(a)On or before January 1, 2028, the internal audit unit of the commission and its staff shall be transferred to the Independent Office of Audits and Investigations, which is hereby established within the commission to ensure all of the following:

(1)The commission is administering funds under its control, including ratepayer funds, efficiently, effectively, economically, and in compliance with applicable state and federal requirements.

(2)The commission’s programs are functioning consistent with applicable accounting standards and practices and are administered effectively, efficiently, and economically.

(3)The commission is accomplishing mandated requirements, developing an annual audit plan, administering an effective enterprise risk management program, and making efficient, effective, and financially responsible decisions.

(4)The president of the commission, the Legislature, and the Governor are fully informed concerning fraud, improper activities, and other serious abuses or deficiencies relating to the expenditure of ratepayer funds or the administration of commission programs and operations.

(5)The commission is monitoring compliance for reports prepared by the commission that are required to be submitted to the Governor and Legislature.

(b)The office shall be responsible for the oversight of the internal audit unit and shall plan, initiate, and perform audits of key financial, management, operational, and information technology functions within the commission to improve accountability and transparency to executive and state management.

(c)The director of the office shall have the title of Inspector General and shall be appointed by the Governor, subject to Senate confirmation. The Inspector General shall serve a six-year term and shall not be removed from office during that term, except for good cause. Any basis for removal of the Inspector General shall be stated in writing, shall be sent to the Secretary of the Senate and the Chief Clerk of the Assembly at the time of the removal, and shall be deemed to be a public document.

(d)The Inspector General is vested with the full authority to exercise all responsibility for maintaining a full-scope, independent, and objective audit and investigation program.

(e)The office shall have access to, and authority to examine, all records, files, documents, accounts, reports, correspondence, or other property of the commission, public utilities, and other entities regulated by the commission. An authorized representative of the office may enter any public office or institution in this state, during regular business hours, and access, examine, and reproduce all records, files, documents, accounts, reports, vouchers, correspondence files, and all other records for any audit or investigation. An officer or employee of an agency or entity that has records or property in their possession or under their control, or otherwise has access to records, shall permit access to, and examination and reproduction of, the records or property upon the request of the Inspector General or the Inspector General’s authorized representative.

(f)In order to achieve independence and objectivity pursuant to this section, the Inspector General shall do both of the following:

(1)Report all audit and confidential investigation findings and recommendations made under the Inspector General’s jurisdiction to the Governor and Legislature on an ongoing and current basis.

(2)Report to the Governor and the Legislature at least annually, and upon request, with a summary of the Inspector General’s investigation and audit findings and recommendations. The summary shall be posted on the office’s internet website and shall otherwise be made available to the public upon its release to the Governor, the commission, and the Legislature. The summary shall include, but not be limited to, significant problems discovered by the Inspector General and whether the Inspector General’s recommendations relative to audits and investigations have been implemented by the affected units and programs of the commission or affected external entities.

(3)A report submitted to the Legislature pursuant to this subdivision shall be in compliance with Section 9795 of the Government Code.