CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 884

Introduced by Assembly Member Patterson

February 17, 2021

An act to amend Sections 1237, 13886, and 13887 of the Government Code, relating to state government.


LEGISLATIVE COUNSEL'S DIGEST


AB 884, as introduced, Patterson. State agencies: audits.
Existing law requires all state and local agencies with an aggregate spending of $50,000,000 or more annually to consider establishing an ongoing audit function.
This bill would require all state agencies with an aggregate spending of $50,000,000 or more annually to establish an ongoing audit function.
Existing law requires any governing body, as defined, that oversees a state agency that performs or reviews internal audits to establish an audit committee. Existing law, the Bagley-Keene Open Meeting Act (Bagley-Keene Act), requires that all meetings of a state body, as defined, be open and public, and all persons be permitted to attend any meeting of a state body, except as provided. Violation of the Bagley-Keene Act is a crime.
This bill would extend the requirements of the Bagley-Keene Act to the internal audit committees established by any governing body if the governing body is subject to the Bagley-Keene Act. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.
Existing law generally requires all internal auditor operations of state agencies to meet specified criteria. If a state agency does not report to a governing body, existing law requires the internal auditor operations to, among other things, report audit findings and recommendations to the head or deputy head of the state agency and to the general counsel of the state agency, if applicable. If a state agency is overseen by a governing body, existing law requires the internal audit operations to, among other things, report audit findings and recommendations to the audit committee and general counsel of the governing body.
This bill would require both of these types of state agencies to post audit findings and recommendations on its internet website within 5 days of reporting its audit findings and recommendations, as described above.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1237 of the Government Code is amended to read:

1237.
 (a) All state and local agencies with an aggregate spending of fifty million dollars ($50,000,000) or more annually shall consider establishing an ongoing audit function.
(b) All state agencies with an aggregate spending of fifty million dollars ($50,000,000) or more annually shall establish an ongoing audit function.

SEC. 2.

 Section 13886 of the Government Code is amended to read:

13886.
 (a) Any governing body that oversees a state agency that performs or reviews internal audits shall establish an audit committee that generally meets the frameworks recommended by the American Institute of Certified Public Accountants, as set forth in the publication entitled “AICPA Audit Committee Toolkit: Government Organizations.”
(b) For purposes of this chapter, “governing body” means a board, commission, board of trustees, council, or other similar body that oversees a state agency.
(c) If a governing body is subject to the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1), an audit committee established by the governing body pursuant to this section shall be subject to the same requirements.

SEC. 3.

 Section 13887 of the Government Code is amended to read:

13887.
 (a) In order to achieve independence and objectivity pursuant to Section 13886, for any state agency that does not report to a governing body, the internal auditor operations shall meet all of the following requirements:
(1) The chief internal auditor shall be accountable to the head or deputy head of the state agency.
(2) The chief internal auditor shall report audit findings and recommendations made under his or her the chief internal auditor’s jurisdiction to the head or deputy head of the state agency and to the general counsel to the state agency, if applicable.
(3) The operations shall be organizationally outside the staff or line management function of the unit under audit.
(b) In order to achieve independence and objectivity as required by the standards identified in Section 13886, for any state agency that is overseen by a governing body, the internal audit operations shall meet all of the following requirements:
(1) The chief internal auditor shall be accountable to the audit committee of the governing body.
(2) The chief internal auditor shall report audit findings and recommendations made under his or her the chief internal auditor’s jurisdiction to the audit committee and the general counsel to the governing body.
(3) The operations shall be organizationally outside the staff or line management function of the unit under audit.
(c) A state agency shall post any audit findings and recommendations on its internet website within five days of a report being made pursuant to paragraph (2) of subdivision (a) or paragraph (2) of subdivision (b).

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.