North Dakota Administrative Code Title 12 - Auditor, State
Overview of NDAC Title 12 — State Auditor
Purpose
The State Auditor in North Dakota is a constitutional officer charged primarily with financial oversight of state and local government agencies. The Auditor’s responsibilities include auditing public funds to ensure transparency, accountability, and compliance with laws and regulations.
NDAC Title 12 sets forth the administrative rules and procedures governing the Office of the State Auditor’s operations, audit processes, reporting requirements, and standards of conduct.
Legal Authority
The authority of the State Auditor is derived from:
North Dakota Constitution, Article VI, Section 6,
The North Dakota Century Code (NDCC), Chapters 54-10 and 54-11, and
Administrative rules codified in NDAC Title 12.
These laws collectively empower the Auditor to conduct audits, investigations, and enforce financial compliance.
Structure of NDAC Title 12
NDAC Title 12 covers key topics including:
Organization and Powers of the State Auditor’s Office
Audit Procedures and Standards
Financial Reporting Requirements
Examination of State Agencies and Local Governments
Special Investigations and Compliance Audits
Enforcement and Sanctions
Public Access to Audit Reports
Key Provisions in Detail
1. Organization and Authority
The State Auditor’s Office is headed by the elected Auditor who appoints staff to conduct audits.
The Auditor has access to all public records, books, and accounts of state agencies, municipalities, school districts, and other public entities.
The Office operates under professional standards, including Generally Accepted Government Auditing Standards (GAGAS).
2. Audit Procedures
Annual financial audits are required for most public entities receiving state funds.
The Auditor sets the scope, methodology, and timing of audits.
Auditors verify compliance with applicable laws, evaluate financial controls, and detect fraud or misuse of funds.
3. Financial Reporting
Agencies and local governments must submit periodic financial reports to the Auditor.
The Auditor reviews these for completeness, accuracy, and adherence to accounting standards.
Deficiencies are reported with recommendations for corrective action.
4. Examination and Compliance
The Auditor conducts performance audits to evaluate efficiency and effectiveness of programs.
Special audits or investigations may be initiated upon suspicion of financial irregularities or public complaint.
Auditors can subpoena records and witnesses as needed.
5. Enforcement and Penalties
If violations or mismanagement are found, the Auditor may issue findings and recommendations.
Persistent non-compliance can result in referral to the Attorney General or other authorities.
The Auditor can impose penalties, including withholding of funds in certain situations.
6. Public Access and Transparency
Audit reports are public records and typically published for public inspection.
This transparency serves to enhance accountability in government spending.
Relevant Case Law and Legal Principles
While specific North Dakota cases interpreting NDAC Title 12 may be limited, broader legal principles from state administrative law and audit-related case law apply:
A. Scope and Authority of the Auditor
Courts generally uphold the State Auditor’s broad authority to inspect public records and conduct audits.
The Auditor’s access to records is essential for fulfilling statutory duties and is protected by law.
Challenge Example: A local government attempts to limit Auditor access; courts reject such efforts as contrary to state law.
B. Due Process in Enforcement Actions
When the Auditor recommends sanctions or funding withholding, affected entities have a right to notice and an opportunity to respond.
If enforcement involves penalties, administrative procedures ensure fairness.
C. Judicial Review of Auditor Decisions
Courts review Auditor findings under an “arbitrary and capricious” or “substantial evidence” standard.
Courts defer to the Auditor’s professional judgment unless there is clear error or legal violation.
D. Protection of Public Interest
Courts emphasize the Auditor’s role in safeguarding public funds and ensuring government accountability.
The Auditor’s reports may serve as evidence in criminal or civil proceedings related to fraud or misuse.
Illustrative Hypothetical Case Types
Audit Dispute: A state agency challenges a critical audit finding. The court examines whether the Auditor followed proper procedures and had sufficient evidence.
Access to Records: A municipality refuses Auditor’s request for financial records. The Auditor sues for enforcement and the court upholds the Auditor’s statutory right.
Penalty Enforcement: The Auditor withholds state funds due to financial mismanagement. The entity contests the action, invoking due process protections.
Summary
| Aspect | Explanation |
|---|---|
| Title | NDAC Title 12 – Auditor, State |
| Purpose | To regulate auditing of state and local government finances |
| Authority | ND Constitution, NDCC Chapters 54-10, 54-11, and NDAC rules |
| Main Functions | Conduct audits, investigate finances, enforce compliance |
| Audit Standards | Use of professional auditing standards (GAGAS) |
| Enforcement | Recommendations, penalties, fund withholding, legal referral |
| Legal Review | Courts defer to Auditor unless arbitrary or unsupported |
| Transparency | Audit reports are public records |
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