BILL NUMBER: SB 503	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 25, 2010
	PASSED THE ASSEMBLY  AUGUST 19, 2010
	AMENDED IN ASSEMBLY  JUNE 23, 2010
	AMENDED IN SENATE  JANUARY 12, 2010
	AMENDED IN SENATE  JUNE 1, 2009
	AMENDED IN SENATE  APRIL 20, 2009

INTRODUCED BY   Senator Kehoe

                        FEBRUARY 26, 2009

   An act to add Section 16794 to the Government Code, relating to
general obligation bonds.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 503, Kehoe. State General Obligation Bond Law: audits.
   The State General Obligation Bond Law sets forth the procedures
for the issuance and sale of bonds governed by its provisions and for
the disbursal of the proceeds of the sale of those bonds. Existing
law provides for various oversight and reporting requirements for the
expenditure of state funds, including the proceeds of bonds.
   This bill would require the Controller to select one or more
projects funded by any state general obligation bond act approved on
or after January 1, 2010, to be the subject of an audit to be
conducted as specified. The Controller would be required annually to
assign up to 5 auditor positions to conduct these audits. The
Controller would be authorized to examine any record of any agency,
contractor, and other specified parties that relates to the use of
bond proceeds and would be required, by April 30 of each year, to
prepare an audit plan for the following fiscal year. The bill would
require an entity that is to be audited, prior to contracting with
the Controller for an audit, to determine that it is able to pay the
estimated cost of conducting the audit from the proceeds of bonds for
administrative purposes for that project. The bill would prohibit
the Controller from conducting the audit if those proceeds are not
available.


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

  SECTION 1.  Section 16794 is added to the Government Code, to read:

   16794.  (a) The Controller shall select one or more projects
funded by any state general obligation bond act approved by the
voters on or after January 1, 2010, to be subject to an audit or
audits pursuant to this section, in accordance with the audit plan
specified in subdivision (e).
   (b) When conducting an audit pursuant to this section, the
Controller shall audit the bond project in order to ensure that the
project is implemented in an efficient, cost-effective, and timely
way and that bond proceeds are spent in a manner that is legal and
consistent with the provisions of the authorizing measures. Based on
these audits, the Controller shall make recommendations to the
Legislature and responsible departments and agencies about how to
improve implementation of bond projects.
   (c) For the purpose of conducting an audit under this section, the
Controller shall be given access to, and is authorized to examine,
any record of any agency, contractor, subcontractor, vendor, or other
individual or entity receiving, directly or indirectly, bond
proceeds if the record is related to the use of those proceeds. For
this purpose, the Controller has the same authority to access
records, and be subject to the same provisions on disclosure of
records, as provided for the State Auditor in Article 1 (commencing
with Section 8543) of Chapter 6.5 of Division 1.
   (d) The department or agency responsible for the project being
audited shall reimburse the Controller for the actual cost of
conducting the audit from the proceeds of bonds allocated for
administrative purposes for that project. Prior to contracting with
the Controller to conduct any audit, the entity responsible for the
project to be audited shall determine that it is able to pay the
estimated cost of conducting the audit from the proceeds of bonds for
administrative purposes for that project. If the entity is unable to
pay the estimated cost of conducting the audit from the proceeds of
bonds for administrative purposes for that project, the Controller
shall not conduct the audit. To cover the cost of each audit, the
Controller shall use only those funds allocated for the particular
project being audited and not funds allocated for any other project.
    (e) The Controller shall, by April 30 of each year, prepare an
audit plan for the following fiscal year specifying the projects that
will be subject to an audit pursuant to this section, the
responsible departments or agencies to be audited, and an estimated
completion date of the audits. The Controller shall annually assign
up to five auditor positions to conduct the audits specified by this
section. If the audit plan identifies a need for additional auditors,
the Controller may request funding in the annual Budget Bill for
additional auditors.
   (f) It is the intent of the Legislature that the savings to the
state from implementing recommendations made as a result of audits
required by this section fully offset the cost of conducting the
audits.