City of Los Angeles Blames Technology, Retired Auditors for Missing $43 Million

Officials in cash-strapped Los Angeles have uncovered almost $43 million that was just sitting in a Department of Transportation account unbeknownst to the city, prompting them to wonder if there's more magic money stashed away:

The discovery of $42.6 million will be a welcome one-time infusion into next year's budget, officials said, but has left them worried that other such funds may still be undiscovered.

Had the money been discovered sooner, it might have added a few million dollars annually to the city fund that pays for police, fire and other basic services during years that city employees were forced to take furloughs and pay cuts.

How exactly does a city in desperate need for spare pennies misplace $43 million? I'm glad you asked!

[F]rom 1995 to 2011, the city was reimbursed from the transportation grant fund only twice, according to a City Council memo. The money grew in a fund that was not audited or examined. The budget office does not know why, it said, because senior officials who managed the budget during those years have retired or resigned.

City Controller Wendy Greuel, who is running for mayor, said her office is auditing about 600 special funds but had not yet looked at the transportation grant fund. She now plans to put the audit "on the front burner," a campaign spokeswoman said.

It's kind of like when you find a $20 in your pants pocket and immediately check every coat pocket and couch cushion for more. Except in this case, we are talking about $43 million. Whatevs.

City Administrative Officer Miguel Santana told the L.A. Times that "the department's failure to see the nearly $43 million seemed to be the result of inadequate technology and — after auditors took early retirement during budget cuts — a lack of institutional knowledge."

"When all your focus is on providing resources and surviving another year, proactive review of our fiscal management can get lost in there," he said.

So remember, kids, if you misplace $43 million that isn't yours, just blame crappy technology, budget problems and guys who don't work for your company anymore.

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

Friday Footnotes: KPMGers Happily Take Slashed Pay; New CPA Model Still a Go; No Rona Accounting | 5.22.20

AICPA Council supports advancement of new CPA licensure model [Journal of Accountancy] An effort to transform the CPA licensure model took a step forward Wednesday when the AICPA governing Council voted to support its advancement during its virtual spring meeting. Council voted to support the CPA Evolution initiative, which is being undertaken by the AICPA […]

Is Trump’s Latest Executive Order Another Sign of a PCAOB-less Future?

On May 19, President Trump issued Executive Order on Regulatory Relief to Support Economic Recovery, directing federal agencies to address coronavirus-related economic emergency “by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national […]