Brief

The Office of Finance has submitted the required annual audit of the Communications Users Tax (CUT) for fiscal year 2025-26. This routine compliance review examines tax revenue collection, user account compliance, and related financial matters. The file was introduced on May 21, 2026, and is currently pending review in the Budget and Finance Committee, where it arrived via referral on May 26, 2026.

Full summary

City ordinance requires an annual independent audit of the Communications Users Tax, a levy on phone, internet, and other communications services that feeds into the City's General Fund. The Office of Finance engaged the accounting firm Turner, Warren, Hwang and Conrad to conduct an agreed-upon procedures review covering the fiscal year ended June 30, 2025. City Treasurer and Director of Finance Diana Mangioglu submitted the resulting audit materials to the Council in May 2026. The audit covered three core questions: whether communications services providers accurately remitted CUT payments to the City; whether the Office of Finance's collection procedures complied with CUT Ordinance No. 179686 and the Los Angeles Administrative Code; and whether CUT revenue was properly deposited into the General Fund. Auditors sampled 107 remittances and journal entry transactions recorded in the City's LATAX tax collection system, traced payments through to the City's FMS general ledger, reviewed delinquent account procedures, and compared monthly collections for fiscal year 2025 against the prior year. They also reviewed quarterly remittances from the California Department of Tax and Fee Administration, which collects a portion of the tax on the City's behalf. All three areas came back clean. Auditors found no exceptions in provider remittances, no departures from required collection procedures, and no instances where CUT revenue was diverted from General Fund use. The internal controls review, conducted under Government Auditing Standards, identified no material weaknesses in the City's CUT collection processes, though auditors noted their review was not designed to surface every possible control deficiency. The Office of Finance separately confirmed in writing that no fraud, unrecorded transactions, or regulatory issues had affected CUT operations through the audit period. The file was introduced on May 21, 2026, and a revised version of the Office of Finance report was submitted on May 26, 2026. Both documents were referred to the Budget and Finance Committee, where the file remains pending. No committee action has been recorded yet.

Activity (4)

• 2026-05-26 Office of Finance document(s) referred to Budget and Finance Committee.
• 2026-05-26 Document submitted by Office of Finance, dated May 26, 2026.
• 2026-05-21 Office of Finance document(s) referred to Budget and Finance Committee.
• 2026-05-21 Document submitted by Office of Finance, dated May 21, 2026.

Documents (2)

• 2026-05-26 Revised Report from Office of Finance · report
• 2026-05-21 Report from Office of Finance · report