LOS ANGELES (CBSLA.com/AP) — A state investigation into the “financial practices” of the city of Industry is set to be launched in response to an audit that raised questions about $326 million in payments to businesses owned by a former mayor and his family, officials said Thursday.

California State Controller Betty Yee sent a letter this morning to Industry notifying city officials that her office would be conducting the investigation, which will focus on alleged discrepancies in financial reporting and an analysis of administrative and internal accounting controls, Yee said.

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Allegations of wrongdoing by city officials and possible irregularities in local, state and federal programs administered by the city in fiscal years 2012-13 and 2013-14 will also be examined by Yee’s staff, officials said.

An audit conducted by outside firm KMPG released in April found that much of the money the city paid former mayor David Perez and his family over 20 years was supported by vague or erroneous invoices.

“Our initial review shows significant discrepancies between the financial transaction reports submitted to my office and the city’s audited financial statements,” Yee said. “As the state’s chief fiscal officer, I have the duty to bring my office’s expertise to bear to identify potential misuse of taxpayer dollars.”

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Perez stepped down from his post as mayor in 2012 after 11 years, citing health issues. In 2014, the city sued Perez and his various companies for nearly $10 million, and last September Industry cut a contract with Zerep to provide general maintenance to city facilities, the Associated Press reported.

Located about 20 miles east of Los Angeles, Industry has around 400 residents and $140 million in annual revenue.

Auditing staff for Controller Yee plans to convene an initial meeting with city officials in May, with fieldwork beginning soon after, according to officials.

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