BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 253 HEARING: 6/22/11
AUTHOR: Smyth FISCAL: Yes
VERSION: 6/14/11 TAX LEVY: No
CONSULTANT: Weinberger
LOCAL ACCOUNTING PROCEDURES
Requires the State Controller to prescribe uniform
accounting procedures for cities.
Background and Existing Law
The State Controller must, in consultation with the
Committee on County Accounting Procedures, prescribe
uniform accounting procedures for counties (AB 2290,
Bradley, 1959). The Committee on County Accounting
Procedures consists of 10 members appointed by the State
Controller, including five county auditors, three county
administrative officers, and two county supervisors.
Committee members serve without compensation, at the
pleasure of the Controller. They are reimbursed by their
counties for expenses incurred in attending Committee
meetings. The uniform accounting procedures for counties
must:
Conform to Generally Accepted Accounting Principles
(GAAP),
Be adopted under statutes governing administrative
rulemaking and regulations,
Be published in the California Code of Regulations,
and
Be approved by a majority vote of the members of
the Committee on County Accounting Procedures.
The State Controller must, in consultation with a local
government advisory committee, prescribe uniform accounting
procedures for most special districts (SB 663, Bradley &
Nisbet, 1963). The advisory committee consists of seven
local government officers appointed by the State
Controller. The uniform accounting procedures for special
districts must:
Be adopted under statutes governing administrative
rulemaking and regulations,
AB 253 -- 6/14/11 -- Page 2
Be published in the California Code of Regulations,
and
Be approved by a majority vote of the advisory
committee.
State law does not require the Controller to prescribe
uniform accounting procedures for cities. The State
Controller wants the Legislature to require his office to
create uniform accounting procedures for cities in
consultation with a newly created Committee on City
Accounting Procedures.
Proposed Law
Assembly Bill 253 requires the Controller, in collaboration
with the Committee on City Accounting Procedures, to
prescribe for cities uniform accounting and reporting
procedures conforming to generally accepted accounting
principles. The Controller must adopt these as
administrative regulations and publish them in the
California Code of Regulations.
AB 253 creates a Committee on City Accounting Procedures,
which consists of 10 members appointed by, and who serve at
the pleasure of, the State Controller. Five members must be
city finance officers, three members must be city managers,
one member must be a certified public accountant
recommended by the California Society of Certified Public
Accountants, and one member must be an officer from a rural
city, as defined. Committee members serve without
compensation, but can receive traveling and other expenses.
The expenses for the city financial officers, city
managers, and the member from a rural city must be paid by
the city of which the member is an officer. The expenses
for the certified public accountant must be paid by the
California Society of Public Accountants. The Controller
must designate a member of the Committee to serve as
chairperson. The Committee meets at the call of the
chairperson and each member must be given written notice of
a meeting at least 10 calendar days prior to the date of
the meeting. The Committee may discuss topics that include
financial transaction reports.
The bill makes technical and conforming changes to the
statute requiring the Controller to develop uniform
accounting and reporting procedures for most special
districts and to a statute specifying information that must
AB 253 -- 6/14/11 -- Page 3
be included in local government agencies' financial reports
to the State Controller.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . To ensure that financial data
that cities report to the State Controller are accurate,
understandable, and useful for analyzing municipal
finances, the State Controller wants to prescribe uniform
accounting procedures for all cities. Without uniform
standards, cities' reported financial information is hard
to interpret and compare because accounts, revenues, or
expenditures that have similar labels in different cities
may actually be very different in their structure and
content. By requiring the Controller to develop uniform
standards in collaboration with an advisory commission
largely comprised of city officers, AB 253 ensures that the
standards will reflect cities' diverse financial accounting
priorities and needs. By largely replicating the
decades-old state laws that require the Controller to
prescribe uniform accounting procedures for counties and
special districts, AB 253 benefits the public by making
fiscal information reported by cities more consistent and
reliable.
2. In a bind . Some city officials worry that the
regulations required by AB 253 will be too prescriptive.
In response, the Controller's staff notes that its
collaborative efforts to develop guidelines and regulations
for counties and special districts haven't produced overly
prescriptive regulations governing those accounting
practices. Nearly 20 years after the Legislature required
the Controller to develop uniform guidelines for counties
and districts, California voters amended the California
Constitution to require the State to reimburse a local
government whenever the Legislature or any state agency
mandates a new program or higher level of service on any
local government, with three exceptions:
Legislative mandates requested by the local agency
affected.
AB 253 -- 6/14/11 -- Page 4
Legislation defining a new crime or changing an
existing definition of a crime.
Legislative mandates enacted before January 1,
1975, or executive orders or regulations initially
implementing legislation enacted prior to January 1,
1975.
(Proposition 4, 1979)
Although AB 253 doesn't directly impose a new mandate on
cities, cities could seek state reimbursement for their
costs of complying with the Controller's new regulations.
To avoid potential costs from mandate reimbursements, the
Committee may wish to consider amending AB 253 to specify
that uniform accounting procedures for cities developed
under the bill's provisions are non-binding guidelines
rather than binding regulations.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee:17-0
Assembly Floor: 77-0
Support and Opposition (6/16/11)
Support : State Controller John Chiang; Howard Jarvis
Taxpayers Association.
Opposition : Unknown.