The State Worker

California controller’s report criticizes her own board

State Controller Betty Yee, who also sits on the California Board of Equalization
State Controller Betty Yee, who also sits on the California Board of Equalization BOE

State Controller Betty Yee on Wednesday issued a blunt criticism of bungled finances by a state tax board, that includes ... Betty Yee.

The detailed review of the Board of Equalization found that agency staff incorrectly sent $47.8 million in retail sales taxes to the state’s general fund, which in turn shorted other funds that should have received the money.

Also, the report said the agency’s loose accounting allowed employees to request salary advances out of what amounted to an office expense fund, sometimes without management approval. Then, according the review, the debt would float uncollected for months or even years.

Staff also failed to quickly reconcile travel advance payments with employees. In some instances vendors were paid from the office fund instead of from the appropriate payment source. Then the office fund wasn’t reimbursed.

The board has already redirected the money and nearly $343 million more to “correct specific fund balances for the period of April 1, 2011, through December 13, 2013,” the agency said in a press release Wednesday afternoon.

The report is something of a self-criticism for Yee, who was elected to the five-member Board of Equalization in 2006, held that position for eight years and then took an ex officio seat after she won the 2014 race for state controller.

Asked to what degree she felt responsible for the troubles uncovered by her team, she said, “I feel very responsible,” but noted that the board sets policy and doesn’t get into the inner workings of the agency.

The Board of Equalization collects roughly $60 billion annually in business taxes, sales taxes and other sources. The money pays for hundreds of state and local government programs.

After Yee’s Wednesday report, agency Chairman Jerome Horton said in a press statement that the board “takes the audit results very seriously and sees this as an opportunity to continue strengthening its existing internal processes.”

Agency Executive Director Cynthia Bridges is heading up that effort, Horton said.

As of April, when Yee’s staff reviewed board records, $1.6 million in receivables for such salary, travel and vendor payment advances were more than 60 days old. More than half that had been owed up to 91 days and more than a quarter of the advances, $415,797, were outstanding for more than three years.

In case after case, the board issued billing statements either late or not at all, according to the report, and follow-up was spotty. “Two American Express payments from 2013, totaling $16,538, have not been reimbursed to the ... fund,” the report states.

In another case, a $1,157 salary advance wasn’t collected, Yee’s report states, and there was no supporting documentation, such as the check, a salary advance request form or the reason for the advance.

In her role as California’s cash manager, Yee noticed irregularities in the retail sales fund and others, which, she said, triggered the review.