SECTION 1. Sections 45-10-4 and 45-10-5 of the General Laws in Chapter 45-10 entitled "Audit of Accounts and Installation of Systems" are hereby amended to read as follows:

45-10-4. Annual post audit required. -- Prior to the close of the fiscal year of each city and town in the state, the city or town shall retain the services of one or more independent certified public accountants holding a certificate from the state of Rhode Island, or from any other state with whom the state board of accountancy has a reciprocal relationship, to make a detailed post audit of the financial records of the city and town for the preceding fiscal year in accordance with generally accepted auditing standards and government auditing standards. The selection of auditors hereunder shall be subject to the final approval of the state auditor general. The municipality shall not engage said auditors or enter into a contract for such services until the auditor general gives his/her written authorization.

45-10-5. Filing of audit report. -- The accountants making the post audit required by section 45-10-4 shall submit a report on their examination of the financial statements to the city or town audited, and the town or city clerk of the city or town shall file duplicate copies of the post audit with the state director of administration and the state auditor general not later than six (6) months after the close of the fiscal year. The copy of the report filed with the director of administration shall be a public record. The auditor general may, in his/her discretion, grant extensions in the filing of the audit report only upon reasonable cause for such extension being demonstrated by the municipality. In such cases, the determination of the auditor general as to the existence of reasonable cause shall be deemed conclusive.

SECTION 2. Chapter 45-10 of the General Laws entitled "Audit of Accounts and Installation of Systems" is hereby amended by adding thereto the following sections:

45-10-5.2. Failure to file audit report -- (a) If the municipality fails to comply with the provisions of this section by filing the audit report as required hereunder, the auditor general, in his/her discretion, is authorized to provide for the completion of said audit. In such event, the auditors and/or the municipality shall transmit the audit workpapers to the auditor general within ten (10) days of his/her request. The workpapers shall include, but not be limited to, the work product customarily generated in the course of an audit under generally accepted auditing standards and practices, as well as any papers, schedules, or documents created or provided by or to the auditors in the conduct of audit field work. The municipality shall bear the cost of the audit to be completed by the auditor general or an independent audit firm engaged by the auditor general to complete the audit. The payment of this cost shall be deducted from state aid funds otherwise due to the municipality.

(b) If the auditor and/or the municipality refuses to transmit said workpapers as provided herein, the auditor general shall have standing to petition the presiding justice of the Rhode Island superior court for an order compelling the immediate transmission of the workpapers to the auditor general. Upon the filing of said petition, the court shall schedule a hearing on an expedited basis, no more than ten (10) days after the filing of the petition. The court shall order the transmission of the workpapers and the draft of the audit report -- if any -- to the auditor general upon the auditor general's certification to the court that:

(1) the audit report was not completed and filed as required under the law;

(2) requests for extension to file were denied by the auditor general; and

(3) the auditors and/or the municipality have failed or refused to transmit the workpapers and/or preliminary draft of the report.

(c) Failure to transmit the workpapers and/or draft audit report after the issuance of a court order will constitute criminal contempt of court, and will empower the court to impose any and all criminal sanctions including imprisonment and/or monetary penalties consistent with the existing power and authority of the superior court to impose such sanctions under law. Any monetary penalty imposed shall be paid into the restricted receipts account established hereunder for the payment of late penalties.

45-10-6.1. Corrective action plan. -- If the auditor conducting the post audit expresses an opinion on the financial statements of a municipality that is other than unqualified, the chief finance officer of the municipality shall submit a detailed corrective action plan and timetable, which addresses the issue(s) which caused the auditor's qualified opinion on the municipality's financial statements. Such plan and timetable shall be submitted to the city or town council, state auditor general and director of administration within forty-five (45) days of receipt of the final audited financial report. The chief finance officer of each municipality shall also submit all findings and recommendations reported by the auditors making the post audit, including those reported in a separate letter, to the state auditor general and director of administration. The chief finance officer of the municipality shall prepare a plan of corrective action and timetable for all findings and recommendations and shall submit such plan to the city or town council, state auditor general and director of administration within forty-five (45) days of receipt of a written report or letter of findings and recommendations from the auditors.

SECTION 3. This act shall take effect upon passage.