The California Public Utilities Commission budget is packed with errors and the agency's practices are flawed, an audit from the state Department of Finance has found.

The analysis discovered "significant weaknesses within CPUC's budget operations which compromise its ability to prepare and present reliable and accurate budget information."

They include ineffective management over budgeting functions, problematic budget forecasting methodologies and failure to comply with rules of the CPUC's consumer protection arm, the Division of Ratepayer Advocates.

The audit found discrepancies of more than $1 million in seven of 14 funds that the CPUC administers. For the past seven budget cycles, CPUC's forecasting models have produced results differing greatly from the revenues, reimbursements and expenditures published in the governor's budget.

Variances were as much as 73 percent and $189 million in revenues, and as much as 99 percent and $212 million in expenditures, it said.

"The Governor, Legislature, Finance and CPUC's management and commissioners rely on the information generated to make budgeting decisions," the report said. "Inaccurate forecasts diminish the confidence in CPUC's budgeting information, and prevent stakeholders from knowing the actual performance of CPUC's funds and programs."

The CPUC's Budget Office is insufficiently staffed, it said, with one employee responsible for managing the budget responsibilities for 14 funds.

"CPUC's organizational structure does not facilitate centralized, cohesive budgeting practices," it added. "We observed general confusion and lack of knowledge by the Budget Office, program staff and management regarding the responsible parties for certain budget tasks."

The report said the director of CPUC's Administrative Services Division has "acknowledged weaknesses exist in its budget operations and displayed a general willingness to improve operations."

"The CPUC Budget Office has begun reviewing and questioning operating practices and is working to improve communication and transparency between program and budget staff," it added.

The Department of Finance undertook the review because of problems in other state department budgets. Last year California discovered that a surplus of nearly $54 million had grown in the Parks Department coffers over 12 years without anyone reporting it. That triggered a review of accounts holding more than a quarter of the state's budget (Greenwire, July 23, 2012).