What's happening
This bill expands the State Comptroller’s authority to audit organizations controlled by local governments and clarifies related procedures.
Why it matters
Expands oversight to a broader range of entities. The bill clarifies and broadens the State Comptroller’s audit authority to include not just fire companies and agencies, but also any organization controlled by local governments—capturing entities that may not have been formally recognized as subject to state audit before.
Defines “control” to close oversight loopholes. By specifying when an organization is considered “controlled” (e.g., when local government officials select or constitute a majority of its governing body or executive leadership), the bill addresses potential workarounds where local governments might have tried to avoid audit scrutiny.
Sets clear procedures for compelled testimony. The legislation outlines specific geographic limits for where individuals can be compelled to appear for audit-related questioning, balancing the State’s oversight needs with practical considerations for those being examined.
Aims to ensure transparency in government-connected organizations. By capturing subsidiary or nested organizations that fall under local government control, the bill seeks to promote greater financial transparency and accountability for entities that use public resources or serve public functions.
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Who cares
State Comptroller and municipal affairs examiners
The bill would expand their authority to examine the finances of organizations controlled by municipal corporations, industrial development agencies, districts or agencies, including organizations those entities indirectly control.
Local government officials and controlled organizations
Officials’ roles in selecting or serving as organizational leaders would determine whether an organization falls under the expanded audit authority.
Witnesses in examinations of controlled organizations
The bill would allow examiners to compel testimony and records but prohibit requiring witnesses to appear or be examined outside the county where the organization has its principal headquarters.
Statewide associations of local governments or local government officials
The bill would expressly exclude these associations from the added category of controlled organizations subject to examination.
Headline styles
Expand Comptroller Audit Powers
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 39
1 Co-sponsor
History
- Signed chap.710
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading rules cal.283
- Substituted for A7476
- Referred to ways and means
- Delivered to assembly
- Passed senateVote 56–2
- Advanced to third reading
- 2nd report cal.
- 1st report cal.801
Show 1 earlier action
- Referred to local government
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Expand Comptroller Audit Powers
Assembly Floor Calendar · Sponsor William Magnarelli
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5445
2019-2020 Regular Sessions
IN SENATE
May 1, 2019
Introduced by Sen. SKOUFIS -- (at request of the State Comptroller) -read twice and ordered printed, and when printed to be committed to the Committee on Local Government
AN ACT to amend the general municipal law, in relation to audits of governmentally controlled entities
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 34 of the general municipal law, as amended by chapter 233 of the laws of 2006, is amended to read as follows:
§ 34. Powers and duties of examiners. 1. The comptroller and each examiner of municipal affairs shall have power to examine into the financial affairs of every such municipal corporation, industrial development agency, district, [fire company as defined in section two hundred four-a of this chapter,] agency [and], activity [and], any fire company as defined in section two hundred four-a of this chapter, and any other organization, except a statewide association of local governments or local government officials, that is controlled by one or more of any such municipal corporations, industrial development agencies, districts or agencies. An organization shall be deemed under the control of one or more municipal corporations, industrial development agencies, districts or agencies when one or more individuals who serve as officers or employees of any such municipal corporation, industrial development agency, district or agency: (a) select either a majority of the organization's highest policy-making body or the organization's chief executive officer; (b) constitute a majority of the voting strength that selects either a majority of the organization's highest policy-making body or the organization's chief executive officer; or (c) serve as: (i) a majority of the organization's highest policy-making body; (ii) in his or her official capacity, the organization's chief executive officer; or (iii) in his or her official capacity, a partner in the organization. An organization under the control of one or more municipal
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08963-01-9
S. 5445 2
corporations, industrial development agencies, districts or agencies shall also include any other organization that is controlled by such organization.
2. In connection with any examination authorized by subdivision one of this section, the comptroller and each examiner of municipal affairs shall have power to administer an oath to any person whose testimony may be required, and to compel the appearance and attendance of such person for the purpose of any such examination and investigation, and the production of books and papers. In the case of a municipal corporation, industrial development agency, or school district, no such person shall be compelled to appear or be examined elsewhere than within such municipal corporation, industrial development agency, or school district. In the case of any district other than a school district, no such person may be compelled to appear or be examined elsewhere than within the town or one of the towns in which such district or portion thereof is located. In the case of an urban renewal agency, no such person shall be compelled to appear or be examined outside the municipal corporation wherein such agency is established. In the case of a fire company, no such person shall be compelled to appear or be examined outside the area served by the company. In the case of an activity, no such person shall be compelled to appear outside the area served by the activity. In the case of an organization under the control of one or more municipal corporations, industrial development agencies, districts or agencies, no such person shall be compelled to appear or to be examined outside the county in which the organization has its principal headquarters. Willful false swearing in such examination shall be perjury and shall be punishable as such.
3. For purposes of this section, the term "a majority of the organization's highest policy-making body" shall mean a majority of the whole number of positions comprising such body, provided, however, that if the documents establishing the organization's internal governance allow such body to act by a majority of a quorum, then such term shall mean a majority of the quorum.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general municipal law, in relation to audits of governmentally controlled entities
Purpose
To authorize the State Comptroller to audit private organizations controlled by local government entities.
Summary of provisions
Section 1 of this bill amends section 34 of the General Municipal Law to authorize the State Comptroller to examine the financial affairs of any organization (other than a statewide association of local governments or local government officials) that is under the control of one or more local government entities, including municipal corporations, school districts, fire districts and industrial development agencies. An organ- ization would be deemed "under the control" of a local government entity when one or more individuals who serve as officers or employees of the local government entity (a) select either a majority of the organiza- tion's highest policy-making body or the organization's chief executive officer; (b) constitute a majority of the voting strength that selects either a majority of the organization's highest policy-making body or the organization's chief executive officer; or (c) serve as (i) a major- ity of the organization's highest policy-making body; (ii) the organiza- tion's chief executive officer in his or her official capacity; or (iii) a partner in the organization in his or her official capacity. The phrase "a majority of the organization's highest policy-making body" would mean a majority of the whole number of positions comprising such body, unless such body is allowed to act by a majority of a quorum, in which case the term would mean a majority of the quorum. Subsidiaries and other entities control led by the organization would also be covered.
Read the full memo (859 words)
Section 2 of this bill provides that this act would take effect imme- diately.
Prior legislative history
S.4827 and A.3047 (Passed Assembly) of 2017-2018 S.5690-A and A.7056-A (Passed Assembly) of 2016 S.5690 and A7056 (Passed Assembly) of 2015 S.4497 and A.3633 (Passed Assembly) of 2013-2014 S. 7540 and A.9689 (Passed Assembly) of 2011-2012 S. 7907 (Passed Senate) an d A. 11088 of 2009-2010
Justification
Local development corporations, as well as certain other types of private organizations (e.g., limited liability companies), have been utilized by counties, cities, towns, villages, and other local govern- ments, such as fire districts, as a means to in directly finance local government operations and projects. Audits performed by the State Comp- troller's Office have found these private entities have been used to avoid constitutional or statutory provisions that apply to projects undertaken directly by a local government entity (e.g. the prohibition on gifts and loans to or in aid of private entities in Article VIII, § 1 of the State Constitution; referendum requirements such as those in the Local Finance Law applicable to certain municipal bond resolutions; the competitive bidding requirements of Article 5-A of the General Municipal Law; and limitations on the issuance of debt such as those contained in Article VIII, § 4 of the State Constitution).
Currently, the State Comptroller does not have the authority to audit directly local development corporations and other similar types of private organizations, even when they are controlled by a local govern- ment entity. Instead, the Comptroller may only examine the relationship between the local government entity and the private organization as part of an audit of the local government entity. And even in the context of such an audit, the Comptroller generally may not look beyond the finan- cial or business relationship to examine the overall finances and oper- ations of the private organization itself. Thus, for example, the Comp- troller may be unable to examine a private organization's internal controls to assess whether moneys provided to the organization by a local government entity are properly safeguarded.
While local development corporations and other similar types of private organizations are established to be legally separate from the local government entity, as a practical matter, they often function as if they are instrumentalities of local government entities. The bill would recognize this reality and expand the Comptroller's audit authority commensurately to include direct audits of private organizations which are under the control of one or more local government entities. Such audits would provide greater assurance that these organizations are operating in the public interest.
The bill's definition of "under the control" is necessary to ensure that the Comptroller's audit authority is based on the substance, rather than the form, of the relationship between the local government entity and the private organization. To avoid creating incentives or disincentives to the use of any particular type of private organization, this bill would apply to every type of organization under the control of a munici- pal corporation or other local government entity that is not already subject to audit by the Comptroller, except a statewide association of local governments or local government officials.
Budget implications
This bill has no significant fiscal impact. The fiscal impact of the bill is limited to organizations actually audited by the Comptroller and confined to the staff time and other resources required to cooperate with the auditors. Any such impact would be offset by potential savings based upon the audit findings.
Effective date
This bill would take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.