BILL NUMBER: AB 117 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Cooley
JANUARY 14, 2013
An act to amend Sections 13401 and 13403 of the Government Code,
relating to state government.
LEGISLATIVE COUNSEL'S DIGEST
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 1. Section 13401 of the Government Code is amended to
read:
13401. (a) The Legislature hereby finds the following:
(1) Active oversight processes, including regular and ongoing
monitoring processes, for the prevention and early detection of fraud
and errors in program administration are vital to public confidence
and the appropriate and efficient use of public resources.
(2) Fraud and errors in state programs are more likely to occur
from a lack of effective systems of internal accounting and
administrative control in the state agencies when active monitoring
measures are not maintained to ensure that accounting and
administrative controls are functioning properly.
(3) Effective systems of internal accounting and administrative
control provide the basic foundation upon which a structure of public
accountability must be built.
(4) Effective systems of internal accounting and administrative
control are necessary to ensure that state assets and funds are
adequately safeguarded, as well as to produce reliable financial
information for the agency.
(5) Systems of internal accounting and administrative control are
necessarily dynamic and must be routinely monitored, continuously
evaluated, and, where necessary, improved.
(6) Reports regarding the continuing adequacy of the systems of
internal accounting and administrative control of each state agency
are necessary to enable the executive branch, the Legislature, and
the public to evaluate the agency's performance of its public
responsibilities and accountability.
(b) The Legislature declares it to be the policy of the State of
California that:
(1) Each state agency must maintain effective systems of internal
accounting and administrative control as an integral part of its
management practices.
(2) The systems of internal accounting and administrative control
of each state agency shall be evaluated on an ongoing basis through
regular and ongoing monitoring processes and, when detected,
weaknesses must be promptly corrected.
(3) All levels of management of the state agencies must be
involved in assessing and strengthening the systems of internal
accounting and administrative control to minimize fraud, errors,
abuse, and waste of government funds, however, key monitoring
processes should be structured to ensure the independence and
objectivity of persons tasked with such monitoring.
(4) It shall be the responsibility of the Department of Finance,
in consultation with the Controller and State Auditor, to establish
guidelines for how the independence and objectivity of the persons
tasked with monitoring processes are to be maintained. Such
guidelines should include establishing monitor training programs,
identification of appropriate chain-of-command reporting
relationships, and recommended best practices for professional
development and the conduct of independent monitoring, including
practices for the regular dissemination of strategies and lessons
learned from successful efforts to strengthen state administration
via interagency cooperation.
SEC. 2. Section 13403 of the Government Code is amended to read:
13403. (a) Internal accounting and administrative controls, if
maintained and reinforced through effective monitoring systems and
processes, are the methods through which reasonable assurances can be
given that measures adopted by state agency heads to safeguard
assets, check the accuracy and reliability of accounting data,
promote operational efficiency, and encourage adherence to prescribed
managerial policies are being followed. The elements of a
satisfactory system of internal accounting and administrative
control, shall include, but are not limited to, the following:
(1) A plan of organization that provides segregation of duties
appropriate for proper safeguarding of state agency assets.
(2) A plan that limits access to state agency assets to authorized
personnel who require these assets in the performance of their
assigned duties.
(3) A system of authorization and recordkeeping procedures
adequate to provide effective accounting control over assets,
liabilities, revenues, and expenditures.
(4) An established system of practices to be followed in
performance of duties and functions in each of the state agencies.
(5) Personnel of a quality commensurate with their
responsibilities.
(6) An effective system of internal review.
(b) State agency heads shall follow these standards of internal
accounting and administrative control in carrying out the
requirements of Section 13402.
(c) Monitoring systems and processes are vital to the following:
(1) Ensuring that routine application of internal controls do not
diminish their efficacy over time.
(2) Providing timely notice and opportunity for correction of
emerging weaknesses with established internal controls.
(3) Facilitating public resources and other decisions by ensuring
availability of accurate and reliable information.
(4) Facilitating production of timely and accurate financial
reports , and the submittal, when appropriate, of
recommendations for how greater efficiencies in support of the agency'
s mission may be attainable via the consolidation or
restructuring of potentially duplicative or inefficient processes,
programs, or practices where it appears such changes may be achieved
without undermining program effectiveness, quality, or customer
satisfaction .
(d) It shall 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.
(d)
(e) State agency heads shall implement systems and
processes to ensure the independence and objectivity of the
monitoring of internal accounting and administrative control as an
ongoing activity in carrying out the requirements of Section 13402.