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FAQ

The Audit Request Process

Any member of the Legislature or a committee of the Legislature can request an audit by submitting to the Committee a request letter addressed to the Chair of the JLAC. The audit request process begins with completing the “JLAC Information Sheet”. Devoting ample time and effort to completing the Information Sheet will provide much of the information needed for the audit request letter. Completing the Information Sheet will assist in framing the issue, problem, deficiency and motivation for the audit request; developing a good argument for approving the audit request; and identifying the questions the audit should answer. "To get the right answer, you must ask the right questions." For best results, the Information Sheet should be completed first, followed by a meeting with the JLAC staff before finalizing the audit request letter.

When formulating the questions to be answered in an audit, it helps to understand the underlying laws as well as the mission, goals, and objectives of the agency or program to clearly establish the criteria on which these questions generally will be based. It is also useful to consider the following general questions:

1. How successful is the agency or program in accomplishing its mission, goals, objectives, and the legislative intent?
2. Are policies and procedures, consistent with laws and regulations, in place and consistently followed?
3. Could the agency or program objectives be achieved more efficiently and effectively? Are resources sufficient to achieve the intended results?
4. Is agency or program generating complete, accurate, and reliable data and information?
5. Does management promote a culture of efficient and effective performance and compliance?
6. Is there sufficient management and external oversight of the agency or program?
7. Are there sufficient checks and balances in place to detect and prevent waste, fraud, abuse, illegal conduct, mismanagement, and conflicts of interest?

These general questions will assist in developing an audit scope to identify the issues, problems and deficiencies and/or the factors contributing to issues, problems, and deficiencies. A well-written audit request provides the State Auditor’s Office (CSA) with clear direction and generally results in objective data and information useful to policymakers.

Legislative staff are strongly encouraged to consult with the JLAC staff to assist with framing the audit request letter. Further, JLAC staff can determine, among other things, the feasibility of the audit idea. The JLAC staff can be reached at (916) 319-3300.

Audit request letters must be received by the JLAC office by 5:00pm on the deadline date noticed in the Assembly and Senate Files for each scheduled hearing. A postmark of the deadline day will not be sufficient; therefore, legislative staff are strongly encouraged to deliver the audit request letter to the Committee office in the Legislative Office Building, Room 107.

When an audit request letter is submitted to the JLAC office, the Chair reviews the request, acknowledges its receipt, and forwards it to the CSA. The CSA prepares an analysis of the audit request, which includes a brief objective background, the audit scope and objectives, and the estimated cost to conduct the proposed audit. Before finalizing the analysis, the CSA staff will confirm the scope and objectives of the audit request with legislative staff in the requester’s office. The written analysis is confidential until the hearing and is provided to the JLAC members before the hearing. Copies of the analyses are available to the public at the start of the hearing. The JLAC will publicly release audit request letters scheduled for a hearing three business days prior to the scheduled hearing.

After the JLAC approves an audit request, the CSA generally takes at least six months to complete the audit work. Under certain circumstances, an audit can be completed in a shorter timeframe when the JLAC requires this of the CSA. Legislative staff can work with the JLAC staff when circumstances warrant a shorter timeframe.

Once the JLAC approves an audit, state law precludes the CSA’s office from discussing or disclosing any aspect of the audit, including the audit approach or potential findings, until it is completed. However, the law does not preclude anyone from providing the CSA’s office information that would be useful to the audit scope and objectives approved by the JLAC. Further, anyone can obtain an update on the estimated release date of an audit in progress.

To check the estimated release date of audits approved by the JLAC, visit the CSA Web site at www.auditor.ca.gov and go to the Work In Progress link.

What Happens After an Audit is Released?

Once an audit is completed and released, the CSA requires the audited agency to provide a 60 day, six month, and one year response on the status of implementing recommendations in the audit report. This information is used to determine the need for any follow up review, or in some cases, legislative oversight hearings.

If appropriate, the JLAC will hold an oversight hearing on the findings and recommendations of a completed audit report. If it determines that laws or regulations have been violated, the Committee may refer the matter to the appropriate investigative or prosecuting agency. The JLAC has the authority, upon approval by the Joint Rules Committee, to subpoena witnesses and documents.

Types of Audits

Performance – Provide information to improve public accountability and transparency as well as facilitate decision-making. Can include an assessment of the performance of a government organization, program, activity or function; the accuracy and reliability of information; and, the effective and efficient use of resources.
Financial – Includes financial statement and financial-related audits:

Financial statement audits provide reasonable assurance about whether financial statements present fairly the financial position, results of operations, and cash flows in accordance with generally accepted accounting principles or other acceptable bases of accounting.
Financial-related audits can include determining whether financial information is accurate, reliable, and presented in accordance with established or stated criteria; examining revenues and expenditures; performing cost benefit analysis; and, determining whether an entity has adhered to specific financial compliance requirements.
(Note: Both performance and financial audits can address compliance issues, which include determining whether an entity or program is complying with applicable laws and regulations).

Mandated v. Discretionary

• Mandated audits are written into law or budget control language (e.g. state’s annual financial audit). Because these audits are mandated by statute, mandated audits receive the highest priority. Joint Rule 37.4(b) requires that any bill requiring an audit or study by the CSA contain an appropriation for the cost of the study or audit.
• Discretionary audits are requested by members of the Legislature through the JLAC. Resources available for discretionary audits vary depending upon the CSA workload and committee priorities. These audits are funded by the CSA annual appropriation.

JLAC Hearings: "What to Expect"

The JLAC conducts two types of hearings: regular and oversight hearings. At times, a regular hearing can include an informational component.

A JLAC regular hearing considers audit request letters from any member or Committee of the Legislature for the California State Auditor’s Office (CSA) to conduct. The JLAC generally conducts regular hearings when the Legislature is in session. These hearings are noticed in the Assembly and Senate files in advance of the hearing date.

Regular hearings typically begin with a briefing from the State Auditor on the status of audits in progress and the availability of CSA resources for new audits. Next, the JLAC reviews each request on its agenda in sign-in order. For each audit request, the requestor first makes a brief presentation on the audit request, followed by the State Auditor’s description of the proposed scope of work and estimated cost to conduct the work. Lastly, the potential auditee and the public at large are given an opportunity to comment on the audit request.

In acting on an audit request, the JLAC can take one of the following four actions: (1) approve the request; (2) deny the request; (3) retain the request for future consideration; or, (4) refer the request to another agency, if it is the more appropriate venue.

Since the JLAC is a joint committee of the Legislature, a quorum is established when four members from the Assembly and four members from the Senate are present. Similarly, an audit request is approved when it has received a minimum of four votes from each house.

Unlike other legislative committees, the JLAC's ability to amend an audit request during a hearing is limited. Substantive changes cannot be made to an audit request at the JLAC hearing. During the hearing, an audit request may only be amended if the amendment does not substantially affect the feasibility, scope or cost of the proposed audit. Should a requestor or the JLAC wish to substantially amend a request, the requestor or Chair may ask the committee to hold the request for a subsequent committee hearing.

Once an audit is approved by the JLAC, on average it takes at least six months for the CSA to complete the audit work. This is an average timeframe, as discretionary audits can be completed in a shorter timeframe should the JLAC require this of the CSA.

Oversight hearing topics vary and generally address the findings, conclusions, recommendations and the auditee's response to issues identified in a completed audit. An oversight hearing may also gather facts for a pending audit request. Oversight hearings are conducted on an as-needed basis and may be included as part of a regular hearing.

 


 

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