At the July 2 Audit Committee meeting, we learned that the city had decided to change auditors, had solicited potential new firms and had closed the bid process. We learned that the reason for the change was the desire of the City Council for a speedier turnaround of the audit report. We learned that the current firm could not commit to an earlier timetable so was not asked to bid.
There was a consensus during public comments that the optics here are not good. Changing auditors after only two years (rather than the normal three to five), combined with having been assessed a material weakness in the city’s financial reporting process by those auditors in both of those years, is just a bad look. And there was a question as to whether absent an improvement in the city’s ability to produce a timely set of financial statements that are free of material error, a change in auditors would actually solve the timing problem.
These issues were raised at the July 9 City Council meeting. While they were not formally addressed, one council member stated that the finance department had made a unilateral decision to change auditors. Not only was the Audit Committee not informed, the change had not been approved by the council.
This is rather amazing. The finance department, which is the subject of the material weakness comment, unilaterally decides to change the firm making that assessment and then manages the entire process. There’s more. In a communication to potential bidders, a question as to whether the city had been notified of any material weaknesses in its past audit, the city responded in the negative, when in fact the opposite was true.
One might think the City Manager and the City Council would be incensed with this end around. Well, not so much. A decision was made to bypass the current Treasurer (a Treasurer who has satisfactorily performed all investment functions for the last 20 years) and reward the Finance Department with responsibility for overseeing the city’s recently outsourced $150 million investment portfolio. So let’s get this straight. A department that has yet to prove it can satisfactorily perform its normal duties has been assigned new duties to oversee a new outsourcing arrangement for which it has no expertise. What could possibly go wrong? And who’s looking out for us—the residents of Laguna Beach?
Mary Locatelli, Laguna Beach
This is shades of what the City pulled on the residents with the Promenade. After the decision had been made to permanently eliminate about 75 parking spaces including those so called parklette monstrosities they then called us (the dumb cash cows in their view) to approve what type of plants we would like to have. This is analogous to building a house that uses your money, a house which is not needed, and then asking you what color shingles do you want. The monstrosity being proposed by NCC for the so called low income housing is going down the same route. Once the design details are ready for review NCC will then tell us that by state statute the normal review process does not apply. That is why they are asking for patience. And City Council will tell us once again that their hands are tied so to avoid a costly legal battle the plans for the monstrosity must be approved. Remember how quickly the zoning ordinance that the City hastily passed as an answer to measure Q was eliminated because of potential litigation? Was this the reason or was the fear of litigation because of the illegal acts that occurred on May 2, 2023 agaignst MOM properties by the City. Remember when Mo Hornarkar got enough signatures to force a refendum on ordinance 1675 he was an employee of MOM. And I’m sure MOM and the other developers were happy to see the city remove this zoning ordinance without letting vote for it. Was this pay back? As a minimum optics on this like many other decisions by the developer majority city council are not stellar.
Mary, great job!
A mixed bag of fiscal prudence, confusing, often contradictory messages and smoke signals are always coming out of City Hall, to whit:
Contemporaneously, Mayor Kempf and CM Kiff don’t seem to have been on the same page, let alone reviewing the same playbook regarding our wastewater system.
In obvious disdain and exasperation during public comments at a recent Council meeting, the Mayor declared that the topic of the sewer system should be shelved, lecturing attendees and online viewers , telling them to just “stifle,’ a la Archer Bunker to Edith.
In a condescending tone she said that we are doing a great job, spend millions on that system, both in maintenance and improvements. In other words, as we write in journalism, basically “–30– (End of story).”
Meanwhile, a community update and outreach, intended to explain the need for increasing taxes, bearing Kiff’s name, “future budgets may not be able to fund some important priorities…….. like replacing our older wastewater pipes.”
I read your CV and portfolio online, Mary, quite impressive…
Meanwhile, City Hall reminds me of an old Simpson’s episode exchange:
“Marge? It takes two to lie. One to lie and one to listen.”