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Excerpted from Sacramento Business Journal
August 30, 2013

California Gov. Jerry Brown this week signed a bill that could prevent local governments from falling into bankruptcy.

Under Assembly Bill 1248, authored by Rancho Cordova Democrat Ken Cooley, the state controller would develop new guidelines to detect accounting errors and fraud at local agencies. Those guidelines would come from standards from the American Institute of Certified Public Accountants and also input from advocacy groups representing a smattering of local governments.

According to Controller John Chiang, the bill is an attempt to learn from fiscal disasters in the California cities of Bell, Stockton, Hercules and Montebello. Chiang said those cities had weak internal controls for preventing accounting snafus.

“This bill calls for the state and local governments to work together to develop stronger fiscal management practices aimed at protecting communities against self-dealing, misuse of taxpayer monies and other abuses of public trust,” Chiang said.

The bill calls for more separation between fiscal duties such as budgeting and check-writing, and other measures to prevent conflicts of interest in hiring and contracting.

“These guidelines will create a highly visible yard stick by which administrative practices may be measured, giving much needed guidance to citizens and public officials,” Cooley said.

The bill passed unanimously in both houses.

Christopher Arns covers state legislation, regulation and contracts, as well as economic news, international trade and economic development for the Sacramento Business Journal.