BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                 SB 617
                                                                 Page 1


         SENATE THIRD READING
         SB 617 (Calderon)
         As Amended  June 14, 2011
         Majority vote 

          SENATE VOTE  :37-0  
          
         ADMINISTRATIVE REVIEW          11-0                 APPROPRIATIONS 
                             17-0        
          
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         |Ayes:|Dickinson, Garrick,       |Ayes:|Fuentes, Harkey,          |
         |     |Block, Buchanan, Cook,    |     |Blumenfield, Bradford,    |
         |     |Silva, Grove, Huber,      |     |Charles Calderon, Campos, |
         |     |Mitchell, Pan, Portantino |     |Davis, Donnelly, Gatto,   |
         |     |                          |     |Hall, Hill, Lara,         |
         |     |                          |     |Mitchell, Nielsen, Norby, |
         |     |                          |     |Solorio, Wagner           |
         |-----+--------------------------+-----+--------------------------|
         |     |                          |     |                          |
          ----------------------------------------------------------------- 
          SUMMARY  :  This bill updates state government accounting practices 
         by requiring state agencies to implement ongoing monitoring of 
         internal accounting and financial controls.  Specifically,  this 
         bill  :

         1)Enacts legislative findings that active oversight of accounting 
           practices is critical to prevent and detect fraud and errors at 
           state agencies and to ensure efficient use of public funds.

         2)Requires that each state agency head develop processes to 
           monitor internal accounting and financial controls. 

         3)Describes elements of a satisfactory system of internal 
           accounting and financial control, including a plan of 
           organization that assigns accounting duties, limits access to 
           state agency assets to authorized personnel, describes 
           recordkeeping procedures, and includes an effective system of 
           internal review.

         4)Requires that the head of each state agency conduct a biennial 
           report on the adequacy of the agency's systems of internal 
           accounting and monitoring practices and submit the report to the 
           Legislature, State Auditor, State Controller, State Treasurer, 








                                                                 SB 617
                                                                 Page 2


           the Attorney General, the director of the Department of Finance, 
           the Governor and the State Library.

         5)Allows the director of the Department of Finance, in 
           consultation with the State Auditor and State Controller, to 
           establish and modify recommended practices to guide state 
           agencies in conducting ongoing monitoring of accounting 
           practices.  
          
         EXISTING LAW  establishes the Financial Integrity and State 
         Managers Accountability (FISMA) Act of 1983 to strengthen 
         accounting practices and administrative controls in state 
         agencies.

          FISCAL EFFECT  :  According to the Assembly Appropriations 
         Committee, this bill will result in minor absorbable costs for 
         state government with possible savings on an ongoing basis.
          
         COMMENTS  :  According to the author, FISMA requires updating, 
         particularly in light of the Enron financial debacle of 2002, and 
         subsequent federal legislation, the Sarbanes-Oxley "Corporate and 
         Auditing Accountability and Responsibility Act."  The federal act 
         calls for ongoing monitoring of internal accounting and 
         administrative controls to ensure organizations remain effective 
         and efficient.  The author argues that state law should be updated 
         to reflect this new best practice in auditing.     


          Analysis Prepared by  :    Mark Martin/ A. & A.R. / (916) 319-3600


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