Does the City of Oxnard hold any past officers responsible for their actions?

ColumnLogo-1By Phil Molina

We will learn this Tuesday that the auditors are finding it difficult to complete the city’s audits on time. One “little” reason is that the city staff hasn’t reconciled the city’s cash account(s) since June or November of 2014.   Yes the city has been running blind fiscally for the last year to a year and a half.
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One wonders what did the CFO do during that time? Who is responsible for this flagrant lapse of duty? Is there anything that can be done to make those responsible for this problem held accountable? What did the Elected City Treasurer do and what did she know?
We should also be informed that before an audit is started the city’s top managers are obligated to sign a “representation letter” addressed to the auditing firm. That letter is usually signed under penalty of perjury. It is a long list of compliance rules, laws, and procedures that every financial government operations are required to comply with and it is a testament from those officers that they complied with all those rules, laws, and procedures.
An example of such a “letter” is provided below for those who want to know more. But by signing the letter the staff is stating that every transaction was posted; and that every transaction was proper, legal and ethical. 
Take note that one of the officers that usually signs the letter is the manager in charge of the budgets.(paragraph 18).
So what will the city attorney do to enforce the terms under which past CFO, Budget Manager, and City Managers who were paid a salary, but obviously did not comply with the duties of their jobs? Oh yes, one of the other officers that must sign is the City Attorney.
Phillip Molina

 

Anonymous City, Inc.

[Date]

To [Independent Auditor]

We are providing this letter in connection with your audit(s) of the [identification of financial statements] of [name of entity] as of [dates] and for the [periods] for the purpose of expressing an opinion as to whether the [consolidated] financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of [name of entity] in conformity with generally accepted accounting principles. We confirm that we are responsible for the fair presentation in the [consolidated] financial statements of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles.

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.

We confirm, to the best of our knowledge and belief, [as of (date of auditor’s report),] the following representations made to you during your audit(s).

1. We are responsible for the fair presentation of the financial statements

and stewardship information in conformity with U.S. generally

accepted accounting principles.

2. The financial statements are fairly presented in conformity with U.S.

generally accepted accounting principles.

3. We have made available to you all

a. financial records and related data;

b. where applicable, minutes of meetings of the Board of Directors [or

other similar bodies, such as congressional oversight committees] or

summaries of actions of recent meetings for which minutes have not

been prepared; and

c. communications from the Office of Management and Budget (OMB)

concerning noncompliance with or deficiencies in financial reporting

practices.

4. There are no material transactions that have not been properly

recorded in the accounting records underlying the financial statements

or disclosed in the notes to the financial statements.

5. We believe that the effects of the uncorrected financial statement

misstatements summarized in the accompanying schedule are

immaterial, both individually and in the aggregate, to the financial

statements taken as a whole. [If management believes that certain of

the identified items are not misstatements, management’s belief may be

acknowledged by adding to the representation, for example, “We

believe that items XX and XX do not constitute misstatements because

[description of reason].”]

6. The [entity] has satisfactory title to all owned assets, including

stewardship property, plant, and equipment; such assets have no liens

or encumbrances; and no assets have been pledged.

7. We have no plans or intentions that may materially affect the carrying

value or classification of assets and liabilities.

8. Guarantees under which the [entity] is contingently liable have been

properly reported or disclosed.

9. Related party transactions and related accounts receivable or payable,

including assessments, loans, and guarantees, have been properly

recorded and disclosed.

10. All intra-entity transactions and balances have been appropriately

identified and eliminated for financial reporting purposes, unless

otherwise noted. All intra-governmental transactions and balances have

been appropriately recorded, reported, and disclosed. We have

reconciled intra-governmental transactions and balances with the

appropriate trading partners for the four fiduciary transactions

identified in Treasury’s Intra-governmental Fiduciary

Transactions Accounting Guide, and other intra-governmental

asset, liability, and revenue amounts as required by the applicable OMB

Bulletin.

11. There are no

a. possible violations of laws or regulations whose effects should be

considered for disclosure in the financial statements or as a basis for

recording a loss contingency,

b. material liabilities or gain or loss contingencies that are required to

be accrued or disclosed that have not been accrued or disclosed, or

c. unasserted claims or assessments that are probable of assertion and

must be disclosed that have not been disclosed.

12. We have complied with all aspects of contractual agreements that

would have a material effect on the financial statements in the event of

noncompliance.

13. No material events or transactions have occurred subsequent to

September 30, 20X2 [or date of latest audited financial statements], that

have not been properly recorded in the financial statements and

stewardship information or disclosed in the notes.

14. We are responsible for establishing and maintaining internal control.

15. We acknowledge our responsibility for the design and implementation

of programs and controls to prevent and detect fraud (intentional

misstatements or omissions of amounts or disclosures in financial

statements and misappropriation of assets that could have a material

effect on the financial statements).

16. We have no knowledge of any fraud or suspected fraud affecting the

[entity] involving:

a. management,

b. employees who have significant roles in internal control, or

c. others where the fraud could have a material effect on the financial

statements.

[If there is knowledge of any such instances, they should be described.]

17. We have no knowledge of any allegations of fraud or suspected fraud

affecting the [entity] received in communications from employees,

former employees, or others. [If there is knowledge of any such

allegations, they should be described.]

18. Pursuant to 31 U.S.C. 3512(c), (d) (commonly known as the Federal

Managers’ Financial Integrity Act), we have assessed the effectiveness

of the [entity’s] internal control in achieving the following objectives:

a. reliability of financial reporting—transactions are properly recorded,

processed, and summarized to permit the preparation of financial

statements and stewardship information in accordance with U.S.

generally accepted accounting principles, and assets are safeguarded

against loss from unauthorized acquisition, use or disposition;

b. compliance with applicable laws and regulations—transactions are

executed in accordance with (i) laws governing the use of budget

authority and with other laws and regulations that could have a

direct and material effect on the financial statements and (ii) any

other laws, regulations, and government-wide policies identified by

OMB in its audit guidance; and

c. reliability of performance reporting—transactions and other data that

support reported performance measures are properly recorded,

processed, and summarized to permit the preparation of

performance information in accordance with criteria stated by

management.

[If the entity bases its internal control assessment on suitable criteria

other than 31 U.S.C. 3512(c), (d), this item should cite the criteria used

(for example, Internal Control—Integrated Framework issued by the

Committee of Sponsoring Organizations (COSO) of the Treadway

Commission).]

19. Those controls in place on September 30, 20X2 [or date of latest audited

financial statements], and during the years ended 20X2 and 20X1,

provided reasonable assurance that the foregoing objectives are met.

[If there are material weaknesses, the foregoing representation should

be modified to read:

Those controls in place on September 30, 20X2, and during the years

ended 20X2 and 20X1, provided reasonable assurance that the

foregoing objectives are met except for the effects of the material

weaknesses discussed below or in the attachment.

or: Internal controls are not effective.

or: Internal controls do not meet the foregoing objectives.]

20. We have disclosed to you all significant deficiencies in the design or

operation of internal control that could adversely affect the entity’s

ability to meet the internal control objectives and identified those we

believe to be material weaknesses.

21. There have been no changes to internal control subsequent to

September 30, 20X2 [or date of latest audited financial statements], or

other factors that might significantly affect it. [If there were changes,

describe them, including any corrective actions taken with regard to

any significant deficiencies or material weaknesses.]

22. We are responsible for implementing and maintaining financial

management systems that substantially comply with federal financial

management systems requirements, federal accounting standards (U.S.

generally accepted accounting principles), and the U.S. Government

Standard General Ledger at the transaction level.

23. We have assessed the financial management systems to determine

whether they substantially comply with these federal financial

management systems requirements. Our assessment was based on

guidance issued by OMB.

24. The financial management systems substantially complied with federal

financial management systems requirements, federal accounting

standards, and the U.S. Government Standard General Ledger at the

transaction level as of [date of the latest financial statements].

[If the financial management systems substantially comply with only

one or two of the above elements, this representation should be

modified as follows:

As of [date of financial statements], the [entity’s] financial

management systems substantially comply with [specify which of the

three elements for which there is substantial compliance (e.g.,

federal accounting standards and the SGL at the transaction level)],

but did not substantially comply with [specify which of the elements

for which there was a lack of substantial compliance (e.g., federal

financial management systems requirements)], as described below

(or in an attachment).]

[If the financial management systems do not substantially comply with

any of the three elements, the following paragraph should be used

instead:

As of [date of financial statements], the [entity’s] financial

management systems do not substantially comply with the federal

financial management systems requirements.]

[If there is a lack of substantial compliance with one or more of the

three requirements, identify herein or in an attachment all the facts

pertaining to the noncompliance, including the nature and extent of the

noncompliance and the primary reason or cause of the

noncompliance.]

25. We are responsible for the [entity’s] compliance with applicable laws

and regulations.

26. We have identified and disclosed to you all laws and regulations that

have a direct and material effect on the determination of financial

statement amounts.

27. We have disclosed to you all known instances of noncompliance with

laws and regulations

 

To the best of our knowledge and belief, no events have occurred subsequent to the balance-sheet date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements.

[Name of Chief Executive Officer and Title] signed under penalty of perjury

[Name of Chief Financial Officer and Title] signed under penalty of perjury

[Name of Chief Budget Officer and Title] signed under penalty of perjury

________________________________

Phil Molina is an Oxnard resident, former Oxnard Finance Director and “whistleblower,” who exposed alleged corruption, and was fired. He sued and won a large award, after many years of litigation.

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