The State Worker

Audit: State Controller’s Office accounting riddled with errors

State Controller John Chiang’s office has understated liabilities, miscalculated debt payments and, in one instance, made a data-entry error that added three additional zeros to a revenue figure, changing the figure from millions of dollars to billions of dollars.

Those accounting mistakes and others led state auditors to conclude that the controller’s office, which acts as California’s chief financial officer and monetary watchdog, needs to reserve a hound or two to sniff around its own operations.

“The number and magnitude of errors we found indicate the Controller’s Office lacks a sufficient review process to prevent and detect significant errors,” investigators concluded in a report to lawmakers submitted by Deputy State Auditor John Collins.

The critical assessment of the controller’s office comes as Chiang, a Democrat, is running for state treasurer. Some of the accounting mistakes flagged by auditors included:

Understating some federal trust fund revenues and expenditures by $7.7 billion.

Overstating state general fund assets and revenues by $653 million.

A reporting error that understated a public building construction fund by $9.1 billion.

Overstating by $8 billion the California State University system’s bond debt.

Posting a deferred tax-revenue figure as $6.2 billion when it was actually $6.2 million.

Those mistakes and others were so glaring, auditors said, that they should have been caught.

The controller’s office “concurs” with their assessment, auditors said, “and believes that the challenges of high staff turnover and in recruiting qualified staff significantly contributed to the issues identified.” The controller also blamed budget cuts, inadequate funding and late, erroneous data from “numerous agencies.”