Sometimes referred to as the "eyes and ears" of the Legislature, the office is known for analyzing the state budget with the aim of making government programs more effective and less costly.

The LAO should not be confused with the California Legislative Counsel (a position established in 1913), which does not focus primarily on the budget.

The analytical staff is divided into four subject areas: Corrections, Environment, and Transportation; State and Local Finance; Education; and Health and Human Services.

[2] The office was founded when the JLBC appointed the first "Legislative Auditor" on October 8, 1941 to assist with the state budgeting process.

[4] [5] One of the most important responsibilities of the LAO has been to analyze the annual Governor's budget and publish a detailed review at the end of February.