Section 7-395 - Secretary's review of audit report. Public meeting. Chief executive officer's or superintendent's plan for corrective action. Referral to Municipal Finance Advisory Commission(a) The secretary shall review each audit report filed with said secretary as provided in section 7-393, except said secretary shall review the audit reports on each audited agency biennially and may review the audit reports on any municipality or regional school district biennially, provided such secretary shall, in any year in which he does not review the report of any such municipality or regional school district, review the comments and recommendations of the independent auditor who made such audit. If, upon such review of the audit report, evidence of fraud or embezzlement is found, he shall report such information to the state's attorney for the judicial district in which such municipality, regional school district or audited agency is located. If, in the review of such audit report said secretary finds that such audit has not been prepared in compliance with the provisions of subsection (a) of section 7-394a, or said secretary finds evidence of any unsound or irregular financial practice in relation to commonly accepted standards in municipal finance, said secretary shall prepare a report concerning such finding, including necessary details for proper evaluation of such finding and recommendations for corrective action and shall refer such report to the Municipal Finance Advisory Commission established under section 7-394b. A copy of such report shall be filed with: (1) The chief executive officer of such municipality or audited agency or the superintendent of such school district and, in the case of a town, city or borough, with the clerk of such town, city or borough; and(2) the Auditors of Public Accounts.(b) If, upon such review of the audit report, the secretary finds (1) that such audit has not been prepared in accordance with subsection (a) of section 7-394a, and the municipality, regional school district or audited agency did not request permission to have the audit report prepared in a manner not in compliance with said subsection; or (2) evidence of unsound or irregular financial practices or management letter comments or lack of internal controls in relation to commonly accepted standards in municipal finance, then the secretary shall prepare a report concerning such finding, including, but not limited to, information to aid in the evaluation of such finding and recommendations for corrective action. The secretary shall submit such report to (A) the Municipal Finance Advisory Commission established pursuant to section 7-394b; (B) the Auditors of Public Accounts; and (C) the chief executive officer and clerk of the municipality, superintendent of schools for the regional school district or chief executive officer of the audited agency.(c) Upon receipt of a report submitted pursuant to subsection (b) of this section, the legislative body of the municipality, or in a municipality where the legislative body is a town meeting, the board of selectmen, or if the report involves a school district operating within its boundaries, the regional board of education, shall hold a public meeting to discuss the nature of the unsound or irregular financial practices, management letter comments or lack of internal controls in relation to commonly accepted standards in municipal finance, to address potential causes for such practices, comments or lack of internal controls and to inform proposing a plan for corrective action. After such meeting, the chief executive officer of a municipality or audited agency or superintendent of schools for the regional school district shall attest to and explain the secretary's findings and submit a plan for corrective action, in writing, to the secretary.(d) The secretary shall refer to the Municipal Finance Advisory Commission any municipality that has not been previously referred to said commission pursuant to subsection (b) of this section or section 7-576, 7-576a or 7-576c, provided the municipality has: (1) A negative fund balance percentage;(2) Reported a fund balance percentage of less than five per cent in the three immediately preceding fiscal years;(3) Reported an operating deficit in the two immediately preceding fiscal years and a fund balance percentage of less than five per cent in the immediately preceding fiscal year, as determined by the statement of revenues, expenditures and changes in fund balance of the general fund of the audited financial statements of the municipality;(4) Issued tax or revenue anticipation notes in the three immediately preceding fiscal years to meet cash liquidity;(5) Did not file an annual audit report in the twelve months after the end of the fiscal year;(6) Reported an annual audit that included at least one material or significant audit finding that was reported in the annual audits of the two immediately preceding fiscal years; or(7) Received a bond rating below A from a bond rating agency.(e) The secretary may, at the secretary's discretion and based upon the review conducted pursuant to subsection (a) of this section, refer to the Municipal Finance Advisory Commission any municipality that has not been previously referred to said commission pursuant to subsection (b) of this section or section 7-576, 7-576a or 7-576c.(f) For the purposes of this section, "deficit", "fund balance" and "fund balance percentage" have the same meanings as provided in section 7-560.(1949 Rev., S. 825; P.A. 76-68, S. 4, 7; P.A. 77-611, S. 2, 6; 77-614, S. 19, 587, 610; P.A. 78-280, S. 2, 127; P.A. 87-573, S. 7, 11; P.A. 88-360, S. 50, 63; P.A. 89-370, S. 3, 15; P.A. 93-422 , S. 6 .)
Amended by P.A. 23-0197,S. 2 of the Connecticut Acts of the 2023 Regular Session, eff. 10/1/2023.Amended by P.A. 22-0035, S. 4 of the Connecticut Acts of the 2022 Regular Session, eff. 10/1/2022.Amended by P.A. 19-0193, S. 1 of the Connecticut Acts of the 2019 Regular Session, eff. 7/1/2019.