BILL ANALYSIS �
SB 617
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Date of Hearing: June 29, 2011
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Roger Dickinson, Chair
SB 617 (Calderon) - As Amended: June 14, 2011
SENATE VOTE : 37-0
SUBJECT : STATE GOVERNMENT: FINANCIAL ACCOUNTABILITY
SUMMARY : This bill updates the state's key statute regarding
state government accounting practices, the Financial Integrity
and State Managers Accountability (FISMA) Act of 1983, to
include ongoing monitoring of internal auditing and financial
controls and other best practices in financial accounting.
EXISTING LAW: FISMA (Government Code Sections 13400 through
13407) was created in 1983 to strengthen accounting practices
and administrative controls in state agencies and departments.
State agency heads are required to establish and maintain
internal accounting systems. In addition, agencies must
complete a biennial report reviewing their accounting systems
and submit the report to various entities, including the
Department of Finance and the Legislature. FISMA also directs
the director of the Department of Finance to consult with the
State Auditor and the State Controller to develop guidelines for
the agencies' biennial internal reviews.
FISCAL EFFECT : This legislation is keyed fiscal.
COMMENTS : According to the author's office, FISMA requires
updating, particularly in light of the Enron financial debacle
of 2002, and subsequent federal legislation, the Sarbanes-Oxley
"Corporate and Auditing Accountability and Responsibility Act."
The federal act calls for ongoing monitoring of internal
accounting and administrative controls to ensure organizations
remain effective and efficient. The author's office argues that
state law should be updated to reflect this new best practice in
auditing.
This bill includes legislative findings that ongoing monitoring
of auditing processes is necessary to ensure the early detection
of fraud or errors and to ensure public resources are being
spent efficiently. State agency heads would be required to
ensure there is effective and independent monitoring of
SB 617
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accounting systems within each agency. The biennial reports on
auditing practices currently required of each agency would
require information on monitoring processes. In addition, the
director of the Department of Finance, in consultation with the
State Auditor and State Controller, is required to establish
guidelines for state agencies regarding conducting ongoing
monitoring of accounting processes.
Monitoring includes processes such as periodic evaluation of
auditing practices or periodic analyses of operating reports or
metrics used to measure programs.
The Department of Finance, which has taken a neutral position on
this legislation, states it "is supportive of the bill's intent
to increase accountability for state agencies and maintain
effective and efficient operation of systems and controls."
However, the Department notes it is already carrying out the
responsibilities proposed by this bill: "Although not
specifically stated in statute, Finance provides state agencies
and departments with guidance to conduct ongoing monitoring of
their internal accounting and administrative controls."
The author's office states the legislation is necessary to
heighten state agencies' focus on oversight and ensure the state
adheres to current best practices in auditing.
The State Auditor and the State Controller also are neutral on
the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
None.
Opposition
None.
Analysis Prepared by : Mark Martin / A. & A.R. / (916)
319-3600
SB 617
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