State Auditor Presents Troubling Audit and Continued Monitoring of South Orange County Wastewater Authority (SOCWA)

SACRAMENTO – The California State Auditor having concluded the audit of SOCWA, presented to the Joint Legislative Audit Committee (JLAC) its findings and recommendations regarding their audit of the South Orange County Wastewater Authority (SOCWA).

After this week’s Joint Legislative Audit Committee meeting, committee member Assemblyman Jay Obernolte (R-Hesperia) stated, “When our committee considered Senator Pat Bates and Assemblyman Brough’s request to audit SOCWA, I was troubled to hear the allegations of the JPA’s financial transparency issues. The State Auditor’s findings of longstanding financial management deficiencies prove that the audit was necessary and I look forward to SOCWA’s plan to address the State Auditor’s recommendations that will help put the JPA into compliance with California law and best practices.”

“The State Auditor’s findings validate the concerns that many in Orange County have had about SOCWA. SOCWA has essentially been in financial disarray for the past 15 years. Unaccounted cash, financial mismanagement, and disregard for key laws requiring the rotation of auditors and compliance with the California Public Records Act. It’s our responsibility to keep monitoring the situation at SOCWA and ensuring they implement every recommendation that the State Auditor gave them,” added Assemblywoman Blanca E. Rubio (D-Baldwin Park), who is also a member of the legislative audit committee.

A key finding of the audit was that “SOCWA has issues with and misreported it financial statements for 15 years.” They also found that “SOCWA’s policy and procedures do not comply with certain requirements of the California Public Records Act.” The State Auditor will continue to monitor SOCWA’s work to ensure they are properly implementing the recommendations. In fact, the Auditor’s office has added a spreadsheet to its website to track SOCWA’s progress.

Assemblyman Brough commented, “as a joint-author of the audit request with Senator Pat Bates it is important for SOCWA to take serious the recommendations presented by the State Auditor and address them as quickly as possible to transform SOCWA into a fiscally sound public entity. Senator Bates and I took this important step in requesting the audit to ensure ratepayer dollars were being fiscally spent.”

“The State Auditor concluded that SOCWA did not adequately account for cash it collected from its member agencies, resulting in a $354,000 discrepancy. SOCWA should finish investigating the difference in available cash balances, prevent future discrepancies in available cash balances and should implement improved procedures to better account for members’ cash contributions. They also need to have a plan to return an additional $2.3 million in capital funds that have accrued over 10 years. To inadequately track cash collected and mismanage the accounting of millions of dollars is an outright abuse of ratepayer’s money,” concluded Brough.