Its annual audits are two years overdue, past budgets were balanced on rate increases that never materialized, and an in-depth look at three months’ worth of checks and credit card statements found serious problems — but for the first time in years, the Oceano Community Services District should have accurate financial information.
“It’s not very happy looking, but it’s accurate,” said Carole Henson, one of the district’s five board members.
Questions about shaky finances and poor bookkeeping have been lobbed at the small water- and sewer-focused agency, which serves about 7,200 residents. The district, which offers street lighting and fire protection, is the only form of local government, aside from the county.
Past and current financial information dominated the Oceano board’s discussions Wednesday night, as the directors reviewed the year-to-date budget, they decided to send some requested financial information to the county district attorney, and voted to “close the books” on the past two fiscal years of financial data and forward the information to an auditor for review. The work has been hampered by an outdated financial and accounting system — which the board voted to replace last March at a total cost of about $236,000 — and staff turnover. Current General Manager Raffaele Montemurro started in October 2009.
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The new financial system will be paid for over a five-year period. It is nearly fully operational; the district’s final water and sewer billing is being done this month on the old system.
The financial data is not without flaws — financial data from the 2008-09 fiscal year shows that the district had either a $12,000 deficit or a $35,000 surplus, according to Montemurro.
And last summer, Montemurro started investigating the history of several accounts containing more than $367,000 in district money that few people knew existed.
But the board, unwilling to spend more time and money for staff to untangle the discrepancy, voted 4-0 on Wednesday to deliver financial data for the 2008-09 fiscal year to a local accounting firm by today, and to turn in information on the 2009-10 fiscal year by March 18.
The data may go either to Santa Maria-based firm Moss, Levy & Hartzheim, which has done two previous district audits, or Glenn, Burdette, Phillips & Bryson, which last year completed a three-month forensic audit.
“This thing has been a disaster, it’s been a disaster for years,” said board President Jim Hill. “‘We’re almost there’ is no longer good enough. We’re out of time.”
The board did not move ahead with another forensic audit that would examine the period of July though September 2009.
A forensic audit completed last August by Glenn, Burdette, Phillips & Bryson looked at three months’ worth of checks, payroll and credit card statements from April through June 2009. It cost the district more than $8,000.
It found some issues: of 438 financial transactions, 134 had cleared the bank statement prior to getting board approval, and 41 transactions never received board approval. A look at credit card charges found a lack of receipts or documentation of some purchases.
The audit had been sent last year to the District Attorney’s Office, which requested more information. On Wednesday, the board directed Montemurro to finish compiling bank deposits, total receipts and total billing for that time period and send it to the district attorney.
The board also received a year-to-date update on its current budget.
It shows, for example, that the agency so far is on budget for administration salaries and benefits, but that it has already exceeded the budget allocated for legal and engineering services. (The report is available at http://oceanocsd.org; go to “OCSD public meetings” and select the second part of Wednesday’s meeting agenda.)
“It’s hard to operate within a budget when you don’t get a report,” said Hill. “Getting a report, with all of its flaws, moves us in that direction.”
The district operates on a general fund budget of about $1.1 million; not including a separate $1.9 million water fund and an $827,000 sewer fund.
Reach Cynthia Lambert at 781-7929. Stay updated by following @SouthCountyBeat on Twitter.