BILL ANALYSIS �
AB 1345
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Date of Hearing: January 19, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1345 (Lara) - As Amended: January 12, 2012
Policy Committee: Local
GovernmentVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands the State Controller's oversight over local
government auditing practices. Specifically, this bill:
1)Directs audit reports to be submitted to the Controller within
nine months after the end of the period audited, or pursuant
to applicable federal or state law.
2)Requires audit reports to comply with the Government Auditing
Standards issued by the Comptroller General of the United
States.
3)Authorizes the Controller to appoint a qualified certified
public accountant (CPA) or public accountant (PA) to complete
an audit report and to obtain required information if a local
agency does not submit the audit report by the established due
date and provides that costs incurred by the Controller shall
be borne by the local agency.
4)Requires the Controller to refer a case to the California
Board of Accountancy if the Controller finds through a quality
control review of audit working papers of the audit report
made pursuant to the provisions of this bill that the audit
was conducted in a manner that constitutes unprofessional
conduct or there were multiple and repeated failures to
disclose noncompliant acts.
FISCAL EFFECT
This bill will result in minor costs that are absorbable by the
Controller.
AB 1345
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COMMENTS
1)Purpose . According to the author's office, the current
statutory approach to protect taxpayers from waste, fraud and
abusive practices by local governments is not working as
illustrated by the Controller's Office audit findings in the
Cities of Bell and Montebello and the County of Modoc where
millions of state, federal, and local dollars were misspent
over several years. Additionally, the author's office says
that the current oversight system of 58 counties, 482 cities,
and nearly 5,000 special districts lacks the authority and
resources to identify and investigate the types of issues that
were found in Bell and Modoc.
2)Background . This bill is a result of the exposure of
unethical and illegal financial practices by numerous
officials in the City of Bell, which came to light in 2010.
The city's independent auditor failed to report abuses such as
excessive salaries, illegal loans and questionable fees. In a
series of audits of Bell's finances, the Controller found that
the independent auditor failed to comply with 13 of 17
fieldwork auditing standards and also reported no significant
deficiencies in any of the city's funds.
3)Prior legislation . AB 229 (Lara) was similar to his bill,
but much broader in scope. AB 229 was amended in the Senate
to deal with a different subject.
4)Support. The State Controller's Office, the sponsor of the
bill, writes that this bill will help provide the independent
oversight needed to protect public funds and restore the
public's confidence in the fiscal integrity of our cities,
counties, and other local government agencies. The
Controller's office believes that the provisions of the bill
will strengthen the independent audit process and provide a
safeguard to protect taxpayers from waste, fraud and abuse.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 1345
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