AB 117, as introduced, Cooley. State government: financial and administrative accountability.
Under the Financial Integrity and State Manager’s Accountability Act of 1983, the Legislature declares it to be the policy of the State of California that, among other things, each state agency must maintain effective systems of internal accounting and administrative control as an integral part of its management practices, and that those systems be evaluated on an ongoing basis through regular and ongoing monitoring processes.
This bill would additionally make a legislative declaration of the policy that it be the responsibility of the Department of Finance, in consultation with the Controller and State Auditor, to establish specified guidelines for how the independence and objectivity of the persons tasked with monitoring processes are to be maintained.
The act requires that state agency heads are responsible for the establishment and maintenance of a system or systems of internal accounting, administrative control, and effective, independent, and objective ongoing monitoring of the internal accounting and administrative controls within their agencies.
This bill would require that it be the responsibility of the Department of Finance, in consultation with the Controller and State Auditor, to establish guidelines to state agencies management on how the role of independent monitor should be staffed, structured, and its reporting function standardized so it fits within an efficient and normalized agency administrative framework.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 13401 of the Government Code is
2amended to read:
(a) The Legislature hereby finds the following:
4(1) Active oversight processes, including regular and ongoing
5monitoring processes, for the prevention and early detection of
6fraud and errors in program administration are vital to public
7confidence and the appropriate and efficient use of public
8resources.
9(2) Fraud and errors in state programs are more likely to occur
10from a lack of effective systems of internal accounting and
11administrative control in the state agencies when active monitoring
12measures are not maintained to ensure that accounting and
13administrative controls are functioning properly.
14(3) Effective systems of internal
accounting and administrative
15control provide the basic foundation upon which a structure of
16public accountability must be built.
17(4) Effective systems of internal accounting and administrative
18control are necessary to ensure that state assets and funds are
19adequately safeguarded, as well as to produce reliable financial
20information for the agency.
21(5) Systems of internal accounting and administrative control
22are necessarily dynamic and must be routinely monitored,
23continuously evaluated, and, where necessary, improved.
24(6) Reports regarding the continuing adequacy of the systems
25of internal accounting and administrative control of each state
26agency are necessary to enable the executive branch, the
27Legislature, and the public to evaluate the agency’s performance
28of its public responsibilities and accountability.
29(b) The Legislature declares it to be the policy of the State of
30California that:
P3 1(1) Each state agency must maintain effective systems of internal
2accounting and administrative control as an integral part of its
3management practices.
4(2) The systems of internal accounting and administrative control
5of each state agency shall be evaluated on an ongoing basis through
6regular and ongoing monitoring processes and, when detected,
7weaknesses must be promptly corrected.
8(3) All levels of management of the state agencies must be
9involved in assessing and strengthening the systems of internal
10accounting and administrative control to minimize fraud, errors,
11abuse, and waste of government funds, however, key monitoring
12processes should be structured to ensure the
independence and
13objectivity of persons tasked with such monitoring.
14(4) It shall be the responsibility of the Department of Finance,
15in consultation with the Controller and State Auditor, to establish
16guidelines for how the independence and objectivity of the persons
17tasked with monitoring processes are to be maintained. Such
18guidelines should include establishing monitor training programs,
19identification of appropriate chain-of-command reporting
20relationships, and recommended best practices for professional
21development and the conduct of independent monitoring, including
22practices for the regular dissemination of strategies and lessons
23learned from successful efforts to strengthen state administration
24via interagency cooperation.
Section 13403 of the Government Code is amended
26to read:
(a) Internal accounting and administrative controls, if
28maintained and reinforced through effective monitoring systems
29and processes, are the methods through which reasonable
30assurances can be given that measures adopted by state agency
31heads to safeguard assets, check the accuracy and reliability of
32accounting data, promote operational efficiency, and encourage
33adherence to prescribed managerial policies are being followed.
34The elements of a satisfactory system of internal accounting and
35administrative control, shall include, but are not limited to, the
36following:
37(1) A plan of organization that provides segregation of duties
38appropriate for proper safeguarding of state agency assets.
P4 1(2) A plan that
limits access to state agency assets to authorized
2personnel who require these assets in the performance of their
3assigned duties.
4(3) A system of authorization and recordkeeping procedures
5adequate to provide effective accounting control over assets,
6liabilities, revenues, and expenditures.
7(4) An established system of practices to be followed in
8performance of duties and functions in each of the state agencies.
9(5) Personnel of a quality commensurate with their
10responsibilities.
11(6) An effective system of internal review.
12(b) State agency heads shall follow these standards of internal
13accounting and administrative control in carrying out the
14requirements of Section 13402.
15(c) Monitoring systems and processes are vital to the following:
16(1) Ensuring that routine application of internal controls do not
17diminish their efficacy over time.
18(2) Providing timely notice and opportunity for correction of
19emerging weaknesses with established internal controls.
20(3) Facilitating public resources and other decisions by ensuring
21availability of accurate and reliable information.
22(4) Facilitating production of timely and accurate financial
23reportsbegin insert, and the submittal, when appropriate, of recommendations end insert
24begin insertfor how greater efficiencies in support of the agency’s mission end insert
25begin insertmay be attainable via the
consolidation or restructuring of end insert
26begin insertpotentially duplicative or inefficient processes, programs, or end insert
27begin insertpractices where it appears such changes may be achieved without end insert
28begin insertundermining program effectiveness, quality, or customer end insert
29begin insertsatisfactionend insert.
30(d) It shall be the responsibility of the Department of Finance,
31in consultation with the Controller and State Auditor, to establish
32guidelines to state agencies management on how the role of
33independent monitor should be staffed, structured, and its reporting
34function standardized so it fits within an efficient and normalized
35agency administrative framework.
36(d)
end delete
37begin insert(e)end insert State agency heads shall implement systems and processes
38to ensure the independence and objectivity of the monitoring of
P5 1internal accounting and administrative control as an ongoing
2activity in carrying out the requirements of Section 13402.
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