High Risk Local Agency Audit Program Takes Effect July 1
The California State Auditor recently adopted regulations that take effect July 1 to establish a mechanism to investigate and seek corrective action for counties and other local agencies deemed to be at high risk for fraud, abuse, and mismanagement of resources.
CSAC provided comments on the draft regulations earlier this year seeking a more reasonable standard by which audits are conducted. This included a request that a local agency subject to an audit receives notice at the outset of the investigation. In addition, we requested that local agencies are given more than five days to respond to an audit’s claims or findings. These changes were not accepted, unfortunately.
The High Risk Local Agency Audit Program was authorized through Assembly Bill 187 (2011) that came in the wake of the City of Bell scandal. AB 187 permits the California State Auditor to develop a high-risk local government agency audit program for the purpose of identifying, auditing, and issuing reports on any local government agency, including a city, county, special district, or other publicly created entity, that the State Auditor identifies as being at high risk for waste, fraud, abuse, and mismanagement or as having major challenges associated with its economy, efficiency, or effectiveness.
However, any audit that the State Auditor wishes to perform under this authority must be authorized by the Legislature’s Joint Legislative Audit Committee before it may move forward.