A joint Assembly and state Senate committee will conduct a hearing to determine the extent California agencies are using off-budget accounts to hold money outside the state system.
Monday's announcement follows a Times report that the California Department of Forestry and Fire Protection hid $3.6 million rather than depositing it in the state's cash-strapped general fund.
Cal Fire, as the department is known, placed the money with the nonprofit California District Attorneys Assn. The money came from legal settlements. Cal Fire's regulations say the money was supposed to go into the state's general fund.
The hearing is expected to be held in two or three weeks.
The state Department of Finance is planning to start an audit of the fund next week, Cal Fire spokeswoman Janet Upton.
The association received fees as high as 3% of the money coming in and 15% going out when Cal Fire needed the funds for equipment or training.
Ken Pimlott, Cal Fire's director, froze the fund in August after receiving a briefing about it, Upton said. The department is looking into how to send the remaining $810,000 to the state treasury.