By Miriam Raftery
January 7, 2015 (Spring Valley) – The State Controller’s Office has issued its final review report on the San Miguel Consolidated Fire Protection District’s administrative and internal accounting controls.
“Our review did not identify any significant deficiencies with the District’s administrative and internal accounting controls,” the report states. None-the-less, the report indicates the state plans to charge the district for the cost of the investigation. report indicates the state launched the investigation because it had “reason to believe that the Annual Report of Financial Transactions submitted by the District is misstated, incomplete, or incorrect.”
Specifically, the report indicates the state launched its investigation because the district understated revenues in fiscal years 2010-11 and 2011-12 by $557,878 and $2,357,252 respectively. In addition, the state contended that expenditures were over-stated by $827,298 and $987,833 during those two years while grant revenues were overstated by more than $1.8 million in fiscal year 2011-12.
San Miguel has since formed a partnership with CAL-FIRE to handle firefighting services for the district. ECM asked CAL-FIRE public information officer Kendal Bortissier for an explanation regarding the differences in the reporting of revenues.
Bortisssier says the numbers used in the State Controller’s Office report were unaudited numbers that did not reflect findings of the independent audit completed about six months later. “The actual independent audit is the official reporting of the District’s financial position,” he said.
The district has not provided details as to exactly why it was off by hundreds of thousands of dollars, or in one case, over $2 million in its initial report--but those bookkeeping discrepancies will cost taxpayers the full expenses of the state's investigation.
The district sent correspondence to the state arguing that district taxpayers should not bear the costs of the review because there was nothing in the district’s reports that were “false, incomplete or incorrect” nor that failed to be made in the “time, form or manner required” and contends that the issues could have been resolved with a phone call.
But the state counters that “the review was initiated because we had reason to believe that the FTRs [financial transaction reports] were misstated, incomplete or incorrect” while acknowledging that preliminary amounts were later adjusted by the district in its financial records—but the financial transaction reports were not amended or submitted to the State Controller’s Office. So the district and its residents remain on the hook financially for those costs.
Bortissier said the district has not received the bill and doesn’t yet know how much that tab will be.
Out of 79 controls evaluated, only one was found by the State Controller’s investigation to be deficient: the District’s failure to update its own strategic plan since 2009, despite a District policy calling for updates quarterly. The majority (64) of the control elements were found adequate and 14 were not applicable due to the district’s size.
The district tried to argue that the strategic plan update wasn’t needed due to various other practices that it claimed “served essentially the same purpose.” Those included board workshops and budget workshops, a Chief’s report at board meetings and a Labor Management Initiative. But the State didn’t accept those arguments, concluding, “The finding and recommendation remain as stated.”