BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 728 Hearing Date: 6/9/2015
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|Author: |Hadley |
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|Version: |4/8/2015 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Felipe Lopez |
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SUBJECT: State government: financial reporting.
DIGEST: This bill requires that any internal audit report
performed by a state agency to be posted on the agency's
Internet Web site within five days of finalization.
ANALYSIS:
Existing law:
1)Provides, under the Financial Integrity and State Manager's
Accountability Act of 1983 (FISMA), that state agency heads
are responsible for the establishment and maintenance of a
system or systems of internal accounting and administrative
control within their agencies, as specified.
2)Requires state agency heads covered by the FISMA to,
biennially, conduct an internal review and prepare a report on
the adequacy of the agency's systems of internal accounting,
administrative control, and monitoring practices. Copies of
the reports are required to be submitted to the Legislature,
the California State Auditor, the Controller, the Treasurer,
the Attorney General, the Governor, the Director of Finance,
and to the State Library where the copies are required to be
available for public inspection.
This bill requires that any internal audit report performed by a
state agency to be posted on the agency's Internet Web site
AB 728 (Hadley) Page 2 of ?
within five days of finalization.
Background
Purpose of the bill. According to the author, every state
agency with annual spending greater than $50 million is
recommended to establish ongoing audit activities. Currently,
42 state agencies employ dedicated audit staff which provides
independent and objective assessments to improve accountability,
identify misuse of public funds, and detect waste, fraud, or
abuse.
The author argues "that agencies are already performing such
audits and maintaining their existing websites. Current law
requires that these audits are submitted to various state
agencies. While these audit reports are technically public
record, there is no requirement to notify the public if and when
an audit has been conducted. Without access to such
information, the public is effectively prevented from demanding
accountability and ensuring that audit recommendations are
implemented in order to correct a waste or abuse of taxpayer
funds."
The author concludes that by requiring all internal audits
performed by state agencies to be published on the agency's
internet website within five days of publishing, this bill is a
simple solution to this transparency problem.
Prior/Related Legislation
AB 661 (Beth Gaines, 2013) would have required state agencies to
post FISMA reports on their websites within five days of
finalization. Additionally, it would have required the head of
an agency to sign off on the reports under penalty of perjury
and would have suspended without pay agency heads who did not
submit FISMA reports within 30 days of their due dates. (Held
in Assembly Appropriation Committee)
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
Howard Jarvis Taxpayers Association
AB 728 (Hadley) Page 3 of ?
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the Howard Jarvis
Taxpayers Association, current law requires numerous state
agencies to receive internal audits performed by a state agency.
Essentially, everybody receives these audits but the public,
and requiring that financial audits be posted on the agency's
website in a timely manner is an effective way to ensure that
taxpayers have more immediate access to information about how
their dollars are spent.