A recently released 2015-16 financial audit for the South San Luis Obispo County Sanitation District found that even though the overall financial health of the district was relatively good, three material weaknesses put it at risk for fraud.
Released last week, the audit found the district improperly separated duties, had unprofessional financial reporting, and difficulty capitalizing assets in a timely manner. After reading the audit, sanitation district directors sparred over how to react.
Director Jim Hill raised concerns over the length of time it took to bring the audit to the board, 18 months, and recommended the district hire an qualified accountant to address the financial reporting issues. In previous years, an independent certified public accountant with government accounting experience had been brought in to perform the very duties that were identified as material weaknesses by the report, Hill said.
Director Linda Austin then accused Hill of “rehashing the past” and “beating a dead horse.”
After sanitation district interim administrators Paul Karp and Rick Sweet admitted that auditor Al Eschenbach with Glenn Burdette had adjusted the district’s books while performing the audit, members of the public questioned the auditors “objectivity” and “independence” because he had a hand in the figures.
Questions were also raised about the upcoming 2016-2017 audit because of a steady stream of employee turnover and hundreds of thousands of dollars in budget overruns because of legal bills.
In order to obtain financing for its $23 million redundancy project, which is scheduled to break ground in fall of 2019, the sanitation district needs a clean audit.
In July 2017, the County’s Auditor Controllers Tax Collector’s Office wrote a letter to the district threatening to send in an independent auditor to perform the audit at the district expense unless the district complied with the Government Code requiring them to submit their audit timely to the county.
But in his report, the auditor noted that there had been no complaints.
“There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices,” the auditor wrote.
The board approved the audit so that an auditor from Glenn Burdette could begin work on the 2016-17 audit. It is required to be submitted no later than July 1 of this year.