Section 61121 - Risk Factors Used to Identify a Potentially High-Risk, or High-Risk, Local Government AgencyThe State Auditor may consider the following risk factors, along with any additional relevant information, including information obtained from a local government agency, when determining whether to designate that entity as potentially high risk or as high risk:
(a) The local government agency's financial report submitted to the State Controller pursuant to Government Code section 53891 or other financial statement, report, or audit indicates that the local agency's financial condition has the potential to impair its ability to efficiently deliver services or to meet its financial or legal obligations. Examples of indicators of an impaired financial condition include, but are not limited to, the following:(1) The local government agency's ability to pay its short-term obligations on time, using available cash and short-term investments, is uncertain given the extent of its obligations in comparison to cash and investments(2) The local government agency's ability to meet its long-term obligations, including those stemming from debt issuances, pension plans, and other postemployment benefits promised to its employees, is uncertain given the extent of its obligations in comparison to available resources.(b) The local government agency's ability to maintain or restore its financial stability is impaired. Indicators of financial stability shall include, but are not limited to, the agency's credit rating, its reliance on potentially unstable sources of revenue, and its ability to raise revenues as necessary to support its commitments.(c) The local government agency's financial reporting does not follow generally accepted government accounting principles, based on the State Auditor's evaluation of any of the following:(1) Whether the local government agency uses Generally Accepted Accounting Principles for its financial statements.(2) Whether the local government agency uses the Comprehensive Annual Financial Report format.(3) Whether the entity has an unqualified audit opinion.(4) Whether financial information is reported timely.(d) Prior audits reported findings related to financial or performance issues regarding a program, service, or activity conducted by the local government agency that indicate the risk of waste, fraud, or abuse, and the agency has not taken adequate corrective action.(e) The local government agency uses an ineffective system to monitor and track state and local funds it receives and spends, including any funds it passes through to other recipients.(f) An aspect of the local government agency's operation or management that involves public health or safety, service delivery, or fiscal operations is ineffective or inefficient, presents the risk for waste, fraud, or abuse, or does not provide the intended level of public service.Cal. Code Regs. Tit. 2, § 61121
1. New section filed 5-27-2015; operative 7-1-2015. Filed for printing only and not subject to OAL review pursuant to Government Code section 8546(g) (Register 2015, No. 22). Note: Authority cited: Section 8546, Government Code. Reference: Section 8546.10, Government Code.
1. New section filed 5-27-2015; operative 7/1/2015. Filed for printing only and not subject to OAL review pursuant to Government Code section 8546(g) (Register 2015, No. 22).