Stem Cell Institute Auditor Refuses State Controller’s Request for Audit Documents

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Santa Monica, CA — The California State Controller’s Quality Control Review of the stem cell institute’s first audit raises troubling questions about access to documents, the Foundation for Taxpayer and Consumer Rights (FTCR) said today.

The audit by Gilbert Associates Inc., covering Nov. 2, 2004 to June 30, 2005 found that financial statements for the California Institute for Regenerative Medicine (CIRM) “present fairly, in all material aspects, the financial position of CIRM.”

However, the state controller’s office in its review said that the auditing firm refused to provide copies of working papers that the firm considered proprietary unless the Controller’s Office signed a letter that agreed to treat the materials confidentially.

CIRM would have us believe that the audit demonstrates the institute operates within the common practices of state agencies,” said John M. Simpson, FTCR’s Stem Cell Project director. “Other state agencies don’t hire auditors who stiff the controller’s office when it’s operating on behalf of the people of California.”

The controller’s staff was able to access the working papers at Gilbert’s offices, but stressed that it needs copies to allow all levels of review, which will be more difficult in “subsequent years when bonds and bond anticipation notes are issues, research grants are awarded and paid and a full year of operations will be subject to audit.” The controller also noted that Proposition 71 requires the CIRM audit “and there is nothing in the proposition, statute, etc. that make any working papers proprietary.”

The controller recommended that CIRM work with its lawyer and Gilbert “to ensure that we are provided copies of all working papers upon request in subsequent reviews.”

“The bottom line is simple,” said Simpson. “CIRM is a state agency; they must act like one. I guess CIRM management needs to engrave that motto on their foreheads.”

FTCR called on CIRM to ensure the necessary documents are given to the controller.

The controller’s report also recommended in the future that CIRM follow generally accepted government accounting standards (GAGAS) rather than the generally accepted auditing standards (GAAS) used in the first audit. A third recommendation was that all items costing more than $5,000 should be capitalized.

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The Foundation for Taxpayer and Consumer Rights is California’s leading non-profit and non-partisan consumer watchdog group. For more information visit us on the web at: Our stem cell information page is located at:

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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