A fact Sheet report 2008-002, for the Fiscal year ended June 30, 2008, by Elaine M.Howle, California State auditor, reports that for her audit of California’s internal controls and compliance with State and federal laws and regulations she reviewed:
More than One half of the 138 Findings identified in the audit were also reported the prior year, Further, in those findings, they noted:
234 material and significant deficiencies in internal controls– Management and program policies, procedures, and guidance that help ensure effective and efficient use of resources : prevention and detection of fraud, waste, and abuse: and the reliability of financial reporting. She further stated the State did not comply with Federal requirements because of insufficient documentation!
California’s automated accounting system is apparently what Yuba County is on. When I requested to know how the County auditor cut 1009 checks for employees of the County but the personnel office said they only had 948 listed employees total, It was discovered the County management was paying unfilled, Funded positions.
The CPA Michael L. Hinz audited TRLIA in late 2007 after a State reclamation Board Meeting in marysville where I had called for an audit of TRLIA since their conception. Hinz apparently audited from information given to him by Logue and Webb, the Internal control management of TRLIA, and Hinz audited all three years of non audit in 2007.
Hinz, in his disclaimer says: I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain assurance about whether the general purpose financial statements are free of material misstatements. In stating this, CPA Hinz is saying the Internal Control Management of TRLIA is free from material misstatements , that principal is at the very heart of any creditable audit.
Hinz continues : in fulfilling this responsibility, estimates and judgments by the Management, are required to assess the expected benefits and related costs of internal control policies and procedures.”
However in that same lengthy paragraph 12 lines long, Hinze makes a statement that exposes the questionability of these audits: ” Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected.”
If there indeed are inherent limitations that resulted in errors or irregularities , the whole purpose of the audit was defeated at the outset unless the audits found the errors and the irregularities and once such things were found there were always severe consequences, as it well there should be!
Audits are performed to ascertain the validity and reliability of information, and provides an assessment of a system’s internal control through transparency of Public funds. That has to do with the actual amount of MONEY that has been taken in from ALL sources in the Life span of TRLIA and how it has been spent right down to the last Penny, which is or should be, the Global Goal of this or any such audit, especially where PUBLIC FUNDS are involved.
However, TRLIA fails to follow a visible transparent accounting, by using an accrual accounting Method that attempts to record the financial effects on an enterprise of transactions and other events and circumstances that have cash consequences for an enterprise in the periods in which those transactions, events and circumstances occur rather than only in the periods in which cash is received or paid by the enterprise . Accrual accounting is concerned with the process by which cash is expended on resources and activities is returned as more ( or perhaps Less ) cash to the enterprise , not just with the beginning and end of that process as a normal audit does. No transparency here.
In past statements and on earlier web sites, TRLIA has stated they have put over $350,000,000 in the Yuba , Bear and Interceptor canal levees.
However, Finding the money spent is like trying to shove a wet noodle through a small hole in the wall because TRLIA’s Numbers do not seem to add up. For instance: From the Audited pages of CPA Hinz 2004 through 2007 years, these numbers are presented.
2004 revenue $4,129.011 Expended $745,848 Total levee Costs $701.774
2005 revenue $8,993, 204 Expended $5,887.034 $5,603,384
2006 revenue $ 61,102,786 Expended $52,009,773 $50,572,148
2007 revenue $70,247,172 Expended $76,331,298 $74,257,632
TOTAL $144,274,015 $134,987,953 $131,224,938
Again, these numbers taken from TRLIA’s own audit’s, using accrual accounting show Revenue of$ 144,274,015 , Expenditures of $134,987,953 and levee costs of $131,224,938.
Now, applying the generally accepted transparent auditing method of crediting income and deducting costs resulting in Balance, we see : Income $ 144, 274,015
Expenditures $ 134,987,953
TOTAL $9,286,062 Left over
The plan of using a Gimmicky auditing method instead of tried and true auditing should have raised Red Flags every where the Method was seen but since no one was looking, and TRLIA had not advised anyone they where deviating from given auditing methods, as well as the County Auditor removing himself from the auditing process, how were we to know?
Given the State auditor’s report at the beginning of this Post, any internal control management bent on keeping the Public in the dark would for sure use this Gimmicky accounting method.
Moving on, if the TRLIA accrual method is being used on the Feather River money rceived recently according to the Appeal Democrat, we have the same questions regarding that Levee also!