CAFR 50, Where Are You?

Are you still waiting on your state stimulus check?  They should be going out the middle part of November.

Have you seen your state’s annual audit for the year ended June 30, 2020?  It should be issued by the end of the month. Deja vu: “Did you know that 49 of the 50 nation’s states have completed and published their annual audited financial statements?” I reported right here June 2020.

The Golden State has had the approval of an annual budget and an historic recall election and we still haven’t seen its balance sheet!

Corporate income tax returns are due two and one-half months after the fiscal year end.  A fiscal year end of June 30 has an August 15^th deadline, unless an extension of time to file is requested.  But, that’s only good for another six months.  More than eight months should be plenty of time to close the books, finish the annual audit by an independent certified public accounting firm, and prepare the tax returns to pay California for the privilege of doing business in this state.

When I served as an officer for the County of Orange, we were able to complete the annual audit and issue the Comprehensive Annual Financial Report (CAFR) by December of the same year.  That would be approximately six months.

Your state has still not closed its books within sixteen months!  And the State Controller’s Office has informed me that we’ll have to wait until the end of November.

With Silicon Valley within its borders, not closing the electronic books within a matter of weeks is egregious, but a year and one-half?  This is unacceptable.

The 49 other states have already completed and issued their CAFRs.

California is a national embarrassment.

The State Controller, Betty Yee, has not fixed this glaring delay.  She concludes her two terms in office at the end of next year.  Something tells me that she will not have improved this situation by then.

She was late last year, too.  The CAFR was released literally hours before the 2020 November elections.  The year before it was the state of Illinois that issued their CAFR last.  Both states are in the bottom 20-percentiles of fiscal rankings of all 50 states.

One of the sad excuses is blaming it on the software, known as Fi$Cal, for the delays.  Pulling out this worn out yarn is getting old.  If the writers and providers of this massive form of QuickBooks cannot get its proverbial act together, then sue them, get the $1 billion cost back and move on to a better General Ledger provider.  This is not rocket science.

California has been taken to the cleaners because it is easy for a software provider to intentionally mess up the project mid-stream and extract more fees to rectify the supposed delays.

If the state of California had a Chief Operating Officer, this office or Governor’s recently appointed State Chief Project Officer, should consider suing the Fi$Cal contractors under the False Claims Act for promissory fraud, fraudulent concealment, negligent misrepresentation, and breach of contract.

The County of Orange, at my behest, filed such a claim against the software writers of its Property Tax Management System for not delivering the finished product on time and within budget.  Government is a deep pocket that can be taken advantage of because it is mismanaged and sloppy.  And if there are overruns, then it just raises taxes.  This is the modus operandi, but it must cease.

Sacramento must send a message to the software industry that it will not be abused or milked by incompetent or untruthful successful bidders.

The County of Orange prevailed in its demand for damages.  It would be the largest settlement ordered in Orange County during 2016.

Without some tangible effort to address the current situation, the State Controller should at least communicate on her website why she is so embarrassingly delinquent on this simple annual requirement.

If a corporation is late in filing its income tax returns, it faces severe financial penalties.  Why are California’s Controller and Governor exempt?  Where are the “lead by example” mantras now?

Why must the California State Auditor keep pointing out the shortcomings of the Information Technology department and nothing gets done?  Why did the Governor establish a Digital Technology Department at $40 million per year and we have yet to see an improvement in this area?

As a stakeholder, I’m outraged at the nearly one-year delay of where my state is financially.  At the least, address the lack of communication as to why California is the national laggard, again.