Cal. Wat. Code § 12891.2
It shall be the duty of the State Controller to make such audit or audits of the books and records of public agencies receiving loans or grants pursuant to this chapter, as he may deem necessary from time to time, for the purposes of determining that the money received by such public agencies as loans or grants hereunder has been expended for the purposes and under the conditions authorized herein. Whenever the State Controller determines that any money paid to such a public agency has been expended by such public agency for purposes not authorized by this chapter, or exceeds the final cost of the project for which a loan or grant was made, or exceeds the final cost of the feasibility report for which a loan was made, the State Controller shall furnish written notice to the department and to the public agency directing the public agency to pay into the State Treasury the amount of such unauthorized expenditures, or the amount in excess of the final authorized cost of the project or the feasibility report. Upon receipt of such notice, such public agency shall, at the time specified therein, pay to the State Treasurer the amount set forth in such notice. Such amount shall, upon order of the State Controller, be deposited in the State Treasury to the credit of the California Water Resources Development Bond Fund to be available for the purposes prescribed in Section 12937 of this code.
It shall be the duty of such public agency to make the payments to the State Treasurer as provided in this section, and it shall be the duty of the State Controller to enforce such collection on behalf of the state.
Ca. Water Code § 12891.2