(a)  There is hereby established within the office of management and budget an office of internal audit. Within the office of internal audit, there shall be a chief, appointed by the director of administration, who shall be the administrative head of the office. The person so selected to be the chief shall be selected without regard to political affiliation and with a demonstrated ability in the following areas: accounting, auditing, financial analysis, investigation, management analysis, and public administration. The office of internal audit will report to the office of management and budget director. Any reference in general law to the “bureau of audits” shall mean the office of internal audit.

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(b)  The chief of the office of internal audit shall not hold, or be a candidate for, any elective or any other appointed public office while a chief. No current chief shall hold a position in any political party or political committee, or, aside from voting, actively engage in the political campaign of any candidate for public office that may cause a real or perceived conflict of interest, or participate as a board member of any entity that receives state or federal funding.

(c)  No employee of the office of internal audit shall hold, or be a candidate for, any elective public office while an employee, nor shall he/she hold a position in any political party or political committee or, aside from voting, actively engage in a political campaign of any candidate for public office that may cause a real or perceived conflict of interest, or participate as a board member of any not for profit entity that receives state or federal funding.

(d) Purposes and scope.  The office of internal audit is authorized to conduct audits of any state department, state agency, or private entity that is a recipient of state funding or state grants. In addition, the office of internal audit is authorized, but not limited to, evaluating the efficiency of operations and internal controls, preventing and detecting fraud, waste, abuse, or mismanagement in the expenditure of public funds, whether federal, state, or local, that are related to any and all state programs and operations as well as the procurement of any goods, services, or construction, by public bodies. As deemed necessary or expedient by the office of internal audit, audits may be made relative to the financial affairs or the economy and efficiency of management of each department, agency or public body. The office of internal audit shall determine which such audits shall be performed in accordance with a risk-based evaluation.

(e)  “Public body” or “public bodies” under this chapter shall mean state agencies, bureaus, divisions, departments, offices, commissions, boards, institutions, including the public institutions of higher education, districts, authorities, quasi-agencies, or political subdivisions created by the general assembly, or the governor. “Public body” shall also include any city and town within the state of Rhode Island but municipal audits under this chapter shall only cover the expenditure of state or federal funds distributed by the state. Audits and investigations of public bodies may include the expenditures by nongovernmental agencies of federal, state, and local public funds.