"This delay resulted in nearly 900 children living in placements that the department later determined to be unsafe or inappropriate," the report stated.
The audit attributed many of the department's problems to high turnover in its management. The department has had four directors in one year and also saw a high turnover in key management positions, the report said.
"A general instability in management has hampered the department's ability to address its long-standing problems such as completing timely investigations and placement assessments," the review found.
"The turnover has impeded the department's ability to develop and implement a strategic plan that would have provided cohesiveness to its various initiatives and communicated a clear vision to department staff," it said.
Other problems found by the audit included failure to meet timelines on monitoring children in their homes, failure to conduct background checks before placing children with relatives, delays in assessments on homes and caregivers and failure to make proper notifications on placements.
At the same time, the state said it found there is hope for improvement as the Board of Supervisors approved the appointment of Philip Browning as director in February and he has begun making changes.
Browning said he found the audit helpful.
"We appreciate the state auditor's reviewing our operations and look forward to working with them to resolve the issues highlighted in their report," Browning said. "Once we have completed our review of the audit, we will respond to each concern."
Also, the state found the case workload was within established targets and employees responded positively to a survey about their work environment.
The state did make two specific recommendations that the agency needs to continue to monitor its backlog of investigations and deal with them in 30 days. Also, it recommended an assessment on whether more resources are needed to investigate allegations of abuse and neglect.
Supervisor Zev Yaroslavsky said much of the audit dealt with issues that were in the past and have since been resolved.
"We brought Philip Browning in and he's a turnaround artist," Yaroslavsky said. "He has already cut the backlog by two-thirds and he's making other changes.
"A lot of the findings were about old issues and we did have problems. But, I have to say I think the department is in better shape than it's been in a long time."