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The fact is: Ex-auditor sets things straight

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webmaster | 02/06/14

I am compelled to respond to comments made during public session by a board member during the Jan. 28 Board of Supervisors meeting. The statement was made that the Comprehensive Annual Financial Reports (CAFR) have always been late. This is true; however, the public needs to be made aware of the facts that contributed to the problem.

The fact is, I was appointed as the auditor controller in January 2010. The 06/07 audit had just been completed (18 months late) and 07/08 audited financial statements were scheduled to be completed in February 2010 (12 months late). The 08/09 CAFR had not yet been started and the audited report was due in two short months (March 31, 2010). The board had been made aware of the Recovery Plan that had been submitted to our cognizant agency (USDA) in Wash., D.C., Meeting the target deadlines outlined in the plan would keep federal funds flowing into the Madera County coffers after the county was sanctioned by the federal government in June 2009. However, the target deadlines contained in the recovery plan were based upon full staffing in the auditor-controller’s office.

The fact is, on March 5, 2010, a letter was hand-delivered to the Board of Supervisor’s office documenting lost production hours due to staff cuts (30 percent).

The fact is, on July 9, 2010, the board was advised the auditor’s office had missed a target date due to the staff reductions. In the same memo, the board was advised Madera County would no longer be eligible for any further audit extensions due to an executive order tied to the ARRA funding the county was now receiving. A copy of the letter from USDA was attached to the memo.

The fact is, on Aug. 30, 2010, after reconciling the trust for IHSS, the auditor’s office determined $1.9 million had been left in a trust fund that should have been used to reimburse the general fund for expenses incurred by IHSS covering fiscal years 02/03 through 6/09. Additionally, the current year owed $720,000, which resulted in $2.6 million owed to the general fund for unrecovered expenses.

The fact is, in September 2010, the Board of Supervisors implemented the furlough on the auditor’s office, further reducing production hours in the department. Even though the auditor’s office had critical deadlines that would affect continued funding for the entire county, the auditor’s office was deemed a “non-essential” department.

The fact is, the board was advised in an email dated Nov. 5, 2010, that the 08/09 CAFR was completed (7.5 months late) but due to the department’s inability to meet the March 31, 2010, due date, the county was now designated as a high risk auditee. This meant the outside auditors would now be required to test 50 percent of all grant expenditures instead of 25 percent. The additional testing would not only compromise our ability to file the 09/10 audit by the due date of 3/31/11, but it would significantly drive up outside audit costs.

The fact is, the auditor’s office developed a multi-year RFP for outside audit services that not only saved the county $200,000 over a four-year period, but would allow the county to expedite the audit process.

The fact is, in March 2011 the auditor’s office became aware of additional trust funds that might not have reimbursed the general fund for expenses covering a period of 15 years. Staff’s attention was then diverted from the CAFR preparation and audit to review trust accounts that were suspect.

The fact is, the reconciliations were completed and agenda items were prepared for the May 10, 2011, board meeting; however the agenda item was deferred to the following month until a full board would be available to hear the items. Therefore, a letter was hand delivered to the Board of Supervisors office on May 16, 2011 advising the board there appeared to be a significant amount of funds due to the general fund. Since there was an action item to move forward with layoffs scheduled for May 24, 2011, it was important for the board to be able to make a decision on the agenda item with full knowledge of what the auditor’s office had found.

The fact is, in the June 7, 2011, Board of Supervisors meeting, the board was advised the Department of Social Services Admin Trust fund owed the general fund $9,000,000 in unrecovered expenses. They were also advised further reconciliations should continue back to the 99/00 fiscal year but there was insufficient staff to complete the task.

The fact is, in the June 7, 2011, Board of Supervisors meeting, the board was advised of the auditor’s office reconciliation of the Child Support Services trust fund for fiscal years ending 99/00 to 10/11 and determined $1,175,329 in expenses paid by the general fund had not been recovered from the trust accounts.

The fact is, in the June 7, 2011, Board of Supervisors meeting, the board was advised of a reconciliation dating back to the 06/07 fiscal year reflected $1,000,781 of expenses paid by the general fund had not been recovered from the Department of Social Services Tanf Incentive trust fund.

The fact is, the board was made aware there were additional trust funds needing reconciliation. Madera County had 800-plus funds in the 09/10 fiscal year, while similar counties only maintain 100 funds.

The fact is, for six months prior to the budget hearings in August 2011, the board was advised that any further cuts to the auditor’s office would render the department non-functional.

The fact is, in August 2011, the board was advised of the completion of the 09/10 fiscal year audit that was due March 31 (five months late). They were also advised the 10/11 fiscal year would be the first year since GASB 34 had been implemented that Madera County would be able to close their books, prepare the financial statements and the outside auditors would be able to start the audit in a timely manner. The outside auditors were scheduled to come in December 2011. The fact that the auditor’s office had caught up on all of the audits was conveniently left out of the public comment statement made at the Jan. 28, 2014, Board of Supervisor’s meeting.

The fact is, during the Aug. 16, 17 and 18, 2011, budget hearings, the board voted 3-2 to cut the auditor’s office by three additional persons.

The fact is, Supervisor(s) Rogers and Wheeler initiated the 3-2 vote to further cut the auditor’s office, making the department’s ability to meet state/federal mandates while supporting the county departments untenable.

The fact is, Supervisor(s) Max Rodriguez and Ronn Dominici attempted to make sure the auditor’s office would get the staffing it needed. They were the two dissenting votes on the item.

In closing, I cannot speak to what happened prior to my arrival in Madera County, nor can I speak to what has happened since I left office. This is not an endorsement of any candidate. I am only responding to a statement made in public session by a board member that is not only a huge disservice to the team that worked so diligently to bring the county into compliance, but the statement was not an accurate portrayal of the facts.

Janet Spillane Kroeger,
former Madera County auditor-controller


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