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State Auditor begins interviews

Process could last through February
By: Steve Archer, Reporter
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California State Auditor team members seem to be interviewing Lincoln elected officials and city employees for more than a week and the process could last until February, according to City Hall sources.

Lincoln City Councilman Dan Karleskint, one of two councilmen serving as a liaison to the State Audit team, said Tuesday night he was under “very clear” directions not to talk about the audit. Karleskint confirmed the audit had begun but would not say whether city staff or elected officials had begun to be interviewed.

However, a steady stream of city employees and elected officials, including Mayor Stan Nader and City Engineer Ray Leftwich, has been seen entering and leaving the ground floor office in City Hall where the auditors are conducting interviews.

“They are treating it like a grand jury,” Karleskint said. “Everything is totally confidential. I can’t comment on any details, not because I don’t want to but because the government code says we can’t.”

Lincoln City Attorney Kristine Mollenkopf reiterated the need for city staff to remain mum on the audit.

The California State Assembly Joint Committee on Legislative Audit voted May 16 to conduct an audit into the city of Lincoln and its administration of public funds. State Sen. Ted Gaines requested the audit in an April 11 letter to the Legislative Audit committee. Gaines, in the letter, described “a distinct pattern of mismanagement among some at the upper echelons of city government in Lincoln.”

“Recently, citizens challenged the city based on water rates and made some disturbing findings, leading to broader concerns over failure to comply with reporting requirements under state law and a pattern showing poor internal controls and fund management abilities,” Gaines testified to the committee May 16. “This pattern could point to the potential for a high risk city, which, should it fail, could require the state to step in with funds to bolster the city’s budget.”

Auditor Karen Wells is heading up the Lincoln audit team. Telephone calls and emails to Wells were not returned, as of press time.

According to a list of the audit’s scope and objectives, the audit team will investigate the administration of public funds and assets by the city of Lincoln. Included in the audit’s scope of activities are:

  • An examination of Lincoln’s governance and operational structure and an assessment of management controls and practices
  • An evaluation of Lincoln’s financial processes during the last five years, including policies and practices regarding money transfers, use of public funds and depositing and collaterizing public funds
  • An examination of Lincoln’s reported water and sewer usage for the last five years as well as connection fee charges and rates
  • An evaluation of Lincoln’s process for collecting and reporting residential and commercial fees
  • An investigation into whether water rate fees assessed by Lincoln for the last five years are in excess of the cost of providing the service
  • An investigation into Lincoln’s use of and distribution of Redevelopment Agency funds.

In addition to providing a key element to the state government’s system of checks and balances, by looking into the fiscal health of state agencies, the State Auditor also conducts an annual audit of California’s financial system as well as auditing the state’s compliance with federal regulations regarding the spending of federal funds.

The State Auditor also investigates and reports on state and government local agencies identified as being high-risk for waste, fraud, abuse and mismanagement or which may have major challenges regarding efficiency or effectiveness, according to the State Auditor website.

If a local agency is found to be high-risk, it is required to submit written progress reports every six months regarding its corrective action plan. The high-risk designation is removed once a local agency has satisfied the required corrective action.