BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                       Bill No:  AB  
          1218
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2013-2014 Regular Session
                                 Staff Analysis

          AB 1218  Author:  Gray
          As Amended:  April 16, 2013
          Hearing Date:  June 25, 2013
          Consultant:  Art Terzakis

                                     SUBJECT  
                            California State Auditor

                                   DESCRIPTION
           
          AB 1218 adds clarity to existing law by authorizing the  
          California State Auditor (CSA), after performing an audit,  
          to conduct follow-up audit work that is related to the  
          audits' original findings and recommendations. 

                                   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.  [SB 1395 - Rubio,  
          Chapter 281 of 2012 renamed the BSA as the "California  
          State Auditor's Office" (CSA).] 

          To assure its independence, the CSA is free from the  
          control of the Executive and Legislative branches; the  
          Milton Marks "Little Hoover" Commission oversees its  
          administrative operations.  The CSA, 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 CSA also conducts financial and performance audits as  




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          directed by statute, and other government audits requested  
          by the Joint Legislative Audit Committee (JLAC).  The CSA  
          has the explicit authority to audit any entity that  
          receives state funds.  Consequently, it sometimes audits at  
          the local government level.  In addition, the CSA  
          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 AB 1218:   This measure, sponsored by the  
          California State Auditor's Office, would authorize the CSA  
          to conduct follow-up work related to original audit  
          findings and recommendations. While the CSA conducts  
          follow-up work under current authority granted by the  
          Government Code, this measure would clarify that authority  
          by making it explicit.  According to the CSA, this change  
          is sought so entities subject to follow-up work clearly  
          understand the authority and grant the CSA appropriate  
          access.   

                            PRIOR/RELATED LEGISLATION
           
           SB 1395 (Rubio), Chapter 281, Statutes of 2012.   Renamed  
          the "Bureau of State Audits" as the "California State  
          Auditor's Office" and made other minor code maintenance  
          changes. 
           
          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  




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          Finance to the 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.  (Held in this Committee at Author's  
          Request)
           
          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:   As of June 21, 2013:

          California State Auditor's Office

           OPPOSE:   None on file as of June 21, 2013.

           FISCAL COMMITTEE:   Senate Appropriations Committee

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