BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 117|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
CONSENT
Bill No: AB 117
Author: Cooley (D)
Amended: As introduced
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/11/13
AYES: Wright, Nielsen, Calderon, Cannella, Correa, De León,
Galgiani, Hernandez, Lieu, Padilla
NO VOTE RECORDED: Berryhill
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 7/3/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 4/25/13 (Consent) - See last page for
vote
SUBJECT : State government: financial and administrative
accountability
SOURCE : Author
DIGEST : This bill makes specified legislative findings and
directs the Department of Finance (DOF) to establish guidelines
for agencies to ensure proper internal monitoring, accounting,
and administrative controls within these agencies.
ANALYSIS : Under the Financial Integrity and State Manager's
Accountability Act of 1983 (FISMA), the Legislature declares it
CONTINUED
AB 117
Page
2
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 makes legislative findings and directs DOF 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 DOF 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.
Background
FISMA established the statutory responsibility of managers to
implement and monitor systems of internal accounting and
administrative control. Under FISMA, all levels of management
are responsible for assessing and strengthening internal
controls to minimize fraud, errors, abuse, and waste of public
funds. Internal control systems must include a staffing and
organizational plan, access controls for accounting,
recordkeeping and expenditure systems, and systems of internal
review.
FISMA requires the director of each department, every two years,
to prepare a report on the adequacy of internal controls,
including recommendations for improvement. Each department
director is required to submit those reports, along with the
CONTINUED
AB 117
Page
3
director's response to any recommendations, to the agency
Secretary, which oversees the department, and the Department of
Finance. Copies are to be submitted to the Legislature, the
Governor, the Bureau of State Audits, and the State Library
where they are made available to the public.
Where internal weaknesses are identified, departments are
required to provide a plan and schedule for corrective action,
with updated reporting every six months until deficiencies are
addressed.
FISMA directs the Department of Finance, in consultation with
the State Auditor and the State Controller, to develop a
framework for departments to comply with the Act. In 2011, the
Legislature updated FISMA, calling for more active monitoring
systems and structures, greater independence and objectivity
among employees charged with that monitoring, and periodic
updates to the state's internal reporting system and framework
for internal reviews.
Comments
According to the author's office, 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's office adds that this bill accomplishes this by
directing DOF 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, this 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
CONTINUED
AB 117
Page
4
Local: No
SUPPORT : (Verified 8/13/13)
State Controller John Chiang
ASSEMBLY FLOOR : 76-0, 4/25/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,
Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Cooley, Lowenthal, Nazarian, Vacancy
MW:nl 8/13/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED