BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 801
                                                                  Page  1

          Date of Hearing:   July 3, 2013

                                 Jim Frazier, Chair
                      SB 801 (Roth) - As Amended:  June 26, 2013

           SENATE VOTE  :  36-0
          SUBJECT  :  Department of Finance: reports: crimes.

           SUMMARY  :  Directs the Department of Finance (DOF) to annually  
          require each department head, or designee, responsible for  
          auditing the accounts of a state entity, as specified, to  
          certify under penalty of perjury that the budgeting and  
          accounting information provided to the DOF reconciles to the  
          year-end finance reports submitted to the State Controller's  
          Office (SCO).  Subjects an individual who willfully makes and  
          subscribes a certification that he or she knows to be false to  
          the penalties for perjury established in the Penal Code.

           EXISTING LAW  : 

          1)Provides the DOF with general powers of supervision over all  
            matters concerning the financial and business policies of the  

          2)Makes the Director of the DOF responsible for coordinating  
            state agency internal audits and identifying when agencies are  
            required to comply with federally mandated audits.  Requires  
            the Director of the DOF, in coordinating the internal auditors  
            of state agencies, to ensure that these auditors utilize the  
            "Standards for the Professional Practices of Internal  

          3)Requires state agencies to prepare and maintain financial and  
            accounting data for inclusion in the Governor's Budget, Budget  
            Act, and related documents, as specified, according to the  
            methods and bases provided in regulations, budget letters, and  
            other directives of the DOF.

          4)Directs the DOF to implement procedures that facilitate annual  
            reconciliations of General Fund and special fund balances  
            between those provided by a state agency to the DOF and to the  
            SCO, as specified. 


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          5)Deems every person guilty of a misdemeanor who fails or  
            neglects to make, verify, and file any report as required by  
            the DOF; who fails or neglects to follow the directions of the  
            DOF in keeping the accounts of his/her office; or, who refuses  
            to permit the examination of, or access to, the records,  
            files, books, accounts, papers, documents or cash drawers of  
            his/her office by a representative of the DOF or in any way  
            interferes with such examination.

          6)Requires specified public auditing officers, pursuant to  
            Government Code section 1094, to require certification under  
            penalty of perjury for specified government accounting audits,  
            and makes any individual who willfully makes and subscribes a  
            certification which he/she knows to be false guilty of a  
            felony and, upon conviction, subject to the penalties  
            prescribed for perjury in the Penal Code. 

          7)Makes perjury a felony punishable by imprisonment for two,  
            three, or four years, depending on the underlying offense. 

           FISCAL EFFECT  :   The current version of this bill has not yet  
          been analyzed by a fiscal committee.

           COMMENTS  :   According to the author, this bill is intended to  
          improve accountability with regard to state agencies' finances.   
          The author states that the recent underreporting of funds by the  
          Department of Parks and Recreation and the Department of  
          Forestry and Fire Protection underscores the need to ensure that  
          state agencies have appropriate controls in place to provide  
          accurate financial information to the DOF and the SCO.

          As the Governor's chief fiscal policy adviser, the DOF directs  
          the efforts of preparing the annual Governor's Budget while the  
          SCO compiles the State's financial statements.  Both agencies  
          report fund balance information in annual reports that are based  
          on information prepared by state departments.  According to a  
          March 2013 Budget Letter from DOF, it is critical that  
          departments' submittal to the SCO reflects correct and  
          reconciled information.  The budget letter states that  
          departments are responsible for ensuring that data included in  
          both the budget schedules and year-end financial statements are  
          identical unless permitted by law or DOF has approved a  

          Current DOF protocols require department heads or designees to  


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          certify under penalty of perjury that past and prior year  
          budgeting and accounting information provided to DOF reconciles  
          to year-end financial reports submitted to the SCO.  The SCO  
          also requires year-end financial reports to be certified under  
          penalty of perjury.  While Government Code section 1094 requires  
          certification under penalty of perjury for specified government  
          accounting audits, this bill would explicitly clarify that DOF  
          has the statutory authority to require these certifications.


          None on file
          None on file

           Analysis Prepared by  :    Cassie Royce / A. & A.R. / (916)