Nevada Administrative Code Chapter 353 - Electronic Approval Codes
š NAC Chapter 353 ā Electronic Approval Codes: Detailed Explanation
Chapter 353 of the Nevada Administrative Code addresses the use of Electronic Approval Codes (EACs) for state financial transactions. It supports the modernization of financial processes by allowing digital authorization rather than manual signatures.
These regulations are authorized under NRS 353.3195, which permits the use of electronic methods to approve or certify documents related to state finances.
š 1. What Is an Electronic Approval Code?
An Electronic Approval Code is a unique digital signature assigned by the State Controller to a public employee (called an āauthorized officerā) that allows them to:
Approve expenditures,
Certify accounting documents,
Execute financial approvals within the stateās internal systems.
This code replaces a handwritten or facsimile signature on official documents like purchase orders, vouchers, or internal transfers.
š¤ 2. Who Gets an EAC?
Only individuals who are:
Employed by the State of Nevada,
Assigned financial responsibilities by their agency,
Certified by the State Controller, and
Have signed a confidentiality and responsibility agreement,
may receive an Electronic Approval Code.
š§¾ 3. Usage Responsibilities
Once issued, the authorized officer must:
Safeguard the code, ensuring it isnāt shared, stolen, or misused.
Use it only within the scope of their authority.
Not delegate the codeās use to another person.
Immediately report if the code is compromised.
Failing to follow these responsibilities can result in disciplinary action, including termination or criminal prosecution, depending on the nature of the misuse.
ā ļø 4. Misuse and Liability
If an EAC is used to improperly approve expendituresāe.g., personal gain, fictitious vendors, inflated invoicesāthe officer:
May be held personally liable for financial loss.
May face disciplinary action including demotion, dismissal, or sanctions.
May be prosecuted for fraud or misconduct in public office.
Additionally, misuse may trigger an audit or criminal investigation by the State Controllerās Office or the Attorney General.
āļø Case Law Involving NAC Chapter 353 ā Electronic Approval Codes
There is no widely published Nevada Supreme Court case specifically citing NAC 353, but we can draw from administrative enforcement and broader cases involving fraudulent use of digital signatures or public funds.
š§āāļø Case Study 1: In re Use of Unauthorized Approval Code (Hypothetical Based on State Practice)
Facts:
An employee in the Department of Health and Human Services used a colleagueās Electronic Approval Code (without their knowledge) to approve three contracts totaling $85,000. The fraud was discovered during a routine audit.
Findings:
Violation of NAC 353ās rules regarding safeguarding and non-delegation of EACs.
The unauthorized user was terminated.
The legitimate code owner was suspended pending investigation but cleared upon proof of non-involvement.
Outcome:
The state recovered funds and implemented additional internal controls. No criminal charges were filed, but disciplinary action was taken administratively.
š§āāļø Case Study 2: State v. Johnson (Fictionalized Based on Enforcement Principles)
Facts:
An agency director used their Electronic Approval Code to authorize payments to a shell company operated by a family member. The fraud occurred over two years and totaled $340,000.
Legal Issues:
Fraudulent use of EAC under NAC 353.
Misappropriation of state funds.
Breach of fiduciary duty.
Result:
Criminal charges were brought for theft and misuse of public funds.
The director was convicted and sentenced to prison.
The state revoked the EAC and restructured approval processes.
Importance:
The case underscored that EACs are treated as legal equivalents of handwritten signatures, with full accountability.
š Key Legal Takeaways from NAC Chapter 353
Electronic = Binding: An Electronic Approval Code carries the same legal weight as a physical signature.
Security is Critical: Officers must treat EACs as sensitive credentials, similar to passwords or encryption keys.
Nontransferable: EACs are personal and cannot be shared or delegated. Violation = misconduct.
Audit Trails Matter: Every use of an EAC is logged. Fraud is often caught during internal audits.
Accountability: Any misuseāintentional or due to negligenceācan lead to personal liability.
ā Conclusion
NAC Chapter 353 facilitates Nevada's transition to electronic financial operations while maintaining accountability and security. Through these rules, the State ensures that every electronic approval is:
Authorized,
Secure,
Traceable, and
Legally enforceable.
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