BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 253 HEARING: 7/6/11
AUTHOR: Smyth FISCAL: Yes
VERSION: 6/27/11 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
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
regulations,
AB 253 -- 6/27/11 -- 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.
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 reimbursements. 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
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
be included in local government agencies' financial reports
to the State Controller.
AB 253 -- 6/27/11 -- Page 3
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
accounting procedures 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 requirements 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.
Legislation defining a new crime or changing an
existing definition of a crime.
AB 253 -- 6/27/11 -- Page 4
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 accounting
procedures. 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.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee: 17-0
Assembly Floor: 77-0
Support and Opposition (6/30/11)
Support : State Controller John Chiang; Howard Jarvis
Taxpayers Association.
Opposition : Unknown.