Humboldt County’s fiscal management has been a hot mess in recent months, with chronically delayed reports, payments and other transactions causing headaches for county employees, department heads and outside vendors.
In an effort to solve some of these problems — and perhaps to quell some of the internal strife that has developed around them — the Board of Supervisors agreed in February to form an audit committee comprised of county officials and qualified members of the public.
On Friday, the Humboldt County Audit Committee held its inaugural meeting via Zoom, and while the tone remained calm and civil throughout, forward progress was largely stymied by the absence of Auditor-Controller Karen Paz Dominguez, who is arguably the most central figure in these matters.
Reached by the Outpost prior to this morning’s meeting, Paz Dominguez said she had informed people involved with the committee that she’d be unable to attend because today represents an end-of-the-month regulatory reporting deadline, so she’d be far too busy. She sent Senior Accountant/Auditor James Hussey in her place.
The five-member committee consists of Fourth District Supervisor Virginia Bass, Third District Supervisor Mike Wilson, Assistant County Superintendent of Schools Corey Weber, county Administrative Analyst Mychal Evenson and former Assistant Auditor/Deputy County Administrative Officer Cheryl Dillingham. Paz Dominguez will serve an advisory role along with County Administrative Officer Amy Nilsen and Treasurer-Tax Collector John Bartholomew.
At the outset of the meeting, Nilsen outlined the committee’s purpose and responsibilities, explaining that it has been charged with providing independent oversight of county audits, internal controls, financial statements and other fiscal matters. It will report to the Board of Supervisors and provide “open avenues of communication” among county staff, officials, independent auditors and the board.
The committee will also be empowered to receive complaints and conduct investigations, though Nilsen noted that its authority does not supersede that of the Humboldt County Grand Jury nor the Auditor-Controller.
After Nilsen’s introduction, Rich Gonzales, an external auditor from the firm CliftonLarsenAllen, explained his role in conducting an annual audit following the close of each fiscal year. Primarily, he said, it’s to provide the county with “reasonable assurance” that its statements of accounting are reliable and “free from material misstatement.” This external “single audit” also assesses the county’s major programs, such as transportation, social services and health services, to make sure they’re compliant with state and federal regulations.
At the end of his presentation, Gonzales noted that Paz Dominguez’s office has yet to fully close the books on fiscal year 2019-20, so he couldn’t provide a timeframe for the next audit. “There’s not much we can do until we obtain that information from the county,” he said.
That prompted Bass to note that it seems awfully late to have not closed the books yet, and she asked Gonzales, who works with numerous other counties, what a typical timeframe is for closing the books.
“Most of our clients close in September [or] October,” he said, though he allowed that the pandemic caused some delays. (Fiscal years end on June 30.) The standard deadline for submitting county audit reports to the State Controller’s Office is March 31, but this year, because of the pandemic, that deadline has been extended until the end of September.
Weber, who represents schools on the committee, said they, too, have to prepare an audit, and their deadline is earlier. This year’s delay from the county is causing problems. School audits can’t be completed until the county calculates and posts taxes and interest for the fiscal year, he said.
Bartholomew said the delay is causing problems for his office, as well. Per state law, treasurers are supposed to report their county’s interest apportionment rate to the State Controller’s Office by the end of September, but since the books have yet to be closed — three months after that deadline — he’s been unable to do so.
Eventually, the meeting arrived at an agenda item that called for a status report on the corrective action plan from the 2018-19 fiscal year, and Nilsen said Paz Dominguez was supposed to provide that report.
In her absence, Bass asked Hussey if he had anything to report. He did not.
The next item on the agenda was another status report that was supposed to be delivered by Paz Dominguez — according to Nilsen, anyway.
Dillingham spoke up to say that in a recent email, Paz Dominguez said nobody had asked her to present anything today. Somehow that message didn’t get to the rest of the group.
This highlighted another theme in the county’s ongoing fiscal mess — poor inter-department communication. Today’s meeting offered evidence that this issue persists. Indeed, nobody present could say why Paz Dominguez was not in attendance.
“I know she’s been invited multiple times, and she saw the agenda,” Bass said.
“Well,” Nilsen replied, “there were several Doodle polls and emails requesting availability, and the agenda was distributed in advance … .”
“So, I guess, in the future, perhaps we should have these [agenda items listed] under which person would be presenting,” Bass said. “Then Jim [Hussey] might have been able to come here with some information.”
Instead, the committee skipped ahead on the agenda. Bartholomew said the county is currently out of compliance with a California statute because in 2019 the Auditor-Controller stopped issuing certificates that verify deposit amounts. She did this, Bartholomew explained, because the deposits in question get made to bank via the Treasury Department, rather than her own office. However, there were checks and balances between the two departments, he said, “so everyone was on the same page with the exact same information.”
Paz Dominguez’s decision to stop issuing those certificates left the county without a “control procedure” to verify that data posted to the county’s General Ledger accurately reflects each deposit.
“Long story short,” Bartholomew said, “we need to agree to alternate control procedures, and we’d like to propose a shift in how those procedures are done in the future.”
Amy Christensen, a senior treasury/tax assistant, explained the county’s financial software provides such an alternative — and it’s a method employed by at least four other counties, according to Bartholomew. He said he’d reach out to the Auditor-Controller’s Office to make sure its staff is on board, adding that he thinks it will be less work for everyone in the long run.
Finally, the committee talked about when to meet next, and once again Paz Dominguez’s absence was an issue. The suggested date on the agenda for the next quarterly meeting was the week of August 9, but Bass said she’d prefer to do it sooner.
“I’d benefit [from] having the auditor with us, rather than waiting until August,” she said.
Weber said he agreed “because a lot was discussed [today] that I’d really like to have her point of view on, to get a fuller picture, especially starting off our work with this committee.” He suggested holding another meeting soon, “before we dive too deep into the year.”
“I do believe we worked with the auditor, trying to schedule this, but something didn’t work out,” Bass said. “It’s important she’s there … . We have to confirm dates she can set in stone. I was really frustrated we didn’t get to have the conversation today.”
Wilson acknowledged that the end of the month is a difficult time for the auditor’s office.
The committee agreed to try to schedule a meeting for May. Hussey said he’d check with Paz Dominguez about availability, though he warned, “I can’t make any promises.”
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