BILL NUMBER: AB 1102 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 4, 2011
INTRODUCED BY Assembly Member Lara
FEBRUARY 18, 2011
An act to amend Section 8545.2 of the Government Code,
relating to the State Auditor. An act to amend
Sections 8544.5, 8545, 8546, 8546.5, 8546.7, 8548.9 of, and to repeal
Section 12430 of, and to repeal Article 2 (commen cing
with Section 10520) of Chapter 4 of Part 2 of Division 2 of Title 2
of, the Government Code, relating to the State Auditor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1102, as amended, Lara. State Auditor.
Existing law sets out the authority and duties of the
State Auditor generally in conducting audits
and surveys of specified entities , and of contracting for
goods and services on behalf of the Bureau of State Audits. Existing
law provides for reimbursement of the State Audit or by annual
appropriation in the Budget Act, for specified costs incurred by the
State Auditor in the performance of certain duties .
This bill would make a technical, nonsubstantive change
to these provisions revise the provisions governing
the scope and conduct of audits and surveys by the State Auditor, the
authority of the State Auditor to contract for goods and services on
behalf of the bureau, and costs for which the State Audit Fund may
be reimbursed .
This bill would also delete various obsolete provisions of law.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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 and the Central Service
Cost Recovery Fund, the amount necessary to reimburse the State Audit
Fund for the cost of audits and any other duties to be
performed that are not directly reimbursed under subdivision (c)
, including for the cost of any other duties imposed on the bureau
by statute . "Cost of audits or any other duties "
means all direct and indirect costs of conducting the audits or
other duties, and any other expenses incurred by the State
Auditor in fulfilling his or her statutory responsibilities.
(b) With regard to the funds appropriated pursuant to subdivision
(a), 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 or the Central Service Cost Recovery
Fund, as applicable, 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) 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.
(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 (d).
SEC. 2. 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 providing
assistance 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.
(d) Any survey of public employees that the State Auditor
determines should be kept confidential because the employees have
expressed fear of retaliation by their employer if they respond to
the survey.
SEC. 3. Section 8546 of the Government
Code is amended to read:
8546. It is the intent of the Legislature that the Bureau of
State Audits have the independence necessary to conduct all of its
audits in conformity with "Government Auditing Standards" published
by the Comptroller General of the United States and the standards
published by the American Institute of Certified Public Accountants,
free from influence of existing state control agencies that could be
the subject of audits conducted by the bureau. Therefore, all of the
following exclusions apply to the office:
(a) Notwithstanding Section 19790, the State Auditor shall
establish an equal employment opportunity program that shall meet the
criteria and objectives established by the State Personnel Board.
The State Auditor shall report annually to the State Personnel Board
and the commission regarding the program.
(b) Notwithstanding Section 12470, the State Auditor shall be
responsible for maintaining its payroll system. In lieu of audits of
the uniform payroll system performed by the Controller or any other
department, the office shall contract pursuant to subdivision (e) of
Section 8544.5 for an annual audit of its payroll and financial
operations by an independent public accountant.
(c) Notwithstanding Section 13292, the State Auditor is delegated
the authority to establish and administer the fiscal and
administrative policies of the bureau in conformity with the State
Administrative Manual without oversight by the Department of Finance,
the Department of Information Technology, or any other state agency.
(d) Notwithstanding Section 11032, the State Auditor may approve
actual and necessary traveling expenses for travel outside the state
for officers and employees of the bureau.
(e) Notwithstanding Section 11033, the State Auditor or officers
and employees of the bureau may be absent from the state on business
of the state upon approval of the State Auditor or Chief Deputy State
Auditor.
(f) Sections 11040, 11042, and 11043 shall not apply to the Bureau
of State Audits. The State Auditor may employ legal counsel under
those terms that he or she deems necessary to conduct the legal
business of, or render legal counsel to, the State Auditor.
(g) The provisions and definitions of Article 2 (commencing with
Section 11342.510) of Chapter 3.5 of Division 3 shall not be
construed to include the Bureau of State Audits. The State Auditor
may adopt regulations necessary for the operation of the bureau
pursuant to the provisions of the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Division 3), but
these regulations shall not be subject to the review or approval of
the Office of Administrative Law.
(h) The State Auditor shall be exempt from all contract
requirements of the Public Contract Code that require oversight,
review, or approval by the Department of General Services or any
other state agency. The State Auditor may contract on behalf of the
State of California for goods and services that he or she deems
necessary for the furtherance of the purposes of the bureau ,
and shall be deemed to have all the powers and duties conferred on
the Director of General Services in the Public Contract Code for that
purpose .
(i) (1) Subject to Article VII of the California Constitution, the
State Auditor is delegated the authority to establish and administer
the personnel policies and practices of the Bureau of State Audits
in conformity with Part 2.6 (commencing with Section 19815) of
Division 5 of Title 2 without oversight or approval by the Department
of Personnel Administration.
(2) At the election of the State Auditor, officers and employees
of the bureau may participate in benefits programs administered by
the Department of Personnel Administration subject to the same
conditions for participation that apply to civil service employees in
other state agencies. For the purposes of benefits programs
administration only, the State Auditor is subject to the
determinations of the department. The Bureau of State Audits shall
reimburse the Department of Personnel Administration for the normal
administrative costs incurred by the Department of Personnel
Administration and for any extraordinary costs resulting from the
inclusion of the bureau employees in these state benefit programs.
SEC. 4. Section 8546.5 of the
Government Code is amended to read:
8546.5. (a) The State Auditor may establish a high-risk
government agency audit program for the purpose of identifying,
auditing, and issuing reports on any agency of the state, whether
created by the California Constitution or otherwise, as well as
statewide issues, that the State Auditor identifies as being at
high risk for the potential of waste, fraud, abuse, and
mismanagement or that has major challenges associated with its
economy, efficiency, or effectiveness.
(b) In addition to identifying an agency as high risk on the basis
of weaknesses identified in audit and investigative reports produced
by the bureau, the State Auditor may consult with the Legislative
Analyst, the Milton Marks "Little Hoover" Commission on California
State Government Organization and Economy, the Office of Inspector
General within the Department of Corrections, the Department of
Finance, and other state agencies that have oversight
responsibilities over any other agency of the state, in identifying
state agencies that are at high risk.
(c) The State Auditor shall notify the Joint Legislative Audit
Committee whenever it identifies a state agency as at high risk.
(d) The State Auditor may issue audit reports with recommendations
for improvement in state agencies , and for statewide issues,
identified as at high risk not less than once every two years.
(e) The State Auditor may require state agencies identified as
high risk , or as responsible for all or a portion of
a statewide issue identified as high risk, to periodically
report to the auditor regarding the status of recommendations for
improvement made by the State Auditor or other state oversight
agencies.
SEC. 5. Section 8546.7 of the
Government Code is amended to read:
8546.7. Notwithstanding any other provision of law, every
contract involving the expenditure of public funds in excess of ten
thousand dollars ($10,000) entered into by any state agency, board,
commission, or department or by any other public entity, including a
city, county, city and county, or district, shall be subject to the
examination and audit of the State Auditor, at the request of the
public entity or as part of any audit of the public entity, or
when the State Auditor determines that an audit of a contract is
warranted, for a period of three years after final payment
under the contract. Every contract shall contain a provision stating
that the contracting parties shall be subject to that examination and
audit. The failure of a contract to contain this provision shall not
preclude the State Auditor from conducting an examination and audit
of the contract at the request of the public entity entering into the
contract or as part of any audit of the public entity.
It is the intent of the Legislature that the Regents of the
University of California include in contracts involving the
expenditure of state funds in excess of ten thousand dollars
($10,000) a provision stating that the contracting parties shall be
subject to the examination and audit of the State Auditor, at the
request of the regents or as part of any audit of the university, for
a period of three years after final payment under the contract.
The examinations and audits under this section shall be confined
to those matters connected with the performance of the contract,
including, but not limited to, the costs of administering the
contract.
SEC. 6. Section 8548.9 of the
Government Code is amended to read:
8548.9. (a) The State Auditor shall, by January 15th of each
year, report to the Joint Legislative Budget Committee, the Joint
Legislative Audit Committee, and the Department of Finance with
respect to each recommendation he or she has made based on an audit
or investigation that was reported more than one year prior and that
has not been fully implemented by the affected agency.
(b) The report shall clearly identify the state agency audited or
investigated, the audit or investigation that contained the
recommendation, a brief description of the recommendation, the date
it was issued, and the most recent explanation provided by the agency
to the State Auditor on the status of the recommendation.
(c) Any state agency that is notified by the State Auditor that it
has not fully implemented a recommendation made pursuant to this
chapter more than one year prior, shall do either of the following:
(1) Provide a written report to the State Auditor, the respective
policy committees and budget subcommittees of the Assembly and Senate
with oversight of the agency, and the Department of Finance,
explaining why the audit recommendation or investigation has not been
fully implemented.
(2) Notify all entities described in subdivision (a) that it will
begin implementing the audit recommendation or investigation
recommendation within 90 days of the notification by the State
Auditor, and include the estimated date of full implementation.
(d) For the purposes of this section, "state agency" means a state
agency as defined by Section 11000, the California State University,
the Supreme Court, a Court of Appeal, a superior court, and the
Administrative Office of the Courts.
SEC. 7. Article 2 (commencing with Section 10520)
of Chapter 4 of Part 2 of Division 2 of Title 2 of the
Government Code is repealed.
SEC. 8. Section 12430 of the Government
Code is repealed.
12430. Annually, the Controller, the 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
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, 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 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 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 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 State Auditor to conduct
any audit of state government pursuant to Chapter 6.5 (commencing
with Section 8540) of Division 1 of Title 2.
SECTION 1. Section 8545.2 of the Government
Code is amended to read:
8545.2. (a) Notwithstanding any other provision of law, the State
Auditor shall, during regular business hours, have access to and
authority to examine and reproduce, any and all books, accounts,
reports, vouchers, correspondence files, and all other records, bank
accounts, and money or other property, of any agency of the state,
whether created by the California Constitution or otherwise, any
local governmental entity, including any city, county, and school or
special district, and any publicly created entity, for any audit or
investigation. Any officer or employee of any agency or entity having
these records or property in his or her possession, 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 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 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.