state auditor checks financial regulators every six years

The text as introduced · 928 words

89R919 MLH-F

By: Hinojosa of Hidalgo
S.B. No. 440

A BILL TO BE ENTITLED

AN ACT

relating to audits of and reports by self-directed and

semi-independent financial regulatory agencies.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 16.004, Finance Code, is amended to read

as follows:

Sec. 16.004. AUDITS. (a) This chapter does not affect the

duty of the state auditor to audit a financial regulatory agency.

The state auditor shall enter into a contract and schedule with each

financial regulatory agency to conduct audits, including a

financial audit, an effectiveness audit, [ reports ] and a

performance audit at least once every six years, unless the state

auditor determines that the auditor may rely on an independent

audit of the agency conducted during the same period [ audits ].

(b) The state auditor may conduct a risk-based audit of a

financial regulatory agency at any time.

(c) The financial regulatory agency shall reimburse the

state auditor for all costs incurred in performing the audits and

shall provide to the governor a copy of any audit performed.

SECTION 2. Sections 16.005(b) and (c), Finance Code, are

amended to read as follows:

(b) Before the beginning of each regular session of the

legislature, each financial regulatory agency shall submit to the

legislature and the governor a report describing all of the

agency's activities in the previous biennium. The report must

include:

(1) an audit as required by Section 16.004;

(2) a financial report of the previous fiscal year,

including reports on financial condition and results of operations;

(3) a description of all changes in fees imposed on

regulated entities, broken down by industry [ industries ];

(4) a report on :

(A) changes in the regulatory jurisdiction of the

agency, including the number of chartered financial institutions,

license holders, and registrants subject to the agency's

jurisdiction and any changes in those figures; and

(B) any enforcement activities by the agency; and

(5) a description [ list ] of all new rules adopted or

repealed.

(c) In addition to the reporting requirements of Subsection

(b), not later than November 1 of each year, each financial

regulatory agency shall submit to the governor, the committee of

each house of the legislature that has jurisdiction over

appropriations, and the Legislative Budget Board a report that

contains:

(1) the salary for all financial regulatory agency

personnel and the total amount of per diem expenses and travel

expenses paid for all agency employees;

(2) the total amount of per diem expenses and travel

expenses paid for each member of the agency's policy-making body [ ,

provided that only one report must be submitted regarding the

Finance Commission of Texas ];

(2-a) trend performance data relating to Subdivisions

(1) and (2) for the preceding five fiscal years;

(3) the agency's operating plan for a period of two

fiscal years [ and annual budget ]; [ and ]

(4) the agency's operating budget that includes:

(A) revenues from all sources; and

(B) an accounting of all expenditures, including

a breakdown of expenditures by program and administrative expenses,

showing:

(i) projected budget data for a period of

two fiscal years; and

(ii) trend budget performance data for the

preceding five fiscal years; and

(5) trend performance data for the preceding five

fiscal years regarding:

(A) the number of full-time equivalent positions

at the agency;

(B) the number of complaints received from the

public and the number of complaints initiated by agency staff;

(C) the number of complaints dismissed and the

number of complaints resolved by enforcement action;

(D) the number of enforcement actions, by

sanction type;

(E) the number of enforcement cases closed

through voluntary compliance;

(F) the amount of each administrative penalty

assessed, broken down by sanction type;

(G) the amount of each administrative penalty

collected, broken down by sanction type;

(H) the total amount of administrative penalties

assessed and the rate of collection of assessed administrative

penalties;

(I) the number of enforcement cases that allege a

threat to public health, safety, or welfare or a violation of

professional standards of care and the disposition of those cases;

(J) the average time to resolve a complaint;

(K) the number of entities regulated by the

agency;

(L) the number of license holders or regulated

persons, broken down by type of license and license status,

including inactive status or retired status;

(M) the fee charged to issue and renew each type

of license, certificate, permit, or other similar authorization

issued by the agency;

(N) any assessments paid to the agency by the

holder of a license, certificate, permit, or other similar

authorization issued by the agency;

(O) the average time to issue a license,

certificate, permit, or other similar authorization issued by the

agency;

(P) litigation costs, broken down by

administrative hearings, judicial proceedings, and outside counsel

costs;

(Q) reserve fund balances; and

(R) the key performance measures approved by the

governing board of the agency during the fiscal year for which the

report is due [ a detailed report of all revenue received and all

expenses incurred by the financial regulatory agency in the

previous 12 months ].

SECTION 3. Section 16.005, Finance Code, as amended by this

Act, applies only to a report originally due on or after the

effective date of this Act. A report originally due before the

effective date of this Act is governed by the law in effect on the

date the report was originally due, and the former law is continued

in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2025.