BILL ANALYSIS
AB 831
Page 1
Date of Hearing: May 12, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 831 (Monning) - As Amended: May 11, 2009
SUBJECT : State Auditor: confidential records.
SUMMARY : Clarifies that state and local government officers
and employees that are the subject of, or possess information
about, an ongoing audit or investigation, cannot release audit
findings.
EXISTING LAW :
1)Sets forth the duties and powers of the Bureau of State Audits
(BSA) and makes reference to audits and investigative audits.
2)Prohibits the State Auditor (SA) or his or her employees from
releasing to the public, among other things, any papers,
correspondence, or any substantive information pertaining to
any audit not completed.
3)Provides that any officer, employee, or person who violates
this prohibition is guilty of a misdemeanor.
4)Allows state bodies and local legislative bodies to meet in
closed session to discuss a confidential BSA final draft audit
report. After the public release of a BSA audit report, those
bodies must meet in open session to discuss those reports.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
Previous Committee Action . This bill was heard on May 5, 2009
and was put over for further hearing. The author's office has
amended the bill to delete specific references to the
descriptions of officers and employees that are the subject of
an ongoing audit or investigation, as well as related documents
or information.
Purpose of the bill . According to the author's office, "AB 831
seeks to clarify that officers and employees of any state or
local governmental agency or publicly created entity that is the
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subject of an ongoing audit cannot release information related
to that ongoing audit before it becomes final. This bill is
declaratory of existing law. In the past, there have been
several agencies which were the subject of an ongoing audit that
decided to release draft recommendations to the public before
the SA had officially completed the audit. Discussing audit
findings before they become final by the SA violates all
auditing standards in 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."
Background . The California SA is the State's independent
external auditor that provides independent, nonpartisan,
accurate, and timely assessments of California government's
financial and operational activities in compliance with
generally accepted government auditing standards. The BSA will
conduct audits or investigations to evaluate whether the auditee
is acting in compliance with existing law. BSA audits originate
from within the bureau, the Joint Legislative Audit Committee
(JLAC), or legislation, and BSA investigations originate from
complaints from state employees or the public. State law
precludes the SA from discussing or disclosing any aspect of the
audit once the audit commences. The BSA will prepare a
confidential final draft report and allow the auditee to respond
to the draft findings before a final report version is released.
State and local legislative bodies are allowed to discuss a
response to a confidential final draft BSA report in closed
session, as provided in Government Code sections 11126.2 and
54956.75. In addition, agencies are allowed to confer with
legal counsel using a confidential attorney-client privilege
that would not result in a release of the draft BSA report or
investigation.
Once a BSA report is finalized and released to the public, state
and legislative bodies must meet in open session to discuss the
report since it is no longer confidential in nature. In
addition, members of the public are allowed to share information
and discuss the final BSA report.
Support . According to the sponsor, the BSA, "The code currently
makes it a misdemeanor to divulge any record, document, or
information regarding an ongoing audit. Some entities have
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taken a position that this language only applies to (the BSA).
Thus, AB 831 would clarify that the code includes the officers
and employees of any state or local governmental agency or
publicly created entity that is the subject of an ongoing audit
or investigation. We believe that the language is declaratory
of existing law and simply serves to clarify that auditees
cannot publicly release information pertaining to the ongoing
audit work of (the BSA) office. We believe the clarification is
necessary because some auditees have expressed different
interpretations. Additionally, this bill does not bear any
costs to the State."
Oppose . According to the State Association of County Auditors
(SACA), " In many cases, County Boards of Supervisors will
request input prior to our responding to an audit. In order for
the Board of Supervisors to discuss the draft audit, it must be
addressed in public for Brown Act compliance. The SACA has
historically shared expertise and knowledge from county to
county in order to perform complete and accurate audits. SACA
has well established sub-committees which produce guidelines and
procedure manuals for compliance with legislative requirements
in areas such as Accounting Standards and Procedures, Property
Taxes, and the County Budget Manual. All counties rely on these
guidelines for consistent interpretation of legislation. Upon
completion of an audit draft, the auditee has an opportunity to
respond to any findings prior to the audit being finalized.
Should these findings be contrary to adopted guidelines, it is
imperative that we are permitted to discuss the issue with other
technical experts."
According to the County of San Diego, "AB 831 would prohibit
county officials from discussing information found in an ongoing
audit with key county staff, including county counsel, and
restrict county auditors from seeking assistance from other
local government officials as technical experts. It will also
prohibit the Board of Supervisors from being informed about the
scope and progress of the audit, which surely cannot be in the
public interest."
Related Legislation . AB 567 (Villines) expands the restrictions
regarding the release of information related to a SA report to
the officers and any employee or former officers or employees of
any state or local agency or publicly created entity that has
been subject to or that has assisted the BSA with an audit or
investigation or that has receive a draft copy of any report or
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other draft document from the bureau for comment or review, and
replaces references to "investigative audit" with
"investigation". This bill is pending in the Assembly
Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Bureau of State Audits (BSA) (sponsor)
Opposition
California State Association of Counties (CSAC)
County of San Diego
State Association of County Auditors (SACA)
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301