Amended in Senate April 8, 2015

Amended in Senate April 6, 2015

Senate BillNo. 481


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 amended, Hueso. Local government: 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. Those standards generally provide, among other things, that auditors should be independent of the activities they audit. Existing law makes every willful omission to perform any duty enjoined by law upon any public officer, or person holding any public trust or employment, where no special provision is made for the punishment of that delinquency, a crime.

This bill would prohibit the general counsel of the city, county, city and county, or district, or the employees of the general counsel from having direct oversight over the city, county, city and county, and district employees that conduct audits or that conduct audit activities of those respective agencies. This bill would also prohibit all city, county, city and county, and district employees that conduct audits or that conduct audit activities of those respective agencies from being required to report to the general counsel or any employees of the general counsel.

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This bill would require that all city, county, city and county, and district employees that conduct audits or that conduct audit activities of those respective agencies be considered to conduct their work under conditions that ensure independence, if the head of the auditing unit, branch, or group for which the employee works meets specified criteria.

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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:

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SECTION 1.  

Section 1236 of the Government Code is amended
2to read:

3

1236.  

(a) All city, county, city and county, and district
4employees that conduct audits or that conduct audit activities of
5those respective agencies shall conduct their work under the general
6and specified standards prescribed by the Institute of Internal
7Auditors or the Government Auditing Standards issued by the
8Comptroller General of the United States, as appropriate. The
9standards generally provide as follows:

10(1) That auditors should be independent of the activities they
11audit.

12(2) That audits should be performed with proficiency and due
13professional care.

14(3) That the scope of the audit should encompass the
15examination and evaluation of the adequacy and effectiveness of
16the organization’s system of internal control and the quality of
17performance in carrying out assigned responsibilities.

18(4) That audit work should include planning the audit, examining
19and evaluating information, communicating results, and following
20up.

P3    1(5) That the chief auditor should properly manage the auditing
2department.

3(b) Nothing in this section is intended to limit the rights or
4obligations of auditors to conduct audits and audit activities in
5accordance with other laws and regulations that may apply to a
6particular entity, as appropriate.

7(c) The general counsel of the city, county, city and county, or
8district, or the employees of the general counsel shall not have
9direct oversight over the city, county, city and county, or district
10employees that conduct audits or that conduct audit activities of
11the respective agency. All city, county, city and county, and district
12employees that conduct audits or that conduct audit activities of
13those respective agencies shall not be required to report to the
14general counsel or any employees of the general counsel.

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15(d) All city, county, city and county, and district employees that
16conduct audits or that conduct audit activities of those respective
17agencies shall be considered to conduct their work under conditions
18that ensure independence if the head of the auditing unit, branch,
19or group for which the employee works meets all of the following
20criteria:

21(1) He or she is answerable directly to the head, deputy head,
22or governing board of the governmental agency being audited, and
23is given direct access to that person or persons, as applicable.

24(2) He or she is required to report the audit results to the head
25or deputy head of the agency being audited, or to the governing
26board of that agency.

27(3) He or she is organizationally placed outside of the staff or
28line-management function of the unit or function being audited.

29(4) He or she is, as much as practicable, administratively situated
30in a manner that provides insulation from political or other
31pressures that could affect his or her ability to conduct audits and
32report findings, opinions, and conclusions objectively without fear
33of political or other reprisal.

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SEC. 2.  

No reimbursement is required by this act pursuant to
35Section 6 of Article XIII B of the California Constitution because
36the only costs that may be incurred by a local agency or school
37district will be incurred because this act creates a new crime or
38infraction, eliminates a crime or infraction, or changes the penalty
39for a crime or infraction, within the meaning of Section 17556 of
40the Government Code, or changes the definition of a crime within
P4    1the meaning of Section 6 of Article XIII B of the California
2Constitution.



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