Today's Law As Amended


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AB-117 State government: financial and administrative accountability. (2013-2014)



As Amends the Law Today
As Amends the Law on Nov 25, 2013


SECTION 1.

 Section 13401 of the Government Code is amended to read:

13401.
 (a) The Legislature hereby  finds all of  the following:
(1) Active oversight processes, including regular and ongoing monitoring processes, for the prevention and early detection of fraud and errors in program administration are vital to public confidence and the appropriate and efficient use of public resources.
(2) Fraud and errors in state programs are more likely to occur from a lack of effective systems of internal accounting and administrative  control in the  state agencies when active monitoring measures are not maintained to ensure that accounting and administrative  controls are functioning properly.
(3) Effective systems of internal accounting and administrative  control provide the basic foundation upon which a structure of public accountability must be built.
(4) Effective systems of internal accounting and administrative  control are necessary to ensure that state resources  assets and funds  are adequately safeguarded, monitored, and administered. as well as to produce reliable financial information for the agency. 
(5) Systems of internal accounting and administrative  control are necessarily dynamic and must be routinely monitored, continuously evaluated, and, where necessary, improved.
(6) Reports regarding the continuing adequacy of the systems of internal accounting and administrative  control of each state agency are necessary to enable the executive branch, the Legislature, and the public to evaluate each state  the  agency’s performance of its public responsibilities and accountability.
(b) The Legislature declares all of the following  it  to be the policies policy  of the state: State of California that: 
(1) Each state agency must maintain effective systems of internal accounting and administrative  control as an integral part of its management practices.
(2) The systems of internal accounting and administrative  control of each state agency shall be evaluated on an ongoing basis through regular and ongoing monitoring processes and, when detected, weaknesses must be promptly corrected.
(3) All levels of management of the  state agencies must be involved in assessing and strengthening the systems of internal accounting and administrative  control to minimize fraud, errors, abuse, and waste of government funds. Monitoring  funds, however, key monitoring  processes should be designed structured  to ensure the independence and  objectivity of persons tasked with monitoring. Objectivity means allowing those tasked with monitoring to maintain integrity, impartiality, a questioning state of mind, and the ability to accurately and fairly assess circumstances and draw sound conclusions. such monitoring. 
(4) It shall be the responsibility of the Department of Finance, in consultation with the Controller and the California  State Auditor, to establish guidelines for how the independence and  objectivity of the persons tasked with monitoring processes are to be maintained. Those Such  guidelines should include establishing monitor training programs, identification of appropriate chain-of-command reporting relationships, and recommended best practices for professional development and the conduct of objective monitoring, including, but not limited to,  independent monitoring, including  practices for the regular dissemination of strategies and lessons learned from successful efforts to strengthen state administration via interagency cooperation.

SEC. 2.

 Section 13403 of the Government Code is amended to read:

13403.
 (a) As used in this chapter, “internal control” means a process, including a continuous built-in component of operations, effected by a state agency’s oversight body, management, and other personnel that provide reasonable assurance that the state agency’s objectives will be achieved. The following five components of internal control, if effectively designed, implemented, and operated in an integrated manner, constitute an effective internal control system:
(1) “Control environment” means the foundation for an internal control system that provides the discipline and structure to help a state agency achieve its objectives.
(2) “Risk assessment” means an assessment of the risks facing the state agency as it seeks to achieve its objectives and provides the basis for developing appropriate risk responses.
(3) “Control activities” means the actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system.
(4) “Information and communication” means the quality of vital information used and communicated to achieve the state agency’s objectives.
(5) “Monitoring” means the activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
(b) (a)  Internal accounting and administrative controls, if maintained and reinforced through effective monitoring systems and processes, are the methods through which reasonable assurances can be given that measures adopted by state agency heads to safeguard assets, check the accuracy and reliability of accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies are being followed.  The elements of a satisfactory system of internal accounting and administrative  control, shall include, but are not limited to, the following:
(1) A plan of organization that provides segregation of duties appropriate for proper safeguarding of state agency assets.
(2) A plan that limits access to state agency assets to authorized personnel who require these assets in the performance of their assigned duties.
(3) A system of policies authorization  and recordkeeping  procedures adequate to provide compliance with applicable laws, criteria, standards, and other requirements. effective accounting control over assets, liabilities, revenues, and expenditures. 
(4) An established system of practices to be followed in performance of duties and functions in each of the state agencies.
(5) Personnel of a quality commensurate with their responsibilities.
(6) An effective system of internal review.
(7) A technology infrastructure to support the completeness, accuracy, and validity of information processed.
(c) (b)  Agency  State agency  heads shall follow the standards established by this section of internal  these standards of internal accounting and administrative  control in carrying out the requirements of Section 13402.
(d) (c)  Monitoring systems and processes are vital to the following:
(1) Ensuring that routine application of internal controls do not diminish their efficacy over time.
(2) Providing timely notice and opportunity for correction of emerging weaknesses with established internal controls.
(3) Facilitating public resources and other decisions by ensuring availability of accurate and reliable information.
(4) Facilitating production of timely and accurate financial reports, and the submittal, when appropriate, of recommendations for how greater efficiencies in support of the state  agency’s mission may be attainable via the consolidation or restructuring of potentially duplicative or inefficient processes, programs, or practices where it appears such changes may be achieved without undermining program effectiveness, quality, or customer satisfaction.
(e) (d)  It shall be the responsibility of the Department of Finance, in consultation with the Controller and the California  State Auditor, to establish guidelines for the management of  to  state agencies management  on how the role of monitoring  independent monitor  should be staffed, structured, and its reporting function standardized so it fits within an efficient and normalized state  agency administrative framework.
(f) (e)  Agency  State agency  heads shall implement systems and processes to ensure the independence and  objectivity of the monitoring of internal accounting and administrative  control as an ongoing activity in carrying out the requirements of Section 13402.