Can the Mississippi State Auditor conduct managerial studies without a request from the Governor or Legislature?

Plain-English summary

Senator John Polk asked, in preparation for the 2025 legislative session, whether the Mississippi Department of Audit can independently launch a managerial study of a state agency or whether the Department's authority to investigate is more limited.

The AG drew the distinction between two kinds of work the Department does: financial audits and managerial studies.

A "financial audit" is the independent authority the State Auditor has under Section 7-7-211(d): "to postaudit each year and, when deemed necessary, preaudit and investigate the financial affairs of the departments, institutions, boards, commissions, or other agencies of state government." That authority is exercised on the Auditor's own judgment ("as deemed necessary by the State Auditor") and reaches financial affairs only.

A "managerial study," by contrast, is something different in kind. Section 7-7-211(c) authorizes the Department to "study and analyze existing managerial policies, methods, procedures, duties and services of the various state departments and institutions … to determine whether and where operations can be eliminated, combined, simplified and improved." Managerial study authority is conditioned on a "written request of the Governor, the Legislature or any committee or other body empowered by the Legislature to make such request." No request, no study.

The AG also confirmed that no other Mississippi statute authorizes the Department to conduct managerial studies independently. Section 7-7-211(c) is the sole authority.

What this means for you

For the Department of Audit and the State Auditor

The opinion holds that the Department's independent authority under Section 7-7-211(d) is limited to financial audits, which the Department may conduct on its own accord, and that the Department lacks authority to conduct a managerial study without the prerequisite written request from an enumerated party.

For state legislators and the Governor's office

The opinion holds that Section 7-7-211(c) authorizes managerial studies only upon written request of the Governor, the Legislature, or any committee or other body the Legislature has empowered to make such a request, and that no other provision of Mississippi law empowers the Department to conduct a managerial study independently.

For state agencies

The opinion distinguishes two kinds of review: financial audits, which the State Auditor may initiate under Section 7-7-211(d), and managerial studies under Section 7-7-211(c), which the opinion holds require the upstream written request from an enumerated party.

Common questions

What is the difference between a financial audit and a managerial study?

A financial audit examines accounting records, financial situation, and financial controls. Black's Law Dictionary's definition aligns with the statutory language of Section 7-7-211(d), which speaks to the "financial affairs" of state agencies. A managerial study, under Section 7-7-211(c), looks at managerial policies, methods, procedures, duties, and services to find places where operations can be eliminated, combined, simplified, or improved.

When can the State Auditor launch a financial audit on the Auditor's own initiative?

Section 7-7-211(d) authorizes the Department "to postaudit each year and, when deemed necessary, preaudit and investigate the financial affairs of the departments, institutions, boards, commissions, or other agencies of state government, as part of the publication of a comprehensive annual financial report for the State of Mississippi, or as deemed necessary by the State Auditor."

When can the State Auditor launch a managerial study?

Only on written request of the Governor, the Legislature, or any committee or other body empowered by the Legislature to make such a request. Section 7-7-211(c).

Is there any other statute that allows the Department to conduct managerial studies independently?

No. The AG opinion checked the rest of Section 7-7-211 and other state law and found no other authority. Section 7-7-211(c) is the sole authority for managerial studies, and it requires the upstream request.

Can a state agency itself ask the Department for a managerial study?

The list in Section 7-7-211(c) is "the Governor, the Legislature or any committee or other body empowered by the Legislature to make such request." A request from an agency about itself would not be on that list unless the Legislature has empowered the agency to make such a request, which is unusual.

What if a managerial concern shows up in the course of a financial audit?

The Department can flag findings as part of a financial audit. But initiating a separate managerial study, with its broader scope of review of policies, methods, procedures, duties, and services, requires the written request under subsection (c).

Background and statutory framework

Section 7-7-211, powers and duties of the Department of Audit. Sets out the Department's authority. Subsections (a) and (b) and (l) deal with the Department's role in providing best practices and training in accounting, budgeting, and recordkeeping. Subsection (c) is the managerial-study authority, conditioned on written request. Subsection (d) is the financial-audit authority. Subsections (e), (f), (j), (k), (m), (n), (o), (p), and (q) cover related financial-audit duties. Subsections (g), (h), and (i) deal with the recovery of misappropriated, improperly withheld, or misspent funds.

Subsection (c) in full:

To study and analyze existing managerial policies, methods, procedures, duties and services of the various state departments and institutions upon written request of the Governor, the Legislature or any committee or other body empowered by the Legislature to make such request to determine whether and where operations can be eliminated, combined, simplified and improved.

Subsection (d) in full:

To postaudit each year and, when deemed necessary, preaudit and investigate the financial affairs of the departments, institutions, boards, commissions, or other agencies of state government, as part of the publication of a comprehensive annual financial report for the State of Mississippi, or as deemed necessary by the State Auditor.

The structure of the statute is the basis for the AG's conclusion that subsection (d)'s independent authority extends to financial audits only, while subsection (c)'s managerial-study authority requires the upstream written request.

Citations

• Miss. Code Ann. § 7-7-211(c), (d)
• MS AG Op., Brock (Nov. 8, 2019)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/12/J.Polk-December-10-2024-Audit-Authority.pdf

Original opinion text

December 10, 2024
The Honorable John A. Polk
Mississippi State Senate
Post Office Box 1018
Jackson, Mississippi 39215
Re:

Audit Authority

Dear Senator Polk:
The Office of the Attorney General has received your request for an official opinion.
Questions Presented

1. Is the authority conferred on the Department of Audit in Mississippi Code Annotated Section
   7-7-211(d) limited to financial audits only?
2. Does any provision of law authorize the Department of Audit to conduct managerial studies
   without a prior request from an enumerated party in Section 7-7-211(c)?
   Brief Response
3. Yes, the authority conferred on the Department of Audit in Section 7-7-211(d) is limited to
   financial audits only.
4. No, there is no other provision of law that authorizes the Department of Audit to conduct
   managerial studies without a request from "the Governor, the Legislature or any committee or
   other body empowered by the Legislature."
   Applicable Law and Discussion
   Section 7-7-211 prescribes the powers and duties of the Department of Audit ("Department").
   Paragraph (d) provides in pertinent part that the Department shall have the following authority:
   (d) To postaudit each year and, when deemed necessary, preaudit and investigate
   the financial affairs of the departments, institutions, boards, commissions, or other
   agencies of state government, as part of the publication of a comprehensive annual
   financial report for the State of Missisisppi, or as deemed necessary by the State
   Auditor.
   (emphasis added).
   The immediately preceding paragraph of Section 7-7-211 provides that the Department shall also
   have the authority:
   (c) To study and analyze existing managerial policies, methods, procedures, duties
   and services of the various state departments and institutions upon written request
   of the Governor, the Legislature or any committee or other body empowered by the
   Legislature to make such request to determine whether and where operations can
   be eliminated, combined, simplified and improved[.]
   (emphasis added).
   As an initial matter, we understand this request to be part of your preparation for the 2025
   legislative session, particularly as it relates to the appropriation of state funds to various agencies
   and departments to enable them to fulfill their statutory duties. Attorney General opinions are
   prospective determinations on matters of state law only and can neither sanction nor invalidate
   past actions. See MS AG Op., Brock at *1 (Nov. 8, 2019).
   It is our understanding that both of your questions arise from the nuanced but essential distinction
   between a financial audit and a managerial study. The term "audit" is undefined in the Mississippi
   Code. According to Black's Law Dictionary, "audit" means "a formal examination of an
   individual's or organization's accounting records, financial situation, or compliance with some
   other set of standards." Audit, BLACK'S LAW DICTIONARY (12th ed. 2024) (emphasis added). This
   is in contrast to the action described in paragraph (c), which focuses instead on managerial
   policies, methods, and procedures.
   As to your first question, the independent authority conferred on the Department in Section 7-7-211(d) is clearly limited to conducting financial audits only. The statute plainly reads "to postaudit
   each year and, when deemed necessary, preaudit and investigate the financial affairs" of state
   government agencies, not their managerial policies, methods, and procedures. Miss. Code Ann. §
   7-7-211(d) (emphasis added).
   In contrast, paragraph (c) of Section 7-7-211 empowers the Department to conduct managerial
   studies, but such authority is patently predicated upon a request in writing from one of the
   enumerated parties.
   As to your second question, no other provision of Mississippi law empowers the Department to
   conduct a managerial study. Section 7-7-211(c) provides the sole authority under state law for the
   Department to conduct such studies. Section 7-7-211 lists the powers and duties of the Department,
   all of which are related to the financial and fiscal affairs of public entities, except for Section 7-7-211(c). See Miss. Code Ann. §§ 7-7-211(a), (b), and (l) (related to the duties of the Department to
   provide best practices and training related to accounting, budgeting, and recordkeeping); 7-7-211(d), (e), (f), (j), (k), (m), (n), (o), (p), and (q) (related to the duties of the Department to conduct
   financial audits); and 7-7-211(g), (h), and (i) (related to the duties of the Department to recover
   funds misappropriated or improperly withheld or misspent).
   Thus, while the Department may conduct a financial audit on its own accord under paragraph (d)
   of Section 7-7-211, the Department lacks the authority under state law to conduct a managerial
   study without the prerequisite written request from an enumerated party, such as the Governor or
   the Legislature.
   If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By:

/s/ Caleb A. Pracht
Caleb A. Pracht
Special Assistant Attorney General