California’s financial watchdog failed to sniff out wasteful spending and abuses happening right under her nose — and her office even tried to burn more taxpayer money to cover their debts.

The findings in a new State Auditor’s report expose waste, fraud and abuse across California government, including inside Controller Malia Cohen’s own office, which is responsible for safeguarding taxpayer money and auditing the agencies that spend it.

The Controller‘s Office — responsible for protecting the state’s financial resources, auditing public spending and administering the state’s payroll system — was singled out for losing track of a manager working from Idaho for five years, as well as another manager who spent parts of multiple years working in Alabama and Tennessee.

Meanwhile, Cohen’s senior officials “purposefully” stalled the recovery of more than $33,000 in employee overpayments and tried to get the state to pay “damages” to cover up the losses.

State Auditor Grant Parks called the idea “poorly conceived” in his report and concluded the failures inside Cohen’s office “risked providing [State Controller’s Office] employees with a gift of public funds.” 

Cohen did not respond to the California Post’s request for comment. 

The Controller’s Office disputed the finding that it violated state law, arguing it had initiated collection within three years. The auditor rejected that argument, finding officials canceled required payroll deductions without reasonable justification.

Herb Morgan, a candidate for state controller in November’s election, slammed Cohen’s oversight and called the overpayments more than “a paperwork error.”

“While Sacramento tells Californians to live here, work here, and pay here, the Controller’s Office had staff teleworking from Idaho, Tennessee, and Alabama — and admitted it does not check where its people actually work,” Morgan told The Post. 

“If Malia Cohen cannot police her own payroll or her own telework, she has no business auditing anyone else’s.”

The findings regarding the Controller’s Office were among nine substantiated cases detailing taxpayer-funded misconduct across state government, resulting in approximately $885,000 in wasted, misspent, lost or improperly distributed funds.

A CAL FIRE employee used a state vehicle to commute for about five years and billed his travel time as work, costing taxpayers an estimated $69,000.

A CalRecycle employee rented and drove state vehicles for more than a year with a suspended license — including rentals on 116 days she wasn’t scheduled to work — racking up nearly $22,000 in rental and fuel expenses.

Caltrans bypassed required competitive solicitation procedures for nearly $624,000 in purchases, and the Student Aid Commission rushed a $30,000 contract through before its funds expired and chose the most expensive vendor without being able to explain why.

This list of wrongdoing offers only a snapshot of investigated cases. 

Gov. Gavin Newsom’s office, which has been defensive over criticism that it has not done enough to root out waste, fraud and abuse, declined The Post’s request for comment.

Two of the nine substantiated cases involved office overseen by Cohen, who is up for reelection to oversee the agency entrusted with accounting for and disbursing billions in state funds.

A manager in the Controller’s Office admitted to working from Idaho “just about every day” after moving there in November 2020. He concealed his location because he feared losing his job, investigators said.

Despite living outside California, he listed California addresses on telework agreements signed in 2023, 2024 and 2025. The address on his 2025 agreement belonged to a family member.

A second manager worked from Alabama and Tennessee while listing California locations on her agreements. Investigators rejected her claim that she still lived in California, concluding she was more likely than not a resident of another state.

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The office did not typically monitor employees’ telework locations, and its policy lacked explicit language requiring employees to generally telework within California.

“The SCO lacks clear policy guidance and internal controls to prevent and detect out-of-state telework,” the report said. 

Both employees have since left the office, and the Controller’s Office said it was finalizing a revised telework policy with periodic location monitoring.

The State Auditor’s office conducted investigative work on 1,721 allegations between July 2025 and June 2026. It’s unclear how many of those allegations were substantiated.