HB26-1254 • 2026

Audit Enforcement

The bill defines "noncompliant state agency" with respect to the implementation date for an audit recommendation and requires the legislative audit committee (committee) to determine, by majority vote

Budget

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Rep. M. Brooks, Rep. L. Suckla, Sen. L. Frizell, Rep. J. Bacon
Last action: 2026-03-12
Official status: House Committee on State, Civic, Military, & Veterans Affairs Postpone Indefinitely
Effective date: Not listed

Plain English Breakdown

The bill text indicates this version was postponed indefinitely by a House Committee on March 12, 2026; however, the official status label says it passed both chambers. The effective date depends on whether voters approve it in November 2026 if a petition is filed.

Audit Enforcement for State Agencies

This bill defines when a state agency is considered noncompliant with audit recommendations and allows the Legislative Audit Committee to either grant an extension or trigger a budget restriction if the agency did not make a good faith effort.

What This Bill Does

Defines a 'noncompliant state agency' as one that had a significant problem found in an audit, agreed to fix it at a hearing with a set date, but failed to finish by that date.
Requires the Legislative Audit Committee to hold a meeting and vote on whether the noncompliant agency made a good faith effort to complete the work.
Allows the committee to accept a new deadline if they find the agency tried hard enough.
Permits the committee to direct the State Auditor to notify the State Controller if no good faith effort was found.
Requires the State Controller to hold back 3% of an agency's general fund money for the fiscal year following the notice if notified by the auditor.
States that this budget restriction can only be removed if the General Assembly passes a new law or if the committee directs the auditor to cancel it after finding the agency is now compliant.

Who It Names or Affects

State agencies in Colorado
The Legislative Audit Committee
The State Auditor
The State Controller

Terms To Know

Noncompliant state agency: A government department that had a significant problem found in an audit, agreed to fix it by a certain date at a hearing, but did not finish the work by that date.
Good faith effort: An honest and serious attempt made by an agency to complete a required task by the deadline, as determined by the Legislative Audit Committee.
General fund appropriations: Money from the state's main budget that is given to agencies for their operations.

Limits and Unknowns

The process only starts if an agency agreed or partially agreed to a recommendation at a Legislative Audit Committee hearing.
Even if multiple recommendations cause noncompliance, the State Auditor sends only one notice per audit.
This law does not take effect until after a 90-day period following the end of the legislative session unless voters approve it in an election.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

L.001

HOU State, Civic, Military, & Veterans Affairs

Passed [*]

Plain English: This amendment gives the Legislative Audit Committee the power to vote on cutting up to three percent of a state agency's budget if it fails to follow audit recommendations.

The committee must now use a majority vote to decide whether to recommend a funding cut for an agency that does not fix its problems.
If recommended, the funding cut can be as much as three percent of the agency's total general fund budget for the next year.
The State Auditor is required to include details about this potential funding cut in their official notice sent to the noncompliant agency.

The text does not explain what happens if the committee votes against a restriction or how often these cuts can happen.
It is unclear from this amendment alone whether the State Controller must follow the committee's recommendation exactly or has other options beyond the three percent limit.

Bill History

2026-03-12 House
House Committee on State, Civic, Military, & Veterans Affairs Postpone Indefinitely
2026-02-18 House
Introduced In House - Assigned to State, Civic, Military, & Veterans Affairs

Official Summary Text

The bill defines "noncompliant state agency" with respect to the implementation date for an audit recommendation and requires the legislative audit committee (committee) to determine, by majority vote, whether or not a noncompliant state agency has made a good faith effort to comply with an audit recommendation by the implementation date. If the committee determines that the noncompliant state agency has made a good faith effort, the committee may accept an extended implementation date provided by the noncompliant state agency. If the committee determines there has not been a good faith effort, the committee may direct the state auditor to notify the state controller of the noncompliant state agency. The bill also requires the state controller to, upon receipt of notice from the state auditor, restrict, in an amount equal to 3% of the total amount of the noncompliant state agency's general fund appropriations, the noncompliant state agency's appropriations for the fiscal year following the fiscal year in which the state controller receives the notice from the state auditor. This restriction may only be released if the general assembly enacts a bill to do so, or if the committee directs the state auditor to notify the state controller to rescind the restriction.
(Note: This summary applies to this bill as introduced.)

Current Bill Text

Read the full stored bill text

Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
INTRODUCED

LLS NO. 26-0781.03 Stephanie Schrab x4330 HOUSE BILL 26-1254
House Committees Senate Committees
State, Civic, Military, & Veterans Affairs
A BILL FOR AN ACT
CONCERNING THE ENFORCEMENT OF RECOMMENDATIONS MADE BY101
THE STATE AUDITOR.102
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov.)
The bill defines "noncompliant state agency" with respect to the
implementation date for an audit recommendation and requires the
legislative audit committee (committee) to determine, by majority vote,
whether or not a noncompliant state agency has made a good faith effort
to comply with an audit recommendation by the implementation date. If
the committee determines that the noncompliant state agency has made
HOUSE SPONSORSHIP
Brooks and Suckla, Bacon
SENATE SPONSORSHIP
Frizell,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law.
a good faith effort, the committee may accept an extended
implementation date provided by the noncompliant state agency. If the
committee determines there has not been a good faith effort, the
committee may direct the state auditor to notify the state controller of the
noncompliant state agency. The bill also requires the state controller to,
upon receipt of notice from the state auditor, restrict, in an amount equal
to 3% of the total amount of the noncompliant state agency's general fund
appropriations, the noncompliant state agency's appropriations for the
fiscal year following the fiscal year in which the state controller receives
the notice from the state auditor. This restriction may only be released if
the general assembly enacts a bill to do so, or if the committee directs the
state auditor to notify the state controller to rescind the restriction.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 2-3-103, add (9.6)2
as follows:3
2-3-103. Duties of state auditor - definitions.4
(9.6) (a) A S USED IN THIS SECTION , UNLESS THE CONTEXT5
OTHERWISE REQUIRES:6
(I) "S TATE AGENCY " MEANS A PRINCIPAL DEPARTMENT OF THE7
EXECUTIVE BRANCH OF STATE GOVERNMENT OR ANY DIVISION OR8
PROGRAM WITHIN A PRINCIPAL DEPARTMENT.9
(II) "NONCOMPLIANT STATE AGENCY " MEANS A STATE AGENCY10
THAT:11
(A) WAS SUBJECT TO AN AUDIT THAT IDENTIFIED A SIGNIFICANT12
PROBLEM OR A MATERIAL WEAKNESS IN THE STATE AGENCY;13
(B) HAS, AT A HEARING OF THE LEGISLATIVE AUDIT COMMITTEE,14
AGREED OR PARTIALLY AGREED TO THE AUDIT RECOMMENDATION AND15
SELECTED A DATE FOR IMPLEMENTING THE AUDITOR'S RECOMMENDATION;16
AND 17
(C) HAS NOT COMPLETED THE AUDIT RECOMMENDATION BY THAT18
IMPLEMENTATION DATE.19
HB26-1254-2-
(b) I F A STATE AGENCY BECOMES A NONCOMPLIANT STATE1
AGENCY, THE LEGISLATIVE AUDIT COMMITTEE SHALL , AT ITS NEXT2
REGULAR MEETING AND WITH A REPRESENTATIVE OF THE NONCOMPLIANT3
STATE AGENCY PRESENT , DETERMINE WHETHER THE NONCOMPLIANT4
STATE AGENCY HAS MADE A GOOD FAITH EFFORT TO COMPLETE THE5
RECOMMENDATION OF THE AUDIT BY THE IMPLEMENTATION DATE.6
(c) (I) IF THE LEGISLATIVE AUDIT COMMITTEE DETERMINES BY A7
MAJORITY VOTE THAT THE NONCOMPLIANT STATE AGENCY HAS MADE A8
GOOD FAITH EFFORT TO IMPLEMENT THE RECOMMENDATION BY THE9
IMPLEMENTATION DATE , THE COMMITTEE MAY ACCEPT AN EXTENDED10
IMPLEMENTATION DATE PROVIDED BY THE NONCOMPLIANT STATE11
AGENCY.12
(II) I F THE LEGISLATIVE AUDIT COMMIT TEE DETERMINES BY A13
MAJORITY VOTE THAT THE NONCOMPLIANT STATE AGENCY HAS NOT MADE14
A GOOD FAITH EFFORT TO IMPLEMENT THE RECOMME NDATION BY THE15
IMPLEMENTATION DATE , THE COMMITTEE MAY DIRECT THE STATE16
AUDITOR TO TAKE THE ACTIONS SPECIFIED IN SUBSECTION (9.6)(e) OF THIS17
SECTION.18
(d) I F THE LEGISLATIVE AUDIT COMMITTEE EXTENDS THE19
IMPLEMENTATION DATE AS SPECIFIED IN SUBSECTION (9.6)(c)(I) OF THIS20
SECTION AND THE NONCOMPLIANT STATE AGENCY DOES NOT COMPLETE21
THE AUDIT RECOMMENDATION BY THE EXTENDED IMPLEMENTATION DATE,22
THE LEGISLATIVE AUDIT COMMITTEE MAY AGAIN DETERMINE WHETHER23
THE NONCOMPLIANT STATE AGENCY MADE A GOOD FAITH EFFORT TO24
IMPLEMENT THE AUDIT RECOMME NDATION PURS UANT TO SUBSECTION25
(9.6)(b) OF THIS SECTION AND MAY THEN TAKE EITHER ACTION SPECIFIED26
IN SUBSECTION (9.6)(c) OF THIS SECTION.27
HB26-1254-3-
(e) THE LEGISLATIVE AUDIT COMMITTEE, BY A MAJORITY VOTE OF1
THE COMMITTEE, MAY DIRECT THE STATE AUDITOR TO NOTIFY THE STATE2
CONTROLLER WHEN A NONCOMPLIANT STATE AGENCY HAS NOT MADE A3
GOOD FAITH EFFORT TO COMPLETE AN AUDIT RECOMMENDATION BY THE4
IMPLEMENTATION DATE.5
(f) T HE STATE AUDITOR SHALL MAKE ONLY ONE NOTIFICATION6
PURSUANT TO SUBSECTION (9.6)(e) OF THIS SECTION FOR A NONCOMPLIANT7
STATE AGENCY FOR A SINGLE AUDIT , REGARDLESS OF THE NUMBER OF8
AUDIT RECOMMENDATIONS THAT CAUSED THE STATE AGENCY TO BECOME9
A NONCOMPLIANT STATE AGENCY.10
SECTION 2. In Colorado Revised Statutes, add 24-30-211 as11
follows:12
24-30-211. Restriction of general fund appropriation - state13
agency noncompliance with audit requirements - state auditor notice.14
IF THE STATE CONTROLLER RECEIVES NOTICE FROM THE STATE15
AUDITOR OF A NONCOMPLIANT STATE AGENCY PURSUANT TO SECTION16
2-3-103 (9.6), THE STATE CONTROLLER SHALL RESTRICT, IN AN AMOUNT17
EQUAL TO THREE PERCENT OF THE TOTAL AMOUNT OF THE NONCOMPLIANT18
STATE AGENCY'S GENERAL FUND APPROPRIATIONS, THE NONCOMPLIANT19
STATE AGENCY'S APPROPRIATIONS FOR THE FISCAL YEAR FOLLOWING THE20
FISCAL YEAR IN WHICH THE STATE CONTROLLER RECEIVES THE NOTICE21
FROM THE STATE AUDITOR. THE GENERAL ASSEMBLY MAY ENACT A BILL22
TO RELEASE THE RESTRICTION , OR THE LEGISLATIVE AUDIT COMMITTEE23
MAY, BY MAJORITY VOTE , DIRECT THE STATE AUDITOR TO NOTIFY THE24
STATE CONTROLLER TO RESCIND THE RESTRICTION IF THE STATE AUDITOR25
DETERMINES THAT THE STATE AGENCY HAS BECOME COMPLIANT BEFORE26
THE RESTRICTION TAKES EFFECT.27
HB26-1254-4-
SECTION 3. Act subject to petition - effective date. This act1
takes effect at 12:01 a.m. on the day following the expiration of the2
ninety-day period after final adjournment of the general assembly (August3
12, 2026, if adjournment sine die is on May 13, 2026); except that, if a4
referendum petition is filed pursuant to section 1 (3) of article V of the5
state constitution against this act or an item, section, or part of this act6
within such period, then the act, item, section, or part will not take effect7
unless approved by the people at the general election to be held in8
November 2026 and, in such case, will take effect on the date of the9
official declaration of the vote thereon by the governor.10
HB26-1254-5-