BILL NUMBER: SB 481 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Hueso
FEBRUARY 26, 2015
An act to amend Section 1236 of the Government Code, relating to
local government.
LEGISLATIVE COUNSEL'S DIGEST
SB 481, as introduced, Hueso. Internal auditors: independence.
Existing law requires, with certain exceptions, that all city,
county, city and county, and district employees who conduct audits or
that conduct audit activities of those respective agencies, conduct
their work under 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. A willful violation of these provisions is a crime.
This bill would recast these provisions to prohibit these internal
audit employees from working under the direct oversight of the
general counsel or employees of the agency that they audit. The bill
would require these employees to conduct their work under conditions
that ensure their independence, as prescribed, including, but not
limited to, the requirement that the head of the auditing unit,
branch, or group for which he or she works be answerable directly to
the head, deputy head, or governing board of the governmental agency
being audited, is given direct access to that person or persons, as
applicable, and is required to report the audit results to head,
deputy head, or governing board.
By expanding the definition of an existing crime, this bill would
impose a state-mandated local program.
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 no reimbursement is required by this
act for a specified reason.
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 1236 of the Government Code is amended to read:
1236. (a) All A city,
county, city and county, and district employees that conduct
employee who conducts audits or that
conduct who conducts audit activities of those
respective agencies shall conduct their his
or her work under the conditions that
ensure independence. The employee shall not work under the direct
oversight of the general counsel or employees of the audited agency
.
(b) A city, county, city and county, and district employee who
conducts internal audit under the direction of the audited agency's
management shall be considered independent for the purposes of
subdivision (a) if all of the following conditions are met:
(1) The head of the auditing unit, branch, or group for which the
internal auditor described in subdivision (a) works, meets all of the
following criteria:
(A) He or she is answerable directly to the head, deputy head, or
governing board of the governmental agency being audited, and is
given direct access to that person or persons, as applicable.
(B) He or she is required to report the audit results to the head
or deputy head of the agency being audited, or to the governing board
of that agency.
(C) He or she is organizationally placed outside of the staff or
line-management function of the unit or function being audited.
(D) He or she is, as much as practicable, administratively
situated in a manner that provides insulation from political or other
pressures that could affect his or her ability to conduct audits and
report findings, opinions, and conclusions objectively without fear
of political or other reprisal.
(2) The internal auditor conducts his
or her work under 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. The standards generally provide as follows:
(1)
(A) That auditors should be independent of the
activities they audit.
(2)
(B) That audits should be performed with proficiency
and due professional care.
(3)
(C) That the scope of the audit should encompass the
examination and evaluation of the adequacy and effectiveness of the
organization's system of internal control and the quality of
performance in carrying out assigned responsibilities.
(4)
(D) That audit work should include planning the audit,
examining and evaluating information, communicating results, and
following up.
(5)
(E) That the chief auditor should properly manage the
auditing department.
(b)
(c) Nothing in this section is intended to limit the
rights or obligations of auditors to conduct audits and audit
activities in accordance with other laws and regulations that may
apply to a particular entity, as appropriate.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.