A state Department of Finance performance audit of the California Public Utilities Commission (CPUC) has found that "significant weaknesses exist within CPUC's budget operations which compromise its ability to prepare and present reliable and accurate budget information."
Among other things, the audit, released January 10, found that the commission's revenue and spending projections often miss the mark by wide margins. The audit report stated: "We observed that over the past seven budget cycles (fiscal years 2005-06 through 2011-12), CPUC's forecasting models have produced results that significantly differ from the actual revenues, reimbursements, and expenditures as published in the Governor's Budget. Identified variances were as much as 73 percent and $189 million in revenues, and as much as 99 percent and $212 million in expenditures. … While program staff were able to explain some variances, most were found to be unexplainable."
The audit identified the following "significant weaknesses" within CPUC's budget operations:
Ineffective management over budgeting functions.
Budget forecasting methodologies need improvement.
Budget monitoring needs improvement.
Fiscal management practices need improvement.
Appropriation adjustments may not be equitably allocated among funds.
Non-compliance with statutory requirements specific to the Division of Ratepayer Advocates.
"CPUC must implement and strengthen the fiscal controls over its budgeting practices and procedures in order to produce reliable and accurate budgetary information for the Governor, the Legislature, Finance, and other stakeholders," the audit stated. (Source: California Department of Finance Audit Report: California Public Utilities Commission Budget Process Performance Audit, January 10.)