BILL ANALYSIS �
AB 1487
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1487 (Budget Committee)
As Amended August 21, 2012
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
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|ASSEMBLY: | |(March 22, |SENATE: |27-11|(August 28, |
| | |2012) | | |2012) |
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(vote not relevant)
Original Committee Reference: BUDGET
SUMMARY : Updates and clarifies accounting expenditure reporting
requirements used by the Department of Finance and the State
Controller.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Require that the State Controller's (SCO) Budgetary-Legal
Basis Annual Report be prepared on the same basis as the
applicable Governor's Budget and the Budget Act.
2)Clarify that an additional annual report be prepared by the
SCO in accordance with generally accepted accounting
principles (GAAP).
3)Require the dissemination of financial reports by the SCO
through print and posting to the agency's Web site.
4)Require departments and agencies to make consistent reporting
to the SCO and Department of Finance (DOF) according to
methods and bases provided in regulations, budget letters, or
other directives of DOF.
5)Provide that the adoption, amendment, or repeal of
regulations, budget letters, or other directives related to
the reporting requirements are exempt from Administrative
Procedure Act.
6)Stipulate that DOF and SCO consult regarding significant
changes to financial and accounting methods, unless such
changes are otherwise specified in law.
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7)Direct DOF to implement procedures to facilitate annual
reconciliation of General Fund and special fund balances
provided to SCO and DOF.
8)Make an appropriation to DOF for implementation of the
provisions of this bill.
9)Contain an appropriation allowing this bill to take effect
immediately upon enactment.
AS PASSED BY THE ASSEMBLY , this bill expressed the intent of the
Legislature to enact statutory changes relating to the Budget
Act of 2012.
FISCAL EFFECT : This bill provides $1,000 to the DOF to
implement this bill. Since this bill clarifies existing
functions performed by DOF and SCO, any additional costs should
be absorbable within existing resources.
COMMENTS : This budget trailer bill makes changes to the state's
accounting reporting rules for special funds to prevent
discrepancies or the accrual of "hidden" funding. California
has in excess of 500 special funds that have specific funding
sources and specific programmatic program responsibilities.
These funds range from very large transportation-related funds
to small specialized accounts. Different state special funds
are accounted for using differing methods of accrual as well as
having different measurement focuses. A key component of fund
accounting is the determination of fund balances within each
account. Generally, the fund balance is based on the amount
derived by subtracting fund liabilities from fund assets.
Various financial reports are prepared at different times of
year for different purposes. Some of the major financial
reports are: Budgetary-Legal Basis Annual Report, prepared by
the SCO, prepared on the same basis as the Governor's Budget
document and released after the end of each fiscal year;
Comprehensive Annual Financial Report, prepared by the SCO to
represent financial results in compliance with GAAP, released
after the end of each fiscal year; and, Governor's Budget Fund
Condition Statements, prepared in conjunction with the January
Budget and the May Revision, prepared on a budgetary basis. The
financial documents prepared by the SCO and the budget documents
cannot be directly compared without significant adjustments
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since they are prepared using different methods.
The DOF's recent review of special funds revealed significant
discrepancies in the fund balances, particularly for a few
funds. Overall, a total of $3.9 million in accounting
differences were detected. The DOF balance was lower in some
accounts totaling $1.7 billion, and higher for other accounts
totaling $2.1 billion, for a net impact of about $415 million
lower. Although some of the differences were due to mistakes or
the situation with State Parks, about 80% of the differences
were the result of methodological and timing issues largely
stemming from different information being provided by
departments to DOF and the SCO. This bill, combined with
process changes underway by DOF and SCO, should prevent these
discrepancies in future years.
Analysis Prepared by : Christian Griffith / BUDGET / (916)
319-2099
FN: 0005762