Karen Paz Dominguez set off a bit of a firestorm late last year when she told the Board of Supervisors that understaffing had left the Auditor-Controller’s Office incapable of being a financial watchdog. | File screenshot of county video stream.

Back in November your Lost Coast Outpost asked, “What’s wrong at the Auditor-Controller’s Office?” We were inspired to investigate after then-Assistant Auditor-Controller Karen Paz Dominguez came forward with allegations that “severe understaffing” had left the office vulnerable to financial misstatements and fraud.

Seven months later Auditor-Controller Joseph Mellett has resigned, Paz-Dominguez has won the election to succeed him, and an outside analysis of the department — prompted by Paz Dominguez’s statements and the Outpost‘s subsequent investigation — has offered some answers to the question of what’s wrong.

In a 12-page, $20,000 report set to be discussed by the Board of Supervisors on Tuesday, Craig Goodman, a certified public accountant, says the Auditor-Controller’s office lacks lacks “institutional knowledge” in certain key positions and needs better employee training generally. 

Does that mean the problem wasn’t understaffing, as Paz Dominguez alleged last fall? Goodman says he can’t be sure.

“It is near impossible to make an honest assessment of whether the current staffing positions will be sufficient for the Auditor-Controller’s Office operations until they are all adequately trained,” he concludes.

In the current work environment, Goodman notes, certain duties that are required of the office have been neglected or have fallen through the cracks. A number of property tax tasks aren’t being completed, for example, and the office has “no established practice” for preparing the year-end Basic Financial Statements internally, relying instead on an external auditor to do the job.

Goodman’s report includes a long list of recommendations for improvements, including cross-training among departments, consulting with both the State Controller’s Office and auditor-controller’s offices in other counties, and working to build better cooperation and camaraderie among staff.

When we spoke to county officials in November, there was plenty of finger-pointing. Mellett blamed the County Administrative Office and county supervisors, claiming they’d deliberately kept his office understaffed while siphoning off responsibilities that rightly belonged to him. Supervisors (and some members of Mellett’s own department), in turn, said Mellett himself was largely to blame because he often seemed to be phoning it in, failing to offer much in the way of oversight or management.

“In speaking with staff, it became apparent that training, in general, is lacking,” Goodman says.

Mellett admitted to the Outpost last fall that he felt burned out after years of trying to change things. He wound up retiring nine months before his elected term of office was up. Paz Dominguez, meanwhile, has faced some internal strife of her own, including a power struggle between herself and the payroll department. 

Goodman’s report suggests Mellett didn’t adequately plan for the future following the departure of experienced employees:

There has been a loss of institutional knowledge over the past years for which succession planning was severely lacking or non-existent. When this happens, the newly hired or promoted staff has to figure out what tasks are supposed to be done. In many cases, they don’t know what is required to be done; so much of their time is spent researching what needs to be done. This opens up the County to penalties and fines due to delinquencies. It also causes frustration to the staff as they feel like they are getting further and further behind, which they are.

That doesn’t necessarily mean the office needs more staff, Goodman says, What it requires is “someone who knows what needs to be done, how to do it and how to share the information.”

The county may already have taken steps in that direction. At an April meeting of the Board of Supervisors, in a move that looked suspiciously like a fait accompli, the board appointed longtime county employee Cheryl Dillingham to serve out the remainder of Mellett’s term, giving Paz Dominguez a potential mentor before she takes over the elected position at the end of the year.

In his analysis, Goodman says the county may need to “add more resources” to the Auditor-Controller’s Office in the short term to “minimize the risk to the County” and complete his recommended changes in procedure.

The $20,000 price tag for Goodman’s report was covered by the county’s tax loss reserve fund, according to the staff report that accompanies it. You can read the full report, if you’re so inclined, through the link below.


CORRECTION: This story originally misidentified the Craig Goodman, CPA, who wrote the report. The Outpost regrets the error.

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DOCUMENT: Assessment of Management and Accounting Practices and Processes

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