County auditor points to areas where security improvements could be made
As the Humboldt County supervisors on Tuesday finalized their responses to a grand jury report outlining major financial issues within the county government, they hesitated to definitively say the problems put the county at “high risk” for fraud.
The report, titled “Mis-Fortunes of Humboldt County,” laid out a number of flaws in the accounting practices of several county departments. It found that “poor cash handling policies and procedures, improper accounting, and lack of accountability” leave the county vulnerable to financial misconduct.
But in its official response, the county’s staff disagreed with the jury’s assertions.
“While there is always room for improving or enhancing processes, especially when a new viewpoint or process change arises, no instances of fraud have been detected by the consultants or the external auditors and staff are working to meet the requirements put in place by new leadership in the Auditor’s Office,” the staff writes.
The report’s findings echoed what Auditor-Controller Karen Paz Dominguez has said publicly for some time, dating back to when she was an un-elected staff member in the auditor’s office.
Paz Dominguez reiterated her position at the Board of Supervisors meeting on Tuesday, saying her office is understaffed and a number of financial practices within the county remain unacceptably shaky.
From waiting years to ratify past invoices, to allowing reimbursements to be cashed without adequate proof, the county has created room for hypothetical bad-faith employees to exploit the system and commit fraud, she told the supervisors.
“I share this with you not because I’m purposely trying to throw someone under the bus,” she said. “I’m trying to communicate to you why I’m pushing so hard at not being clear that there is a high risk of fraud.”
The supervisors were receptive, praising Paz Dominguez’s commitment and acknowledging past problems in internal auditing. But Supervisors Rex Bohn and Mike Wilson nevertheless were hesitant to outright agree the risk of fraud is decidedly “high.”
At one point, Wilson questioned Paz Dominguez on the raw numbers. She said one element of her concern, the loose handling of “petty cash” boxes, probably didn’t figure greatly into the county’s $300 million budget, but the boxes altogether add up to around $27,000.
On the other hand, 5th District Supervisor Steve Madrone was on board with approving the jury’s phrasing. He praised Paz Dominguez’s commitment to due diligence and noted she had once been a “whistleblower” for the auditor-controller’s office as a staff member.
“I have to trust the department head knows what’s going on the department, probably better than anybody else,” said 5th District Supervisor Steve Madrone.
The supervisors eventually voted to unanimously move forward with staff’s responses, which offer mostly conditional agreement to the jury’s findings.
October 8, 2019
The Eureka Times-Standard
By Shomik Mukherjee
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