BILL ANALYSIS Ó
AB 187
Page 1
Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 187 (Lara and Smyth) - As Introduced: January 25, 2011
Policy Committee: Accountability
and Admin. Review Vote: 13 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes the State Auditor to establish a high-risk
local agency audit program.
Specifically, this bill:
1)Allows the State Auditor to establish a high-risk local agency
audit program to audit any city, county, special district or
other publicly created entity that the auditor identifies as
being at high risk of waste, fraud, abuse, mismanagement or
other major challenges.
2)Allows the State Auditor to consult with the State Controller,
Attorney General or other state agencies that have oversight
responsibilities over the local entity.
3)Requires the State Auditor to notify the Joint Legislative
Audit Committee whenever it identifies a local government as
being at risk.
4)Requires the State Auditor to issue audit reports at least
once every two years if a local agency is determined to be at
high risk.
FISCAL EFFECT
Annual GF costs are expected to be around $500,000. Costs
depend on the number and complexity of audits.
COMMENTS
1)Purpose. Currently, the high-risk program only applies to
AB 187
Page 2
state government and does not give the State Auditor the
authority to include local governments high-risk assessments.
Yet the State Auditor's general jurisdiction for audit work
includes all levels of state and local government. Omitting
local governments from the high-risk program could hamper the
ability of the State Auditor to provide state-wide oversight
and government transparency. AB 187 allows the State Auditor
to examine local governments during the course of the
high-risk audit program to determine if there are any areas
that are at risk of fraud, waste or mismanagement.
2)Background. Existing law authorizes the State Auditor to
establish a high-risk government agency audit program. Every
two years, the State Auditor produces a high-risk report that
identifies agencies and programs at risk for waste, fraud and
abuse. The high-risk program can also identify major
challenges and impediments associated with government
efficiency.
3)Auditing priorities . The resources of the Bureau of State
Audits are limited, which is one reason that the Legislature
has established the Joint Legislative Audit Committee (JLAC).
JLAC has adopted a specific procedure for evaluating and
approving audit proposals. The BSA gives priority to audits
mandated by statute and these would be done regardless of
JLAC's decisions. Establishing a high risk local government
agency audit program could mean that JLAC would have to defer
or deny a different audit. A factor for the committee to
consider is that because of the competition for resources, BSA
is receiving significant budget increases in the next two
fiscal years.
4)Amendment Suggested. The bill requires the State Auditor to
issue audit reports at least once every two years once a local
agency is at high risk. Since it is possible for a local
agency to respond to the initial audit in a way that
demonstrates it is no longer at high risk, the requirement to
continue audits should be permissive.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 187
Page 3