Relating to global professional standards for internal auditing.
relating to global professional standards for internal auditing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2102, Government Code is amended to read
as follows:
Sec. 2102.002. PURPOSE. The purpose of this chapter is to
establish guidelines for a program of internal auditing to assist
agency administrators and governing boards by furnishing
independent analyses, appraisals, and recommendations about the
adequacy and effectiveness of a state agency ‘s systems of internal
control policies and procedures and the quality of performance in
carrying out assigned responsibilities. Internal auditing is
defined as an independent, objective assurance and consulting
activity designed to add value and improve an organization ‘s
operations. It helps an organization accomplish its objectives by
bringing a systematic, disciplined approach to evaluate and improve
the effectiveness of risk management, control, and governance
processes.The purpose of internal auditing is to strengthen an
organization’s ability to create, protect, and sustain value by
providing the board and management with independent, risk-based,
and objective assurance, advice, insight, and foresight.
Sec. 2102.003. DEFINITIONS. In this chapter:
(1) “Administrator” means the executive head of a
state agency.
(2) “Assurance services” means an examination of
evidence for the purpose of providing an independent assessment of
risk management, control, or governance processes for an
organization. Assurance services include audits as defined in this
section.
(3) “Audit” means:
(A) a financial audit described by Section
321.0131;
(B) a compliance audit described by Section
321.0132;
(C) an economy and efficiency audit described by
Section 321.0133;
(D) an effectiveness audit described by Section
321.0134; or
(E) an investigation described by Section
321.0136.
(4) “ConsultingAdvisory services” means advisory and
related client service activities, the nature and scope of which
are agreed upon with the client and are intended to add value and
improve an organization ‘s operations without providing assurance
or taking on management responsibilities.Advisory Consulting
services include counsel, advice, facilitation, and training.
(5) “State agency” means a department, board, bureau,
institution, commission, or other agency in the executive branch of
state government.
Sec. 2102.005. INTERNAL AUDITING REQUIRED. (a) A state
agency shall conduct a program of internal auditing that includes:
(1) an annual audit plan that is prepared using risk
assessment techniques and that identifies the individual audits to
be conducted during the year; and
(2) periodic audits of the agency ‘s major systems and
controls, including:
(A) accountingfinancial systems and controls;
(B) operational or administrative systems and
controls; and
(C) information technologyelectronic data
processing systems and controls.
(b) In conducting the internal auditing program under
Subsection (a), a state agency shall consider methods for ensuring
compliance with contract processes and controls and for monitoring
agency contracts.
Sec. 2102.007. DUTIES OF INTERNAL AUDITOR. (a) The
internal auditor shall:
(1) report directly to the state agency ‘s governing
board or the administrator of the state agency if the state agency
does not have a governing board;
(2) develop an annual audit plan;
(3) conduct audits as specified in the audit plan and
document deviations;
(4) prepare audit reports communicate audit results;
(5) conduct quality assurance reviews in accordance
with professional standards as provided by Section 2102.011 and
periodically take part in a comprehensive external peer review; and
(6) conduct economy and efficiency audits and program
results audits as directed by the state agency ‘s governing board or
the administrator of the state agency if the state agency does not
have a governing board.
(b) The program of internal auditing conducted by a state
agency must provide for the auditor to:
(1) have access to the administrator; and
(2) be free of all operational and management
responsibilities that would impair the auditor ‘s ability to review
independently all aspects of the state agency ‘s operation.
Sec. 2102.011. INTERNAL AUDIT STANDARDS. The internal
audit program shall conform to the Global Internal Audit Standards
Standards for the Professional Practice of Internal Auditing, the
Code of Ethics contained in the Professional Practices Framework as
promulgated by The Institute of Internal Auditors, and generally
accepted government auditing standards.
SECTION 2. This Act takes effect September 1, 2025.
