BILL ANALYSIS Ó Bill No: AB 117 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2013-2014 Regular Session Staff Analysis AB 117 Author: Cooley As Introduced: January 14, 2013 Hearing Date: June 11, 2013 Consultant: Paul Donahue SUBJECT State government: Financial and administrative accountability DESCRIPTION This bill makes specified legislative findings and directs the Department of Finance (Finance) to establish guidelines for agencies to ensure proper internal monitoring, accounting, and administrative controls within these agencies. Specifically, this bill: 1)Provides that the elements of a satisfactory system of internal accounting and administrative control, shall additionally include submittal, when appropriate, of recommendations for how greater efficiencies in support of an 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. 2)Requires Finance to put in place guidelines for state agency managers 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. AB 117 (Cooley) continued Page 2 EXISTING LAW 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. BACKGROUND According to the author, recent events have highlighted and heightened the importance of continued progress in strengthening the soundness of fiscal auditing and transparent accountability of state operations. This bill seeks to create stronger guidelines for agencies' internal monitors ensuring that the state follows the same best practices as required in the private sector and gives an additional check on state finances to ensure public funds are wisely spent. The author adds that this bill accomplishes this by directing Finance to develop guidelines ensuring agency monitors are independent and objective. This includes the consideration of how an independent monitor should be staffed, structured, and utilized in a standardized way to ensure efficiency and fit within an agencies normal administrative framework. Additionally, the bill directs state agency heads use financial reports that include recommendations on how an agency may achieve greater efficiencies without undermining its mission or customer satisfaction. PRIOR/RELATED LEGISLATION SB 617 (Calderon), Chapter 496, Statutes of 2011. Requires the director of Finance, in consultation with the State Auditor and the Controller, to establish, and modify as necessary, a general framework of recommended practices to AB 117 (Cooley) continued Page 3 guide state agencies in conducting active, ongoing monitoring of processes for internal accounting and administrative control. SUPPORT: None on file OPPOSE: None on file DUAL REFERRAL: Senate Governance and Finance Committee FISCAL COMMITTEE: Senate Appropriations Committee **********