BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          AB 187 (Lara)
          
          Hearing Date: 7/11/2011         Amended: 6/22/2011
          Consultant: Bob Franzoia        Policy Vote: G O 9-1
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          BILL SUMMARY: AB 187 would, subject to specified conditions, 
          authorize the State Auditor to establish a high-risk local 
          government agency audit program to identify, audit, and issue 
          reports on any local government agency, including any city, 
          county, or special district, or any publicly created entity that 
          the State Auditor identifies as being at high risk for the 
          potential of waste, fraud, abuse, or mismanagement or that has 
          major challenges associated with its economy, efficiency, or 
          effectiveness.
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                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           State Auditor local    Unknown, likely major costs annually 
          General
          government audit program                                    
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          STAFF COMMENTS: This bill meets the criteria for referral to the 
          Suspense File. 

          This bill states that the State Auditor shall notify the Joint 
          Legislative Audit Committee whenever he or she identifies a 
          local government as at high risk and that the State Auditor 
          shall only conduct audits under the provisions of this bill to 
          the extent the Legislature appropriates funds sufficient to 
          cover the state costs of those audits.  

          Existing law requires the State Auditor to conduct an audit of a 
          state or local governmental entity that is requested by the 
          Joint Legislative Audit Committee (JLAC), to the extent that 
          funding is available and in accordance with priorities 
          established by JLAC.  Existing law also requires the State 
          Auditor to conduct specified financial and performance audits 
          directed in statute.  Under the 2011-12 Joint Rules of the 








          AB 187 (Lara)
          Page 1


          Senate and Assembly, Rule 37.4 (b) specifies that "any bill 
          requiring action by the Bureau of State Audits shall contain an 
          appropriation for the cost of any study or audit."  This bill 
          appears to conflict with Joint Rule 37.4 (b) because the bill 
          does not provide for payment of State Auditor costs associated 
          with audits.  In order to maintain budgetary oversight and to 
          avoid any conflict with Joint Rule 37.4 (b), staff recommends 
          this bill be amended to strike out lines 11 to 13 on page 3 and 
          instead require JLAC to approve any audits recommended by the 
          State Auditor. 

          Any auditing costs associated with this bill would be difficult 
          to predict and would depend upon how many local entities are 
          audited and the size and complexity of the audit.  State Auditor 
          costs are generally about $100 an hour with audits requiring 
          2,000 to 5,000 hours to complete.