BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 728| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 AB 728 Page 2 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 AB 728 Page 3 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, AB 728 Page 4 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 **** END ****