LACK OF INTERNAL ACCOUNTING CONTROLS (Related to Forensic Accounting Report in 2017)

During the 2009/2010, St. Helena Flood Control project, at least $1.9 million dollars of FEMA money was misspent or mis-allocated. In 2014, a large $1.9M check was written by city staff to pay this back, creating a disruption in St. Helena’s finances.

This “lost money”, was continually pointed to as a main source of our City’s economic problems, and yet the processes, and the lack of internal controls, that allowed this to happen, have still not been completely fixed. And, until the fall of 2017, were never prioritized.

The documentation for this information is in the NIGRO AND NIGRO FORENSIC REPORT, presented at a St. Helena City Council meeting, June 27, 2017. It states we still do NOT have a system of proper written accounting procedures and policies in place to protect ourselves from misappropriation, and fraud. These are basic financial controls that are consistent with general accounting practices, and recommendations from the League of California Cities.

Every year, since the 2014 $1.9M FEMA payback incident, we are told, by outside auditors that we need to implement these policies and procedures, and yet as late as June 27, 2017, the mayor voted only to “Receive and File” the forensic report, instead of turning it into an “Action Item”.

Once this lack of internal controls was learned of by staff and Council, it should have been rectified.
The City was told about the problem in 2015, in 2016, 2017, and it was STILL NOT made a priority until after the new City Manager took office in late summer 2017. And while city staff has recently been working on this, it’s still not complete.

One would think that the mishandling of $1.9 million dollars of City funds would have spurred the City to implement a comprehensive plan of establishing these policies, and procedures, as quickly as possible.

That was not the case however, and the City has continued to operate with the same vulnerabilities in our accounting and finance systems as when the $1.9M FEMA misappropriation happened.

This is beyond unacceptable.

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