20010 CENTRAL AUDIT ORGANIZATIONS
(Renumbered from 20005, Revised 12/00)
The State's central audit organizations include the Department of Finance, the Bureau of State Audits, and the State Controller's Office.
Department of Finance
The Director of the Department of Finance has general responsibility for supervising matters concerning the State's financial and business policies. Additionally, the Director is responsible for coordinating the internal audit function for the executive branch of state government, as well as acting as the Governor's representative in coordinating the executive branch response to the BSA's annual single audit of the State.
Numerous statutes require the DOF to perform audits of various state funds and/or programs. As a result, the DOF's Office of State Audits and Evaluations assists in fulfilling these responsibilities. The Department's broad oversight responsibilities result in a wide variety of audits being conducted, including financial audits, financial related audits, performance audits, information technology audits, and compliance audits. Additionally, the Department monitors and coordinates the implementation of the Financial Integrity and State Manager's Accountability Act as described in SAM Sections 20050 and 20060. As part of the Department's internal control oversight function, the DOF evaluates the work of the State's internal audit organizations by completing Quality Assurance Reviews, and issues Audit Memos instructing internal audit organizations on audit policies, procedures, and requirements. Finally, the Department performs reviews of suspected instances of fraud and special program reviews as requested by the Governor's Office, the Director of the DOF, or other state agencies. Many of these activities are conducted through interagency agreements.
Bureau of State Audits
Senate Bill 37, Chapter 12, Statues of 1993 (GC 8543), created the Bureau of State Audits as part of the Executive Branch. To assure its independence, the BSA is free from the control of the Executive and Legislative branches; a state commission oversees its administrative operations. The BSA, under the direction of the State Auditor, performs an annual examination (single audit) of the State's general-purpose financial statements as prepared by the SCO. The federal government, as a condition of receiving federal funds, requires this audit. The single audit also includes a review of major federal programs for compliance with federal laws and regulations, and recommendations to improve the State's financial systems and internal control.
The BSA also conducts financial and performance audits as directed by statute, and other government audits requested by the Joint Legislative Audit Committee. The BSA has the explicit authority to audit any entity that receives state funds. Consequently, it sometimes audits at the local government level. In addition, the BSA administers the "Reporting of Improper Governmental Activities Act," which includes a hotline for anonymous reporting.
State Controller's Office
The primary function of the State Controller's Office is to provide sound fiscal control over both receipts and disbursements of public funds and to report periodically on the financial operations and condition of both state and local government. Consequently, the SCO performs financial audits and financial related audits of federal and state funds, and audits state entities' payroll procedures in connection with the SCO's central disbursing function. Additionally, the SCO performs audits under contract for state and federal entities and is responsible for coordinating single audit activities in local government and K-12 school districts.
The SCO also provides pre-audits and post-audits of claims for payment as part of the state's central disbursement function. The SCO functions in a coordinating role for Auditor/Controllers at the local government level.
