BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 617
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 617 (Calderon) - As Amended:  June 14, 2011 

          Policy Committee:                             AA&R  Vote:11-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill updates state government accounting practices, the 
          Financial Integrity and State Managers Accountability (FISMA) 
          Act of 1983, to require ongoing monitoring of internal auditing 
          and financial controls and other new best practices in financial 
          accounting.  

           FISCAL EFFECT  

          This bill will result in minor absorbable costs for state 
          government with possible savings on an ongoing basis.

           COMMENTS  

        1)Purpose  .  The author's office states the legislation is necessary 
            to heighten state agency focus on oversight and ensure the 
            state adheres to current best practices in auditing.  
            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.

        2)Department of Finance.   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 








                                                                  SB 617
                                                                  Page  2

            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."  



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081