What is the Office of the Controller?
The City Controller is charged by the City Charter to be the auditor and general accountant of the City. In order to fulfill the Controller’s Charter mandated functions, the City Controller’s Office has three major divisions – Auditing, Accounting Operations and Financial Analysis and Reporting.
The Audit Division of the Controller’s Office conducts scheduled audits, special audits, investigations and audits on request from City Council and management. The audits determine if existing controls are adequate, departments are operating efficiently and effectively, and ensure that revenues and expenditures are properly recorded in conformance with applicable laws and regulations. Auditors recommend improvements that promote efficiency and effectiveness of City operations and save taxpayer dollars. The following are the types of audits conducted by the Audit Division:
Financial and Compliance Audits - Financial-related audits determine whether (1) financial information is presented in accordance with established or stated criteria, and (2) the internal control structure over financial reporting and/or safeguarding of assets is suitably designed and implemented to achieve control objectives. Also includes routine payroll observations and reviews of departmental bank accounts.
Performance Audits - Performance and operational audits of City departments and programs are mandated by the City Charter, and assess whether government programs or functions are efficiently and effectively achieving their goals.
Vendor Services Reviews - Reviews of selected contracts to ensure vendor compliance with contract terms, whether acceptable services and/or goods were received, and that charges and corresponding payments were reasonable.
Fraud, Waste & Abuse - Manages the Controller's Fraud Hotline, which receives allegations of fraud and other improprieties committed by City employees, contractors or others in connection with City programs that impact City resources. Issues may be referred to another City agency in accordance with established protocols, or investigated by Controller staff.
Special Analysis and Reviews - Includes other reviews and analysis, such as tracking the implementation status of audit recommendations as asserted by Management, Follow-Up audits to independently ensure implementation status, and other special assignments as directed. On an as-needed basis, the Division also performs information systems audits such as general control reviews, application reviews, and post-implementation systems reviews to ensure system functionality and data integrity.
ACCOUNTING OPERATIONS DIVISION
The Accounting Operations Division is responsible for paying employees and vendors, budgetary control of all City funds as authorized by Ordinance, pre and post-audit approval and release of City funds. The Accounting Operations Division is comprised of the following sections:
Funds and Appropriations Section – Responsible for budgetary control of all City funds authorized by Ordinance, the Mayor and City Council. The section verifies the availability of funds before releasing expenditures for all City departments. This section also sets up the Budget appropriations within the City’s General Ledger in accordance with the approved budget. The group also reviews, analyzes and audits all journal entries to ensure compliance with the City Charter, Administrative Code and Generally Accepted Accounting Principles (GAAP).
Demand Audit Section – Responsible for approval of all demands (payments) by the City and establishing policies and procedures in regard to the receipt and disbursement of City funds by all City departments including proprietary departments. The section is also responsible for filing and remitting Payroll Tax and Use Tax to government agencies for all City Departments. Demand Audit also administers the City’s Travel and Purchasing Card programs.
Payroll Section – The Payroll Section is the central payroll-processing unit for the City of Los Angeles. It ensures that the City processes its payroll and pays its employees in a timely manner and in accordance with the City Charter, Administrative Code (Division 4), Civil Service Rules, Department Personnel Ordinances, Memorandums of Understandings, State and Federal regulations. Payroll Section also provides support to PaySR, the City’s payroll system and is responsible for system enhancements and updates.
Paymaster Section – Responsible for the security, control and disbursement of all warrants (checks) for City vendors, workers’ compensation and payroll. Paymaster is also responsible for enforcing legal wage garnishments against City employees and vendors and disbursing funds collected through the voluntary child and spousal support payroll deduction program.
Financial Management System Section (FMS) – FMS is the City’s financial system of record and integrated to the business processes of virtually all aspects of the Controller’s Office. FMS provides four major modules (functions) and a business intelligence tool for the City of Los Angeles:
• Accounts Payable (A/P) for the setup and payment of City vendors
• Accounts Receivable (A/R) for the billing and collection of payments from City customers
• Cost Accounting (CA) to track project/grant expenditures used to support the processing of cost reimbursements
• General Ledger (GL) for financial reporting and budgetary controls
• InfoAdvantage for FMS reporting
FMS supports the business operations of 42 City offices/departments with approximately 1,500 users.
FINANCIAL REPORTING AND ANALYSIS DIVISION
The Financial Reporting and Analysis is responsible for producing federal, state and local financial compliance reports and providing financial reports and forecasts to the City Council and management. The following are the sections of the Division:
GAAP Section – Produces the City’s Annual Financial Report (CAFR) in accordance with Generally Accepted Accounting Practices (GAAP) and in compliance with accounting standards set by the Government Accounting Standards Board (GASB). The CAFR is the official financial report of the City. In compiling the CAFR, the GAAP section converts non-GAAP budgetary basis (Cash) financial data to a GAAP format (Modified and Full Accrual) for financial statement presentation. The section provides GAAP conversion guidelines to all City Departments as well as training and guidance.
General Accounting Section - Tracks, forecasts and reports on City receipts, cash flows, debt levels and the status of the Reserve Fund. The General Accounting Section prepares the Controller’s March 1 revenue forecast for the General Fund and the Preliminary Financial Report (the first official financial information available on the prior fiscal year).
Single Audit Section – Produces the Single Audit in support of $426 million in grants awarded to the City each year in compliance with the Federal Single Audit Act of 1984, the Single Audit Amendments of 1996 and Office of Management and Budget (OMB) Circular A-133.
Cost Allocation Plan (CAP) Section - Produces the City’s CAP or "Cost Allocation Plan". The CAP is a method by which the City secures reimbursement of indirect costs (Fringe Benefits, Central Services and Department Administration and Support) from the State and Federal governments in connection to grant funded projects. The reimbursements average about $19 million annually.
Check Reconciliation Section – Reconciles all warrants issued against warrants paid taking into account all adjustments. The Check Reconciliation Section protects the City by ensuring that the banks only honor the checks that are issued by the City and not fraudulent checks. This section is responsible for processing remakes of checks, issuance of duplicate and emergency checks and the processing of returned checks.