Amends GS 143-745 as follows. Amends the definition of agency head to also include the President of the Community College System, the State Controller, and other independent appointed officers with authority over a state agency and removes the Superintendent of Public Instruction. Also amends the definition of state agency to include all institutions, boards, commissions, and authorities that are a unit of the state executive branch; makes conforming changes and provides that the term does not include a unit of local government.

Deletes provisions of GS 143-746(c) and instead states that any state employee who performs the internal audit function must meet the minimum qualifications for internal auditors established by the Office of State Personnel. Amends GS 143-746(d), providing that the Director of Internal Auditing (Director) will report to (1) the agency head; (2) the chief deputy or chief administrative assistant; or (3) the agency governing board, if the board exists. States that the Director will be situated to avoid impairing independence. Makes other clarifying changes to GS 143-746.

Makes other clarifying changes to GS 143-147.

Enacts new GS 143-748 providing that internal audit work papers are confidential except as otherwise provided  or upon subpoena. Provides that a published internal audit report is public record as long as the information is not confidential under federal or state law or would not compromise security of a state agency. Provides for the retention and inspection of audit reports and reports of other examinations, investigations, surveys, and reviews.

Effective for offenses committed on or after December 1, 2013, enacts new GS 143-749 making it a Class 2 misdemeanor for any state agency officer, employee, or agent to willfully make or cause to be made to an agency internal auditor or designee any false, misleading, or unfounded report in order to interfere with the performance of an audit, special review, or investigation, or to hinder or obstruct the auditor in performing the auditor's duties.