Auditor Powers Modernization Act

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Policy Status

  • Type: Model Policy
  • Status: Draft
  • Date Introduced: July 23, 2026

Task Forces

  • Process and Procedures

    • Tags

  • 2026 Annual Meeting

    • Summary

    This Act would grant state auditors broader authority than what is typically provided under state law. Most significantly, the Act would expressly authorize state auditors to: (i) broadly investigate private organizations that receive or collect any funds from the state, and assess whether those organizations advance state policies; (ii) audit policies and practices related to proxy votes, including by auditing proxy advisors that contract with the state; and (iii) conduct fiscal oversight of State and local elections, including by supervising and approving related budgets and contracts, and by appointing members to election boards. Every state has statutes that define the powers and functions of the state auditor (or other official responsible for state-level audits). Thus, if any provision of this Act is adopted by a state, that provision may conflict or overlap with existing statutes, and the state may have to harmonize those statutes so that they align with the adopted provision. Also, many of the Act’s individual components find precedential support in certain existing state-law provisions (as indicated in the footnotes below), but some of those existing provisions are very rare, and in any event the components are reconfigured here in a way that would expand a state auditor’s powers significantly beyond what is typically authorized by existing law. In other words, although some states’ laws currently provide some of the powers that are set forth in this Act, no single state currently has laws that provide all of those powers. For a state that wishes to expand its auditor’s powers, this Act provides a useful menu of options that could be integrated into that state’s existing statutory framework governing the state auditor.    AN ACT to update and clarify the powers of the State Auditor. 
    Draft

    Auditor Powers Modernization Act

    Section 1. Definitions  

    • (A) “Artificial intelligence” means a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments. 
    • (B) “Compliance audit” includes an audit to determine whether:   
      1. public funds have been expended, disbursed, received, collected, or used in accordance with or in furtherance of the laws or policies of this State; 
      2. a proxy vote or a proxy-voting policy, procedure, or practice is in accordance with or in furtherance of the laws or policies of this State; and  
      3. a program or entity that receives, collects, expends, or uses public funds has adopted policies or taken actions that conflict with the laws or policies of this State. 
    • (C) “Economy and efficiency audit” includes an audit to determine:  
      1. whether a program or entity is managing or using its resources, including any public funds or property that it has received, collected, or expended, in an economical and efficient manner; and  
      2. the causes of any uneconomical or inefficient practices, including causes relating to a program’s or entity’s policies, use of resources, organizational structure, staffing, asset management, purchasing and contracting decisions, and internal programming and administrative procedures. 
    • (D) “Effectiveness audit” includes an audit to determine whether:  
      1. a program is delivering results and benefits effectively and efficiently, according to applicable program objectives, program evaluation standards, program performance criteria, and any applicable statutes, regulations, and duties; and  
      2. a program duplicates, overlaps, or conflicts with another program. 
    • (E) “Financial audit” includes an audit to determine whether:  
      1. the records, books, documents, and accounts of a program or entity accurately reflect the program’s or entity’s financial and fiscal operations; 
      2. a program or entity is maintaining effective management and accounting control over budgeting, revenues, expenditures, obligations, liabilities, and assets; and  
      3. a program’s or entity’s accounting of the collection and use of public funds is accurate, fair, and in accordance with the laws of this State. 
    • (F) “Financial and budgeting functions” includes any fiscal or administrative functions or operations related to: expending, receiving, or using any public funds or resources; preparing or submitting a budget request or allotment request; accounting, payroll, and financial reporting; or procurements, contracting, and purchasing.   
    • (G) “Information technology resources” means any equipment or service, or any interconnected system or subsystem of equipment or services, used in the electronic acquisition, storage, processing, analysis, management, control, display, interchange, transmission, or reception of data or information. This includes computers and ancillary or peripheral equipment, hardware, software, firmware, telecommunications and internet networking, storage media, database administration, artificial intelligence, and services or service providers related to any of the foregoing. 
    • (H) “Investigation” means an inquiry into alleged or suspected acts of impropriety, malfeasance, or nonfeasance in the obligation, expenditure, receipt, or use of public funds; or into specified transactions or practices that may involve such impropriety, malfeasance, or nonfeasance; or into any other matter pertaining to the Auditor’s performance of official duties and functions. 
    • (I) “Local government” includes all counties, towns, cities, municipalities, municipal corporations, quasi-municipal corporations, or other political subdivisions, however denominated, within this State. 
    • (J) “Public funds” includes funds spent by any State program or entity, or any local government program or entity.  
    • (K) “Proxy advisor” means any person, including any entity, that is engaged in the business of providing advice, research, analysis, ratings, or recommendations specifically with respect to proxy voting, and that has received any public funds as compensation for any of those services. 
      1. “Proxy advisor” does not include an “investment adviser” under the federal Investment Advisers Act of 1940, 15 U.S.C. § 80b-2, except when engaged in the business of providing proxy-advisory services to a third party for compensation. 

    Section 2. Applicability   

    If any provision of this Act conflicts with any other law or regulation of this State, the provision of this Act shall control.  

    Section 3. Subpoena Powers; Administration of Oaths  

    In all matters pertaining to the Auditor’s official duties and functions, including any authorized audit or investigation, the Auditor shall have the power to compel the attendance of witnesses and the production of records or documents, to administer oaths, and to issue and serve subpoenas of all kinds. 

    Section 4. Audit of Entities Receiving Public Funds  

    The Auditor may audit any entity, organization, or association, including any private nonprofit corporation, that has received or collected any public funds, including any funds that were paid or disbursed by the State pursuant to any contract, charge, or assessment. 

    Section 5. Investigations and Special Reports  

    In all matters in which the Auditor is authorized to conduct an audit, the Auditor may conduct an investigation and issue a special report disclosing the Auditor’s investigative findings and related recommendations. 

    Section 6. Technology Independence   

    The Auditor may procure, operate, maintain, and secure information technology resources that are separate from, and not accessible through, the information technology resources that are used by any other State agency or office. 

    Section 7. Contracting Authority  

    The Auditor may procure the services of independent public accountants, qualified management consultants, or other professional persons and experts, as the Auditor deems necessary or appropriate to carry out the Auditor’s official duties and functions, including any authorized audit or investigation. 

    Section 8. Types of audits  

    • (A) In addition to any other types of audits that the Auditor is authorized to conduct, the Auditor may conduct compliance audits, economy and efficiency audits, effectiveness audits, and financial audits, as the Auditor deems necessary or appropriate to carry out the Auditor’s official duties and functions. 
    • The Auditor may conduct an economy and efficiency audit to assess the overall economy and efficiency of the State government or any local government, or to assess the economy and efficiency of any unit, department, agency, office, or other division of the State government or any local government. 

    Section 9. Audit Regarding Proxy Voting  

    • (A) The Auditor may audit any State or local government entity or program, or any proxy advisor, to evaluate:  
      1. the manner in which any proxy votes have been cast, directly or indirectly, in connection with public funds; and  
      2. any recommendations, policies, procedures, records, analysis, agreements, practices, or services relating to proxy voting in connection with public funds.  

    Section 10. Artificial Intelligence  

    The Auditor may use artificial intelligence as the Auditor deems necessary or appropriate to carry out the Auditor’s official duties and functions, including any authorized audit or investigation. 

    Section 11. Financial Oversight of Elections  

    • (A) The Auditor shall direct and supervise the financial and budgeting functions of the State board of elections and of all local government boards of elections.  
      1. The Auditor’s direction and supervision under this section may include, but is not limited to:  
        • (a) requiring the State board of elections or any local government board of elections to submit to the Auditor a budget or budget proposal, staffing plan, or procurement plan, in a form prescribed by the Auditor; and approving, disapproving, or requiring modification of any financial and budgeting functions, including any expenditures, procurements, contracts, or purchases, of the State board of elections or any local government board of elections.  
    • (B) In accordance with the appointment procedures set forth in [applicable statutes governing appointments to state election board], the Auditor shall appoint all members of the State board of elections. 
    • (C) In accordance with the appointment procedures set forth in [applicable statutes governing appointments to local government election boards], the Auditor shall appoint one member to serve as the chair of each local government board of elections. 
    • (D) The Auditor may audit the State board of elections or any local government board of elections.  

    Section 12. Bond Issuance  

    The Auditor shall serve as a member ex officio on the [name of local government commission responsible for approving local government bond issuances]. 

    Section 13. Financial Health of Local Governments  

    The Auditor shall audit the financial affairs, including the financial and budgeting functions, of all local governments, at such reasonable, periodic intervals as the Auditor deems necessary or appropriate to carry out the Auditor’s official duties and functions. 

    Section 14. Recovery of Money Obtained Through Fraud  

    • (A) Upon finding that any public funds have been obtained, withheld, expended, paid, maintained, or disposed of in a fraudulent manner or as a result of fraud, the Auditor may bring a civil action on behalf of the State to recover such funds. 
    • (B) Upon the Auditor’s request, the Attorney General may prosecute any civil action that is described in this section. 

    Section 15. Unclaimed Property  

    • (A) The Auditor may conduct an audit of any property or funds that are subject to [name of state’s unclaimed-property act] or that are presumed or deemed unclaimed or abandoned under [applicable state statutes]. 
    • (B) An audit under this section may, without limitation, extend to the reporting, receipt, custody, safeguarding, transfer, investment, sale or liquidation, payment, or administration of any property or funds described in subsection (A).   

    Section 16. Procurement  

    The [name of state procurement code] does not apply to any contract, purchase, or other procurement of services by the Auditor under this Act. 

    Section 17. Rulemaking  

    The Auditor may adopt rules to implement and administer the provisions of this Act.  

    Section 18. Severability  

    If any provision of this Act or its application to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.  

    Section 19. Effective Date  

    Notwithstanding any statutes or regulations to the contrary, this Act, including each provision thereof, shall apply and be effective as of [date].