13400-13407
GOVERNMENT CODE
SECTION 13400-13407
13400. This act shall be known and may be cited as the Financial Integrity and State Manager's Accountability Act of 1983. 13401. (a) The Legislature hereby finds that: (1) 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. (2) Effective systems of internal accounting and administrative control provide the basic foundation upon which a structure of public accountability must be built. (3) Effective systems of internal accounting and administrative control are necessary to assure that state assets and funds are adequately safeguarded, as well as to produce reliable financial information for the agency. (4) Systems of internal accounting and administrative control are necessarily dynamic and must be continuously evaluated and, where necessary, improved. (5) Reports regarding the 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 the agency's performance of its public responsibilities and accountability. (b) The Legislature declares it to be the policy of the 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 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. 13402. State agency heads are responsible for the establishment and maintenance of a system or systems of internal accounting and administrative control within their agencies. This responsibility includes documenting the system, communicating system requirements to employees, and assuring that the system is functioning as prescribed and is modified, as appropriate, for changes in conditions. 13403. (a) Internal accounting and administrative controls 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 authorization and recordkeeping procedures adequate to provide 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. (b) State agency heads shall follow these standards of internal accounting and administrative control in carrying out the requirements of Section 13402. 13404. As used in this chapter: (a) "Governor" means the Governor of California. (b) "Controller" means the Controller of California. (c) "Director" means the Director of Finance. 13405. (a) To ensure that the requirements of this chapter are fully complied with, the head of each state agency that the director determines is covered by this section shall, on a biennial basis but no later than December 31 of each odd-numbered year, conduct an internal review and prepare a report on the adequacy of the agency's systems of internal accounting and administrative control in accordance with the guide prepared by the director pursuant to subdivision (d). (b) The report, including the state agency's response to review recommendations, shall be signed by the head of the agency and addressed to the agency secretary, or the director for agencies without a secretary. Copies of the reports shall be submitted to the Legislature, the State Auditor, the Governor, the director, and to the State Library where they shall be available for public inspection. (c) The report shall identify any material inadequacy or material weakness in an agency's systems of internal accounting and administrative control that prevents the head of the agency from stating that the agency's systems comply with this chapter. No later than 30 days after the report is submitted, the agency shall provide to the director a plan and schedule for correcting the identified inadequacies and weaknesses, which shall be updated every six months until all corrections are completed. (d) The director, in consultation with the State Auditor and the Controller, shall establish, and may modify from time to time as necessary, a system of reporting and a general framework to guide state agencies in conducting internal reviews of their systems of internal accounting and administrative control. 13406. (a) The head of the internal audit staff of a state agency or a division, as specified by the director, or, in the event there is no internal audit function, a professional accountant, if available on the staff, designated as the internal control person by the head of the state agency or a division, shall receive and investigate any allegation that an employee of the agency provided false or misleading information in connection with the review of the agency's systems of internal accounting and administrative control or in connection with the preparation of the biennial report on the systems of internal accounting and administrative control. (b) If, in connection with any investigation under subdivision (a), the head of the internal audit staff or the designated internal control person determines that there is reasonable cause to believe that false or misleading information was provided, he or she shall report in writing that determination to the head of the agency or the division. (c) The head of the agency or division shall review any matter referred to him or her under subdivision (b), shall take such disciplinary or corrective action as he or she deems necessary, and shall forward a copy of the report, indicating therein the action taken, to the director within 90 days of the date of the report. 13407. Because sound internal controls and the monitoring of those internal controls significantly inhibits waste of resources and thereby creates savings, the director and agencies and divisions shall carry out the provisions of this chapter by using existing resources.