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GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 2
SENATE BILL 1013
State and Local Government Committee Substitute Adopted 6/17/26
Short Title: 2026 Office of the State Auditor Agency Bill.-AB (Public)
Sponsors:
Referred to:
May 4, 2026
*S1013-v-2*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIOUS CHANGES FOR THE OFFICE OF THE STATE AUDITOR. 2
The General Assembly of North Carolina enacts: 3
SECTION 1.(a) G.S. 147-64.6 reads as rewritten: 4
"§ 147-64.6. Duties and responsibilities. 5
… 6
(c) Responsibilities. – The Auditor is responsible for the following acts and activities: 7
… 8
(3) The Auditor, on the Auditor's own initiative and as often as the Auditor deems 9
necessary, or as requested by the Governor or the General Assembly, shall, to 10
the extent deemed practicab le and consistent with the Auditor's overall 11
responsibility as contained in this Article, make or cause to be made audits of 12
all or any part of the activities of the State agencies. Each State agency 13
receiving a financial statement audit by the Auditor und er this subdivision 14
subsection shall prepare a and submit financial statement statements and 15
supplementary information in the format required by the Auditor. Financial 16
statements and supplementary information prepared as required by this 17
subdivision shall be completed and submitted to the Auditor not later than 60 18
days after the deadline for the State agency's Annual Comprehensive Annual 19
Financial Report submission as established by the State Controller. 20
… 21
(5) The Auditor may contract with federal audit age ncies, or any governmental 22
agency, on a cost reimbursable basis, for the Auditor to perform audits of 23
federal grants and programs administered by State agencies in accordance 24
with agreements negotiated between the Auditor and the contracting federal 25
audit agencies or any governmental agency. In instances where the grantee 26
State agency subgrants these federal funds to local governments, regional 27
councils of government, and other local groups or private or semiprivate 28
institutions or agencies, the Auditor may examine the books and records of 29
these subgrantees to the extent necessary to determine eligibility and proper 30
use in accordance with State and federal laws. 31
The Auditor shall charge and collect from the contracting federal audit 32
agencies, or any governmental agencies, the actual cost of all the audits of the 33
grants and programs contracted by the Auditor to do. Amounts collected under 34
these arrangements shall be deposited in the State Treasury and be budgeted 35
in the Department of State Auditor and shall be available to hire sufficient 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 1013-Second Edition
personnel to perform these contracted audits and to pay for related travel, 1
supplies, and other necessary expenses. 2
… 3
(11) The Auditor shall, through appropriate tests, satisfy himself or herself 4
concerning the propriety of the data presented in the Annual Comprehensive 5
Annual Financial Report and shall express the appropriate auditor's an audit 6
opinion of it in accordance with generally accepted auditing standards. 7
… 8
(13) At the conclusion of an audit, the Auditor or the Audit or's designated 9
representative shall discuss the audit with the official whose office is subject 10
to audit and submit necessary underlying facts developed for all findings and 11
recommendations that may be included in the audit report. On audits of 12
economy and efficiency and program results, the auditee's written response 13
shall be included in the final report if received within 15 to 30 days from 14
receipt of the draft report. The length of time shall be determined by the 15
Auditor and shall be commensurate with the number and complexity of the 16
findings. 17
… 18
(25) The Auditor may elect to be exempted from oversight by the Department of 19
Administration on the matters of purchasing, contracts, acquisition and 20
maintenance of real property, and leasing of office space under 21
G.S. 143-341(2), (4)d. and d1., and (8)d. and Article 6 of Chapter 146 of the 22
General Statutes. This election shall be made in wri ting by the Auditor and 23
shall be sent to the Secretary of Administration. 24
(26) The Auditor may enter into an agreement with the Conference of District 25
Attorneys to assign resource prosecutors under G.S. 7A-415 to matters 26
referred by the Auditor to district attorneys. A resource prosecutor working 27
under this agreement may do all of the following: 28
a. Handle financial crimes and any criminal matters that result from an 29
investigation conducted by the Auditor. 30
b. Assist the Auditor and Auditor's staff in criminal matters. 31
c. At the request of a district attorney, prosecute criminal matters that 32
result from an investigation by the Auditor. 33
d. Perform other duties assigned by the Executive Director of the 34
Conference of District Attorneys. 35
(27) The Auditor may enter into agreements under G.S. 147-64.7(b) for 36
subject-matter expertise and assistance in auditing Medicaid providers, as 37
defined in G.S. 108C-2. Any contingent fees paid to contractors that enter into 38
agreements with the Auditor under this subdivision shall be calculated in the 39
same manner and subject to the same procedural requirements as payments 40
made under G.S. 108C-5.1 and shall be paid from the final overpayment, as 41
defined in G.S. 108C-2, when the overpayment was identified and referred to 42
the Department of Health and Human Services by the Auditor 's respective 43
contractors. The Auditor and any contractors that enter into agreements under 44
this subdivision shall work with the Department of Health and Human 45
Services with respect to poten tial adverse determinations , as defined in 46
G.S. 108C-2, and refer any matter to the appropriate law enforcement entities 47
in accordance with G.S. 147-64.6B. 48
The Auditor and any contractors that enter into agreements with the 49
Auditor under this subdivision a re not acting under the Medicaid Recovery 50
Audit Contractors Program set forth in 42 U.S.C. § 1396a(a)(42) and 42 51
General Assembly Of North Carolina Session 2025
Senate Bill 1013-Second Edition Page 3
C.F.R. Part 455, Subpart F. Nothing in this subdivision limits the authority of 1
the Department of Health and Human Services as the single State agency 2
designated under 42 C.F.R. § 431.10. 3
… 4
(f) Costs of Audits. – The Auditor shall charge and collect from contracting federal audit 5
agencies, or any governmental agencies, the actual cost of all audits of the grants and programs 6
contracted by the Auditor to do pursuant to subdivision (5) of subsection (c) of this section. The 7
Auditor may charge and collect from each State agency the actual cost of the financial statement 8
audits completed pursuant to subdivision (3) of subsection (c) of this section and the actual cost 9
of audits of the financial information and workbooks prepared by State agencies for submission 10
into the Annual Comprehensive Financial Report when the audits support the Auditor's opinion 11
of the Annual Comprehensive Financial Report. The Auditor shall not charge or collect from the 12
Office of the State Controller any costs associated with auditing the Annu al Comprehensive 13
Financial Report . Amounts collected under th is subsection shall be deposited with the 14
Department of State Treasurer and shall be budgeted for the Department of State Auditor. The 15
Department of State Auditor may use t hese funds to hire sufficient personnel to perform these 16
contracted audits and to pay for related travel, supplies, and other necessary expenses." 17
SECTION 1.(b) G.S. 147-64.7(b)(2) reads as rewritten: 18
"(2) No State agency may shall enter into any a contract for auditing services which 19
that may impact on the State's comprehensive annual financial report Annual 20
Comprehensive Financial Report without consultation with, and the prior 21
written approval of, the Auditor, except in instances where audits are called 22
for by the Governor under G.S. 143C-2-1 and he shall so notify the Auditor. 23
The Auditor shall prescribe policy and establish guidelines c ontaining 24
appropriate criteria for selection and use of independent public accountants, 25
qualified management consultants, or other professional persons by State 26
agencies and governing bodies to perform all or part of the audit function." 27
SECTION 1.(c) This section becomes effective October 1, 2026. 28
SECTION 2.(a) Notwithstanding any other provision of law, the Auditor may 29
change existing appropriated positions and benefits responsible for performing financial 30
statement audits to receipt-supported positions and benefits. These appropriated funds shall not 31
revert to the General Fund. 32
SECTION 2.(b) This section becomes effective July 1, 2026. 33
SECTION 3. G.S. 143B-1208.3 reads as rewritten: 34
"§ 143B-1208.3. General powers and duties of Director and law enforcement officers of the 35
State Bureau of Investigation. 36
The Director of the Bureau and other sworn law enforcement officers of the State Bureau of 37
Investigation are given the same power of arrest as is now vested in the sheriffs of the several 38
counties, and their jurisdiction shall be statewide. The Director of the Bureau and other sworn 39
law enforcement officers of the Bureau may give assistance to sheriffs, police officers, district 40
attorneys, and judges judges, and the State Auditor when called upon by them and so directed. 41
They shall also give assistance, when requested, to the Department of Public Safety in the 42
investigation of cases pending before the parole office and of complaints lodged against parolees, 43
when so directed by the Governor." 44
SECTION 4.(a) There is appropriated from the General Fund to the Office of State 45
Auditor the sum of five hundred thousand dollars ($500,000) in recurring funds for the 46
2026-2027 fiscal year to be used by the Office of State Auditor to pay for the cost of auditing the 47
Annual Comprehensive Financial Report. 48
SECTION 4.(b) This section becomes effective July 1, 2026. 49
SECTION 5. Except as otherwise provided, this act is effective when it becomes 50
law. 51