Update on State Audit of SOCWA


In June 2017, the Joint Legislative Audit Committee recommended that the South Orange County Wastewater Authority undergo a State Audit. It was requested by Senator Pat Bates and Assemblyman Bill Brough. The Audit took place from summer 2017 through March 2018.


State Auditor Elaine Howle concluded that SOCWA is on the right path of strong financial management. Her assessment was that SOCWA faced challenges in the past, but that it had implemented a plan to address these matters. The State Auditor characterized these practices as “sound,” “reasonable” and “sufficient.” Importantly, the State Auditor also debunked unfortunate and unsubstantiated claims of missing funds.

SOCWA appreciates the impartiality of the State Auditor and her confidence in our financial management path. The report’s title, which reads in part SOCWA “Should Continue to Improve,” speaks to the confidence the State Auditor has in SOCWA’s current path.

Next Steps

The State Auditor had great recommendations for SOCWA to consider and the agency will implement all ideas promptly.  The process-oriented recommendations include: ensure written policies to guide public information requests; consider amendments to governing documents to assign pension responsibility if SOCWA were to ever dissolve; create written guidelines for financial reporting and accountant selection process. SOCWA anticipates implementing all recommendations promptly.


Additional FAQs

What is SOCWA’s mission?

SOCWA protects local public health, ocean water quality, the environment by treating billions of gallons of wastewater from South Orange County communities. It also creates about 40 percent of the region’s recycled water for golf courses, parks, medians and other landscape areas. It serves about 500,000 people from the souther edge of Irvine to the San Diego border.

Why was SOCWA audited? 

Two local legislators requested the audit. It was approved by the Joint Legislative Audit Committee in June 2017. The audit was requested to review financial practices over the past several years, governance structure and other matters.

Does SOCWA agree with the audit?

Yes. The results characterize our current financial practices as “sound.” We also agree with characterizations of the past. SOCWA is pleased the State Auditor expressed confidence in our current path.

What challenges has SOCWA faced in the past?

Our financial system technology did not match the sophistication of the agency. We completely rebuilt this system in 2014, which set us on a path to strong financial management. The Auditor expressed confidence in this approach and new system.

Did SOCWA receive “qualified” financial statement audits in the past? 

Every government agency must conduct an audit of their financial statements each year. For the Fiscal Years 2014/15 and 15/16, our audits had a “qualification” that we needed to address. This dealt with ensuring all SOCWA assets had historical and current details to ensure accurate depreciation. This was completed and approved by the board in December 2017. The FY 2016/17 audit was clean and had no qualifications as a result.

How is SOCWA funded? 

SOCWA has ten member agencies (local water districts and cities) that fund operations, maintenance and capital repairs. Some expenses, like general admin, are shared evenly. Other costs are shared proportionally based on agreements and participation in any of SOCWA’s facilities.