BILL ANALYSIS �
SB 617
Page 1
SENATE THIRD READING
SB 617 (Ron Calderon and Pavley)
As Amended September 2, 2011
Majority Vote
SENATE VOTE :37-0
ADMINISTRATIVE REVIEW 11-0
APPROPRIATIONS 17-0
-----------------------------------------------------------------
|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 |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
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
SB 617
Page 2
Treasurer, 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.
6)Adds a requirement that any state agency proposing to adopt,
amend or repeal a major regulation conduct an economic impact
analysis that assesses the proposed regulation's impact on:
a) The creation or elimination of jobs;
b) The creation of new business or elimination of new
business;
c) The competitive advantages or disadvantages to
California businesses;
d) The increase or decrease in investment in the state;
e) The incentives for innovation in products, materials or
processes; and,
f) The benefits to the health, safety and welfare of
Californians.
7)Adds a requirement that the Department of Finance adopt, by
January 1, 2013, regulation describing the process for
agencies to conduct a standardized economic impact analysis.
8)Adds a requirement that agencies submit economic impact
analyses to the Department of Finance for review.
9)Adds a definition for major regulation as any proposed
adoption, amendment or repeal of a regulation that will have
an impact on California businesses in an amount exceeding $50
million.
EXISTING LAW establishes the Financial Integrity and State
Managers Accountability (FISMA) Act of 1983 to strengthen
accounting practices and administrative controls in state
agencies.
SB 617
Page 3
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:
0002646