BILL ANALYSIS
AB 539
Page 1
Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 539 (Monning) - As Introduced: February 25, 2009
SUBJECT : State Auditor.
SUMMARY : Clarifies existing law and codifies existing
practices as it relates to the Bureau of State Audits (BSA).
Specifically, this bill :
1)Requires the State Auditor (SA) to establish an equal
employment opportunity (EEO) program that meets the criteria
and objectives established by the State Personnel Board (SPB).
2)Requires the BSA to deliver a completed report to the
Legislature, appropriate committees or subcommittees of the
Legislature, and the Governor, not later than 24 hours after
delivery of the report to the Milton Marks "Little Hoover"
Commission (Commission) on California State Government
Organization and Economy.
3)Authorizes the SA to examine all the financial records,
accounts, and documents of any state agency, as defined, in
the performance of an annual audit and any other audit or
investigation undertaken by the BSA.
4)Requires that if the SA submits a report of alleged improper
activity to the head of an employing agency or appropriate
appointing authority, that individual is required: to report
to the SA with respect to any action regarding the activity,
to transmit the first report no later than 60 days after the
date of the SA's report, and to transmit monthly reports
thereafter until final action has been taken.
EXISTING LAW :
1)Requires the SA to establish an affirmative action (AA)
program that meets the criteria and objectives established by
the SPB.
2)Requires the SA to complete any audit in a timely manner and
in accordance with the "Government Auditing Standards"
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published by the U.S. Comptroller General.
3)Requires the SA to transmit a copy of the audit report to the
Commission immediately upon completion of the audit.
4)Requires the Commission to deliver a completed report to the
Legislature, appropriate committees or subcommittees of the
Legislature, and the Governor, not later than 24 hours after
delivery of the report to the Commission.
5)Requires the SA to annually issue an auditor's report based
upon the general purpose financial statements included in
Controller's annual report to the Governor.
6)Authorizes the SA to examine all the financial records,
accounts, and documents of any state agency, as defined, in
the performance of an annual audit.
7)Requires that if the SA submits a report of alleged improper
activity to the head of an employing agency or appropriate
appointing authority, that individual is required: to report
to the SA with respect to any action taken regarding the
activity, to transmit the first report no later than 30 days
after the date of the SA's report, and to transmit monthly
reports thereafter until final action has been taken.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of the bill . According to the author's office, the
proposed provisions clarify existing law or codify existing
practices.
After the passage of Proposition 209, the state's AA program was
deemed unlawful and the Government Code was amended to instead
reference an EEO program. The author's office maintains that
striking the reference to "affirmative action" will ensure that
the particular statute conforms to existing law and the language
used to cross-reference the code section.
Existing law requires the SA to transmit a copy of a completed
audit report to the Commission, which must deliver the report
within 24 hours, upon receipt, to the Legislature, appropriate
committees or subcommittees of the Legislature, and the
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Governor. For the past several years, the SA has simultaneously
delivered audit reports to the Commission, the Legislature, and
the Governor. This bill would codify current practice.
This bill will clarify the BSA's ability to obtain and examine
all records, including all financial records, regardless of
asserted privileges in any audit or investigation by BSA.
The bill extends from 30 to 60 days the date by which the head
of an employing agency or appropriate appointing agency must
respond to the BSA following a report on alleged improper
activity. The author contends, "AB 539 would instead require
the head of the employing agency or appropriate appointing
authority to transmit the first report to the SA no later than
60 days after the date of the SA's report. This change is
necessary to correct an inconsistency in current law. Under
current whistleblower law, if, after investigation, the SA finds
that an employee may have engaged or participated in improper
governmental activities, the SA must send a copy of the
investigation to the employee's appointing power. The
appointing power has 60 days from receipt of the report to
either serve a notice of adverse action on the employee or
provide to the SA and the SPB a written explanation for why it
was not done. However, as is also provided in current law, upon
a finding of improper governmental activity, the SA shall report
the finding to the head of the appropriate employing agency or
appointing power and that individual must report to the SA any
responsive action taken by that individual within 30 days. The
proposed amendment would make both reports due within 60 days
after the Auditor reports the findings of improper governmental
activities."
Background . The California State Auditor is the State's
independent external auditor that provides independent,
nonpartisan, accurate, and timely assessments of California
government's financial and operational activities in compliance
with generally accepted government auditing standards. The
California State Auditor's Office reports its findings to the
legislature and recommends actions to improve government
operations.
Support . According to the sponsor, the BSA, this bill "would
amend certain sections of the Government Code (sections 8545.2,
8546, 8546.1, 8546.4 and 8547.7) that relate to (the) office
(of) the BSA. Although the amendments are minor and are
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essentially technical in nature, and made as part of code
maintenance?amendments are needed to clarify existing law,
codify current practices, and to correct an inconsistency in
current law."
According to the American Federation of State, County and
Municipal Employees, "When audits are set on a calendar,
individuals with dual interests working in state agencies may
alter items at the last minute to ensure the audit does not turn
up anything implicating questionable accounting. At times,
members of state agencies may seek to "pad" their budgets to
ensure an equal amount of funding, or more, the following year.
This money is often spent toward the end of the fiscal year in a
spending binge on items that may not be needed at the
time?Giving the State Auditor constant authority to audit any
state agency will allow for a more honest environment and ensure
that taxpayer's monies are being prudently spent as
appropriated."
Double referred . This bill is double-referred to Assembly
Public Employees, Retirement and Social Security Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Bureau of State Audits (BSA) (sponsor)
American Federation of State, County and Municipal Employees
(AFSCME)
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301