BILL ANALYSIS �
SB 617
Page 1
SENATE THIRD READING
SB 617 (Calderon)
As Amended June 14, 2011
Majority vote
SENATE VOTE :37-0
ADMINISTRATIVE REVIEW 11-0 APPROPRIATIONS
17-0
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|Ayes:|Dickinson, Garrick, |Ayes:|Fuentes, Harkey, |
| |Block, Buchanan, Cook, | |Blumenfield, Bradford, |
| |Silva, Grove, Huber, | |Charles Calderon, Campos, |
| |Mitchell, Pan, Portantino | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : This bill updates state government accounting practices
by requiring state agencies to implement ongoing monitoring of
internal accounting and financial controls. Specifically, this
bill :
1)Enacts legislative findings that active oversight of accounting
practices is critical to prevent and detect fraud and errors at
state agencies and to ensure efficient use of public funds.
2)Requires that each state agency head develop processes to
monitor internal accounting and financial controls.
3)Describes elements of a satisfactory system of internal
accounting and financial control, including a plan of
organization that assigns accounting duties, limits access to
state agency assets to authorized personnel, describes
recordkeeping procedures, and includes an effective system of
internal review.
4)Requires that the head of each state agency conduct a biennial
report on the adequacy of the agency's systems of internal
accounting and monitoring practices and submit the report to the
Legislature, State Auditor, State Controller, State Treasurer,
SB 617
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the Attorney General, the director of the Department of Finance,
the Governor and the State Library.
5)Allows the director of the Department of Finance, in
consultation with the State Auditor and State Controller, to
establish and modify recommended practices to guide state
agencies in conducting ongoing monitoring of accounting
practices.
EXISTING LAW establishes the Financial Integrity and State
Managers Accountability (FISMA) Act of 1983 to strengthen
accounting practices and administrative controls in state
agencies.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill will result in minor absorbable costs for
state government with possible savings on an ongoing basis.
COMMENTS : According to the author, 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 argues that state law should be updated
to reflect this new best practice in auditing.
Analysis Prepared by : Mark Martin/ A. & A.R. / (916) 319-3600
FN: 0002041