Today's Law As Amended


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SB-521 State Audits and Evaluations.(2007-2008)



As Amends the Law Today


SECTION 1.

 Section 8543 of the Government Code is amended to read:

8543.
 (a)  There is hereby created in state government the California State Auditor’s Office under the direction of the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy. Bureau of State Audits and Evaluations.  In order to be free of organizational impairments to independence, the office bureau  shall be independent of the executive branch and legislative control.
(b) Notwithstanding any other law, any reference to the “Bureau of State Audits” or “bureau,” as used in a context to refer to the Bureau of State Audits, shall be deemed to refer to the “California State Auditor’s Office,” and any reference to the “State Auditor” or “auditor,” as used in a context to refer to the “State Auditor,” shall be deemed to refer to the “California State Auditor.”

SEC. 2.

 Section 8543.1 of the Government Code is amended to read:

8543.1.
 The duties of the California State Auditor’s Office  Bureau of State Audits and Evaluations  are to examine and report annually upon the financial statements prepared by the executive branch of the state and  state,  to perform other related assignments, including performance audits, that are mandated by statute.  statute, and to make recommendations to the Governor and the Legislature for improving the effectiveness and efficiency of state agencies and programs.  For the purposes of this chapter “office” “bureau”  means the “California State Auditor’s Office,”  “Bureau of State Audits and Evaluations,”  unless the context clearly requires otherwise.

SEC. 3.

 Section 8544.5 of the Government Code is amended to read:

8544.5.
 (a) There is hereby established in the State Treasury the State Audit and Evaluation Fund, to replace the State Audit  Fund. Notwithstanding Section 13340, the State Audit and Evaluation  Fund is continuously appropriated for the expenses of the California  State Auditor. There shall be appropriated annually in the Budget Act to the State Audit and Evaluation  Fund, from the General Fund and the Central Service Cost Recovery  Fund, the amount necessary to reimburse the State Audit and Evaluation  Fund for the cost of audits and any other duties  to be performed that are not directly reimbursed under subdivision (c), including for the cost of any other duties imposed on the office by statute. “Cost of audits or any other duties”  (c). “Cost of audits”  means all direct and indirect costs of conducting the audits or other duties,  and any other related  expenses incurred by the California  State Auditor in fulfilling his or her statutory responsibilities.
(b) With regard to the funds appropriated pursuant to subdivision (a), upon  Upon  certification by the California  State Auditor of estimated costs on a monthly basis, the Controller shall transfer the amount thus certified from the General Fund or the Central Service Cost Recovery Fund, as applicable,  to the State Audit and Evaluation  Fund. The Controller shall thereafter issue warrants drawn against the State Audit and Evaluation  Fund upon receipt of claims certified by the California  State Auditor.
(c) To ensure appropriate reimbursement from federal and special funds for the costs of the duties performed pursuant to Section 8546.3, the California  State Auditor may directly bill state agencies for the costs incurred, subject to the approval of the Director of Finance. incurred. 
(d) To ensure adequate oversight of the operations of the office, bureau,  the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy shall annually obtain the services of an independent public accountant to audit the State Audit and Evaluation  Fund and the operation of the office bureau  to ensure assure  compliance with state law, including Section 8546. The results of this audit shall be submitted to the commission and shall be a public record.
(e) To ensure that audits of the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy are conducted in conformity with government auditing standards, any audit of the commission that is required or permitted by law shall be conducted by the independent public accountant selected pursuant to subdivision (d).

SEC. 4.

 Section 8546 of the Government Code is amended to read:

8546.
 It is the intent of the Legislature that the California State Auditor’s Office  Bureau of State Audits and Evaluations  have the independence necessary to conduct all of its audits in conformity with “Government Auditing Standards” published by the Comptroller General of the United States and the standards published by the American Institute of Certified Public Accountants, free from influence of existing state control agencies that could be the subject of audits conducted by the office. bureau.  Therefore, all of the following exclusions apply to the office:
(a) Notwithstanding Section 19790, the California State  Sections 19790, 19792, 19792.5, 19794, 19795, 19798, and 19798.5 do not apply to the Bureau of State Audits. The State  Auditor shall establish an equal employment opportunity program that shall meet the criteria and objectives established by Section 19797 and by  the State Personnel Board. The California State Auditor  Board and  shall report annually to the State Personnel Board and the commission regarding the program. commission. 
(b) Notwithstanding Section 12470, the California  State Auditor shall be  is  responsible for maintaining its payroll system. In lieu of audits of the uniform payroll system performed by the Controller or any other department, the office shall contract pursuant to subdivision (e) of Section 8544.5 for an annual audit of its payroll and financial operations by an independent public accountant.
(c) Notwithstanding Section 13292, the California  The  State Auditor is delegated the authority to establish and administer the fiscal and administrative policies of the office bureau  in conformity with the State Administrative Manual without oversight by the Department of Finance, the Department of Information Technology,  or any other state agency.
(d) Notwithstanding Section 11032, the California  State Auditor may approve actual and necessary traveling expenses for travel outside the state for officers and employees of the office. bureau. 
(e) Notwithstanding Section 11033, the California  State Auditor or officers and employees of the office bureau  may be absent from the state on business of the state upon approval of the California  State Auditor or Chief Deputy California  State Auditor.
(f) Sections 11040, 11042, and 11043 shall do  not apply to the California State Auditor’s Office. The California  Bureau of State Audits. The  State Auditor may employ legal counsel under those terms that he or she deems necessary to conduct the legal business of, or render legal counsel to, the California  State Auditor.
(g) The provisions and definitions of Article 2 (commencing with Section 11342.510) of Chapter 3.5 of Division 3 of Title 2  shall not be construed to include the California State Auditor’s Office. The California  Bureau of State Audits and Evaluations. The  State Auditor may adopt regulations necessary for the operation of the office bureau  pursuant to the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Division 3),  3 of Title 2),  but these regulations shall not be subject to the review or approval of the Office of Administrative Law.
(h) The California  State Auditor shall be  is  exempt from all contract requirements of the Public Contract Code that require oversight, review, or approval by the Department of General Services or any other state agency. The California  State Auditor may contract on behalf of the State of California for goods and services that he or she deems necessary for the furtherance of the purposes of the office. bureau. 
(i) (1) Subject to Article VII of the California Constitution, the California  State Auditor is delegated the authority to establish and administer the personnel policies and practices of the California State Auditor’s Office  Bureau of State Audits and Evaluations  in conformity with Part 2.6 (commencing with Section 19815) of Division 5 of Title 2 without oversight or approval by the Department of Human Resources. Personnel Administration. 
(2) At the election of the California  State Auditor, officers and employees of the office bureau  may participate in benefits programs administered by the Department of Human Resources Personnel Administration  subject to the same conditions for participation that apply to civil service employees in other state agencies. For the purposes of benefits programs administration only, the California  State Auditor is subject to the determinations of the department. The California State Auditor’s Office  Bureau of State Audits and Evaluations  shall reimburse the Department of Human Resources Personnel Administration  for the normal administrative costs incurred by the Department of Human Resources Personnel Administration  and for any extraordinary costs resulting from the inclusion of the office bureau  employees in these state benefit programs.

SEC. 5.

 Section 8546.4 of the Government Code is amended to read:

8546.4.
 (a) The California  State Auditor shall annually issue an auditor’s report based upon the general purpose financial statements included in the Controller’s annual report that is submitted to the Governor pursuant to Section 12460. The report shall be in accordance with the “Government Auditing Standards” published by the Comptroller General of the United States and the standards published by the American Institute of Certified Public Accountants.
(b) The California  State Auditor, in the performance of this annual audit and any other audit or investigation undertaken by the office,  audit,  may examine all the financial records, accounts, and documents of any state agency as defined by Section 11000.
(c) The California  State Auditor shall rely, to the maximum extent possible, upon the audits performed by the Controller, the Department of Finance, internal auditors of state agencies, and independent contractors. The Director of Finance  State Auditor  shall be responsible for coordinating and providing technical assistance to the internal auditors of state agencies. Nothing in this article is intended to reduce or restrict the operations of internal auditors whose review of internal financial and administrative controls of state agencies is essential for coordinated audits.
(d) State agencies receiving federal funds shall be primarily responsible for arranging for federally required financial and compliance audits. State agencies shall immediately notify the Director of Finance, the California State Auditor, State Auditor  and the Controller when they are required to obtain federally required financial and compliance audits. The Director of Finance, the California State Auditor, State Auditor  and the Controller shall coordinate the procurement by state agencies, including any negotiations with cognizant federal agencies, of federally required financial and compliance audits.
(e) To prevent duplication of the annual audit conducted by the California  State Auditor pursuant to subdivision (a), except for those state agencies that are required by state law to obtain an annual audit, no state agency shall enter into a contract for a financial or compliance audit without prior written approval of the Controller and the Director of Finance,  Controller,  which approval shall state the reason for the contract and shall be filed with the California  State Auditor at least 30 days prior to the award of the contract. No funds appropriated by the Legislature shall be encumbered for the purpose of funding any contract for an audit that duplicates the annual financial audit conducted by the California  State Auditor.
(f) Notwithstanding any other provision of this article, nothing in this section shall be construed to limit, restrict, or otherwise infringe upon the constitutional or statutory authority of the Controller to superintend the fiscal concerns of the state.
(g) Except as provided in subdivision (b), notwithstanding  Notwithstanding  any other provision of this article, nothing in this section shall be construed to limit, restrict, or otherwise infringe upon the statutory authority of the Director of Finance to supervise the financial and business policies of the state. state, except that the auditing and evaluation functions previously assigned to the Department of Finance are assigned to the bureau. 

SEC. 6.

 Section 8546.8 of the Government Code is amended to read:

8546.8.
 Unless the contrary is stated or clearly appears from the context, any reference to the Auditor General or to  the Office of the Auditor General or the Bureau of State Audits  in any statute or contract in effect on the effective date of this chapter, other than Chapter 4 (commencing with Section 10500), with respect to the performance of audits, shall be construed to refer to the California  State Auditor and the California State Auditor’s Office,  Bureau of State Audits and Evaluations,  respectively.

SEC. 7.

 Section 8546.10 is added to the Government Code, to read:

8546.10.
 (a) The State Auditor shall evaluate each state agency, as defined in subdivision (a) of Section 11000, on a random basis, with each program having a budget in excess of one million dollars ($1,000,000) being evaluated not less than once every five years, to identify any inefficiencies or failures in the program, the ability of agency managers to effectively and efficiently administer the agency, and the effectiveness of the agency. The results of each evaluation shall be provided to the Governor and the Legislature, as well as to the direct supervisor of each manager.
(b) If an agency manager fails to use state resources efficiently and effectively or fails to ensure that the agency meets its goals, the State Auditor, working cooperatively with the direct supervisor of the manager, shall establish performance goals and identify appropriate actions to be taken to correct these failures within a reasonable and defined period of time.
(c) If the failures are not corrected or performance goals are not achieved within the time specified, the State Auditor shall recommend to the Governor and the Legislature whether the manager should be removed or the program terminated, or both.

SEC. 8.

 Section 8546.11 is added to the Government Code, to read:

8546.11.
 The Bureau of State Audits and Evaluations may require financial and statistical reports, duly verified and covering the period of each fiscal year, from all agencies of the state included within the provisions of Section 8546.22.
The reports shall be made upon blank forms prescribed and furnished by the bureau, and mailed to each agency not less than 60 days before the time the reports are required to be filed with the bureau.

SEC. 9.

 Section 8546.12 is added to the Government Code, to read:

8546.12.
 When necessary, the bureau may require special reports from any state or public agency. These special reports shall be filed with the bureau without delay.

SEC. 10.

 Section 8546.13 is added to the Government Code, to read:

8546.13.
 (a) No later than October 31 of each year, each state agency listed in subdivision (d) shall submit a report to the bureau that identifies and describes the status of that agency’s liquidated and delinquent accounts as of the end of the previous fiscal year and efforts made by that agency to collect these accounts during that previous fiscal year. The report shall identify receivables that are valid and collectible. For this purpose, “valid” means due and payable and for which there is no known disagreement about the amount of the claim at the time it was established, and “collectible” means due and payable and for which collection has not been deferred by any other provision of law. The report shall be in a form prescribed by the State Auditor and shall include a summary of the total of all of the following:
(1) The total number and aggregate dollar amount of liquidated and delinquent accounts.
(2) Liquidated and delinquent accounts, by total number and aggregate dollar amount, that were not included in the annual report for the immediately preceding fiscal year.
(3) Aggregate beginning balance and aggregate ending balance of all liquidated accounts and of all delinquent accounts.
(4) Aggregate dollar amount of moneys paid on liquidated and delinquent accounts.
(5) Total amount and total number of liquidated and delinquent accounts that have been discharged from accountability.
(6) Total dollar amount of liquidated and delinquent accounts turned over to private collection agencies and total amount collected by those agencies for the fiscal year that is the subject of the report.
(7) An aging of the liquidated and delinquent accounts included in the report, which, at a minimum, shall identify the total number and aggregate dollar amount of liquidated and delinquent accounts that are within the following time periods after the obligation was first due to a state agency:
(A) From 180 to 365 days.
(B) From 366 to 545 days.
(C) More than 545 days.
(b) No later than February 28 of each fiscal year, the State Auditor shall submit to the Legislature a report on the status of liquidated and delinquent accounts of state agencies, which shall be based on the reports submitted by state agencies pursuant to subdivision (a).
(c) As used in this section, “liquidated and delinquent accounts” means any loans, accounts receivable, fines, assessments, penalties, or other monetary obligation owed to a state agency that is unpaid for 180 or more days after the obligation was first due to that state agency.
(d) Subdivision (a) shall apply to all of the following state agencies:
(1) State Board of Equalization.
(2) Franchise Tax Board.
(3) State Lands Commission.
(4) Department of General Services.
(5) Department of Motor Vehicles.
(6) Department of Real Estate.
(7) Department of Corporations.
(e) A state agency shall not enter into a contract with a private nongovernmental collection agency to perform the functions required of a state agency under this section.
(f) The agencies listed in subdivision (d) and the bureau shall use existing resources to comply with the requirements of this section, which shall apply only if sufficient resources are available for this purpose.
(g) This section shall become inoperative on July 1, 2010, and, as of January 1, 2011, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2011, deletes or extends the dates on which it becomes inoperative and is repealed.

SEC. 11.

 Section 8546.14 is added to the Government Code, to read:

8546.14.
 The bureau may examine all records, files, documents, accounts and all financial affairs of every agency mentioned in Section 8546.22. It may enter any public office or institution in this state and examine any records, files, books, papers or documents contained therein or belonging thereto for the purpose of making the examination, and shall have access, in the presence of the custodian or his or her deputy, to the cash drawers and cash in the custody of the agency.
During business hours the bureau may examine the public accounts in any depository that has public funds in its custody

SEC. 12.

 Section 8546.15 is added to the Government Code, to read:

8546.15.
 The Bureau of State Audits and Evaluations shall examine the books of the several state agencies as often as the State Auditor deems necessary, taking into consideration the work done by other auditors, including the internal auditors of the various state agencies, so that duplication of auditing effort may be minimized.

SEC. 13.

 Section 8546.16 is added to the Government Code, to read:

8546.16.
 Every state agency shall permit examination and upon demand shall produce without unnecessary delay all books, contracts, and papers in its offices, and furnish information touching books, papers, contracts, and other matters pertaining to the agency.

SEC. 14.

 Section 8546.17 is added to the Government Code, to read:

8546.17.
 The State Auditor shall supply to the Controller a certified copy of each periodical audit of the accounts of any state agency. Additionally, if the audit includes a review of federal funds, the State Auditor shall also report the results of the audit simultaneously to the Legislature and the affected state agency.

SEC. 15.

 Section 8546.18 is added to the Government Code, to read:

8546.18.
 The money in the State Treasury shall be counted by the State Auditor at least twice each year, without giving the Treasurer any previous notice of the day or hour of counting.
At any counting the State Auditor may place any sum in bags or boxes and mark and seal them with a seal adopted and kept by him or her. At any subsequent counting he or she may count each sealed bag or box separately and credit at the value stamped thereon the contents of the bags or boxes as part of the money counted without making a detailed count of the contents.

SEC. 16.

 Section 8546.19 is added to the Government Code, to read:

8546.19.
 The State Auditor shall count as cash all evidence of money belonging to the state upon deposit outside the State Treasury that may be held by the Treasurer in accordance with law and shall determine for himself or herself whether that evidence is sufficient according to law.

SEC. 17.

 Section 8546.20 is added to the Government Code, to read:

8546.20.
 After each count of money, the State Auditor shall make and file with the Secretary of State and cause to be published in some newspaper in the City of Sacramento, an affidavit showing the following information:
(a) The amount of money or credit that should be in the State Treasury.
(b) The amount and kind of money or credit actually in the State Treasury.

SEC. 18.

 Section 8546.21 is added to the Government Code, to read:

8546.21.
 Securities held in the State Treasury or other depositories for safekeeping purposes shall be counted or confirmed, at least annually, by the State Auditor. After each count or confirmation of securities, the State Auditor shall issue his or her report on the accountability of securities.

SEC. 19.

 Section 8546.22 is added to the Government Code, to read:

8546.22.
 (a) The bureau shall devise, install, supervise, and, at its discretion, revise and modify, a modern and complete accounting system for each agency of the state permitted or charged by law with the handling of public money or its equivalent, to the end that all revenues, expenditures, receipts, disbursements, resources, obligations, and property of the state be properly, accurately, and systematically accounted for and that there shall be obtained accurate and comparable records, reports, and statements of all the financial affairs of the state.
(b) This system shall be of a nature so as to permit a comparison of budgeted expenditures, actual expenditures, and encumbrances and payables, as defined by the California Fiscal Advisory Board, and estimated revenue to actual revenue, which is compatible with a budget coding system, developed by the bureau. In addition, the system shall provide for a federal revenue accounting system with cross-references of federal fund sources to state activities.
(c) This system shall include a cost accounting system that accounts for expenditures by line item, governmental unit, and fund source. The system shall also be capable of performing program cost accounting as required. The system and the accounts maintained by the several agencies of the state shall be coordinated with the central accounts maintained by the Controller, and shall provide the Controller with all information necessary to the maintenance by the Controller of a comprehensive system of central accounts for the entire state government. The Controller or the State Auditor may consider and adopt any rule or regulation required to implement this section.
(d) The requirements of this section apply to departments commencing with the second fiscal year following the fiscal year for which funds are appropriated by the Legislature to implement this section. The bureau shall adopt guidelines and instructions to implement the application of this section.

SEC. 20.

 Section 8546.23 is added to the Government Code, to read:

8546.23.
 For the purpose of administering Section 8546.22, the State Auditor may appoint and prescribe the duties and fix the salaries of as many skillful accountants or assistants as he or she deems necessary. Each appointee is a civil executive officer.
Before entering upon the discharge of the duties of his or her office, each appointee shall execute to the state an official bond conditioned upon the faithful performance of his or her duties in a penal sum prescribed by the State Auditor of not less than five thousand dollars ($5,000).

SEC. 21.

 Section 8546.24 is added to the Government Code, to read:

8546.24.
 (a) The accounting system devised as provided in Section 8546.22 shall provide, with respect to the General Fund and other governmental funds, for the following:
(1) The accrual of expenditures as of the end of each fiscal year on the basis of payables incurred, excluding accrued interest on general obligation bonded indebtedness.
(2) The accrual of revenues at the end of the fiscal year, if the underlying transaction has occurred as of the last day of the fiscal year and the due date for the tax is within two months of the end of the period.
(b) Cash in agency trust accounts within the centralized State Treasury system which is in transit to the State Treasury, accrued interest receivable, and accounts receivable shall be accrued as of the end of each fiscal year.
(c) For the purposes of financial reporting, the following applies:
(1) A payable exists when goods or services have been delivered and the state is required to pay for those goods or services, and an encumbrance exists when a valid obligation against an appropriation has been created.
(2) All funds appropriated shall be identified as either expended, payable, encumbered (exclusive of payables), or unencumbered, as further defined by the California Fiscal Advisory Board, and the total of these shall equal the total appropriation

SEC. 22.

 Article 2 (commencing with Section 10520) of Chapter 4 of Part 2 of Division 2 of Title 2 of the Government Code is repealed.

SEC. 23.

 Section 12430 of the Government Code is amended to read:

12430.
 Annually, the Controller and the State Auditor shall each prepare a plan to meet their audit responsibilities. With respect to audits to fulfill the requirements necessary for the receipt of federal funds, the State Auditor shall be primarily responsible for financial audits, the Controller shall be primarily responsible for compliance audits, and the State Auditor shall be primarily responsible for coordinating state agency internal audits and determining when agencies are required to obtain federally mandated audits. Upon completion of these audit plans, the Controller and the State Auditor shall meet to review and discuss the plans with the purpose of coordinating their audit efforts to avoid unnecessary duplication and negotiation with federal agencies regarding federally mandated audits.
Subsequent to their review of the audit plans and negotiations with federal agencies, if the Controller or the State Auditor determines that the proposed audit plan of the other does not fulfill all audit requirements necessary for the receipt of federal funds, they may expand the scope of their audit of state agencies to meet the additional federal audit requirements. The financial audit report issued by the State Auditor and the compliance audit report issued by the Controller are intended to fulfill federally mandated audit requirements. These audit reports shall be performed in accordance with the “Standards for Audits of Governmental Organizations, Programs, Activities and Functions,” published by the Comptroller General of the United States, and the standards published by the American Institute of Certified Public Accountants.
Nothing in this section shall be construed to limit, restrict, or otherwise infringe upon the duty of the State Auditor to conduct annual financial audits pursuant to Section 8546.1 or to limit, restrict, or otherwise infringe upon the authority of the Joint Legislative Audit Committee to direct the State Auditor to conduct any audit of state government pursuant to subdivision (b) of Section 8546.1.

SEC. 24.

 Section 13291 of the Government Code is repealed.

13291.
 The department may require financial and statistical reports, duly verified and covering the period of each fiscal year, from all agencies of the state included within the provisions of Section 13300.
Such reports shall be made upon blank forms prescribed and furnished by the department, and mailed to each such agency not less than 60 days before the time the reports are required to be filed with the department.

SEC. 25.

 Section 13292 of the Government Code is repealed.

13292.
 When necessary, the department may require special reports from any such State or public agency. These special reports shall be filed with the department without delay.

SEC. 26.

 Section 13292.5 of the Government Code is repealed.

SEC. 27.

 Section 13293 of the Government Code is repealed.

13293.
 The department shall have access and authority to examine all records, files, documents, accounts, reports, correspondence, and all financial affairs of every agency of the state permitted or charged by law with the handling of public money or its equivalent. It may enter any public office or institution in this state and access, examine, and reproduce any records, files, books, papers, accounts, reports, correspondence, or documents contained therein or belonging thereto for the purpose of making such examination, and shall have access, in the presence of the custodian or his deputy, to the cash drawers and cash in the custody of such agency.
During business hours the department may examine the public accounts in any depository which has public funds in its custody.

SEC. 28.

 Section 13294 of the Government Code is repealed.

13294.
 The Department of Finance shall examine the books of the several state agencies as often as the director deems necessary, taking into consideration the work done by other auditors, including the internal auditors of the various state agencies, so that duplication of auditing effort may be minimized.

SEC. 29.

 Section 13295 of the Government Code is repealed.

13295.
 Every State agency shall permit such examination and experting and upon demand shall produce without unnecessary delay all books, contracts, and papers in its offices, and furnish information touching books, papers, contracts, and other matters pertaining to the agency.

SEC. 30.

 Section 13296 of the Government Code is repealed.

13296.
 The director shall supply to the Controller a certified copy of each periodical audit of the accounts of any state agency. Additionally, if the audit includes a review of federal funds, the director shall also report the results of the audit simultaneously to the Legislature and the affected state agency.

SEC. 31.

 Section 13297 of the Government Code is repealed.

13297.
 The money in the Treasury shall be counted by the State Auditor at least twice each year, without giving the Treasurer any previous notice of the day or hour of counting.
At any counting the State Auditor may place any sum in bags or boxes and mark and seal them with a seal adopted and kept by him or her. At any subsequent counting he or she may count each sealed bag or box separately and credit at the value stamped thereon the contents of the bags or boxes as part of the money counted without making a detailed count of the contents.

SEC. 32.

 Section 13298 of the Government Code is repealed.

13298.
 The State Auditor shall count as cash all evidence of money belonging to the state upon deposit outside the treasury that may be held by the Treasurer in accordance with law and shall determine for himself or herself whether that evidence is sufficient according to law.

SEC. 33.

 Section 13299 of the Government Code is repealed.

13299.
 After each count of money the State Auditor shall make and file with the Secretary of State and cause to be published in some newspaper in the City of Sacramento, an affidavit showing:
(a) The amount of money or credit that should be in the treasury.
(b) The amount and kind of money or credit actually in the treasury.

SEC. 34.

 Section 13299.1 of the Government Code is repealed.

13299.1.
 Securities held in the treasury or other depositories for safekeeping purposes shall be counted or confirmed, at least annually, by the State Auditor. After each count or confirmation of securities, the State Auditor shall issue his or her report on the accountability of securities.

SEC. 35.

 Section 13300 of the Government Code is repealed.

13300.
 (a) The department shall devise, install, supervise, and, at its discretion, revise and modify, a modern and complete accounting system and policies for each agency of the state permitted or charged by law with the handling of public money or its equivalent, to the end that all revenues, expenditures, receipts, disbursements, resources, obligations, and property of the state be properly, accurately, and systematically accounted for and that there shall be obtained accurate and comparable records, reports, and statements of all the financial affairs of the state.
(b) This system shall permit a comparison of budgeted expenditures, actual expenditures, encumbrances and payables, and estimated revenue to actual revenue that is compatible with a budget coding system developed by the department. In addition, the system shall provide for a federal revenue accounting system with cross-references of federal fund sources to state activities.
(c) This system shall include a cost accounting system that accounts for expenditures by line item, governmental unit, and fund source. The system shall also be capable of performing program cost accounting as required. The system and the accounts maintained by all state departments and agencies shall be coordinated with the central accounts maintained by the Controller, and shall provide the Controller with all information necessary to the maintenance by the Controller of a comprehensive system of central accounts for the entire state government.

SEC. 36.

 Section 13301 of the Government Code is repealed.

13301.
 For the purpose of administering Section 13300 of this code the director may appoint and prescribe the duties and fix the salaries of such number of skillful accountants or assistants as he deems necessary. Each such appointee is a civil executive officer.
Before entering upon the discharge of the duties of his office each such appointee shall execute to the state an official bond conditioned upon the faithful performance of his duties in such penal sum as the director prescribes, but not less than five thousand dollars ($5,000).

SEC. 37.

 Section 13302 of the Government Code is repealed.

13302.
 The accounting system devised as provided in Section 13300 shall provide, with respect to the General Fund and other governmental funds, for all of the following:
(a) The accrual of expenditures as of the end of each fiscal year on the basis of payables incurred, excluding accrued interest on general obligation bonded indebtedness.
(b) (1) The accrual of revenues at the end of the fiscal year if the underlying transaction has occurred as of the last day of the fiscal year, the amount is measurable, and the actual collection will occur either during the current period or after the end of the current period but in time to pay current yearend liabilities.
(2) Cash in agency trust accounts within the centralized State Treasury system that is in transit to the State Treasury, accrued interest receivable, and accounts receivable shall be accrued as of the end of each fiscal year.
(c) For the purposes of financial reporting, both of the following shall apply:
(1) A payable exists when goods or services have been delivered and the state is required to pay for those goods or services, and an encumbrance exists when a valid obligation against an appropriation has been created.
(2) All funds appropriated shall be identified as either expended, payable, encumbered (exclusive of payables), or unencumbered, as further defined by the California Fiscal Advisory Board, and the total of these shall equal the total appropriation.
(d) (1) Notwithstanding any other law, and except as provided in paragraph (2), payments to employees made through the uniform state payroll system, as described in Section 12472.5, and with an issue date each year of July 1, shall be considered payables incurred in the fiscal year in which the payment is issue dated.
(2) Notwithstanding paragraph (1), for purposes of calculating maintenance of effort expenditures under Section 8 of Article XVI of the California Constitution, or for purposes of calculating funds used by a program during the fiscal year, payments made on July 1 may be counted towards the prior fiscal year.
SEC. 38.
 The Legislature finds and declares that the Office of State Audits and Evaluations and the Performance Review Unit in the Department of Finance and the Bureau of State Audits have statutory duties that are overlapping and duplicative. By this act, the Legislature intends to transfer the duties, personnel, and funding for the Office of State Audits and Evaluations and the Performance Review Unit to the Bureau of State Audits and to rename the bureau, the Bureau of State Audits and Evaluations. Any statutory duties previously assigned to either the Office of State Audits and Evaluations and the Performance Review Unit in the Department of Finance or to the Bureau of State Audits are hereby reassigned to the Bureau of State Audits and Evaluations.
SEC. 39.
 This act shall become operative only if Senate Constitutional Amendment 7 of the 2007–08 Regular Session is approved by the voters and, in that case, shall take effect on the day after the election in which the voters approve that measure.