How "Accounting Mistakes" Cost California Taxpayers $32 Billion This Year

Tyler Durden's picture

Spend more than 30 minutes watching TV in California and you will be bombarded by politicians proclaiming they single-handedly balanced the budget, brought prosperity back to the Silicon Valley alone, and turned water into wine. Yet, oddly, there is one thing none of them seem too quick to admit to. As CBS reports, the state office in charge of keeping track of California taxpayers’ money made tens of billions of accounting mistakes. CBS added it up and came up with a big number: $31.65 billion in errors. That’s more than the gross domestic product of Iceland and Jamaica combined.



As CBS reports,

Controller John Chiang’s office is the state’s financial watchdog, but an audit by the Bureau of State Audits claims the office’s accounting is off by billions of dollars.


The audit revealed:

  • $7.7 billion – Understated federal trust fund revenues and expenditures
  • $653 million – Overstated general fund assets and revenues
  • $8 billion – Overstated California State University’s bond debt
  • $9.1 billion – Reporting error that understated a public building construction fund
  • Also there was a deferred tax-revenue figure posted as $6.2 billion when it was actually $6.2 million.

All told, that’s more than $31 billion in mistakes.


Sacramento State accounting professor John Corless agrees with auditors saying those glaring mistakes should have been caught by somebody.


"Someone’s not using their equipment right, and they’re not using their heads,” he said.
Republican consultant Mitch Zak is calling for an investigation.


“It’s offensive as a taxpayer,” he said. “There’s no consideration it appears if they misstate or mismanage my tax dollars that there’s any retribution.”


Chiang is running for state treasurer. His aides refused to go on camera for this story.


They said they concur with the assessment, and they blame high staff turnover and a lack of qualified staff, budget cuts, and late and incorrect data from numerous agencies.

Of course, we are sure that no one knows anything about it; no one is responsible for the errors; no one is accountable for the missing money; but a full-scale probe-y investigation will be launched... well played government. Doesn't matter after all - it's not their money.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
CH1's picture

No prob. Everyone will keep obeying them just the same.

AlaricBalth's picture

Accounting mistakes? BS!!!
Perhaps just a little creative financial engineering.

TheReplacement's picture

Just wait.  SAT800 will be along soon to blame it all on capitalism.

NoDebt's picture

Last week we were all laughing at France buying a bunch of trains that wouldn't fit through their stations (for which nobody got fired).  Now it's The Peoples Republik of Kalifornia losing billions (for which nobody will be fired)

It's EVERYWHERE that socialism/statism exists.  Accountability is antithetical to those types of regimes.  By definition they are incompatible with accountability for their actions since they exist contrary to the will of those they rule/govern over.  They can only exist in a power culture mutually committed to enriching a few at the expense of the many.  Corruption is REQUIRED in those situations or the whole system fails.

Pure Evil's picture


"Of course, we are sure that no one knows anything about it; no one is responsible for the errors; no one is accountable for the missing money; but a full-scale probe-y investigation will be launched..."


Just a small microcosm of the Obama administration.

(And Bush, and Clinton, and Bush again, and Reagan, and .....)

r00t61's picture

Corruption is a feature of the system.  Not a bug.

JLee2027's picture

So is denial of a problem, until the people revolt and hang you from a tree.

lunaticfringe's picture

Just exactly, when does that happen?

duo's picture

The University of California was the largest single contributor to Obama's campaign in 2012. 

booboo's picture

yes, and he is a "scientist"...did I mention that he is a scientist.

rubiconsolutions's picture

"That’s more than the gross domestic product of Iceland and Jamaica combined."

What a bunch of "jerks" doing the accounting. 


doctor10's picture

Accounting "mistake" my ass!! That's REALLY "Organized Crime" is what that is!!!

Cpiiesf7's picture

CH1 -- I was scanning the audit items mentioned and then listened to the CBS report...   The CBS news report says that all the audit issues were fixed before the final budget submittal. And in looking at the error items themselves, most of the big mistakes were to the benefit of the state (a conservatively low number for revenues, a conservatively high number for debt, etc). So it is probably incorrect to think that the CA budget was submitted showing that they are $31B "better" than real. It looks like one of the pols running for office was using these mistakes to show that he is the better candidate...  regards - esf7

flyingcaveman's picture

That's no big deal its only like 16 basket ball teams.  Did I happen to mention that California by itself is the 75th largest economy in the world.

KickIce's picture

Trickle down fraud.  Actually more like a river these days.

alexcojones's picture



Remember how Rummy announced the Pentagram was missing $2.3 TRillion, the day before 9-11? Story soon forgotten. Guess something more critical happened the next day.

"River of Fraud," that is a deluge, few seem to see coming - except here at Ice Station ZH

Binko's picture

Actually it's somewhere around the 8th to 10th largest economy in the world. Back in the glory days of the '70s I believe it climbed all the way to 5th.

Amish Hacker's picture

But, but, those imaginary revenues and understated expenses were the only things keeping the unicorn budget balanced.

Ah, well, human beings make mistakes. That's why every pencil comes with an eraser.

TheReplacement's picture

Q:  How does an accountant deal with constipation?

A:  He works it out with a pencil.

shermacman's picture

Teh gross domestic product of Jamaica?!
Perhaps you haven't heard of hookers and blow, let me school ya.
According to the way they calculate Italy's GDP, Jamaica has the highest in the world.


overexposed's picture

This is pretty much the same way the Soviet Union ran for 70 years.  Californians oughtta be proud... LOL

ebworthen's picture

Send in Linda Ronstadt!

I bet her math is better than Jerry Brown's.

Handful of Dust's picture

Jerry Brown has it under control; his planned Bullet train from Mexico to the LA ‘Safety Zone’ should be a real boost to their economy.

Winston Churchill's picture

A billion here, a billion there, and suddenly you're talking real money.

Colonel Klink's picture

The meme needs to be updated for the current inflationary environment.  It's now a trillion here, a trillon there, and suddenly you're talking real money.

FieldingMellish's picture

" That’s more than the gross domestic product of Iceland and Jamaica combined."

Not when you count the contribution from hookers and drugs.

Yen Cross's picture

   Gawd!  Moonbeams during the day are "prohibited".  Chrome "dome" Brown is as ass-backwards as his father was!

    Reason Foundation - California Has a Transportation Spending Problem, Not a Transportation Revenue Problem

The California Local Government Finance Almanac

Distressed Cities and the Lessons of California

California Drought Cost Nears $2 Billion

   This shit goes on and on! If Californika is so solvent then why do they release convicted "child molestors" and "illegal immigrant murdurers" back into the general population?

 1,400 'lifers' released from California prisons in last 3 years - CBS News

TrustWho's picture

But Californians will re-elect Brown. Who is the stupid one? I think Californians like electing liars, because they know they can NOT handle the TRUTH. Kick the can folks, this is the new age American Way! Let the kids pay for it. Making your kid walk a mile to get home is child abuse, but the financial debt is not? 

Pure Evil's picture

In order to define the "New Normal" we have to deconstruct the "Old Normal" in people's minds.

you enjoy myself's picture

it's not stupid if you're a parasite, which over 50%+ of Cali is.   so nothing will change with the gigantic money sinkhole until it finally implodes.  then the parasites just find a new host.  which is why you shouldn't be allowed to vote unless you're a net positive tax payer.

foodstampbarry's picture

I agree +100. My vote and the welfare queen are equal? How can a system like that not eventually collapse?

Promethus's picture

Then Mexico will build a super security fence along the boarder like the Great Wall of China to keep the Brown/Obama Free Shit Army out.

OldPhart's picture

What's really fucked up is that most of the inland is pretty conservative.  But the population centers of Los Angeles and San Francisco, along with most of the left coast out people the rest of us.  They are the ones that benefit from rail, buses, and programs.  Those of us in the interior see little of that other than the exports from the coast of section 8, welfare, and other social diseases. (In many cases encouraged by the city programs and actually exported due to generally lower costs in our area.)

That's why I thinik the plan to split this shit-hole, failed state, may succeed.  Someone did their homework on the proposed lines. 


AGuy's picture

"That's why I thinik the plan to split this shit-hole, failed state, may succeed."

It will never happen. As the parasites need the working half to support them. They will block any effort to split the state.


One And Only's picture

Another example of how the citizens of CA are just dumber than shit:

"Someone’s not using their equipment right, and they’re not using their heads,” he said.

Instead try:

i. weather's fault

ii. Bush did it

Get elected/appointed/reappointed. This isn't calculus and while calculus can be hard it's only because there's a drought and dehydration leads to decreased brain function. [did you see it?]


joego1's picture

And you don't thing the Feds have atleast that many screw ups laying around? I think it should be the citizens of the U.S.A. are dumber than shit for putting up with their criminal governments at every level.

Pure Evil's picture

Actually its because of all the smoke haze from the medical marijuana drifting around Sacramento.

Seasmoke's picture

When the state makes a million dollar error, it's their problem....when they make a 32 billion dollar error, it's your problem.

One And Only's picture

When you lie to the government it's a felony (perjury for example). When the government lies to us it's called "politics".

Excursionist's picture

I have a small business in California. 

And I wonder how much mileage I'd get out of, "Sorry Dept. of Business Oversight.  My bad in screwing up the myriad forms the business must file every year.  I'm launching an investigation of myself to see what really happened.  Please bear with me while this process runs its course.  In the interim, please give me money, so I can pay for all the legal and accounting professionals to conduct the investigation."

Sigh.  Just when I thought I couldn't get more jaded.

TheReplacement's picture

And yet!, you still live there...

One And Only's picture

I had a business in CA and made a choice. I moved it to another state (VA). I've never been happier.

I can empathize with you though. Those tears on your pillow will dry in the morning.

Pure Evil's picture

Its only the ass raping from .gov that never fades from memory.

alexcojones's picture

I spend time in California, and was recently in Rio, Brazil.

BOTH places suffer from boom bubble in Real estate. Both places have gilded youth. Lots of wealth and poverty in both places.

But the Best things about Rio, are the beautiful beaches, clean ocean air, (No chemtrails) and non-radioactive water. All things that LA sadly lacks.

Okay, and the babes in tiny teeny bikinis. California lacks those too.

Pure Evil's picture

And, of course you're going to share all the snapshots of the babes in teeny tiny bikinis.

AGuy's picture

"But the Best things about Rio, are the beautiful beaches, clean ocean air, (No chemtrails) and non-radioactive water"

Sorry to inform you but, Brazil has some of the most radioactive beaches:

Guarapari has an extremely high level of background radiation, some 175 mSv per year (20?Sv/h).[4][5] Along a roughly 500-mile portion of Brazil's Atlantic coast that runs from north of Rio de Janeiro up to the region south of Bahia, the sands of old beaches are naturally radioactive. Sea waves pound coastal mountains rich in monazite, a phosphate of rare earth metals containing uranium and thorium