BILL ANALYSIS Ó
SB 481
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Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 481
(Hueso) - As Amended June 18, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill prohibits local agency employees who work on internal
audits from being directly overseen by a local agency's general
SB 481
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counsel.
FISCAL EFFECT:
Negligible state costs.
COMMENTS:
1)Purpose. According to the author, "Audits provide essential
accountability and transparency over government programs and
it is important that the public has access to them. Some
organizations require their internal auditors (to) be
supervised by their general counsel. This structure weakens
the independence and transparency of an auditor's work by
making it easier for organizations to claim that a particular
audit report is a privileged communication between an attorney
and client, meaning the public no longer has access to it.
This bill would address this issue by prohibiting a general
counsel from having direct supervision over an auditor,
thereby ensuring greater public access to these audit
reports."
2)Background. Existing law requires local employees who perform
audits or audit activities to operate under one of two sets of
professional auditing standards. One standard, known as the
yellow book, is published by the US Government Accountability
Office. The other standard, known as the red book, is
published by the Institute of Internal Auditors. While both
standards indicate that auditors should be independent of the
activities they audit, neither standard prohibits audits from
being reported to a general counsel.
SB 481
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The California Public Records Act (CPRA) requires public
records to be open to inspection during office hours and gives
every person a right to inspect public records, with specific
exceptions. One exception applies to records that are subject
to the "attorney client privilege," which allows
communications between a public agency and its lawyers to be
kept confidential. Generally, the final reports of local
agencies' internal audits are public records that are open to
inspection pursuant to the CPRA.
3)Previous Legislation. SB 1452 (Speier), Chapter 452, Statutes
of 2006, enacted a number of provisions to update auditing
standards for local and state auditors, and to ensure the
independence of internal auditors for state agencies
specifically.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081