An audit of the California Public Utilities Commission (PUC) budget process by the state’s Department of Finance found “general confusion and lack of knowledge” among management and staff.

For instance, budget control officers who are established in program divisions have ill-defined responsibilities; lines of authority among executive management are unclear; PUC written policies and procedures are unclear; and “there is little or no guidance and oversight provided by the Budget Office,” the report said.   

The result of expense and revenue miscues in seven fee-supported funds caused the commission to incorrectly project in 2011 that it had $422 million that didn’t actually exist. Most of the mistakes were “found to be unexplainable” by PUC staff.

The audit noted that some of the problems it was detailing were ongoing issues for the commission. It singled out the lousy job the commission does of developing forecasting models to project revenues, reimbursements and expenditures in its various accounts and funds, and traced the problems back through seven previous budget cycles.

As the audit pointed out, “The Governor, Legislature, Finance and CPUC’s management and commissioners rely on the information generated to make budgeting decisions.”

Also inexplicable was an $81 million typographical error the auditors found in one of the PUC fund forecasts. The commission fixed the mistake when the auditors brought it to their attention. The auditors said that mistakes like that could be linked to a lack of supervisory reviews.

The auditors also found bunches of unrecorded transactions, incorrect calculations and transfer errors.

The commission agreed with almost all of the Department of Finance’s findings and agreed to fix the problems.

–Ken Broder

To Learn More:

State Audit Rips California Utilities Commission for Fund Errors (by Kevin Yamamura, Sacramento Bee)

California Public Utilities Commission Budget Process Performance Audit (Department of Finance) (pdf)