California State Capitol Dome. (Photo: Kevin Sanders for California Globe)
California Gets a Clean Audit – Now Comes the Hard Part
The California State Auditor’s report reveals that major departments are still unable to maintain basic financial hygiene
By Marc Joffe, May 21, 2026 10:51 am
After years of embarrassing delays that left taxpayers and municipal bond investors flying blind, California has finally produced its audited financial statements before the state’s budget is finalized. On May 12, State Controller Malia Cohen released the Annual Comprehensive Financial Report for the 2024-2025 fiscal year. While still missing the standard nine-month reporting deadline by 42 days, the filing delay was much shorter than it had been in recent years. And, for the first time since 2019, the state received an unmodified, or clean, audit opinion from the state auditor.
The audit filing delays began under former Controller Betty Yee, peaking at about 12 months in the 2021 fiscal year. Given this record of failing to properly execute a key responsibility of a state controller, it is shocking that Yee was a serious candidate for Governor and a relief that she suspended her campaign. Although Malia Cohen seemed like a questionable replacement for Yee given her lack of relevant experience, she deserves credit for overseeing a marked improvement.
The restoration of a clean audit opinion reflects a necessary, albeit delayed, cleanup of the catastrophic failures at the Employment Development Department. For the previous several years, auditors were forced to issue modified opinions because the state literally could not verify its own accounting for the Unemployment Trust Fund. During the pandemic, the agency’s spectacular internal control collapse allowed tens of billions of dollars to flow to international crime rings and prison inmates, an institutional failure extensively covered by the Globe. While the 2024-2025 financial statements finally untangled the massive web of fraudulent pandemic-era unemployment payments sufficiently to pass an audit, taxpayers and businesses will be paying higher payroll taxes for decades to backfill the multi-billion dollar deficit left behind by bureaucratic negligence.
Effective financial management is essential given the enormous size of California State government. According to the government-wide Statement of Activities, total primary government expenses reached $520 billion in the 2024-2025 fiscal year up from $320 billion in 2018-2019, the last pre-COVID fiscal year.
Managing a half-trillion-dollar expense base requires strong internal controls, yet the California State Auditor’s accompanying Internal Control and Compliance Audit Report reveals that major departments are still unable to maintain basic financial hygiene. Nowhere are these deficiencies more alarming than at the Department of Health Care Services, where the auditor identified material weaknesses and severe understatements of expenses within the Medi-Cal program. So it should not be surprising that the federal government is withholding $1.3 billion on Medi-Cal matching payments until the state can provide assurance that the money is not being lost to improper payments.
This inability to track health care spending accurately is particularly dangerous given the state’s aggressive expansion of Medi-Cal eligibility. California recently extended full health coverage to all low-income residents regardless of immigration status, a decision that has driven unprecedented cost increases and blown a massive hole in the budget.
So while this year’s less-delayed, clean audit is a step toward fiscal responsibility, it is only the first step of many. Hopefully, voters will choose elected officials that will demand more progress in 2027.
- California Gets a Clean Audit – Now Comes the Hard Part - May 21, 2026
- The Bay Area’s $100 Billion Natural Gas Appliance Ban - April 15, 2026
- California’s Bloated Healthcare Sector and the Push for a Billionaire Wealth Tax - January 19, 2026
RELATED ARTICLES
-
September 22, 2024 -
August 29, 2018 -
June 22, 2022
Despite the State Controller being responsible for overseeing the accountability and disbursement of the state’s financial resources, Malia Cohen had NO previous background in finance, accounting or auditing before she was installed as State Controller. She has a degree in political science and has been a professional Democrat political hack since graduating from college. She worked as a field organizer for Gavin Newsom in his San Francisco mayoral election and was his confidential secretary for two years when he was mayor. After leaving Newsom’s office, Cohen worked as a legislative aide for San Mateo County supervisor Rose Jacobs Gibson. In the election for District 10 of the San Francisco Board of Supervisors, she was third but eventually won the election based on ranked choice voting. Cohen succeeded London Breed as president of the Board of Supervisors on June 26, 2018, following Breed’s election as mayor of San Francisco. Cohen ran in the 2022 election for California State Controller against Republican Lanhee Chen winning the race with 55% of the vote, the lowest margin of victory for any statewide candidate that election cycle. In the lead-up to her 2022 campaign for California State Controller, Malia Cohen faced significant scrutiny over her personal financial history. The controversy centered on two key issues: the foreclosure of her San Francisco condo in 2010 and the 2021 suspension of her business license for her social media consulting firm, Power Forward, due to unpaid taxes and failure to file returns.
Her Republican opponent, Lanhee Chen, used these incidents to question her fitness for the role of the state’s chief fiscal officer, asking, “How does Malia Cohen expect to be able to be the chief fiscal officer for one of the largest economies in the world when she can’t even handle her own finances?”
She released the Annual Comprehensive Financial Report well after the reporting deadline and the Internal Control and Compliance Audit Report revealed that the Department of Health Care Services has material weaknesses and severe understatements of expenses within the Medi-Cal program.
Malia Cohen has proven that she is not fit to be State Controller and no doubt she was probably installed with Democrat voter fraud and rigged voting machines?
Excellent expose’ TJ, and I’ll throw one more log on your proverbial fire – if Malia Cohen WAS competent, she would also issue a report that would explain the corrective steps necessary to improve the system of internal controls so that the incoming officeholder would have awareness of the structural defects in the segregation of duties or other internal control weaknesses.
But as you said, she is a San Franfreakshow political insider from Newsom’s earlier political career, who has NO technical training or financial management or reporting experience that would prepare her for the SIGNIFICANT responsibilities of the office.
But that’s the California Democrat party way – install a know-nothing political climber, who can scrape by in elected office for their term, do the VERY bare minimum to scrape by, and then leverage their “experience” in office to fail-upwards into the next elected office, where they can continue to siphon off money or influence/kickbacks to enrich themselves and their network.
Case in point – rainbow-warrior and wanna-be Insurance Commissioner Ricardo Lara, the state’s first “openly gay” elected official (big whoopee doo…) who has NO accounting, finance, actuarial or risk management background, either…
This knucklehead thought he would take the role, slide on by and use the “experience” to use in his next campaign…
Unfortunately, Karen Bass happened, and much of West LA burned to the ground, along with much of the San Gabriel Valley, and now he’s crying that he’s stressed out (and probably why he’s taking international trips to escape the pressures of the job).
California should amend its Constitution to REQUIRE that elected officeholders of offices that are TECHNICAL in nature must have significant and RELEVANT BUSINESS EXPERIENCE and at least TRAINING in order to be successful and COMPETENT at their jobs.
In the meantime, the Republicans are running a slate of EXPERIENCED BUSINESS PROFESSIONALS that know HOW TO DO THEIR JOBS, specifically :
Michael Gates = Attorney General (to replace corrupt Rob Bonta)
Herb Morgan = Controller (replacing incompetent Malia Cohen)
Stacy Korsgaden = Insurance Commissioner (replacing incompetent Ricardo Lara)
Jennifer Hawks = State Treasurer (replacing invisible Fiona Ma, who is employing the above stated “fail upward” plan to run for Lt. Governor – I recommend David Collenberg, to get Agriculture a seat at the head table going forward)
Don Wagner = Secretary of State (replacing doughnut-eating Dr. Shirley Weber, our first DEI SOS, who proudly wears her Kente sash to signal her self-annointed royalty status, and is running for re-(s)election. This woman is so dumb that she’s left a damning PDF up on her website that explains how WEAK the security is on Padilla’s “Dominion” voting machines…
We are truly “led” by an incompetent pack of virtue-signaling “community organizers” and DEI-hires that have no background or training for the roles that they hold, which explains WHY California is SUCH a dumpster-fire mess of a state….
Both TJ and CritialDfence9 detail the fraud and failure of Democrat elected officials. The concentration of incompetence boosted by unfunded liabilities contribute to California’s unaffordable living standards and lower quality of life.
California will never recover these inexcusable losses or restore its golden glory of enterprise until governance is virtuously held ACCOUNTABLE.
.