Amended in Senate July 16, 2015

Amended in Senate June 30, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 783

Introduced by Assembly Member Daly

February 25, 2015

An act to amend Sections 25303, 26881, and 53087.6 of, and to add Sections 25250.5 and 26915 to, the Government Code, and to amend Section 4108.5 of the Revenue and Taxation Code, relating to county government.

LEGISLATIVE COUNSEL’S DIGEST

AB 783, as amended, Daly. County auditors.

(1) Existing law enumerates the officers of a county, including the office of the auditor, prescribes their duties, and permits a county board of supervisors to consolidate, separate, and reconsolidate their duties, as specified. Existing law requires the board of supervisors, at least biennially, to audit county financial accounts and records of all county officers responsible for the care, management, collection, or disbursement of county money, as specified. Existing law requires the board of supervisors to supervise the official conduct of all county officers, particularly with regard to the functions and duties of these county officers as they relate to the assessing, collecting, safekeeping, management, or disbursement of public funds.

This bill would require, in any county with both an elected auditor-controller and a population exceeding 3,000,000 people, that the auditor-controller, and not the board of supervisors, examine and audit, or cause to be audited, the financial accounts and records of all officers having responsibility for the care, management, collection, or disbursement of county money, as described above. The bill would require this audit to be filed with the board of supervisors. The bill would require, in any county with both an elected auditor-controller and a population exceeding 3,000,000 people, that the authority of the board of supervisors to supervise the official conduct of county officers not be construed to affect the independent auditing and accounting functions of the begin delete auditor-controller and would prohibit the board of supervisors from obstructing his or her auditing and accounting functions. end delete begin insert auditor-controller. end insert By increasing the duties of local officials in a county with the above-described characteristics, this bill would impose a state-mandated local program.

(2) Existing law generally prescribes the duties of the county auditor. Existing law requires the county auditor or auditor-controller, as specified, to be the chief accounting officer of the county. Upon order of the board of supervisors, existing law requires the auditor or auditor-controller to prescribe the accounting forms and methods of all offices under the control of the board of supervisors and to supervise generally practices in those offices, which includes the ability to review departmental and countywide internal controls.

This bill would require a county auditor or auditor-controller also to be the chief auditor of the county. The bill would grant the auditor or auditor-controller, as part of its supervisory powers, the authority to audit, rather than review, departmental and countywide internal controls. The bill would require, in reference to the duties of auditors, that the term “county auditor” include certain county offices that have been consolidated. The bill would prescribe requirements for the head of a county auditing unit. The bill would prohibit a board of supervisors from creating or operating a separate auditing unit outside of the county auditor, except if the separate auditing unit was established before 1981, and would prohibit the board from transferring any auditing unit away from the county auditor. By increasing the duties of local officials in a county with the above-described characteristics, this bill would impose a state-mandated local program.

(3) Existing law authorizes a county auditor or controller to establish and maintain a whistleblower hotline for receiving information regarding fraud, waste, or abuse by local government employees, subject to certain requirements.

This bill would require, in a county with an elected auditor-controller and a population exceeding 3,000,000, that the county auditor-controller be the sole county officer with the authority to maintain a whistleblower hotline, as described above. By increasing the duties of local officials in a county with the above-described characteristics, this bill would impose a state-mandated local program.

(4) Existing law authorizes tax-defaulted property to be redeemed until the right of redemption terminates. Existing law requires the audit of a tax collector’s records and accounts related to redemption of tax-defaulted property at least once every 3 years.

This bill would require, in a county with an elected auditor-controller and a population exceeding 3,000,000 people, that the auditor-controller either conduct the audit described above or retain the services of an independent certified public accountant or licensed public accountant to perform the audit, in accordance with specified standards. By increasing the duties of local officials in a county with the above-described characteristics, this bill would impose a state-mandated local program.

(5) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 25250.5 is added to the Government
Code, to read:

25250.5.  

Notwithstanding Section 25250, in any county with
both an elected auditor-controller and a population exceeding
3,000,000 people, at least biennially, the county auditor-controller
shall examine and audit, or cause to be audited, the financial
accounts and records of all officers having responsibility for the
care, management, collection, or disbursement of money belonging
to the county or money received or disbursed by them under
authority of law. The audit shall encompass the immediately
preceding two-year period, or any portion thereof not included in
a prior audit. This financial examination or audit may be performed
in coordination with the investigations conducted by the grand
jury under Section 925 of the Penal Code, or the auditor-controller
may elect to accept reports delivered pursuant to Section 933 of
the Penal Code in lieu of its own separate examination if these
reports are found to fulfill some or all of the requirements of this
section. In connection with the requirements of this section and
Section 25253, the county auditor-controller may employ the
services of an independent certified public accountant or licensed
public accountant to perform an examination of the financial
statements in accordance with generally accepted auditing
standards. The audit shall be filed with the board of supervisors
to enable the board to supervise county officers and county fiscal
affairs.

SEC. 2.  

Section 25303 of the Government Code is amended
to read:

25303.  

(a) The board of supervisors shall supervise the official
conduct of all county officers, and officers of all districts and other
subdivisions of the county, and particularly insofar as the functions
and duties of such county officers and officers of all districts and
subdivisions of the county relate to the assessing, collecting,
safekeeping, management, or disbursement of public funds. It shall
see that they faithfully perform their duties, direct prosecutions
for delinquencies, and when necessary, require them to renew their
official bond, make reports and present their books and accounts
for inspection.

(b) In any county with both an elected auditor-controller and a
population exceeding 3,000,000 begin delete people: end delete begin insert people, this section shall
not be construed to affect the independent and statutorily
designated auditing and accounting functions of the county
auditor-controller. end insert

begin delete

(1) This section shall not be construed to affect the independent
and statutorily designated auditing and accounting functions of
the county auditor-controller.

end delete begin delete

(2) The board of supervisors shall not obstruct the auditing and
accounting functions of the elected county auditor-controller.

end delete

(c) This section shall not be construed to affect the independent
and constitutionally and statutorily designated investigative and
prosecutorial functions of the sheriff and district attorney of a
county. The board of supervisors shall not obstruct the investigative
function of the sheriff of the county nor shall it obstruct the
investigative and prosecutorial function of the district attorney of
a county.

(d) Nothing contained herein shall be construed to limit the
budgetary authority of the board of supervisors over the district
attorney or sheriff.

SEC. 3.  

Section 26881 of the Government Code is amended
to read:

26881.  

The county auditor, or in counties that have the office
of controller, the auditor-controller shall be the chief accounting
officer of the county and the chief auditor of the county. Upon
order of the board of supervisors, the auditor or auditor-controller
shall prescribe, and shall exercise a general supervision, including
the ability to audit departmental and countywide internal controls,
over the accounting forms and the method of keeping the accounts
of all offices, departments and institutions under the control of the
board of supervisors and of all districts whose funds are kept in
the county treasury.

SEC. 4.  

Section 26915 is added to the Government Code, to
read:

26915.  

(a) Any reference to “county auditor” shall also mean
county auditor-controller, county auditor-recorder, county
clerk-auditor-recorder, county clerk-auditor, county
auditor-controller-treasurer-tax collector, any office consolidated
under Section 24300.5, and any office into which the office of
county auditor is consolidated.

(b) The head of any county auditing unit, division, branch, or
group shall be one of the following:

(1) The county auditor.

(2) A person who shall be answerable directly to the county
auditor, shall have direct access to the county auditor, and shall
report the audit results to the county auditor.

(c) A board of supervisors shall not create or operate a separate
auditing unit, division, branch, or group outside of the county
auditor, except if the separate auditing unit, division, branch, or
group was established before 1981. A board of supervisors shall
not transfer any auditing unit, division, branch, or group away
from the county auditor.

SEC. 5.  

Section 53087.6 of the Government Code is amended
to read:

53087.6.  

(a) (1) A city, county, or city and county auditor or
controller who is elected to office may maintain a whistleblower
hotline to receive calls from persons who have information
regarding fraud, waste, or abuse by local government employees.

(2) A city, county, or city and county auditor or controller who
is appointed by, or is an employee of, a legislative body or the
government agency that is governed by the city, county, or city
and county, shall obtain approval of that legislative body or the
government agency, as the case may be, prior to establishing the
whistleblower hotline.

(3) In any county with both an elected auditor-controller and a
population exceeding 3,000,000 people, the county
auditor-controller shall be the sole county officer with the authority
to maintain a whistleblower hotline to receive calls from persons
who have information regarding fraud, waste, or abuse by county
government employees.

(b) The auditor or controller may refer calls received on the
whistleblower hotline to the appropriate government authority for
review and possible investigation.

(c) During the initial review of a call received pursuant to
subdivision (a), the auditor or controller, or other appropriate
governmental agency, shall hold in confidence information
disclosed through the whistleblower hotline, including the identity
of the caller disclosing the information and the parties identified
by the caller.

(d) A call made to the whistleblower hotline pursuant to
subdivision (a), or its referral to an appropriate agency under
subdivision (b), may not be the sole basis for a time period under
a statute of limitation to commence. This section does not change
existing law relating to statutes of limitation.

(e) (1) Upon receiving specific information that an employee
or local government has engaged in an improper government
activity, as defined by paragraph (2) of subdivision (f), a city or
county auditor or controller may conduct an investigative audit of
the matter. The identity of the person providing the information
that initiated the investigative audit shall not be disclosed without
the written permission of that person, unless the disclosure is to a
law enforcement agency that is conducting a criminal investigation.
If the specific information is in regard to improper government
activity that occurred under the jurisdiction of another city, county,
or city and county, the information shall be forwarded to the
appropriate auditor or controller for that city, county, or city and
county.

(2) Any investigative audit conducted pursuant to this
subdivision shall be kept confidential, except to issue any report
of an investigation that has been substantiated, or to release any
findings resulting from a completed investigation that are deemed
necessary to serve the interests of the public. In any event, the
identity of the individual or individuals reporting the improper
government activity, and the subject employee or employees shall
be kept confidential.

(3) Notwithstanding paragraph (2), the auditor or controller may
provide a copy of a substantiated audit report that includes the
identities of the subject employee or employees and other pertinent
information concerning the investigation to the appropriate
appointing authority for disciplinary purposes. The substantiated
audit report, any subsequent investigatory materials or information,
and the disposition of any resulting disciplinary proceedings are
subject to the confidentiality provisions of applicable local, state,
and federal statutes, rules, and regulations.

(f) (1) For purposes of this section, “employee” means any
individual employed by any county, city, or city and county,
including any charter city or county, and any school district,
community college district, municipal or public corporation, or
political subdivision that falls under the auditor’s or controller’s
jurisdiction.

(2) For purposes of this section, “fraud, waste, or abuse” means
any activity by a local agency or employee that is undertaken in
the performance of the employee’s official duties, including
activities deemed to be outside the scope of his or her employment,
that is in violation of any local, state, or federal law or regulation
relating to corruption, malfeasance, bribery, theft of government
property, fraudulent claims, fraud, coercion, conversion, malicious
prosecution, misuse of government property, or willful omission
to perform duty, is economically wasteful, or involves gross
misconduct.

SEC. 6.  

Section 4108.5 of the Revenue and Taxation Code is
amended to read:

4108.5.  

(a) The records and accounts of the tax collector
pursuant to this part shall be audited at least once each three years.

(b) In any county with both an elected auditor-controller and a
population exceeding 3,000,000 people, the county
auditor-controller shall either conduct the audit required by this
section or shall employ the services of an independent certified
public accountant or licensed public accountant to perform the
audit required by this section in accordance with the general and
specified standards prescribed by the Institute of Internal Auditors
or the Government Auditing Standards issued by the Comptroller
General of the United States, as appropriate.

SEC. 7.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.