Could South Carolina’s Legislative Audit Council audit a county water and sewer district?

Plain-English summary

In 1999, the Legislative Audit Council asked whether it could accept a request to audit the Georgetown County Water and Sewer District. The Attorney General's office said no. The council's post-audit authority covered state agencies, while the water and sewer district was a local special purpose district. The office read the statutory definition of “state agency” in light of earlier AG opinions reaching the same conclusion for other local districts.

The office expressly left open whether an audit of this district was warranted. It noted a separate statute requiring every special purpose district to provide an annual financial audit by a certified public accountant or public accountant to its county auditor. The letter was informal.

Currency note

This opinion was issued in 1999. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could the Legislative Audit Council audit this water and sewer district? A: The AG said it lacked authority because the district did not fall within the statutory definition of a state agency.

Did the opinion say the district needed no audit?
A: No. It cited a separate annual financial-audit requirement for special purpose districts and made no judgment about whether any additional audit was warranted.

Why did the council's general audit power not apply? A: The council's authority concerned state agencies as defined by statute. The AG treated this district as a local special purpose district, not a state agency.

Who received the annual district audit under the cited provision? A: The opinion quoted a rule requiring the district to provide an audit by a certified public accountant or public accountant to the county auditor where it resided.

Background and statutory framework

The opinion read the council's authority under § 2-15-10 and § 2-15-60 together with Section 2-15-50's definition of state agency. It then applied prior AG analyses of local districts and identified Section 6-11-1650 as the separate special district audit route.

Citations and references

Statutes: § 2-15-10; § 2-15-60; Section 2-15-50; Section 6-11-1650.

Official title

Asking whether the Legislative Audit Council has the authority to conduct audits of special purpose districts.

Requester

Mr. George L. Schroeder, Director, Legislative Audit Council

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/august-5-1999-1/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/11/99aug-5-schroeder.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CHARLES MOLONY CONDON
ATTORNEY GENERAL

August 5, 1999

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Mr. George L. Schroeder, Director
Legislative Audit Council
400 Gervais Street
Columbia, South Carolina 29201

RE:

Informal Opinion

Dear Mr. Schroeder:
Attorney General Condon has forwarded your recent opinion request to me for reply. You have informed this Office that the Legislative Audit Council (hereinafter "LAC") has received a request to audit the Georgetown County Water and Sewer District (hereinafter "GCWSD"). You have asked whether the LAC has the authority to conduct audits of special purpose districts. You also ask whether the LAC may accept the request to audit the GCWSD. The LAC's authority is codified at S.C. Code Ann.§ 2-15-10 et seq. The LAC is directly responsible to the General Assembly and is independent of any other state agency, board or department. Among the duties of the LAC is "[t]o establish a system of post audits for all fiscal matters and financial transactions for all state agencies of the state government." S.C. Code Ann. § 2-15-60( d). Section 2-15-50 defines "state" agencies as
... all officers, departments, boards, commissions, institutions, universities, colleges, bodies politic and corporate of the State and any other person or any other administrative unit of state government or corporate outgrowth of state government, expending or encumbering state funds by virtue of an appropriation from the General Assembly, or handling money on behalf of the State, or holding any trust funds from any source

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FAC SIMILE: 80.1-253-6283

Mr. Schroeder
Page2
August 5, 1999
derived, but does not mean or include counties.
An "audit" is defined by Section 2-15-50 as

... a full-scope examination of and investigation into all state agency matters necessary to make a determination of: (a)

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( 1) whether the entity is acquiring, protecting, and using its resources, such as personnel, property, and space, economically and efficiently; (2) the causes of inefficiencies or uneconomical practices; and (3) whether the entity has complied with laws and regulations concerning matters of economy and efficiency; and

(b)

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(1) the extent to which the desired results or benefits established by the General Assembly or other authorizing body are achieved;

(2) the effectiveness of organizations, programs,
activities, or functions; and
(3) whether the entity has complied with laws and
regulations applicable to the program.
The issue you present is, therefore, whether the GCWSD would be considered a "state" agency for purposes of Section 2-15-50. The GCWSD is a special purpose district, located wholly within Georgetown County. Ex Parte Georgetown County Water and Sewer District, 284 S.C. 466, 327 S.E.2d 654 (1985). This Office has previously addressed the question of whether the LAC possesses the power to audit a special purpose district. In an opinion dated June 2, 1976, we found that a special purpose district was not a "state" department, agency, or institution, for purposes of the LAC's authority. Accordingly, the LAC did not possess the power to audit the Western Carolina Sewer Authority. While this opinion is over twenty years old, the

Mr. Schroeder
Page 3
August 5, 1999
statutory definition of "state" agency has not changed significantly since the time it was written. Therefore, the conclusion reached therein is still applicable today. 1

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Based on the foregoing, it does not appear that a special purpose district falls within the definition of"state" agency found in Section 2-15-50. Thus, the LAC does not possess the power to audit the GCWSD. In expressing this opinion, I make no comment as to whether an audit is warranted in this case. I am merely commenting on the LAC's authority to conduct the audit. I note that the General Assembly has provided a mechanism for auditing special purpose districts. Section 6-11-1650 provides that"[ eJach special purpose district shall provide an annual financial audit performed by a certified public accountant or public accountant to the county auditor in which the district resides." This letter is an informal opinion only. It has been written by a designated assistant attorney general and represents the position of the undersigned attorney as to the specific questions asked. It has not, however, been personally scrutinized by the Attorney General nor officially published in the manner of a formal opinion. With best personal regards, I am Sincerely yours,

73A.i~

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Paul M. Koch
Assistant Attorney General

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Support for the conclusion reached in the 1976 opinion can also be found in an opinion dated January 30, 1986. Following a detailed examination of Section 2-15-50, this Office found "[i]n the absence of any clear legislative expression providing the authority to audit a local political subdivision, such as a school district, we are unable to suggest that the legislature intended to provide [the Legislative Audit] Council with such authority."