SECTIONS 13400-13407 - California Statutes

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.