Conducting an audit is one of the many ways in which State officials can ensure that a company, individual or organization is reporting their financial activity accurately. However, in other cases, these audits are used in an effort to reveal the identities of individuals who have provided the entity or individual with donations that are meant to serve a particular purpose. Based on a newly enacted California law, an organization has filed a request for an audit to take place in order to discover who was responsible for donating $11 million to an organization that opposes recently proposed state legislation.

The donation is believed to have been made by an out-of-state organization that has listed themselves as being non-profit. It has been asserted by Governor Jerry Brown that this money will be used to combat his tax initiative, which would continue to allow California students to receive state sponsored assistance. If the proposal initiated by Brown, titled Proposition 30, does not pass, it has been reported that $6 billion in state aid would be cut from the budget.

The donations are believed to have come from a group in Arizona. However, it is unclear exactly what their motive is behind the donation, which some have called the largest secret political donation in state history. The California commission now has 14 days to determine whether they will initiate an audit.

Understanding the laws surrounding who can be subject to audits may not only assist those who are being audited, but also those who feel that another California organization or individual should be audited. This process can be essential to ensuring that everyone is playing by the same rules. However, enduring this process without a proper plan can turn it into something far more difficult. Those being audited or seeking an audit of someone else may benefit from understanding just how this process works prior to the audit taking place.

Source: Daily Democrat Online, “Calif. group seeks audit of $11M donation by Ariz. nonprofit,” Oct. 20, 2012