Bill Text: CA AB941 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Controller: reports.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2014-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB941 Detail]

Download: California-2013-AB941-Introduced.html

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BILL NUMBER: AB 941	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Rendon

                        FEBRUARY 22, 2013

   An act to amend Sections 12463, 12464, 53890, and 53895 of, to add
Article 6 (commencing with Section 12486) to Chapter 5 of Part 2 of
Division 3 of Title 2 of, and to repeal Sections 53895.5 and 53895.7
of, the Government Code, relating to state and local government.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 941, as introduced, Rendon. Controller: reports.
   (1) Existing law requires the Controller to annually compile and
publish reports of the financial transactions of each county, city,
and school district within the state, together with other matters he
or she deems of public interest.
   This bill would change the definition of a special district
subject to the reporting requirements of the Controller to include a
public entity, agency, or board provided for by a joint powers
agreement that is separate from the parties to the agreement and is
responsible for the administration of the agreement.
   (2) Existing law provides that if the county, city, or district
reports are not made in a specified manner, or there is reason to
believe that the report is false, the Controller is required to
appoint a qualified accountant to make an investigation and to obtain
the information required for the annual report of financial
transactions. Existing law provides that if a similar investigation
is made of any county, city, or district for 2 successive years, then
a copy of the results of those investigations shall be transmitted
to the grand jury of the county investigated or in which the local
agency investigated is situated. Existing law requires any costs
incurred by the Controller in carrying out those audits to be paid by
the local agency.
   This bill would also authorize the Controller to perform an audit
or investigation of any county, city, or special district, if the
Controller has made findings, supported by documentation, that the
local agency is not complying with the financial requirements in
state law, state grant agreements, local charters, or local
ordinances and require the Controller to prepare a report of the
results of the audit or investigation and to file a copy with the
local legislative body, as specified. This bill would require that if
the results of those audits determine that the financial report
filed by the local agency did not contain false, incomplete, or
incorrect information, then the Controller shall waive the costs of
the investigation, and would authorize the Controller to establish a
payment program, as specified, to assist a local agency to pay for
any costs that cannot be waived.
   (3) Existing law provides that an officer of a local agency who
fails or refuses to make and file his or her financial report within
20 days after receipt of a written notice of the failure from the
Controller forfeits to the state a specified amount depending on the
amount of total revenue of that local agency. Existing law raises
these amounts in the case of a community redevelopment agency and a
joint powers agency that issues conduit revenue bonds in the 2nd and
3rd consecutive year.
   This bill would raise the forfeiture amounts for all local
agencies, as specified. The bill would double these fines if the
agency fails to submit the report to the Controller for 2 consecutive
years, and would triple the fines if the agency fails to submit the
report to the Controller for 3 consecutive years. This bill would
remove other specified provisions that provide penalties for an
agency that fails to submit a report.
   This bill would also make technical, nonsubstantive changes and
remove references to redevelopment agencies.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 12463 of the Government Code is amended to
read:
   12463.  (a) The Controller shall compile and publish reports of
the financial transactions of each county, city, and special
district, respectively, within this state, together with any other
matter he or she deems of public interest. The reports shall include
the appropriations limits and the total annual appropriations subject
to limitation of the counties, cities, and special districts. The
reports to the Controller shall be made in the time, form, and manner
prescribed by the Controller.
   (b) Effective January 1, 2005, the Controller shall compile and
publish reports of the financial transactions of each county, city,
and special district pursuant to subdivision (a) on or before August
1, September 1, and October 1 respectively, of each year following
the end of the annual reporting period. The Controller shall make
data collected pursuant to this subdivision available upon request to
the Legislature and its agents, on or before April 1 of each year.
   (c) The Controller shall annually publish, on the Internet Web
site of the Controller, reports of the financial transactions of each
school district within this state, together with any other matter he
or she deems of public interest. The reports shall include the
appropriations limit and the total annual appropriations subject to
limitation of the school district. The reports to the Controller
shall be made in the time, form, and manner prescribed by the
Controller.
   (d) As used in this section, the following terms have the
following meanings:
   (1) "School district" means a school district as defined in
Section 80 of the Education Code.
   (2) "Special district" means any of the following:
   (A) A special district as defined in Section 95 of the Revenue and
Taxation Code.
   (B) A  public entity, agency,  commission  , or board
 provided for by a joint powers agreement pursuant to Chapter 5
(commencing with Section 6500) of Division 7 of Title 1  that is
separate from the parties to the agreement and is responsible for
the administration of the agreement  .
   (C) A nonprofit corporation that is any of the following:
   (i) Was formed in accordance with the provisions of a joint powers
agreement to carry out functions specified in the agreement.
   (ii) Issued bonds, the interest on which is exempt from federal
income taxes, for the purpose of purchasing land as a site for, or
purchasing or constructing, a building, stadium, or other facility,
that is subject to a lease or agreement with a local public entity.
   (iii) Is wholly owned by a public agency.
  SEC. 2.  Section 12464 of the Government Code is amended to read:
   12464.  (a) If the county, city, or  special  district
reports are not made in the time, form, and manner required or there
is reason to believe that a report is false, incomplete, or
incorrect, the Controller shall appoint a qualified accountant to
make an investigation and to obtain the information required. The
accountant appointed shall report to the Controller the results of
investigation, and a copy shall be filed with the legislative body of
the county, city, or  special  district, the accounts of
which were investigated. If a similar investigation has to be made of
the accounts of any county, city, or  special  district,
for two successive years, a certified copy of the results of the
investigation last made shall be transmitted to the grand jury of the
county that was investigated or in which the city or  special
 district investigated is situated, or, if the district is
situated in more than one county, in the county in which any portion
of the  special  district is situated. 
   (b) (1) If the Controller has made findings pursuant to
subdivision (c) that a county, city, or special district is not
complying with the financial requirements in state law, state grant
agreements, local charters, or local ordinances, he or she may audit
or investigate the issue if he or she determines that sufficient
funds exist within his or her budget to conduct the audit or
investigation.  
   (2) The Controller shall prepare a report of the results of the
audit or investigation that shall include detailed documentation of
the material basis for the findings included in the audit or
investigation. A copy of the report shall be filed with the
legislative body of the city, county, or special district subject to
the audit or investigation. A finding of illegal acts or fraud shall
be communicated to the appropriate authorities, including the county
grand jury.  
   (c) (1) Prior to an audit or investigation being conducted
pursuant to subdivision (b), the Controller, after consultation with
the local agency, shall make written findings that explain the legal
and factual basis supporting the decision to conduct the audit or
investigation and the Controller shall give the local agency a
reasonable opportunity to respond to these findings.  
   (2) (A) In cases in which the Controller seeks to audit or
investigate compliance with the financial requirements in local
charters or local ordinances, the Controller shall first share with
the local agency documentation of evidence relied upon in determining
the need for the audit or investigation and provide the local agency
the opportunity to conduct its own audit or investigation of the
matter in a reasonable period of time. If the local agency elects to
conduct an audit or investigation, the local agency shall provide the
results to the Controller promptly upon completion. If the
Controller subsequently proceeds with his or her own audit or
investigation, he or she shall make specific written findings
concerning the evidence relied upon in determining the need for the
audit or investigation and confirming that each issue to be audited
or investigated has not been or is not likely to be addressed by
local means, which may include, but are not limited to, a grand jury
or district attorney.  
   (B) The Controller shall not audit or investigate compliance with
the financial requirements in local charters or local ordinances if
the matter involves a pending policy or administrative decision, such
as adoption of a budget, negotiations of labor or other contracts,
or a pending decision on an unpaid claim. The Controller shall not
audit or investigate the matter until a final decision has been
adopted by the local agency.  
   (C) The Controller shall not audit or investigate compliance with
the financial requirements of local charters or local ordinances if
the matter is the subject of actual or completed litigation. 

   (3) For purposes of this subdivision, documentation means a
writing, photograph, photostat, email or facsimile transmission, or
any other means of recording upon a tangible thing in any form of
communication or representation, including letters, words, pictures,
sounds, or symbols, or combinations thereof, or a record thereby
created, regardless of the manner in which the record has been
stored.  
   (4) The Controller shall not initiate or conduct an audit or
investigation pursuant to subdivision (b) or (c) of a local agency
that falls within the date the local agency has initiated the neutral
evaluation process, pursuant to Article 5 (commencing with Section
53760) of Chapter 4 of Part 1 of Title 2, and the date that process
has been completed.  
   (b) 
    (d)     (1)    Any costs
incurred by the Controller pursuant to subdivision (a), including
contracts with, or employment of, certified public accountants or
public accountants, in compiling a financial report pursuant to
Section 12463  or 12463.3  shall be borne by the
county, city,  or special  district,  or
redevelopment agency,  and shall be a charge against any
unencumbered funds of the county, city,  or special 
district  , or redevelopment agency  . Any
forfeiture imposed by Section 53895  or 53895.5  may
be offset up to the total costs incurred by the Controller. Any
remaining balance shall be forfeited in accordance with Sections
53895 and 53895.5. Any costs incurred by the Controller in excess of
the forfeiture imposed shall be a charge against any unencumbered
funds of the county, city,  or special  district  ,
or redevelopment agency  . 
   (2) If an investigation conducted pursuant to subdivision (a)
determines that the financial report filed by the county, city, or
special district did not contain materially false, incomplete, or
incorrect information, the Controller shall waive the costs of the
investigation. The Controller may establish a payment program, with
interest, for up to five years to assist a local agency to pay for
the costs that cannot be waived. 
  SEC. 3.  Article 6 (commencing with Section 12486) is added to
Chapter 5 of Part 2 of Division 3 of Title 2 of the Government Code,
to read:

      Article 6.  Voluntary Local Agency Financial Review


   12486.  (a) At the written request of the governing body, chief
administrative officer, or chief executive of a local agency, the
Controller may convene a local agency financial review committee to
provide assistance to the local agency in reviewing and assessing its
financial condition and related internal controls to avert or manage
a serious financial problem.
   (b) The request shall include a description of the factors that
warrant the need for review and assessment.
   (c) The local agency shall reimburse the Controller for any costs
incurred by the Controller in conducting a review pursuant to this
section. The Controller may establish a payment program for up to
five years, with interest.
   (d) A local agency financial review committee shall be chaired by
the Controller and both state and local government representatives
selected by the Controller. The Controller shall allow at least two
local government representatives to serve on the committee, selected
as follows:
   (1) If the local agency is a city, representatives selected by the
League of California Cities.
   (2) If the local agency is a county, representatives selected by
the California State Association of Counties.
   (3) If the local agency is a special district, representatives
selected by the California Special Districts Association.
   (e) The Controller shall use the services of a consultant that has
extensive financial management and accounting experience with local
agencies in the state to assist the local agency financial review
committee in evaluating and assisting the local agency.
   (f) In consultation with the local agency requesting assistance,
the local agency financial review committee shall provide a written
report to the local agency, which may include its recommendations and
an assessment of the local agency's financial practices and
conditions and internal controls related to its financial condition.
   (g) Assistance provided pursuant to this section shall not include
direct financial payments or loans to local agencies that are not
otherwise authorized by statute.
   (h) If the local agency notifies the Controller that it has
initiated the neutral evaluation process pursuant to Article 5
(commencing with Section 53780) of Chapter 4 of Part 1 of Title 2,
the Controller shall suspend all activities under this section,
unless the local agency requests that the activities be continued.
The local agency shall be liable for costs under subdivision (c).
   12487.  For purposes of this article, "local agency" means a city,
county, city and county, or special district.
  SEC. 4.  Section 53890 of the Government Code is amended to read:
   53890.  As used in this article, "local agency" means any city,
county,  any   and special  district
 , and any community redevelopment agency  required
to furnish financial reports pursuant to Section  12463.1 or
12463.3   12463  .
  SEC. 5.  Section 53895 of the Government Code is amended to read:
   53895.  (a) An officer of a local agency who fails or refuses to
make and file his or her report within 20 days after receipt of a
written notice of the failure from the Controller shall forfeit to
the state:
   (1)  One   Two  thousand  five
hundred  dollars  ($1,000)   ($2,500) 
, in the case of a local agency with total revenue, in the prior
year, of less than one hundred thousand dollars ($100,000), as
reported in the Controller's annual financial reports.
   (2)  Two   Five  thousand five hundred
dollars  ($2,500)   ($5,500)  in the case
of a local agency with total revenue, in the prior year, of at least
one hundred thousand dollars ($100,000) but less than two hundred
fifty thousand dollars ($250,000), as reported in the Controller's
annual financial reports.
   (3)  Five   Ten    thousand
dollars  ($5,000)   ($10,000)  in the case
of a local agency with total revenue, in the prior year, of at least
two hundred fifty thousand dollars ($250,000), as reported in the
Controller's annual financial reports.
   (b) (1) Upon the request of the Controller, the Attorney General
shall prosecute an action for the forfeiture in the name of the
people of the State of California.
   (2) Upon a satisfactory showing of good cause, the Controller may
waive the penalties for late filing provided in this section. 
   (c) If an officer of a local agency fails or refuses to make and
file his or her report within 20 days after receipt of a written
notice pursuant to subdivision (a) for two consecutive years, the
forfeiture assessed pursuant to paragraphs (1), (2), and (3) of
subdivision (a) in the second year shall be doubled.  
   (d) If an officer of a local agency fails or refuses to make and
file his or her report within 20 days after receipt of a written
notice pursuant to subdivision (a) for three consecutive years, the
forfeiture or fine assessed pursuant to paragraphs (1), (2), and (3)
of subdivision (a) in the third year shall be tripled. 
  SEC. 6.  Section 53895.5 of the Government Code is repealed.

   53895.5.  (a) An officer of a community redevelopment agency who
fails or refuses to make and file his or her report within 20 days
after receipt of a written notice of the failure from the Controller
shall forfeit to the state:
   (1) One thousand dollars ($1,000) in the case of a community
redevelopment agency with total revenue, in the prior year, of less
than one hundred thousand dollars ($100,000), as reported in the
Controller's annual financial reports.
   (2) Two thousand five hundred dollars ($2,500) in the case of a
community redevelopment agency with total revenue, in the prior year,
of at least one hundred thousand dollars ($100,000), but less than
two hundred fifty thousand dollars ($250,000), as reported in the
Controller's annual financial reports.
   (3) Five thousand dollars ($5,000) in the case of a community
redevelopment agency with total revenue, in the prior year, of at
least two hundred fifty thousand dollars ($250,000), as reported in
the Controller's annual financial reports.
   (b) An officer of a community redevelopment agency who fails or
refuses to make and file his or her report within 20 days after
receipt of a written notice of the failure from the Controller in the
second or more consecutive year shall forfeit to the state:
   (1) Two thousand dollars ($2,000) in the case of a community
redevelopment agency with total revenue, in the prior year, of less
than one hundred thousand dollars ($100,000), as reported in the
Controller's annual financial reports.
   (2) Five thousand dollars ($5,000) in the case of a community
redevelopment agency with total revenue, in the prior year, of at
least one hundred thousand dollars ($100,000), but less than two
hundred fifty thousand dollars ($250,000), as reported in the
Controller's annual financial reports.
   (3) Ten thousand dollars ($10,000) in the case of a community
redevelopment agency with total revenue, in the prior year, of at
least two hundred fifty thousand dollars ($250,000), as reported in
the Controller's annual financial reports.
   (c) In the case of a community redevelopment agency that fails or
refuses to make and file its report within 20 days after receipt of a
written notice of the failure from the Controller in the third or
more consecutive year, the Controller shall conduct or cause to be
conducted an independent financial audit report consistent with the
requirements of Section 33080.1 of the Health and Safety Code. The
community redevelopment agency shall reimburse the Controller for the
cost of complying with this subdivision. The community redevelopment
agency shall not use any of the funds in the Low and Moderate Income
Housing Fund to reimburse the Controller.
   (d) (1) Upon the request of the Controller, the Attorney General
shall prosecute an action for the forfeiture in the name of the
people of the State of California.
   (2) Upon a satisfactory showing of good cause, the Controller may
waive the penalties for late filing provided in this section.
   (e) A community redevelopment agency that makes a forfeiture or
payment pursuant to this section shall still file the report required
pursuant to Section 53891. 
  SEC. 7.  Section 53895.7 of the Government Code is repealed.

   53895.7.  (a) For the purpose of this section, "agency" means any
agency or entity formed pursuant to the Joint Exercise of Powers Act
(Article 1 (commencing with Section 6500) of Chapter 5 of Division 7
of Title 1) that issues conduit revenue bonds.
   (b) An officer of an agency who fails or refuses to make and file
his or her report pursuant to this article within 20 days after
receipt of a written notice of the failure from the Controller shall
forfeit to the state:
   (1) One thousand dollars ($1,000) in the case of an agency with
total revenue, in the prior year, of less than one hundred thousand
dollars ($100,000), as reported in the Controller's annual financial
reports.
   (2) Two thousand five hundred dollars ($2,500) in the case of an
agency with total revenue, in the prior year, of at least one hundred
thousand dollars ($100,000), but less than two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
   (3) Five thousand dollars ($5,000) in the case of an agency with
total revenue, in the prior year, of at least two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
   (c) An officer of an agency who fails or refuses to make and file
his or her report within 20 days after receipt of a written notice of
the failure from the Controller in the second or more consecutive
year shall forfeit to the state:
   (1) Two thousand dollars ($2,000) in the case of an agency with
total revenue, in the prior year, of less than one hundred thousand
dollars ($100,000), as reported in the Controller's annual financial
reports.
   (2) Five thousand dollars ($5,000) in the case of an agency with
total revenue, in the prior year, of at least one hundred thousand
dollars ($100,000), but less than two hundred fifty thousand dollars
($250,000), as reported in the Controller's annual financial reports.

   (3) Ten thousand dollars ($10,000) in the case of an agency with
total revenue, in the prior year, of at least two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
   (d) In the case of an agency that fails or refuses to make and
file its report within 20 days after receipt of a written notice of
the failure from the Controller in the third or more consecutive
year, the Controller shall conduct, or cause to be conducted, an
independent financial audit report consistent with the requirements
of Section 6505. The agency shall reimburse the Controller for the
cost of complying with this subdivision.
   (e) (1) Upon the request of the Controller, the Attorney General
shall prosecute an action for the forfeiture in the name of the
people of the State of California.
   (2) Upon a satisfactory showing of good cause, the Controller may
waive the penalties for late filing provided in this section.
   (f) An agency that makes a forfeiture or payment pursuant to this
section shall still file the report required pursuant to Section
53891.