California Code, Government Code - GOV § 22559

Every public agency included in the agreement between the board and the federal agency shall submit all wage, contribution, and other reports required to fulfill the obligations of the state under the federal system.  In the event of a failure or refusal to submit such reports, the board or the state officer or agency designated to assist in the administration of this part may audit the books and records of such public agency to the extent necessary to determine the public agency's liability for employer and employee contributions, penalties and interest required under the terms of the agreement.  The cost of such audits as determined by the board in a manner approved by the Department of General Services shall be assessed against such public agency and each public agency so assessed shall reimburse the state for such cost.