BILL ANALYSIS
Bill No: AB
540
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 540 Author: Monning
As Introduced: February 25, 2009
Hearing Date: June 23, 2009
Consultant: Art Terzakis
SUBJECT
Bureau of State Audits: budget
DESCRIPTION
AB 540 requires the Bureau of State Audits (BSA) to provide
the Department of Finance (DOF) with the BSA's proposed
budget for each fiscal year and requires DOF to include the
BSA's proposed budget in the Governor's Budget without
modification.
EXISTING LAW
Existing law establishes the BSA under the direction of the
Milton Marks "Little Hoover" Commission on California State
Government Organization and Economy and requires the BSA to
be independent of the executive branch and legislative
control in order to be free of organizational impairments
to independence.
Existing law states that the duties of the BSA are to
examine and report annually upon the financial statements
prepared by the executive branch of the state and to
perform performance audits, as mandated.
BACKGROUND
Purpose of AB 540: In 1994, BSA and DOF entered into a
memorandum of understanding (MOU) to recognize the
importance of audit independence and to specify the roles
and responsibilities of the BSA and DOF in regards to the
BSA's budget. That MOU included a purpose and delineated
AB 540 (Monning) continued
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the BSA and DOF's roles. Specifically, the MOU states that
the DOF will "advise and assist the BSA on budget issues,
preparation and format, and include the BSA's budget as
submitted to the annual Governor's Budget."
According to the sponsor, the Bureau of State Audits, this
measure is necessary to streamline the BSA budget process
by clarifying DOF's role. This measure would essentially
codify the MOU referenced above between DOF and BSA. The
BSA believes this legislation is necessary to ensure that
their independence is safeguarded.
In a letter to the author, the State Auditor writes, "The
exemptions from executive branch controls are essential in
fulfilling the independence requirements of Government
Auditing Standards that my office must abide by. . . . Over
the years, my office has had to devote time and effort to
ensure that our independence is safeguarded during the
budget process. We believe the language in this bill is
necessary to ensure that our budget process is efficient
and does not infringe upon the integrity of my office's
independence."
PRIOR/RELATED LEGISLATION
AB 539 (Monning) 2009-10 Session. Would clarify existing
law and codify current practices related to the Bureau of
State Audits (BSA). (Pending in this committee)
AB 567 (Villines) 2009-10 Session. Would create a
"Clearinghouse for Government Innovation and Improvement
Program" within the Bureau of State Audits (BSA) to solicit
recommendations from the public for improving state
operations and make specified modifications to the
California Whistleblower Protection Act including certain
other changes to the operations of the BSA. (Pending in
Senate Judiciary Committee)
SB 521 (Wyland) 2007-08 Session. Among other things, would
have transferred audit and evaluation duties within the
Department of Finance to the Bureau of State Audits (BSA)
and renamed the BSA as the Bureau of State Audits and
Evaluations (BSAE). (Held in this committee at author's
request)
SB 1452 (Speier) Chapter 452, Statutes of 2006. Updated
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the auditing standards for state and local agencies and set
up a process whereby the Legislature would be informed when
auditor recommendations are being ignored or not
implemented by state agencies. Also, it protected auditors
from intimidation while providing them with a process to
have audit expectations reported to agency counsel if audit
findings are suppressed by management.
SB 413 (Speier) Chapter 883, Statutes of 2001. Made
numerous changes to the California Whistleblower Protection
Act, as specified.
SB 37 (Maddy) Chapter 12, Statutes of 1993. Created the
Bureau of State Audits under the direction of the Little
Hoover Commission and transferred many of the duties and
power of the Office of Auditor General to the Bureau of
State Audits. This was done in response to the passage of
Proposition 140 which had the effect of greatly reducing
the size and scope of the Auditor General's office. In
addition, it created the Improper Governmental Activities
Act to provide state employees protection when disclosing
improper governmental activities.
SUPPORT: As of June 19, 2009:
Bureau of State Audits (sponsor)
American Federation of State, County and Municipal
Employees (AFSCME)
OPPOSE: None on file as of June 19, 2009.
FISCAL COMMITTEE: Senate Appropriations Committee