CA Controller: Lack of oversight in City of Calexico
State Controller Betty T. Yee released a report that found 37 out of 48 auditors inadequate after reviewing the internal control system in Calexico, according to a press release by the California State Controller.
The CSC said the results were determined after being evaluated from July 1, 2015, through June 30, 2017.
“Within a two-year span, city management allowed a $4.1 million surplus to become a $4.0 million deficit,” said Controller Yee. “Clearly, Calexico’s financial controls need improvement.”
Calexico is a city of 38,000 in southern Imperial County. City officials claim the oversight happened before a new city administration was brought in.
“One of the biggest things we encountered was the lack of leadership in key departments. So, now as Mr. Dale as the City Manager and myself as the Assistant City Manager, we have prioritized bringing in professionals to run the departments here at our city,” said Miguel Figeroa, assistant city manager.
Details of the auditor’s findings include:
The city engaged in significant deficit spending in FY 2014-15 and 2015-16 with expenditures exceeding revenues by more than $8.1 million. Budget-to-actual reviews were never performed, budget amounts were inaccurate, and timely financial reports were not produced, in violation of several municipal codes. Calexico did not exercise sufficient oversight of its cash flows and credit card usage, lacking internal controls such as prompt bank reconciliations and segregation of duties. For example, one employee had access to the city’s cash and the key to the city vault; the ability to record and approve journal entries; and access to city bank accounts, in addition to serving as the main contact for the armored car delivery service. Further, the city did not have adequately trained back-up staff for critical functions and did not conduct performance evaluations. The California Department of Housing and Community Development (HCD) froze Calexico’s housing grants and the city temporarily lost its opportunity to apply for future HCD grants. The city initiated a public works utility project to upgrade water meters for $4.8 million without a formal contract. City management circumvented policies and procedures when they approved $736,238 in change orders without city council approval The city also documented the actions it has taken or plans to take in response to the Controller’s review, it is available here .
“This was a collaborative process between the State Controller’s office and the finance department here in Calexico, in which day by day for I would say roughly three and a half months we worked day by day, hand by hand to make sure we addressed every matter,” said Figeroa.
The State Controller’s audits and reviews of local governments can be accessed here .
