individual audits to   be conducted during the year; and                (2)  [ periodic ] audits of the agency's major systems   and controls, including:                      (A)   financial [ accounting ] systems and controls;                      (B)   operational or administrative systems and   controls; and                      (C)   information technology [ electronic data   processing ] systems and controls.          SECTION 4.  Section 2102.007(a), Government Code, is amended   to read as follows:          (a)  The internal auditor shall:                (1)  report directly to the state agency's governing   board or the administrator of the state agency if the state agency   does not have a governing board;                (2)  develop an annual audit plan;                (3)  conduct audits as specified in the audit plan and   document deviations;                (4)  prepare [ audit ] reports and communicate advisory   and assurance services engagement results ;                (5)  conduct quality assurance reviews in accordance   with professional standards as provided by Section 2102.011 and   periodically take part in a comprehensive external peer review; and                (6)  conduct economy and efficiency audits and program   results audits as directed by the state agency's governing board or   the administrator of the state agency if the state agency does not   have a governing board.          SECTION 5.  The heading to Section 2102.008, Government   Code, is amended to read as follows:          Sec. 2102.008.  APPROVAL OF AUDIT PLAN AND REVIEW OF AUDIT   REPORTS [ REPORT ].          SECTION 6.  The heading to Section 2102.0091, Government   Code, is amended to read as follows:          Sec. 2102.0091.  REPORTS OF [ PERIODIC ] AUDITS.          SECTION 7.  Section 2102.011, Government Code, is amended to   read as follows:          Sec. 2102.011.  INTERNAL AUDIT STANDARDS. The internal   audit program shall conform to the Global Internal Audit Standards   [ for the Professional Practice of Internal Auditing, the Code of   Ethics contained in the Professional Practices Framework ] as   promulgated by the Institute of Internal Auditors[ , and generally   accepted government auditing standards ].          SECTION 8.  Section 2102.003(4), Government Code, is   repealed.          SECTION 9.  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, 2025.