Mad River Union
HUMBOLDT – After a long discussion, Humboldt County supervisors agreed that there is a risk of fraud in government operations but most couldn’t completely agree that the risk is high.
The reform of the county’s Auditor-Controller’s Office figured into the Board of Supervisors’ response to a Grand Jury finding during the discussion at the Oct. 8 board meeting.
Continued from the previous week’s meeting, the discussion focused on proposed responses to recent Grand Jury findings on the county’s financial oversight.
One finding is that there is “a high risk of fraud in a number of county departments due to their poor cash handling policies and procedures, improper accounting, and lack of accountability.”
A related finding is that the Auditor-Controller’s Office lacks the staffing needed to provide adequate employee training.
On the fraud risk finding, county administrative staff recommended disagreeing with it. But Auditor-Controller Karen Paz Dominguez, who was elected after campaigning for the office’s reform, said a variety of risky situations exist and the response should be in agreement.
“Since I took office in January, I’ve seen 16 different situations that I would consider high risk situations,” she said. “When we did the year-end balancing for petty cash, we found that petty cash has been lost, stolen, accidently destroyed and there’s unmonitored access to petty cash boxes.”
Additionally, county departments purchase hundreds of dollars of gift cards “and those go regularly missing – there is no formal tracking of them.”
Theft is also an issue. “I learned, through happenstance I suppose, that a former employee who was already suspected of stealing cash managed to also steal two motor pool vehicles,” said Paz Dominguez.
After Paz Dominguez’s breakdown of financial vulnerabilities, some supervisors were unconvinced that they represent high risk situations.
She allowed that “one petty cash box is, of course, immaterial to a $300 million operating budget” and the county’s current amount of available petty cash only totals $27,000.
“I don’t think anybody’s going to go to jail for grand larceny for stealing petty cash but that combined with the 15 other things shows that there’s a lot of need for attention and revisiting,” she said.
Supervisor Mike Wilson said there’s no doubt about that but “it’s not the end-all process, we’re going to be here next year and again and again – we’re going to keep moving.”
He added, “I’m trying to figure out, how freaked out should I be in terms of the numbers of this.”
In a motion on the Grand Jury responses, Supervisor Steve Madrone went with the gist of the discussion and a response of “partially agree” to the high risk finding.
Throughout the discussion, supervisors acknowledged that there were serious problems with management of the office before Paz Dominguez took its helm. When she worked as assistant auditor Controller, she had warned supervisors of the office’s mismanagement.
“There have been huge problems with past practices and I think we all recognize that,” Madrone said. “I, for one, very much appreciate you having brought that to this board back in 2017 when you were starting to be a whistleblower on some of these activities going on in the department – and that’s not an easy role.”
Saying that the office “has come a long way” under Paz Dominguez’s leadership and “attention to detail,” Madrone said her judgment should be respected and he supports responses in full agreement with the Grand Jury findings.
Although he also said that “I don’t think it’s worth splitting the hairs” on semantics, Madrone made a final effort to persuade full agreement prior to voting.
It was unsuccessful, however, and the board unanimously voted to “partially agree” with the high risk and lack of staff findings.