BILL NUMBER: AB 1493 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 3, 2001
INTRODUCED BY Assembly Member Keeley
FEBRUARY 23, 2001
An act to amend Section 10504 of the Government Code,
relating to state audits. An act to amend Section
156.1 of the Business and Professions Code, to amend Sections 8448,
22217, 22362, 41320, and 62004 of the Education Code, to amend
Sections 7604, 8543.1, 8544.2, 8544.3, 8544.5, 8544.6, 8545, 8545.1,
8545.2, 8545.4, 8545.5, 8546.1, 8546.3, 8546.4, 8546.8, 12430, 13297,
13298, 13299, 13299.1, 13405, 16366.7, 53134, and 53138 of, to amend
the heading of Article 3 (commencing with Section 8547) of Chapter
6.5 of Division 1 of Title 2 of, and to amend and renumber Section
8546.5 of, the Government Code, to amend Section 18052.5 of the
Health and Safety Code, to amend Section 10359 of the Public Contract
Code, to amend Section 2154 of the Streets and Highways Code, to
amend Sections 11212 and 11222 of the Vehicle Code, and to amend
Section 14100.2 of the Welfare and Institutions Code, relating to the
Bureau of State Audits.
LEGISLATIVE COUNSEL'S DIGEST
AB 1493, as amended, Keeley. State audits: Auditor
General. Bureau of State Audits.
Existing law establishes the Bureau of State Audits under the
direction of the Milton Marks Commission on California State
Government Organization and Economy, and generally provides that any
reference in state law to the Auditor General or the office of the
Auditor General with respect to the performance of audits, shall be
construed to refer to the State Auditor or the Bureau of State
Audits, respectively.
This bill would delete obsolete references to the office of the
Auditor General and the Auditor General and make various other
technical, nonsubstantive changes.
Existing law specifies a procedure for selection of an Auditor
General by concurrent resolution after a recommendation by the Joint
Legislative Audit Committee.
This bill would make a technical, clarifying change to these
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10504 of the Government Code is
SECTION 1. Section 156.1 of the Business and Professions Code is
amended to read:
156.1. (a) Notwithstanding any other provision of law,
individuals or entities contracting with the department or any board
within the department for the provision of services relating to the
treatment and rehabilitation of licentiates impaired by alcohol or
dangerous drugs, shall retain all records and documents pertaining to
those services until such time as these records and documents have
been reviewed for audit by the department. These records and
documents shall be retained for a maximum of three years from the
date of the last treatment or service rendered to that licentiate, or
until such time as the records pertaining to treatment or services
rendered to that licentiate are audited, whichever occurs first,
after which time the records and documents may be purged and
destroyed by the contract vendor. This provision shall supersede any
other provision of law relating to the purging or destruction of
records pertaining to those treatment and rehabilitation programs.
(b) Notwithstanding any other provision of law, all records and
documents pertaining to services for the treatment and rehabilitation
of licentiates impaired by alcohol or dangerous drugs provided by
any contract vendor to the department or to any board within the
department shall be kept confidential and are not subject to
discovery or subpoena.
(c) With respect to all other contracts for services with the
department or any board within the department other than those set
forth in subdivision (a), the director or chief deputy director may
request an examination and audit by the department's internal auditor
of all performance under the contract. For this purpose, all
documents and records of the contract vendor in connection with such
performance shall be retained by such vendor for a period of three
years after final payment under the contract. Nothing in this
section shall affect the authority of the Auditor General
State Auditor to conduct any examination or
audit under the terms of Section 10532 8546.7
of the Government Code.
SEC. 2. Section 8448 of the Education Code is amended to read:
8448. As used in this article:
(a) "Financial and compliance audit" means a systematic review or
appraisal to determine each of the following:
(1) Whether the financial statements of an audited organization
fairly present the financial position and the results of financial
operations in accordance with generally accepted accounting
principles.
(2) Whether the organization has complied with laws and
regulations that may have a material effect upon the financial
statements.
(b) "Public accountants" means certified public accountants, or
state licensed public accountants.
(c) "Independent auditors" means public accountants who have no
direct or indirect relationship with the functions or activities
being audited or with the business conducted by any of the officials
or contractors being audited.
(d) "Generally accepted auditing standards" means the auditing
standards set forth in the financial and compliance element of the
"Standards for Audit of Governmental Organization, Programs,
Activities, and Functions" "Government Auditing
Standards" issued by the Comptroller General of the United
States and incorporating the audit standards of the American
Institute of Certified Public Accountants.
(e) "Direct service contract" means any contract with any public
or private entity for child care and development programs, resource
and referral programs, and programs contracting to provide support
services as defined in Section 8208.
(f) "Nonprofit organization" means an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1954 which is
exempt from taxation under Section 501(a) of that code, or any
nonprofit, scientific, or educational organization qualified under
Section 23701d of the Revenue and Taxation Code.
(g) Annually, there shall be a single independent financial and
compliance audit of organizations that contract with the state under
a direct service contract. Any such audit shall include an
evaluation of the accounting and control systems of the direct
service contractor and of the activities by the contractor to comply
with the financial requirements of direct service contracts received
by the contractor from the state agency. The financial and
compliance requirements to be reviewed during the audit shall be
those developed and published by the State Department of Education in
consultation with the Department of Finance and the Auditor
General . Audits carried out pursuant to this section
shall be audits of the contractor rather than audits of individual
contracts or programs. In the case of any contractor that receives
less than twenty-five thousand dollars ($25,000) per year from any
state agency, the audit required by this section shall be conducted
biennially, unless there is evidence of fraud or other violation of
state law in connection with the direct service contract. The cost
of the audit may be included in direct service contracts.
The organization receiving funds from the state shall be
responsible for obtaining the required financial and compliance
audits of the organization and any subcontractors, except for direct
service subcontracts and other subcontracts exempt from State
Department of Education review, as agreed to by the Departments of
Finance and General Services. The audits shall be made by
independent auditors in accordance with generally accepted auditing
standards. The audit shall be completed by the 15th day of the fifth
month following the end of the contractor's fiscal year. A copy of
the required audit will shall be filed
with the State Department of Education upon its completion. In the
event an audit is not filed, the State Department of Education
will shall notify the organization of
the contract violation. The audit report filed will
shall be an integral part of the direct service
contract file.
(i) (1) Nothing in this article limits the authority of the State
Department of Education to make audits of direct service contracts.
However, if independent audits arranged for by direct service
contractors meet generally accepted auditing standards, the State
Department of Education shall rely on those audits and any additional
audit work shall build upon the work already done.
(2) Nothing in this article precludes the state from conducting,
or contracting for the conduct of, contract performance audits which
are not financial and compliance audits.
(3) Nothing in this article limits the state's responsibility or
authority to enforce state law or regulations, procedures, or
reporting requirements arising pursuant thereto.
(4) Nothing in this article limits the responsibility of the State
Department of Education to provide an independent appeal procedure
according to the provisions of the Administrative Procedure Act
(Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of
Title 2 of the Government Code.
SEC. 3. Section 22217 of the Education Code is amended to read:
22217. (a) The board shall employ a certified public accountant
or public accountant, who is not in public employment, to audit the
financial statements of the system. The costs of the audit shall be
paid from the income of the retirement fund. The audit shall be made
annually commencing with the fiscal year ending June 30, 1974. The
board shall file a copy of the audit report with the Governor, the
Secretary of the Senate, and the Chief Clerk of the Assembly.
(b) These audits shall not be duplicated by the Department of
Finance or the Auditor General State Auditor
. The system shall be exempt from a pro rata general
administrative charge for auditing.
SEC. 4. Section 22362 of the Education Code is amended to read:
22362. (a) Notwithstanding any other provision of law, the board
shall give first priority to investing not less than 25 percent of
all funds of the plan that become available in a fiscal year for new
investments, in any of the following:
(1) Obligations secured by a lien or charge solely on residential
realty, including rental housing, located in the state and on the
security of which, commercial banks are permitted to make loans
pursuant to Article 2 (commencing with Section 1220) of Chapter 10 of
Division 1 of the Financial Code.
(2) Securities representing a beneficial interest in a pool of
obligations secured by a lien or charge solely on residential realty
located in the state.
(3) Certificates of deposit issued by savings and loan
associations, if the savings and loan associations agree to make
loans, or to fund tax-exempt notes or bonds issued by housing
authorities, cities, or counties, on residential realty located in
the state, including rental housing, in an amount equal to the amount
of the deposit.
(b) Funds subject to investment pursuant to this section include
all moneys received as employer and member contributions, investment
income, and the proceeds from all net gains and losses from
securities, reduced by the amount of benefit payments and withdrawals
occurring during the fiscal year. In computing the amount of
investment pursuant to this section, a dollar-for-dollar credit shall
be given for residential realty investments described in this
section that are contractually agreed to be made by a financial
institution from which the board, in consideration thereof, purchases
other such investments. In computing the amount of investment
pursuant to this section, the board may elect to include the dollar
amount of commitments to purchase mortgages from public revenue bond
programs in the year the commitment is given. However, that election
may not exceed one-fifth of the total guideline amount.
(c) Nothing in this section shall be construed to require the
acquisition of any instrument or security at less than the market
rate.
(d) If the board determines during any fiscal year that compliance
with this section will result in lower overall earnings for the
retirement fund than obtainable from alternative investment
opportunities that would provide equal or superior security,
including guarantee of yield, the board may substitute those higher
yielding investments, to the extent actually available for
acquisition, for the investments otherwise specified by this section.
Additionally, if, and to the extent that, adherence to the
diversification guideline specified in this section would conflict
with its fiduciary obligations in violation of Section 9 of Article I
of the California Constitution or Section 10 of Article I of the
United States Constitution, or would conflict with the standard for
prudent investment of the fund as set forth in Section 17 of Article
XVI of the California Constitution, the board may substitute
alternative investments. In that case, the board shall estimate the
amount of funds available in substitute alternative investments and
the amount of funds invested pursuant to subdivision (a) and shall
submit its resolution of findings and determinations, together with a
description of the type, quantity, and yield of the investments
substituted, to the Governor and to the Joint Legislative Audit
Committee within 20 days following the conclusion of the fiscal year.
Within 30 days thereafter, the Joint Legislative Audit Committee
shall transmit the Auditor General's State
Auditor's report to the Speaker of the Assembly and to the
Senate Committee on Rules for transmittal to affected policy
committees.
(e) The board, upon determining the final amount of funds
available for investment in substitute alternative investments and
the estimated amount of funds invested pursuant to subdivision (a),
shall submit that information to the Governor and the Joint
Legislative Audit Committee. Thereafter, the Joint Legislative Audit
Committee shall transmit the report of the Auditor General
State Auditor to the Speaker of the Assembly and
the Senate Committee on Rules for transmittal to the affected policy
committees.
SEC. 5. Section 41320 of the Education Code is amended to read:
41320. As a condition to any emergency apportionment to be made
pursuant to Section 41310, the following requirements shall be met:
(a) The district requesting the apportionment shall submit to the
county superintendent of schools having jurisdiction over the
district a report issued by an independent auditor approved by the
county superintendent of schools on the financial conditions and
budgetary controls of the district, a written management review
conducted by a qualified management consultant approved by the county
superintendent of schools, and a fiscal plan adopted by the
governing board to resolve the financial problems of the district.
(b) The county superintendent of schools shall review, and provide
written comment on, the independent auditor's report, the management
review, and the district plan. That written comment shall include
the county superintendent's approval or disapproval of the district
plan. In the event the county superintendent disapproves the plan,
the governing board shall revise the district plan to respond to the
concerns expressed by the county superintendent.
(c) Upon his or her approval of the district plan, the county
superintendent of schools shall submit copies of the report, review,
plan, and written comments specified in subdivision (b) to the
Superintendent of Public Instruction, the Auditor General
Joint Legislative Audit Committee , the Joint
Legislative Budget Committee, the Director of Finance, and the
Controller.
(d) The Superintendent of Public Instruction shall review the
reports and comments submitted to him or her by the county
superintendent of schools and shall certify to the Director of
Finance that the action taken to correct the financial problems of
the district is realistic and will result in placing the district on
a sound financial basis.
(e) The district shall develop a schedule to repay the emergency
loan and submit it to the county superintendent of schools. The
county superintendent of schools shall review and comment on the
repayment schedule and submit it to the Superintendent of Public
Instruction for approval or disapproval. Upon the approval of the
repayment schedule, and of the other reports, reviews, plans, and the
appointment of the trustee required by this article, the
Superintendent of Public Instruction shall request the Controller to
disburse the proceeds of the emergency loan to the district.
(f) The district requesting the apportionment shall reimburse the
county superintendent of schools for the costs incurred by the
superintendent pursuant to this section.
SEC. 6. Section 62004 of the Education Code is amended to read:
62004. The Auditor General State Auditor
shall audit, on a sampling basis, school districts' use of the
funds specified in Section 62002.
SEC. 7. Section 7604 of the Government Code is amended to read:
7604. In the event of a loss in the reacquisition of loaned
securities, the responsible state agency shall make a written report
of such the loss to the Legislature and
the Auditor General State Auditor as
soon as possible, but not later than 30 days after the incurrence of
such that loss.
SEC. 8. Section 8543.1 of the Government Code is amended to read:
8543.1. The duties of the Bureau of State Audits are to examine
and report annually upon the financial statements prepared by the
executive branch of the state and to perform other related
assignments, including performance audits, that are mandated by
statute. For the purposes of this chapter "bureau" means the
"Bureau of State Audits," unless the context clearly requires
otherwise.
SEC. 9. Section 8544.2 of the Government Code is amended to read:
8544.2. Persons employed by the Bureau of State Audits
bureau pursuant to Section 8544.1 shall be
allowed to enroll in the Public Employees' Medical and Hospital Care
Act contained in Part 5 (commencing with Section 22751) of Division 5
of Title 2.
SEC. 10. Section 8544.3 of the Government Code is amended to read:
8544.3. All persons employed by the Bureau of State
Audits bureau pursuant to Section 8544.1 who
were members of the Public Employees' Retirement System as of
November 3, 1992, shall retain their existing classification within
the system and shall be considered state miscellaneous members as
defined in Section 20014.
SEC. 11. Section 8544.5 of the Government Code is amended to read:
8544.5. (a) There is hereby established in the State Treasury the
State Audit Fund. Notwithstanding Section 13340, the State Audit
Fund is continuously appropriated for the expenses of the State
Auditor. There shall be appropriated annually in the Budget Act to
the State Audit Fund, from the General Fund, the amount necessary to
reimburse the State Audit Fund for the cost of audits to be performed
that are not directly reimbursed under subdivision (c). "Cost of
audits" means all direct and indirect costs of conducting the audits
and any other related expenses incurred by the State Auditor in
fulfilling his or her statutory responsibilities.
(b) Upon certification by the State Auditor of estimated costs on
a monthly basis, the Controller shall transfer the amount thus
certified from the General Fund to the State Audit Fund. The
Controller shall thereafter issue warrants drawn against the State
Audit Fund upon receipt of claims certified by the State Auditor.
(c) To ensure appropriate reimbursement from federal and special
funds for the costs of the duties performed pursuant to Section
8546.3, the State Auditor may directly bill state agencies for the
costs incurred, subject to the approval of the Director of Finance.
(d) As of May 7, 1993, all unallocated funds in the Auditor
General Fund pursuant to former Section 10507 shall be available for
transfer to the State Audit Fund pursuant to subdivision (b). The
amount of funds provided in Item 8855-011-001 of Chapter 587 of the
Statutes of 1992 (Budget Act of 1992) shall be available for transfer
to the State Audit Fund pursuant to subdivision (b) without regard
to Provision 1 of that item.
(e)
(d) To ensure adequate oversight of the operations of the
bureau, the Milton Marks "Little Hoover" Commission on California
State Government Organization and Economy shall annually obtain the
services of an independent public accountant to audit the State Audit
Fund and the operation of the bureau to assure compliance with state
law, including Section 8546. The results of this audit shall be
submitted to the commission and shall be a public record.
(f) In order to
(e) To ensure that audits of the Milton Marks "Little Hoover"
Commission on California State Government Organization and Economy
are conducted in conformity with government auditing standards, any
audit of the commission that is required or permitted by law shall be
conducted by the independent public accountant selected pursuant to
subdivision (e) (d) .
SEC. 12. Section 8544.6 of the Government Code is amended to read:
8544.6. All unreimbursed expenditures of the Bureau of
State Audits bureau are defined as
"administrative costs" defined in Section 11270.
SEC. 13. Section 8545 of the Government Code is amended to read:
8545. The State Auditor shall not destroy any papers or memoranda
used to support a completed audit sooner than three years after the
audit report is released to the public. All books, papers, records,
and correspondence of the bureau pertaining to its work are public
records subject to Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 and shall be filed at any of the regularly
maintained offices of the State Auditor, except that none of the
following items or papers of which these items are a part shall be
released to the public by the State Auditor, his or her employees, or
members of the commission:
(a) Personal papers and correspondence of any person
receiving providing assistance from
to the State Auditor when that person has
requested in writing that his or her papers and correspondence be
kept private and confidential. Those papers and correspondence shall
become public records if the written request is withdrawn or upon
the order of the State Auditor.
(b) Papers, correspondence, memoranda, or any substantive
information pertaining to any audit not completed.
(c) Papers, correspondence, or memoranda pertaining to any audit
that has been completed, which papers, correspondence, or memoranda
are not used in support of any report resulting from the audit.
SEC. 14. Section 8545.1 of the Government Code is amended to read:
8545.1. It is a misdemeanor for the (a)
The State Auditor or , and any
employee or former employee of the bureau to divulge or make
known in any manner not expressly permitted by law ,
is prohibited from divulging or making known to any person not
employed by the bureau in any manner not expressly permitted by
law any particulars of any record, document, or information the
disclosure of which is restricted by law from release to the public.
This prohibition is also applicable to any
This prohibition includes, but is not limited to, the restrictions on
the release of records, documents, or information set forth in
Section 8545.
(b) The prohibition established by subdivision (a) also applies
to:
(1) Any person or business entity that is contracting with
or has contracted with the State Auditor
bureau and to the employees and former employees of that person
or business entity or the .
(2) The officers and employees of and any person or
business entity that is contracting with or has contracted with
any state or local governmental agency or public
publicly created entity that has assisted the
State Auditor bureau in the course of
any audit or investigative audit or that has been furnished
received a draft copy of any report or
other draft document from the bureau for comment or review.
(c) Any officer, employee, or person who discloses the particulars
of any record, document, or other information in violation of this
section is guilty of a misdemeanor.
SEC. 15. Section 8545.2 of the Government Code is amended to read:
8545.2. (a) Notwithstanding any other provision of law, the State
Auditor during regular business hours shall have access to and
authority to examine and reproduce, any and all books, accounts,
reports, vouchers, correspondence files, and other records, bank
accounts, and money or other property, of any agency of the state,
whether created by the California Constitution or otherwise,
and any public any local governmental entity,
including any city, county, and school or special district , and
any publicly created entity, for any audit or investigative
audit. Any officer or employee of any agency or entity having these
records or property in his or her possession or
, under his or her control , or otherwise having
access to them, shall permit access to, and examination and
reproduction thereof, upon the request of the State Auditor or his or
her authorized representative.
(b) For the purposes of access to and examination and reproduction
of the records and property described in subdivision (a), an
authorized representative of the State Auditor is an employee or
officer of the state or local governmental agency or
public publicly created entity involved
and is subject to any limitations on release of the information as
may apply to an employee or officer of the state or local
governmental agency or public publicly
created entity. For the purpose of conducting any audit or
investigation, the State Auditor or his or her authorized
representative shall have access to the records and property of any
public or private entity or person subject to review or regulation by
the public agency or public entity being audited or investigated to
the same extent that employees or officers of that agency or public
entity have access. No provision of law providing for the
confidentiality of any records or property shall prevent disclosure
pursuant to subdivision (a), unless the provision specifically refers
to and precludes access and examination and reproduction pursuant to
subdivision (a). This subdivision does not apply to records
compiled pursuant to Part 1 (commencing with Section 8900) or Part 2
(commencing with Section 10200) of Division 2.
(c) Any officer or person who fails or refuses to permit access
and examination and reproduction, as required by this section, is
guilty of a misdemeanor.
SEC. 16. Section 8545.4 of the Government Code is amended to read:
8545.4. (a) In connection with any audit or investigative audit
conducted by the State Auditor, the State Auditor or his or her
designee, may do any of the following:
(1) Administer oaths.
(2) Certify to all official acts.
(3) Issue subpoenas for the attendance of witnesses and the
production of papers, books, accounts, or documents, or for the
making of oral or written sworn statements, in any
investigative interview conducted as part of an audit or
investigative audit.
(b) Any subpoena issued under this section extends as process to
all parts of the state and may be served by any person authorized to
serve process of courts of record or by any person designated for
that purpose by the State Auditor or his or her designee. The person
serving this process may receive compensation as allowed by the
State Auditor or his or her designee, not to exceed the fees
prescribed by law for similar service.
(c) Notwithstanding Section 7470, 7474, or 7491, subpoenas issued
under this section for financial records of financial institutions
concerning customers of financial institutions or for information
contained in those records shall not be subject to the requirement or
conditions of Section 7474.
SEC. 17. Section 8545.5 of the Government Code is amended to
read:
8545.5. (a) The superior court in the county in which any
investigative interview is held under the
direction of the State Auditor or his or her designee has
jurisdiction to compel the attendance of witnesses, the making of
oral or written sworn statements, and the production of papers,
books, accounts, and documents, as required by any subpoena issued by
the State Auditor or his or her designee.
(b) If any witness refuses to attend or testify or produce any
papers required by the subpoena, the State Auditor or his or her
designee may petition the superior court in the county in which the
hearing is pending for an order compelling the person to attend and
answer questions under penalty of perjury or produce the papers
required by the subpoena before the person named in the subpoena. The
petition shall set forth all of the following:
(1) That due notice of the time and place of attendance of the
person or the production of the papers has been given.
(2) That the person has been subpoenaed in the manner prescribed
in Section 8545.4.
(3) That the person has failed and refused to attend or produce
the papers required by subpoena before the State Auditor or his or
her designee as named in the subpoena, or has refused to answer
questions propounded to him or her in the course of the
investigative interview under penalty of perjury.
(c) Upon the filing of the petition, the court shall enter an
order directing the person to appear before the court at a specified
time and place and then and there show cause why he or she has not
attended, answered questions under penalty of perjury, or produced
the papers as required. A copy of the order shall be served upon him
or her. If it appears to the court that the subpoena was regularly
issued by the State Auditor or his or her designee, the court shall
enter an order that the person appear before the person named in the
subpoena at the time and place fixed in the order and answer
questions under penalty of perjury or produce the required papers.
Upon failure to obey the order, the person shall be dealt with as for
contempt of court.
SEC. 18. Section 8546.1 of the Government Code is amended to read:
8546.1. (a) The State Auditor shall conduct financial
and performance audits as directed by statute. The State Auditor may
conduct these audits of any state agency as defined by Section
11000, whether created by the California Constitution or otherwise,
and any local governmental agency, including any
city, county, and school or special district , or any publicly
created entity . However, the State Auditor shall not audit
the activities of the Milton Marks Commission on California State
Government Organization and Economy or the Legislature to assure
compliance with government auditing standards.
The
(b) The State Auditor shall conduct any audit of a state or
local governmental agency or any other publicly created entity that
is requested by the Joint Legislative Audit Committee to the extent
that funding is available and in accordance with the priority
established by the committee with respect to other audits requested
by the committee. Members of the Legislature may submit requests for
audits to the committee for its consideration and approval. Any
audit request approved by the committee shall be forwarded to the
State Auditor as a committee request.
The
(c) The State Auditor shall complete any audit in a timely
manner and in accordance with the "Government Auditing Standards"
published by the Comptroller General of the United States.
Immediately
(d) Immediately upon completion of the audit, the State
Auditor shall transmit a copy of the audit report to the commission.
Not later than 24 hours after delivery to the commission, the
commission shall deliver the report to the Legislature, appropriate
committees or subcommittees of the Legislature, and the Governor.
Once transmitted to these parties, the report shall be made available
to the public.
SEC. 19. Section 8546.3 of the Government Code is amended to read:
8546.3. The State Auditor shall examine and report annually upon
the financial statements otherwise prepared by the executive branch
of the state so that the Legislature and the public will be informed
of the adequacy of those financial statements in compliance with
generally accepted accounting principles applied on a basis
consistent with that of the preceding fiscal year . In
making that examination, the State Auditor may make the audit
examination of accounts and records, accounting procedures, and
internal auditing performance that he or she determines to be
necessary to disclose all material facts necessary to proper
reporting in accordance with the federal Single Audit Act of 1984 (31
U.S.C. Section 7501 et seq. and following
) and the purposes set forth in Section 8521.5.
SEC. 20. Section 8546.4 of the Government Code is amended to read:
8546.4. (a) The State Auditor shall annually issue an auditor's
report based upon the general purpose financial statements included
in the Controller's annual report that is submitted to the Governor
pursuant to Section 12460. The auditor's report
shall be in accordance with the "Government Auditing Standards"
published by the Comptroller General of the United States and the
standards published by the American Institute of Certified Public
Accountants.
(b) The State Auditor, in the performance of this annual audit,
may examine all the financial records, accounts, and documents of any
state agency as defined by Section 11000.
(c) The State Auditor shall rely, to the maximum extent possible,
upon the audits performed by the Controller, the Department of
Finance, internal auditors of state agencies, and independent
contractors. The Director of Finance shall be responsible for
coordinating and providing technical assistance to the internal
auditors of state agencies. Nothing in this article is intended to
reduce or restrict the operations of internal auditors whose review
of internal financial and administrative controls of state agencies
is essential for coordinated audits.
(d) State agencies receiving federal funds shall be primarily
responsible for arranging for federally required financial and
compliance audits. State agencies shall immediately notify the
Director of Finance, the State Auditor, and the Controller when they
are required to obtain federally required financial and compliance
audits. The Director of Finance, the State Auditor, and the
Controller shall coordinate the procurement by state agencies,
including any negotiations with cognizant federal agencies, of
federally required financial and compliance audits.
(e) To prevent duplication of the annual audit conducted by the
State Auditor pursuant to subdivision (a), except for those state
agencies that are required by state law to obtain an annual audit, no
state agency shall enter into a contract for a financial or
compliance audit without prior written approval of the Controller and
the Director of Finance, which approval shall state the reason for
the contract and shall be filed with the State Auditor at least 30
days prior to the award of the contract. No funds appropriated by
the Legislature shall be encumbered for the purpose of funding any
contract for an audit that duplicates the annual financial audit
conducted by the State Auditor.
(f) Notwithstanding any other provision of this article, nothing
in this section shall be construed to limit, restrict, or otherwise
infringe upon the constitutional or statutory authority of the
Controller to superintend the fiscal concerns of the state.
(g) Notwithstanding any other provision of this article, nothing
in this section shall be construed to limit, restrict, or otherwise
infringe upon the statutory authority of the Director of Finance to
supervise the financial and business policies of the state.
SEC. 21. Section 8546.5 of the Government Code is amended and
renumbered to read:
8546.5.
13071. The Director of Finance, in coordinating the
internal auditors of state agencies, shall ensure that these auditors
utilize the "Standards for the Professional Practices of Internal
Auditing."
SEC. 22. Section 8546.8 of the Government Code is amended to read:
8546.8. Unless the contrary is stated or clearly appears from the
context, any reference to the Auditor General ,
or the Office of the Auditor General , or the
Joint Legislative Audit Committee in any statute or
contract in effect on the effective date of this chapter, other than
Chapter 4 (commencing with Section 10500), with respect to the
performance of audits, shall be construed to refer to the State
Auditor , and the Bureau of State
Audits, and the Milton Marks Commission on California State
Government Organization and Economy, respectively.
SEC. 23. The heading of Article 3 (commencing with Section 8547)
of Chapter 6.5 of Division 1 of Title 2 of the Government Code is
amended to read:
Article 3. Reporting of Improper Governmental
Activities California Whistleblower Protection Act
SEC. 24. Section 12430 of the Government Code is amended to read:
12430. Annually, the Controller, the Auditor General
State Auditor , and the Director of the
Department of Finance shall each prepare a plan to meet their audit
responsibilities. With respect to audits to fulfill the requirements
necessary for the receipt of federal funds, the Auditor
General State Auditor shall be primarily
responsible for financial audits, and the Director of Finance or the
Controller shall be primarily responsible for compliance audits, and
the Director of Finance shall be primarily responsible for
coordinating state agency internal audits and determining when
agencies are required to obtain federally mandated audits. Upon
completion of these audit plans, the Controller, Auditor
General State Auditor , and Director of Finance
shall meet to review and discuss the plans with the purpose of
coordinating their audit efforts to avoid unnecessary duplication and
negotiation with federal agencies regarding federally mandated
audits.
Subsequent to their review of the audit plans and negotiations
with federal agencies if the Controller, the Director of Finance, or
the Auditor General State Auditor
determines that the proposed audit plan of the other does not fulfill
all audit requirements necessary for the receipt of federal funds,
they may expand the scope of their audit of state agencies to meet
the additional federal audit requirements. The financial audit
report issued by the Auditor General State
Auditor and the compliance audit report issued by the
Controller or the Director of Finance or both are intended to fulfill
federally mandated audit requirements. These audit reports shall be
performed in accordance with the "Standards for Audits of
Governmental Organizations, Programs, Activities and Functions,"
published by the Comptroller General of the United States, and the
standards published by the American Institute of Certified Public
Accountants.
Nothing in this section shall be construed to limit, restrict, or
otherwise infringe upon the duty of the Auditor General
State Auditor to conduct annual financial audits
pursuant to Section 10534 or to limit, restrict, or otherwise
infringe upon the authority of the Joint Legislative Audit Committee
to direct the Auditor General State Auditor
to conduct any audit of state government pursuant to
Chapter 4 (commencing with Section 10500) of Part 2 of Division 2
Chapter 6.5 (commencing with Section 8540) of Division
1 of Title 2.
SEC. 25. Section 13297 of the Government Code is amended to read:
13297. The money in the Treasury shall be counted by the
Auditor General State Auditor at least twice
each year, without giving the Treasurer any previous notice of the
day or hour of counting.
At any counting the Auditor General State
Auditor may place any sum in bags or boxes and mark and seal
them with a seal adopted and kept by him or her. At any subsequent
counting he or she may count each sealed bag or box separately and
credit at the value stamped thereon the contents of the bags or boxes
as part of the money counted without making a detailed count of the
contents.
SEC. 26. Section 13298 of the Government Code is amended to read:
13298. The Auditor General State Auditor
shall count as cash all evidence of money belonging to the
state upon deposit outside the treasury that may be held by the
Treasurer in accordance with law and shall determine for himself or
herself whether such that evidence is
sufficient according to law.
SEC. 27. Section 13299 of the Government Code is amended to read:
13299. After each count of money the Auditor General
State Auditor shall make and file with the
Secretary of State and cause to be published in some newspaper in the
City of Sacramento, an affidavit showing:
(a) The amount of money or credit which
that should be in the treasury.
(b) The amount and kind of money or credit actually
therein in the treasury .
SEC. 28. Section 13299.1 of the Government Code is amended to
read:
13299.1. Securities held in the treasury or other depositories
for safekeeping purposes shall be counted or confirmed, at least
annually, by the Auditor General State
Auditor . After each count or confirmation of securities, the
Auditor General State Auditor shall
issue his or her report on the accountability of securities.
SEC. 29. Section 13405 of the Government Code is amended to read:
13405. (a) To ensure that the requirements of this section are
fully complied with, the head of each agency which the director
determines is covered by this section shall prepare and submit a
report on the adequacy of the agency's systems of internal accounting
and administrative control by December 31, 1983, and by December 31
following the end of each odd-numbered fiscal year thereafter.
(b) The report, including the state agency's response to report
recommendations, shall be signed by the head of the agency and
addressed to the agency secretary or the director of finance for
agencies without an agency secretary. Copies of the reports shall be
forwarded to the Legislature, the Auditor General
State Auditor , the Governor, and the Director of
Finance. Copies of these reports shall also be forwarded to the State
Library where they shall be available for public inspection.
(c) By January 1, 1983, the director, in consultation with the
Auditor General State Auditor and the
Controller, shall establish a system of reporting and a general
framework to guide the agencies in performing evaluations on their
systems of internal accounting and administrative control. The
director, in consultation with the Auditor General
State Auditor and the Controller, may modify the format
for the report or the framework for conducting the evaluations from
time to time as deemed necessary.
(d) Any material inadequacy or material weakness in an agency's
systems of internal accounting and administrative control which
prevents the head of the agency from stating that the agency's
systems of internal accounting and administrative control provided
reasonable assurances that each of the objectives specified above was
achieved, shall be identified and the plans and schedule for
correcting any such inadequacy described in detail.
SEC. 30. Section 16366.7 of the Government Code is amended to
read:
16366.7. Since federal block grant funds were reduced by an
average of 26 percent during the 1981-82 fiscal year and are proposed
for further reductions during the 1982-83 fiscal year, the
Legislature declares that the state's administrative costs and
processes must be reduced in order to insure
ensure that maximum funds are available to continue essential
direct human services.
Therefore, notwithstanding any other provision of law, all of the
following state procedures shall be implemented within 60 days after
the effective date of this section:
(a) All state agencies, offices, or departments administering
federal block grant funds shall have the authority, subject to the
approval of the Department of Finance, to grant advance payments of
federal funds to contractors or local governmental agencies in any
amounts as the administering state department deems necessary for
startup or continued provision of services or program operation.
(b) Departmental service contracts utilizing federal block grant
funds shall be exempt from approval by the Department of Finance and
the State Department of General Services prior to their execution.
Instead, the proper state fiscal controls over federal block grant
funds shall be insured by all of the following provisions:
(1) State departments which that
award block grant funds to local agencies shall permit, as
appropriate, to the extent that federal funds are available for this
purpose, local agencies to provide for federally mandated financial
and compliance audits of block grant awards in accordance with the
federal audit provisions and standards promulgated by the Comptroller
General of the United States, and consistent with the department's
approved audit plan.
(2) The Department of Finance, in consultation with the
Controller, shall establish fiscal reporting requirements for the
departments to use on a quarterly basis with all providers.
(3) In the event a contractor has not engaged in a contract for
these program purposes before with the state, state administering
departments shall have the authority to conduct a preaudit or fund a
preaudit by the Controller in order to certify the ability of the
contractor to administer the funds.
(4) The Auditor General State Auditor
shall provide audit findings regarding each block grant to the
Legislature no later than May 1 of each year.
(c) Each administering state department shall develop standard
definitions for units of service, costs per unit of service, citizen
participation processes, and due process notification for clients in
relation to diminishing federal funds within 60 days after the
effective date of this section and shall incorporate all of these
elements into each agreement or contract.
(d) To the extent possible, compliance with this section shall be
consistent with federal policies and procedures. Reports required
under this section shall be combined, where practical, with any other
similar reports required by the Legislature and by the federal
government.
SEC. 31. Section 53134 of the Government Code is amended to read:
53134. (a) Local agencies shall have the option, pursuant to the
provisions of Section 53135, to provide for federally mandated
financial and compliance audits of block grant funds received from
state departments. If, however, a local agency does not elect to, or
fails to provide for, federally mandated financial and compliance
audits, or if it is determined by the administering state department
that a local agency warrants assistance in this function, the state
department shall notify the Controller, and the Controller shall
identify appropriate methods for accomplishing federally required
audits.
The decision of the Controller shall be based upon use of any
existing state audit relationship, whenever appropriate in view of
federal requirements, so as to avoid duplication and excess costs.
(b) The state shall rely on the audit arranged by the local agency
if the audit is conducted in accordance with the standards
promulgated by the state consistent with federal policy. Additional
work shall not duplicate these audits and shall be conducted only
upon approval of the Controller in consultation with the Department
of Finance and the Auditor General .
(c) Audits performed pursuant to this article shall be conducted
not less frequently than every two years, or as specified by federal
law, by qualified state or local government auditors or independent
public accountants in accordance with the financial and compliance
requirements of federal Standards for Audit of Governmental
Organizations, Programs, Activities and Functions. These audits
shall be completed no later than six months after the close of the
audit period. If the provisions of this subdivision have not been
met, the Controller shall immediately notify the Governor and the
Legislature as to what corrective actions it intends to take.
SEC. 32. Section 53138 of the Government Code is amended to read:
53138. The Controller, the Department of Finance, the
Auditor General's State Auditor's office, or
other state department auditors may perform audit activities pursuant
to this article insofar as the standards of independence contained
in the federal Standards for Audit of Governmental
Organizations, Programs, Activities and Functions
"Government Auditing Standards" published by the Comptroller General
of the United States are met.
SEC. 33. Section 18502.5 of the Health and Safety Code is amended
to read:
18502.5. (a) There is hereby established in the State Treasury
the Mobilehome Parks Revolving Fund into which funds collected by the
department pursuant to this part shall be deposited.
Notwithstanding Section 13340 of the Government Code, money deposited
in the fund is continuously appropriated to the department for
expenditure in carrying out the provisions of this part.
(b) Notwithstanding any maximum fees set by this part, the
department may, by regulation, set fees charged by the department for
all permits and for the department's activities mandated by this
part. The fees shall be set with the primary objective that the
aggregate revenue deposited in the Mobilehome Parks Revolving Fund
shall not, on an annual basis, exceed the costs of the department's
activities mandated by this part.
(c) No proposed increase in fees may be effective any sooner than
45 days after written notification thereof is provided to the
Chairman of the Joint Legislative Audit Committee and the
Auditor General State Auditor . Upon receipt of
the notification, the Auditor General State
Auditor may prepare, a report to the Legislature which
indicates whether the proposed increase is appropriate and consistent
with the provisions of this part.
(d) The total money contained in the Mobilehome Parks Revolving
Fund on June 30 of each fiscal year shall not exceed the amount of
money needed for the department's operating expenses for one year for
the enforcement of this part. If the total money contained in the
fund exceeds this amount, the department shall make appropriate
reductions in the schedule of fees authorized by this section.
(e) This section shall become operative January 1, 1984.
SEC. 34. Section 10359 of the Public Contract Code is amended to
read:
10359. (a) Each state agency shall annually prepare a report
pursuant to this section that includes a list of the consulting
services contracts into which it has entered during the previous
fiscal year. The listing shall include the following information:
(1) The name and identification of each contractor.
(2) The type of bidding entered into, the number of bidders,
whether the low bidder was accepted, and if the low bidder was not
accepted, an explanation of why another contractor was selected.
(3) The amount of the contract price.
(4) Whether the contract was a sole-source contract, and why the
contract was a sole-source contract.
(5) The purpose of the contract and the potential beneficiaries.
(6) The date on which the initial contract was signed, the date on
which the work began and was completed.
The report shall also include a separate listing of consultant
contracts completed during that fiscal year, with the same
information as above.
(b) The report this section requires shall also include a list of
any contracts underway during that fiscal year on which any change
was made regarding the following:
(1) The completion date of the contract.
(2) The amount of money to be received by the contractor, if it
exceeds 3 percent of the original contract price.
(3) The purpose of the contract or duties of the contractor. A
brief explanation shall be given if the change in purpose is
significant.
(c) Copies of the annual report shall be sent within 30 working
days after the end of the previous fiscal year to the Legislative
Analyst, the Department of Finance, the Department of General
Services, the Auditor General State Auditor
, the Joint Legislative Budget Committee, the Joint
Legislative Audit Committee, and the Senate
Appropriations Committee, and Assembly and the Assembly Ways and
Means Committee and Assembly Committees on
Appropriations .
(d) State agencies shall not use the temporary budget allocation
process as a means of circumventing the requirements of this section.
(e) Sixty days after the close of the fiscal year, the department
shall furnish to the officials and committees listed in subdivision
(c), a list of the departments and agencies that have not submitted
the required report specified in this section.
SEC. 35. Section 2154 of the Streets and Highways Code is amended
to read:
2154. The State Controller shall annually
tabulate and compile all such reports received by him or her
and shall distribute copies of such
that tabulation and compilation to the Governor, the Lieutenant
Governor, the Members of the Legislature, the department, the
Auditor General State Auditor ,
the Joint Legislative Audit Committee, the cities, and the
counties and to any legislative committee charged with the
investigation of streets, roads, highways, or bridges in this state.
SEC. 36. Section 11212 of the Vehicle Code is amended to read:
11212. (a) Every owner licensed under this chapter shall keep a
record at the traffic violator school's primary business location
showing all of the following for each student:
(1) The name and address and license number of the traffic
violator school providing instruction.
(2) The name and address of each person given
instruction.
(3) The instruction permit number or driver's license number of
every person given instruction.
(4) The name and number of the license issued pursuant to Section
11207 of the traffic violator school instructor.
(5) The particular type of instruction given and the date or dates
of the instruction.
(6) A statement as to whether the approved lesson plan was
followed.
(7) The total number of hours of instruction.
(8) The total cost to the student of the instruction, which shall
not exceed the amount of the fee represented or advertised by the
traffic violator school at the time of the student's enrollment.
(9) The court docket number under which the student was referred
to a traffic violator school.
(10) The number of the completion certificate issued to the
student pursuant to subdivision (e) of Section 11208 and, if
different, the number of any copy thereof issued to the student.
(b) The records shall be retained for a minimum of three years and
shall be open to the inspection during business hours and at all
other reasonable times by the department, the court, a private entity
providing monitoring pursuant to Section 11222, the Legislative
Analyst, and the Auditor General State
Auditor or authorized employees thereof, but shall be only for
confidential use.
(c) Whenever a licensee suspends or terminates the licensed
activity, the licensee shall surrender the records specified in
subdivision (a) to the department for examination not later than the
end of the third day, excluding Saturdays, Sundays, and legal
holidays, after the date of suspension or termination. The
department may duplicate or make a record of any information
contained therein. All these records shall be returned to the
licensee not later than 30 days after the date of surrender.
SEC. 37. Section 11222 of the Vehicle Code is amended to read:
11222. The department may contract with a nongovernmental entity
to administer any part of this chapter, subject to limitations in
other laws regarding contracting out for services. No such contract
shall exceed three years' duration. The contracting entity, and any
affiliate or subsidiary thereof monitoring traffic violator schools,
shall conform to all of the following requirements:
(a) Engage in no other business activity with traffic violator
schools or any of the principals of the traffic violator schools,
including the provision of services or supplies.
(b) Provide reports in statistical form to the department and to
the Legislature as instructed by the department. These reports shall
be issued not less frequently than annually.
(c) Make its records available for inspection by authorized
representatives of the department, the Legislative Analyst, and the
Auditor General State Auditor .
SEC. 38. Section 14100.2 of the Welfare and Institutions Code is
amended to read:
14100.2. (a) All types of information, whether written or oral,
concerning a person, made or kept by any public officer or agency in
connection with the administration of any provision of this chapter,
Chapter 8 (commencing with Section 14200), or Chapter 8.7 (commencing
with Section 14520) and for which a grant-in-aid is received by this
state from the United States government pursuant to Title XIX of the
Social Security Act shall be confidential, and shall not be open to
examination other than for purposes directly connected with the
administration of the Medi-Cal program. However, in the context of a
petition for the appointment of a conservator for a person with
respect to whom such this information
is made or kept, and in the context of a criminal prosecution for a
violation of Section 368 of Penal Code with respect to such a person,
all of the following shall apply:
A public officer or employee of any such agency may answer
truthfully, at any proceeding related to the petition or prosecution,
when asked if he or she is aware of information that he or she
believes is related to the legal mental capacity of that aid
recipient or the need for a conservatorship for that aid recipient.
If the officer or employee states that he or she is aware of this
information, the court may order the officer or employee to testify
about his or her observations and to disclose any relevant agency
records if the court has an other independent reason to believe that
the officer or employee has information that would facilitate the
resolution of the matter.
(b) Except as provided in this section and to the extent permitted
by federal law or regulation all information about applicants and
recipients as provided for in subdivision (a) to be safeguarded
includes, but is not limited to, names and addresses, medical
services provided, social and economic conditions or circumstances,
agency evaluation of personal information, and medical data,
including diagnosis and past history of disease or disability.
(c) Purposes directly connected with the administration of the
Medi-Cal program, Chapter 8 (commencing with Section 14200), or
Chapter 8.7 (commencing with Section 14520) encompass those
administrative activities and responsibilities in which the State
Department of Health Services and its agents are required to engage
to insure effective program operations. These activities include,
but are not limited to: establishing eligibility and methods of
reimbursement; determining the amount of medical assistance;
providing services for recipients; conducting or assisting an
investigation, prosecution, or civil or criminal proceeding related
to the administration of the Medi-Cal program; and conducting or
assisting a legislative investigation or audit related to the
administration of the Medi-Cal program.
(d) Any officer, agent, or employee of the State Department of
Health Services or of any public agency shall provide the Joint
Legislative Audit Committee and the Auditor General
State Auditor with any and all the information
described in subdivision (b) within a reasonable period of time as
determined by the committee in consultation with the State Department
of Health Services, after receipt of a request from the committee
approved by a majority of the members of the committee. The Joint
Legislative Audit Committee and the Auditor General
State Auditor may use such
that information only for the purpose of investigating or
auditing the administration of the Medi-Cal program, Chapter 8
(commencing with Section 14200), or Chapter 8.7 (commencing with
Section 14520), and shall not use such that
information for commercial or political purposes. In any case
where disclosure of information is authorized by this section, the
Joint Legislative Audit Committee or the Auditor General
State Auditor shall not disclose the identity of
any applicant or recipient, except in the case of a criminal or
civil proceeding conducted in connection with the administration of
the Medi-Cal program.
(e) The access to information provided in subdivision (d) shall be
permitted only to the extent and under the conditions provided by
federal law and regulations governing the release of such
information.
(f) The State Department of Health Services may make rules and
regulations governing the custody, use and preservation of all
records, papers, files , and communications pertaining to
the administration of the laws relating to the Medi-Cal program,
Chapter 8 (commencing with Section 14200), or Chapter 8.7 (commencing
with Section 14520). The rules and regulations shall be binding on
all departments, officials , and employees of the state,
or of any political subdivision of the state and may provide for
giving information to or exchanging information with agencies, public
or political subdivisions of the state, and may provide for giving
information to or exchanging information with agencies, public or
private, which are engaged in planning, providing or securing such
services for or in behalf of recipients or applicants; and for making
case records available for research purposes, provided, that
such that research will not result in
the disclosure of the identity of applicants for or recipients of
such those services.
(g) Upon request, the department shall release to the negotiator
established pursuant to Article 2.6 (commencing with Section 14081)
all computer tapes and any modifications thereto, including paid
claims, connected with the administration of the Medi-Cal program
which are in the possession or under the control of the department,
including tapes prepared prior to the effective date of this section.
To ensure compliance with federal law and regulations, the
department shall make the minimum necessary modifications to its
computer tapes prior to releasing the tapes to the negotiator in
order to assure the confidentiality of the identity of all applicants
for, or recipients of, those services. The department shall not
make any modifications to paid claims tapes which
that affect information regarding beneficiaries' aid
categories or counties of origin.
(h) Any person who knowingly releases or possesses confidential
information concerning persons who have applied for or who have been
granted any form of Medi-Cal benefits or benefits under Chapter 8
(commencing with Section 14200) or Chapter 8.7 (commencing with
Section 14520) for which state or federal funds are made available in
violation of this section is guilty of a misdemeanor.
amended to read:
10504. After recommendation by the committee, the Auditor General
shall be selected by concurrent resolution and shall serve until his
or her successor is selected or until he or she is removed by
concurrent resolution. When the Legislature is not in session, the
committee may suspend the Auditor General until the Legislature
reconvenes. When the Legislature is in session, the committee may
suspend the Auditor General for a period not to exceed 30 days. When
there is a vacancy in the office of Auditor General, the Chairman of
the Joint Legislative Audit Committee shall select an acting Auditor
General until an Auditor General is selected by the Legislature.
The committee shall fix the salary of the Auditor General, deputies,
and staff. The funds for the support of the committee shall be
provided from the Contingent Funds of the Assembly and Senate in the
same manner that those funds are made available to other joint
committees of the Legislature.