BILL ANALYSIS �
AB 1102
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1102 (Lara) - Amended: April 4, 2011
SUBJECT : State Auditor.
SUMMARY : Clarifies the authority of the State Auditor (SA) to
conduct audits of the judiciary, and includes all Bureau of
State Audits' (BSA) costs under their continuous appropriation
authority. Specifically, this bill :
1)Requires that the costs of other statutory duties imposed on
BSA be appropriated to the State Audit Fund (Fund), and
redefines "cost of audits or any other duties" to mean all
direct and indirect costs of conducting the audits or other
duties, and any other expenses incurred by the SA in
fulfilling statutory responsibilities.
2)Requires that any survey of public employees that the SA
determines should be kept confidential be kept private if
employees express fear of retaliation by their employer for
responding.
3)Authorizes the SA to issue audit reports for statewide issues
and to require state agencies to report to the SA regarding
statewide issues identified as high-risk.
4)Authorizes the SA to audit a public contract worth more than
$10,000, upon its own determination that an audit is
warranted.
5)Expands the SA's audit authority to include the judiciary and
the California State University (CSU) by redefining the term
"state agency" to mean every state office, officer,
department, division, bureau, board, and commission, CSU, the
Supreme Court, a Court of Appeal, a superior court, and the
Administrative Office of the Courts (AOC).
6)Repeals obsolete provisions.
EXISTING LAW :
AB 1102
Page 2
1)Sets forth the duties and powers of BSA and makes reference to
audits and investigative audits.
2)Prohibits the SA or his or her employees from releasing to the
public, among other things, any papers, correspondence, or any
substantive information pertaining to any audit not completed.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "This
bill was requested as a general clean-up and omnibus bill for SA
and BSA. Every two years, the Chair of the Joint Legislative
Audit Committee (JLAC) introduces a bill to clarify and clean up
any code sections pertaining to the SA and the SA's functions."
Background . The SA 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. BSA will conduct audits or investigations
to evaluate whether the auditee is acting in compliance with
existing law. BSA audits originate from within BSA, JLAC, or
legislation, and BSA investigations originate from complaints
from state employees or the public.
The author's office has submitted the following reasons for
amending existing law related to BSA:
1)The Fund receives continuous appropriations from the General
Fund and special fund money to cover BSA expenditures. The
author's office claims that Legislative Counsel has begun
regarding new state-mandated, non-audit duties as making an
appropriation and subject to a 2/3 vote requirement. This
bill eliminates the 2/3 vote requirement on bills imposing
new, non-audit duties on the SA by specifying that those costs
will be appropriated in the annual Budget Act.
2)BSA often surveys employees of public agencies that are
audited or investigated. Some employees have hesitated to
complete a survey out of fear of employee retaliation. This
bill would authorize the SA to keep such surveys confidential.
AB 1102
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3)The SA is exempt from procurement and oversight of goods and
services contracts by the Department of General Services
(DGS). The current language in this bill is a placeholder
until BSA finalizes its language.
4)BSA develops its audit workload from three principal sources:
JLAC, statutory mandates, and the SA under the high-risk audit
program. This bill clarifies that the SA audits under the
high-risk audit program can include statewide issues.
5)Existing law requires BSA to receive JLAC approval to audit a
public entity's contracts over $10,000. The author's office
claims that JLAC approval can take several months and delay
the ability to audit a contract under urgent circumstances.
This bill authorizes the SA, at the request of the public
entity or as part of any public entity audit, to audit a
public entity's contracts over $10,000 when he or she
determines an audit is warranted.
6)The Office of the Auditor General (OAG) preceded BSA, and any
references to OAG are obsolete. This bill repeals obsolete
sections relating to the OAG.
7)The provisions relating to the completion of BA's single audit
of financial statements prepared by the executive branch are
obsolete. This bill repeals obsolete sections relating to
the single audit.
This bill clarifies the SA's audit authority to conduct audits
of the judiciary and CSU by redefining the term "state agency"
to include CSU, the Supreme Court, a Court of Appeal, a superior
court, and AOC. Recent audits of the trial courts' construction
costs and scrutiny over CSU expenditures have prompted a need to
clarify BSA's role and ability to conduct audits of those
entities.
Committee Amendments . While the author's office notes that this
is placeholder language, it is unclear what powers and duties
conferred on DGS in the Public Contract Code that BSA would need
in order to purchase goods and services. The committee may want
to consider amendments that would delete these ambiguous and
overly broad provisions.
On page 5, line 3, strike out ", and" and lines 4-6 inclusive,
and insert "."
AB 1102
Page 4
On page 6, line 23, strike out "or when", strike out line 24,
and on line 25 strike out "warranted,".
Previous Legislation . AB 539, Chapter 115, Statutes of 2009,
clarified existing law and codified existing practices as it
relates to BSA.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301