Analysis: BOS Ran Up Audit Bill
While State Demanded Results


While an understaffed auditor’s office struggled to make sense of Modoc County’s nonexistent record keeping and an obstinate Board of Supervisors for more than a year ran up the outside auditors’ bill to an estimated $750,000 by resisting to seek less expensive help, the State of California was pressing for results.

What the state was demanding for much of last year were the findings of the single audit for the fiscal year ending June 30, 2009.

What the state received were promises that led to delays while at least two members of the Board of Supervisors balked at asking for less costly help from the California State Association of Counties, according to a source who spoke on condition of anonymity because she was not authorized to discuss matters related to the county’s misappropriation of an estimated $20 million.

It was the disclosure of the misappropriation of county treasury funds that caused the State Controller’s Office (SCO) to conduct its own investigation of the county’s financial records, resulting in a mandate that an outside firm audit the county’s records gong back to 2007.

But the state-ordered audits were slow in coming and only because the state held off taking any action against Modoc County was the threat of bankruptcy was avoided.

At least three different state agencies sent letters to county officials demanding an accounting as fiscal year 2009 came to end and the single audit did not materialize, according to correspondence obtained by the Modoc Independent News.

On July 29, 2010 the California Emergency Management Agency (CalEMA) asked for an accounting as to why it had not received the financial reports. On Aug. 23, 2010 the California Department of Mental Health followed with its own demands, and on Oct. 18, 2010 the Department of Alcohol and Drug Programs (ADP) made its request.

In every letter from the state agencies it was clear that their requests for accountability were not the first ones they had made.

All three agencies are required to monitor subrecipients of federal awards, such as Modoc County. In each letter to the county, the agencies cited the following sanctions that could occur if the county failed to compile with their demands:

-- Withholding a percentage of federal awards until the audit is completed satisfactorily
-- Withholding or disallowing overhead costs
-- Suspending federal awards until the audit is conducted or
-- Terminating the federal award.
   
If the state agencies had imposed any of the threatened sanctions or demanded refunds of federal awards, the county could have faced serious repercussions.

“The return of any funds would have likely tripped the county into insolvency,” said the source.

In the meantime, although the SCO has apparently yet to receive copies of the audits, Modoc County Auditor Darcy Locken, as she reported to the Board of Supervisors Feb. 8, has provided copies to an independent underwriter and financial consultant so that an “offer” of an interest rate for a proposed Certificates of Purchase (CPO) can be provided to the board.

Repeated calls and e-mails to Locken’s office seeking comment went unanswered.

-- Ray A. March

Happy Valentine's Day

A Line-storm Song
by Robert Frost
The line-storm clouds fly tattered and swift, The road is forlorn all day, Where a myriad snowy quartz stones lift, And the hoof-prints vanish away. The roadside flowers, too wet for the bee, Expend their bloom in vain. Come over the hills and far with me, And be my love in the rain. . .   Poets.org