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

89(R) HB 3666 - Engrossed version - Bill Text

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.