BILL NUMBER: AB 1345	CHAPTERED
	BILL TEXT

	CHAPTER  231
	FILED WITH SECRETARY OF STATE  SEPTEMBER 7, 2012
	APPROVED BY GOVERNOR  SEPTEMBER 7, 2012
	PASSED THE SENATE  AUGUST 13, 2012
	PASSED THE ASSEMBLY  AUGUST 16, 2012
	AMENDED IN SENATE  JUNE 6, 2012
	AMENDED IN SENATE  APRIL 24, 2012
	AMENDED IN ASSEMBLY  JANUARY 12, 2012
	AMENDED IN ASSEMBLY  JANUARY 4, 2012
	AMENDED IN ASSEMBLY  MARCH 31, 2011

INTRODUCED BY   Assembly Member Lara

                        FEBRUARY 18, 2011

   An act to amend Section 12410.5 of, and to add Section 12410.6 to,
the Government Code, relating to audits.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1345, Lara. Local government: audits.
   (1) The federal Single Audit Act of 1984 requires any nonfederal
entity, defined as a state, local government, or nonprofit
organization, that expends $300,000 or more in federal money to
prepare an annual audit that meets certain specifications and
transmit that audit to specified federal agencies. Existing law
requires the Controller to receive every audit report prepared by any
local public agency, pursuant to the federal Single Audit Act of
1984, and review those reports for compliance with federal law before
forwarding them to the designated state agency.
   This bill would require the annual audit reports made pursuant to
the federal Single Audit Act of 1984 to be submitted to the
Controller within 9 months after the end of the period audited or
pursuant to applicable federal or state law. This bill would
authorize the Controller to appoint a qualified certified public
accountant or public accountant to complete an audit report if a
local agency, as defined, fails to submit the audit report to the
Controller by the specified date. The bill would require the
Controller to first notify a local agency of its failure to submit
the audit report and give the local agency a reasonable amount of
time to submit the report before appointing a certified public
accountant or public accountant. The bill would require the
Controller to report certain misconduct and nondisclosures to the
California Board of Accountancy.
   (2) Existing law requires certain audits to be performed by
specified accountants and accounting firms.
   This bill would require any audit for any local agency to be
performed by a certified public accountant or public accountant, as
specified. The bill would prohibit a local agency from employing
certain public accounting firms to perform an audit, as specified,
unless the Controller finds that another eligible public accounting
firm is not available to perform the audit.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 12410.5 of the Government Code is amended to
read:
   12410.5.  (a) The Controller shall receive every audit report
prepared for any local agency, as defined in Section 53890, in
compliance with the federal Single Audit Act of 1984 (31 U.S.C. Sec.
7501 et seq.) and required under any law to be submitted to any state
agency, and shall, after ascertaining its compliance with that
federal act, transmit the report to the designated state agency.
   (b) The audit report shall be submitted to the Controller within
nine months after the end of the period audited or pursuant to
applicable federal or state law.
   (c) An audit report for any local agency submitted to the
Controller pursuant to this section shall comply with the Government
Auditing Standards issued by the Comptroller General of the United
States.
   (d) If a local agency does not submit the audit report required by
this section to the Controller by the due date established in
subdivision (b) of this section, the Controller may appoint a
qualified certified public accountant or public accountant to
complete the report and to obtain the information required. Any cost
incurred by the Controller pursuant to this subdivision, including a
contract with, or the employment of, the certified public accountant
or public accountant, in completing the audit shall be borne by the
local agency and shall be a charge against any unencumbered funds of
the local agency.
   (e) Before appointing a certified public accountant or public
accountant pursuant to subdivision (d), the Controller shall first
notify a local agency of its failure to submit the audit report and
give the local agency a reasonable amount of time to submit the
report.
   (f) The Controller shall refer any matters of unprofessional
conduct, as defined in Section 5100 of the Business and Professions
Code, and multiple and repeated failures to disclose noncompliant
acts to the California Board of Accountancy.
  SEC. 2.  Section 12410.6 is added to the Government Code, to read:
   12410.6.  (a) An audit for any local agency, including those
submitted to the Controller pursuant to subdivision (a) of Section
12410.5, shall be made by a certified public accountant or public
accountant, licensed by, and in good standing with, the California
Board of Accountancy.
   (b) Commencing with the 2013-14 fiscal year, a local agency shall
not employ a public accounting firm to provide audit services to a
local agency if the lead audit partner or coordinating audit partner
having primary responsibility for the audit, or the audit partner
responsible for reviewing the audit, has performed audit services for
that local agency for six consecutive fiscal years. For purposes of
calculating the six consecutive fiscal years, the local agency shall
not take into account any time that a public accounting firm was
employed by that local agency prior to the 2013-14 fiscal year. The
Controller may waive this requirement if he or she finds that another
eligible public accounting firm is not available to perform the
audit.