BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 728|
          |Office of Senate Floor Analyses   |                              |
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                                      CONSENT 


          Bill No:  AB 728
          Author:   Hadley (R)
          Amended:  7/2/15 in Senate
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  13-0, 6/9/15
           AYES:  Hall, Berryhill, Block, Gaines, Galgiani, Glazer,  
            Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak

          SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  77-0, 5/7/15 (Consent) - See last page for  
            vote

           SUBJECT:   State government:  financial reporting


          SOURCE:    Author

          DIGEST:    This bill requires that any internal audit report  
          performed by a state agency to be posted on the agencys 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  








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            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  
          within five days of finalization.

          Comments
          
          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 Web site 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 Web sites within five days of  








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          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 Appropriations Committee)

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified6/22/15)


          Howard Jarvis Taxpayers Association


          OPPOSITION:   (Verified6/22/15)


          None received


          ARGUMENTS IN SUPPORT:     According to the Howard Jarvis  
          Taxpayers Association, existing 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  
          Web site in a timely manner is an effective way to ensure that  
          taxpayers have more immediate access to information about how  
          their dollars are spent.


          ASSEMBLY FLOOR:  77-0, 5/7/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,  
            Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,  
            Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  








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            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark  
            Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,  
            Wood, Atkins
          NO VOTE RECORDED:  Campos, Roger Hernández, Steinorth


          Prepared by:Felipe Lopez / G.O. / (916) 651-1530
          7/2/15 11:37:51


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