BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: SB 1473
AUTHOR: Wyland
AMENDED: April 12, 2010
FISCAL COMM: No HEARING DATE: April 21, 2010
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : School facility bond performance audits.
KEY POLICY ISSUE
Should constitutionally required performance audits
required of local bond initiatives enacted with a 55
percent vote threshold be conducted in accordance with
Government Auditing Standards?
SUMMARY
This bill requires that the constitutionally required
performance audit established by initiative measure
(Proposition 39, November 2000) be conducted in accordance
with 2007 Government Auditing Standards issued by the
Comptroller General of the United States.
BACKGROUND
Article XI, section 18 of the California Constitution, as
amended by voter initiative measure (Proposition 39,
November 2000) authorizes a school district, community
college district, or county office of education to incur
bond indebtedness for the construction, reconstruction,
rehabilitation, or replacement of school facilities, with
the approval of 55 percent of the voters of the district or
county. Article XIII A provides that this vote threshold
only applies if, among other things, the local bond measure
includes a specific list of school projects to be funded
and requires the authorizing board to conduct annual,
independent financial and performance audits until all bond
funds have been spent to ensure they are used exclusively
for the projects listed in the measure. Current law
provides that a Citizen's Oversight Committee be
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established to, among other things, receive and review
copies of the constitutionally required annual independent
financial and performance audits. (Education Code 15278)
Current law requires every county superintendent of schools
to provide for an audit of all funds under his or her
jurisdiction and control and the governing board of each
local educational agency to either provide for an audit of
its books and accounts or make arrangements with its county
superintendent of schools to provide for the audit. Current
law also requires the audit fully comply with the
Government Auditing Standards issued by the Comptroller
General of the United States. (EC 14020)
ANALYSIS
This bill requires that the annual independent performance
audit required as the result of the passage of Proposition
39 be conducted in accordance with the 2007 revision of
Government Auditing Standards issued by the Comptroller
General of the United States.
STAFF COMMENTS
1) Need for the bill . According to the author, while
Proposition 39 required, and the Education Code
currently requires both annual financial and annual
performance audits for funds connected to bonds issued
under the provisions of Proposition 39, the standards
and methodologies to use with the performance audits
have never been defined.
2) Government Auditing Standards . Government Auditing
Standards (the "Yellow Book") contains standards for
audits of government organizations, programs,
activities, and functions, and of government
assistance received by contractors, nonprofit
organizations, and other nongovernmental
organizations. These standards, often referred to as
Generally Accepted Government Auditing Standards
(GAGAS), are to be followed by auditors and audit
organizations when required by law, regulation,
agreement, contract, or policy. These standards
pertain to auditors' professional qualifications, the
quality of audit effort, and the characteristics of
professional and meaningful audit reports. On July 27,
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2007, the Comptroller General of the United States
issued the 2007 revision of Government Auditing
Standards, which supersedes the 2003 revision and
updates the January 2007 revision.
3) Technical amendment . To help ensure that Government
Auditing Standards (the "Yellow Book") continue to
meet the needs of the audit community and the public
it serves, the Comptroller General of the United
States appointed the Advisory Council on Government
Auditing Standards to review the standards and
recommend necessary changes to the Comptroller General
of the United States. When the Comptroller General
issues a revised standard, the electronic version of
Government Auditing Standards is immediately codified
with a periodic codification of the standards into the
printed book format. This specifically references the
2007 auditing standards.
Staff recommends the bill be amended to delete the
reference to the 2007 standards and instead require
the performance audit be "conducted in accordance with
Government Auditing Standards issued by the
Comptroller General of the United States" to ensure
consistency with current law references and the
application of the most recent audit standards
applicable.
4) Similar legislation . AB 125 (Ma, 2007) would have
authorized the independent performance audit required
by Proposition 39 to include reviews of the compliance
by a school district or a community college district
with specified information. The bill was vetoed by the
Governor, whose veto message read, in pertinent part:
This bill is unnecessary since it simply provides
legislative authorization to include the specified
issues for districts to review in its annual,
independent performance audits of local general
obligation bonds. Nothing in current law prohibits a
district from including these elements today, even in
the absence of this measure.
SUPPORT
Board of Governors of the California Community Colleges
California Association of School Business Officials (CASBO)
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California League of Bond Oversight Committees (CALBOC)
Howard Jarvis Taxpayers Association
OPPOSITION
None received.