AB 804 Will Provide Local Agency Transparency

For immediate release:

Bill Will Ensure Taxpayer Dollars Are Spent as Required by Law, Despite Funding Source

(Sacramento) – Assemblywoman Cristina Garcia (D- Bell Gardens) today introduced legislation to improve local agency transparency with public funds.  Assembly Bill 804 would allow the State Controller’s Office (SCO) to audit a local agency’s records to determine if its internal controls are sufficient to detect and prevent financial errors and fraud ensuring that taxpayer dollars are spent in accordance with the law as intended, regardless of the funding source.

“Now more than ever taxpayers want to know if public dollars are spent appropriately,” said Assemblywoman Cristina Garcia. “Proper oversight and documentation by the SCO will provide the public with the accountability they deserve to ensure public assets are not misused or abused.  This is good government on behalf of the people we are elected to serve.”

Currently, Government Code (12410) provides the SCO authority to audit any public entity that receives state funding to ensure that funding is spent in accordance with state law and its intended purpose.  However, the SCO cannot audit agencies that do not receive state funding, nor can they audit programs within an agency that are funded with public funds that come from local or federal sources, for example.  Existing Government Code (12422.5) also provides that the SCO develop internal control guidelines that local agencies can—but are not required to—use to prevent and detect financial errors and fraud within their accounting practices. 

No mechanism in law currently allows the SCO to review if an agency’s internal procedures and controls are sufficient to prevent misuse—intentional or unintentional—anywhere taxpayer dollars are spent.

“Since I’ve become State Controller, several of my team’s audits and reviews have shown a lack of internal controls especially in smaller cities and government entities,” said Controller Betty T. Yee, the state’s chief fiscal officer. “AB 804 allows my auditors to analyze the essential accounting practices of all public entities that receive state funds to ensure taxpayer dollars are being used appropriately.”

Last year the SCO’s audit of the Panoche Water District, like many small public agencies, including water districts, school districts and special districts, are operating without sufficient internal controls.  Absent a transparent “check and balance” system that follows the best practices established by the SCO’s guidelines, these agencies could be operating outside the law.

“The goal of this bill is to enable the SCO to proactively assess an agency’s preparedness at ensuring public funds will be spent as required.  At the end of the day, it’s a tool that will enable prevention and accountability in communities throughout the state,” added Garcia.

The bill is pending committee referral.                                                                                                                                                       

The 58th Assembly District includes the cities of Montebello, Pico Rivera, Commerce, Bell Gardens, Downey, Norwalk, Bellflower, Cerritos and Artesia.