BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 801
          Author:   Roth (D)
          Amended:  6/26/13
          Vote:     21

           
           SENATE PUBLIC SAFETY COMMITTEE  :  7-0, 4/30/13
          AYES: Hancock, Anderson, Block, De León, Knight, Liu, Steinberg

           SENATE APPROPRIATIONS COMMITTEE :  Senate Rule 28.8

           SENATE FLOOR  :  36-0, 5/20/13 (Consent)
          AYES:  Anderson, Beall, Berryhill, Block, Calderon, Cannella,  
            Corbett, Correa, De León, DeSaulnier, Evans, Fuller, Gaines,  
            Galgiani, Hancock, Hernandez, Hill, Hueso, Huff, Jackson,  
            Knight, Leno, Lieu, Liu, Monning, Nielsen, Padilla, Pavley,  
            Roth, Steinberg, Torres, Walters, Wolk, Wright, Wyland, Yee
          NO VOTE RECORDED:  Emmerson, Lara, Price, Vacancy

           ASSEMBLY FLOOR  :  78-0, 8/22/13 (Consent) - See last page for  
            vote


           SUBJECT  :    Department of Finance:  reports:  crimes

           SOURCE  :     Author


           DIGEST  :    This bill 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  
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          year-end finance reports submitted to the State Controller's  
          Office (Controller).  This bill also subjects an individual who  
          willfully makes and subscribes a certification that he/she knows  
          to be false to the penalties for perjury established in the  
          Penal Code.

           Assembly Amendments  make technical and clarifying changes.

           ANALYSIS  :    

          Existing law:

          1. Provides that there is in the State Government a DOF.

          2. Provides that the DOF has general powers of supervision over  
             all matters concerning the financial and business policies of  
             the state and whenever it deems it necessary, or at the  
             instance of the Governor, shall institute or cause the  
             institution of such investigations and proceedings as it  
             deems proper to conserve the rights and interests of the  
             state.

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

          4. Requires state agencies to "prepare and maintain financial  
             and accounting data for inclusion in the Governor's Budget,  
             Budget Act and related documents, and the budgetary-legal  
             basis annual report (as specified), according to the methods  
             and bases provided in regulations, budget letters, and other  
             directives of the DOF. . . .  The DOF shall 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 State Controller.  In the  
             Governor's Budget documents, appendices thereof, or other  
             directives, the DOF shall ensure that adjustments of  
             prior-year fund balances and accounting methods are clearly  
             noted in some fashion in order to ensure the closest possible  
             comparability of these documents with past and future  

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             budgetary-legal basis annual reports."

          5. Provides that every person is guilty of a misdemeanor who:

             A.    Fails or neglects to make, verify and file with the  
                DOF any report required by this part.

             B.    Fails or neglects to follow the directions of the DOF  
                in keeping the accounts of his office.

             C.    Refuses to permit the examination of or access to the  
                records, files, books, accounts, papers, documents or  
                cash drawers or cash of his office by a representative  
                of the DOF or in any way interferes with such  
                examination.

          6. Provides that "(e)very officer whose duty it is to audit and  
             allow the accounts of other state, county, or city officers  
             shall, before allowing such accounts, require each of such  
             officers to make and file with him/her an affidavit or  
             certificate under penalty of perjury that he has not violated  
             any of the provisions of this article, and any individual who  
             willfully makes and subscribes such certificate to an account  
             which he/she knows to be false as to any material matter  
             shall be guilty of a felony and upon conviction thereof shall  
             be subject to the penalties prescribed for perjury by the  
             Penal Code of this state." 

          7. Provides that perjury is a felony punishable by imprisonment  
             for two, three or four years. 

          This bill directs 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  
          Controller.  This bill also subjects an individual who willfully  
          makes and subscribes a certification that he/she knows to be  
          false to the penalties for perjury established in the Penal  
          Code.  

           Comments
           
          According to the author's office, this bill intends to  

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          improve accountability with regard to state agencies'  
          finances.  The author's office 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 Controller.

          Current DOF protocols require department heads or designees  
          to 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  
          Controller.  The Controller 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 explicitly clarifies that DOF has the  
          statutory authority to require these certifications.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           ASSEMBLY FLOOR  :  78-0, 8/22/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,  
            Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,  
            Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,  
            Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,  
            Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,  
            Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas,  
            Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,  
            Wilk, Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Vacancy, Vacancy


          JG:d  8/23/13   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  NONE RECEIVED

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