In a report to the Los Osos Community Services District board, general manager Kathy Kivley continued to maintain that accounting discrepancies found in an independent audit for fiscal year 2013-2014 were caused by previous staffers and software limitations.
Kivley, who was hired in 2013, and current district accountant Mike Doyel said they have collaborated to ensure they and the district’s staff won’t continue to have audit concerns in future years.
“In reconciling the financial software staff found numerous discrepancies in the bankruptcy, liabilities, reserves, bank statements, etc. from prior years,” Kivley wrote in her report, which was discussed Thursday at a Los Osos CSD board meeting.
However, director Chuck Cesena said that he still was having trouble understanding why audits from past years were clean and “unqualified,” while the audit from 2013-2014 found numerous issues, including that accounting couldn’t be easily tracked, vacation and sick pay were inaccurately reported, and at least two employees received overtime pay for work done during normal business hours.
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“What I see is a lot of throwing darts at people who had unqualified audits in the past,” Cesena said. “I’m not going to touch trying to (approve Kivley’s corrective action plan).”
The board voted 3-1, with Cesena voting against and director Marshall Ochylski abstaining, to receive and file Kivley’s list of responses as part of a corrective action plan to address internal procedures to ensure appropriate audit practices.
The district’s accounting practices for the 2013-14 fiscal year were called into question in an independent audit performed by the Santa Maria accounting firm of Moss, Levy & Hartzheim. The audit was made public in September. County Auditor-Controller James Erb, whose authority includes monitoring county special district audit reports, sent an Oct. 7 letter to the Los Osos board calling the audit’s findings “of great concern.”
Erb sought more detail about how the district will implement corrective accounting practices, prompting Kivley’s responses.
In reconciling the financial software staff found numerous discrepancies in the bankruptcy, liabilities, reserves, bank statements, etc. from prior years.
Kathy Kivley in staff report
Kivley’s corrective actions have included:
• Clarifying payroll software functions to document compensated absences (vacation and sick time).
• Bringing district accounting in line with bank statements and making sure district financial information has carried over accurately from year to year.
• Implementing a plan to print a detailed uncompensated absence report to ensure proper documentation.
• Vigilance of overtime pay through general manager oversight, using worksheets designed to catch any pay discrepancies.
• Noticing district staff not to use cash for payments over $50, cited in two purchases in the audit, as directed in district policy.
A key finding of the audit identified changes in journal entries made in the district’s system by Kivley. The firm recommended that the district accountant handle those duties solely.
Kivley defended her actions for making changes to the entries that should have been made by the district accountant, according to the audit’s recommendation. Kivley said that she and the district’s previous accountant had numerous discussions about the changes she made.
What I see is a lot of throwing darts at people who had unqualified audits in the past. I’m not going to touch trying to (approve Kivley’s corrective action plan).
Chuck Cesena, Los Osos CSD director
Mike Doyel, the district’s current accountant, also said that information provided to the board in past years wasn’t correct.
“All I’m here to tell you is the facts,” Doyel said. “I’m not here to blame anyone. The information in the books isn’t the same as what the board was receiving.”
Former Los Osos CSD board member Julie Tacker, speaking as a member of the public, called for an outside accountant to look into the district’s books, saying the finances were like a “bowl of spaghetti.”
“Until you get a different set of eyes on this, you will continue to erode the public’s trust,” Tacker said.
Board president Michael Wright said, “I have no problem with these corrective actions” and that he was ready to move forward, only recommending that names of past accountants whose actions were cited, be removed in the response, simply referring to them anonymously.
He said Erb and the auditor both received Kivley’s responses but hadn’t yet responded.
Meanwhile, district legal counsel Mike Seitz told The Tribune that at the direction of the board on Oct. 12, private investigator Jim Gardiner, a former San Luis Obispo police chief, has been hired to look into whether Kivley took unpermitted time off and used her work computer for personal activities.
Gardiner now operates Jim Gardiner Associates, offering “comprehensive executive and personnel investigations in the public and private sectors.”