State officials are rushing to put new oversights in place following the embezzlement of almost $1.3 million by an Association of Bay Area Governments official from a bond-funded San Francisco development account.
State Treasurer John Chiang on Thursday announced a partnership with Senate President Pro Tem Kevin de León, D-Los Angeles, to conduct legislative oversight hearings to make sure money raised through government bond sales is safe from fraud, abuse, and mismanagement. Chiang also said he has created a special task force to develop best-practices guidelines on the care of bond proceeds that will be issued to all state and local governments.
California and its local governments over the past decade have issued more than $700 billion in public debt, Chiang noted in a news release.
“We rely on these borrowed moneys to build and maintain the critical infrastructure upon which our communities and economy depend – from schools and roads to levees and libraries,” Chiang said. “The ease in which one of ABAG’s leaders allegedly fleeced more than a million dollars in bond funds raises concerns regarding whether there are sufficient safeguards at the thousands of State and local agencies which are responsible for nearly three-quarters of a trillion bond dollars.”
And state Controller Betty Yee announced Thursday her staff will audit ABAG’s internal administrative and accounting controls.
“As California’s chief fiscal officer, I am charged with protecting state resources,” Yee said. “When public money goes missing, I need to determine how it happened and whether effective controls are in place.”
Yee’s audit will initially focus on FY 2012-13 and 2013-2014, but that might expand if investigators discover accounting weaknesses that may have affected earlier years. The Controller’s Office sent a letter today to ABAG asking that the association make available documents that will be used in the audit including ledgers, contracts, invoices, personnel records, meeting minutes, policies and procedures. The audit work will begin Feb. 20 and is expected to take a few weeks.
More, after the jump…