§ 2116-b. Internal audit function. 1. No later than July first, two\nthousand six, each school district shall establish an internal audit\nfunction to be in operation no later than the following December\nthirty-first. Such function shall include: (a) development of a risk\nassessment of district operations, including but not limited to, a\nreview of financial policies and procedures and the testing and\nevaluation of district internal controls; (b) an annual review and\nupdate of such risk assessment; and (c) preparation of reports, at least\nannually or more frequently as the trustees or board of education may\ndirect, which analyze significant risk assessment findings, recommend\nchanges for strengthening controls and reducing identified risks, and\nspecify timeframes for implementation of such recommendations.\n 2. School districts of less than eight teachers, school districts with\nactual general fund expenditures totaling less than five million dollars\nin the previous school year, or school districts with actual enrollment\nof less than one thousand five hundred students in the previous school\nyear shall be exempt from this requirement. Any school district claiming\nsuch exemption shall annually certify to the commissioner that such\nschool district meets the requirements set forth in this subdivision.\n 3. The commissioner, in consultation with the comptroller, is\nauthorized to promulgate regulations with respect to the internal audit\nfunction as is necessary for the proper performance of its duties,\nincluding standards, qualifications and training for audit personnel. In\ndeveloping such regulations, the commissioner shall consider the\ndiffering needs, capabilities and environments of school districts of\nvarying sizes across the state.\n 4. A district shall be permitted to utilize existing district\npersonnel to fulfill this function, but such persons shall not have any\nresponsibility for other business operations of the district while\nperforming such function.\n 5. A district shall be permitted to use (a) inter-municipal\ncooperative agreements, (b) shared services to the extent authorized by\nsection nineteen hundred fifty of this title, or (c) independent\ncontractors, to fulfill this function as long as personnel or entities\nperforming the internal audit function comply with any regulations\nissued by the commissioner and meet professional auditing standards for\nindependence between the auditor and the district.\n 6. Personnel or entities performing the internal audit function shall\nreport directly to the trustees or board of education of each district.\nThe district audit committee established under section twenty-one\nhundred sixteen-c of this article shall assist in the oversight of the\ninternal audit function on behalf of the trustees or board.\n 7. Nothing in this section shall be construed as requiring a school\ndistrict in any city with a population of one hundred twenty-five\nthousand or more to replace or modify an existing internal audit\nfunction where such function already exists by special or local law, so\nlong as the superintendent of the district annually certifies to the\ncommissioner that the existing internal audit function meets or exceeds\nthe requirements of this section.\n
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