Plumas County Auditor Martee Graham presented the board of supervisors May 7 with a clean audit for fiscal year 2021-2022. As a result, an early proposal to alert the state to Plumas County’s financial shortcomings has been tabled.
A clean bill of fiscal health
The county ended that fiscal year “in accordance with accounting principles generally accepted in the United States of America,” said Norm Newell, an accountant with Smith & Newell CPAs of Yuba City. Smith & Newell provided an April 24 report to the supervisors for the year ending June 30, 2022. The introduction explains that their audit presents financial statements that describe “fairly, in all material <important> respects,” the county’s fiscal activities, from government and business to cash flow.
“This breaks the cycle of ongoing audit exceptions,” said Board of Supervisors Chairman Greg Hagwood. The county has not had an audit approved on time since 2020.
The supervisors unanimously approved the 2022 fiscal year audit. It leaves the county still one year behind in the audits required annually of every government entity.
With the 2021-2022 audit process now completed, the supervisors granted Graham approval to launch the 2022-2023 audit.
2022 audit highlights
At the end of 2022 Plumas County was generally in better financial health than in the previous year, according to the audit. County governmental funds reported a combined fund balance of $72,838,568, an increase of $18,684,658 over 2021. The county’s general fund also grew, ending the year at $10,834,528, a 7.8% increase from 2021. The county’s net investment in capital assets increased by $2,113,427, and the total long-term debt decreased by $18,831,786.
The 2022 fiscal year ended with a total net balance of $80,967,011. That is an increase of $32,929,898 over the previous year, according to the audit. The report attributed the upturn to a $16,785,239 increase in both state and federal revenues.
The largest sector of county spending in 2022 went to public protection. Law enforcement and related costs represented 27% of the county’s expenses, a slight increase over 2021. The second-largest expense was public roads and facilities at 13% of expenditures overall. General government expenses were close behind, representing 12.7% of all county spending.
Plumas County devoted 1% of its funds to education in 2022. Less than 1% went to culture and recreation.
Newell reported that the county has not reconciled its cash account; it is out of balance by $42,000. Graham said this is a result of poor coordination between departments due to accounting systems that are not fully integrated. “This is part of the challenge within our financial systems. We’re working on it,” she said.
In view of the overall budget, $42,000 “is not very much,” Newell said.
‘A disturbing trend‘
County Administrative Officer Debra Lucero credited Norm Newell with knowing “more about Plumas County finances than anyone else.” He has been involved in county audits for at least a decade.
But Lucero challenged the 2022 audit’s report of no material findings, which indicate significant errors or risks in the county’s financial information. Despite the county’s positive fiscal position at the end of 2022, it continued to lag in required monthly reports, she said. They were consistently late, she said.
And Lucero cited a trend in her review of 11 years of county audits. From 2012 to 2022, she documented repeated issues with reconciling pooled cash and investments, allocating interest earnings, accounts receivable and year-end closing processes. The section of an audit dealing with federal awards and questions has shown problems for the last four years and deserves immediate attention, she said. From 2018 to 2022 she found that material weaknesses represented the bulk of the findings.
“This is a disturbing trend,” Lucero said in her written report to the board. The supervisors have allocated $1.4 million in contracts with accounting agencies to address “some of these control patterns,” she said.
Report to state controller is tabled
Following adoption of the 2021-2022 audit, the supervisors revisited an April 2 proposal to disclose the county’s financial shortcomings and missed deadlines to the California state controller as a preemptive strike against possible state penalties. Among the failings is the 2022-2023 audit, due March 30, 2024.
In light of the now completed 2021-2022 audit and the steps county officials have taken to address the problems, Supervisor Tom McGowan said he favored continuing to delay any report to the state controller. “I’m willing to give it a little more time. The state is aware of our situation,” he said.
Graham reiterated her April 2 plea for cooperation. “It all starts with us,” she said May 7. “We need a plan to work cohesively together. Once a door closes it’s very hard to work together.” And she called for looking forward: “Let’s quit bringing up the past.”
Supervisor Dwight Ceresola agreed. “I’m kind of tired of this, too,” he said.
Hagwood tabled the proposal to report county finances to the state controller.
