BILL ANALYSIS Ó Bill No: SB 1395 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2011-2012 Regular Session Staff Analysis SB 1395 Author: Rubio As Amended: April 17, 2012 Hearing Date: April 24, 2012 Consultant: Art Terzakis SUBJECT State Auditor DESCRIPTION SB 1395 renames the "Bureau of State Audits" as the "State Auditor's Office" and makes other minor code maintenance changes. EXISTING LAW Senate Bill 37 (Maddy) Chapter 12, Statutes of 1993, (Government Code 8543), created the Bureau of State Audits (BSA) as part of the Executive Branch. To assure its independence, the BSA is free from the control of the Executive and Legislative branches; the Milton Marks "Little Hoover" Commission oversees its administrative operations. The BSA, under the direction of the State Auditor, performs an annual examination (single audit) of the State's general-purpose financial statements as prepared by the State Controller's Office. The federal government, as a condition of receiving federal funds, requires this audit. The single audit also includes a review of major federal programs for compliance with federal laws and regulations, and recommendations to improve the State's financial systems and internal control. The BSA also conducts financial and performance audits as directed by statute, and other government audits requested SB 1395 (Rubio) continued Page 2 by the Joint Legislative Audit Committee (JLAC). The BSA has the explicit authority to audit any entity that receives state funds. Consequently, it sometimes audits at the local government level. In addition, the BSA administers the "Reporting of Improper Governmental Activities Act," which includes a hotline for anonymous reporting. Existing law provides that the State Auditor is appointed by the Governor, from a list submitted by the Joint Legislative Audit Committee, to a four-year term. BACKGROUND Purpose of SB 1395: According to the author's office, this measure is simply intended to rename the "Bureau of State Audits" as the "State Auditor's Office." Staff Comments: As this measure moves through the legislative process, the author may wish to consider adding a provision restricting expenditures on the name change until existing supplies, logos, and such are exhausted or unserviceable, thereby minimizing costs associated with the change. PRIOR LEGISLATION AB 187 (Lara) Chapter 451, Statutes of 2011. Subject to specified conditions, authorized the State Auditor to establish a high-risk local government agency audit program to identify, audit, and issue reports on any local government agency, including any city, county, or special district, or any publicly created entity that the State Auditor identifies as being at high risk for the potential of waste, fraud, abuse, or mismanagement or that has major challenges associated with its economy, efficiency, or effectiveness. SB 1314 (Wyland) 2007-08 Session. Would have transferred audit and evaluation duties within the Department of Finance to the Bureau of State Audits (BSA) and renamed the BSA as the Bureau of State Audits and Evaluations (BSAE) with responsibility for auditing the performance of state programs and managers and for recommending actions to correct any inefficiencies or ineffectiveness that may exist. (Held in this Committee at Author's Request) SB 1395 (Rubio) continued Page 3 SB 1452 (Speier) Chapter 452, Statutes of 2006. Updated the auditing standards for state and local agencies and enacted the Omnibus Audit Accountability Act of 2006 which established a process whereby the Legislature would be informed when auditor recommendations are being ignored or not implemented by state agencies. SB 1437 (Speier) Chapter 251, Statutes of 2004. Authorized the State Auditor to establish a high-risk government agency audit program for the purpose of identifying, auditing, and issuing reports on any state agency that the auditor identifies as high risk for the potential of waste, fraud, abuse, and mismanagement, or that has major challenges associated with its economy, efficiency, or effectiveness. SB 37 (Maddy) Chapter 12, Statutes of 1993. Created the Bureau of State Audits under the direction of the Little Hoover Commission - many of the duties and power of the Office of Auditor General were passed to the Bureau of State Audits. This was done in response to the passage of Proposition 140 which had the effect of greatly reducing the size and scope of the Auditor General's office. SUPPORT: Bureau of State Audits (sponsor) OPPOSE: None on file as of April 20, 2012. FISCAL COMMITTEE: Senate Appropriations Committee **********