Unreported thefts, forged reports, opportunities for fraud and uncooperative department heads are only a few of the factors that have made keeping track of the county's finances a nightmare for Auditor-Controller Karen Paz Dominguez, she told the Board of Supervisors on Tuesday.
"Despite the A-C Office's preemptive efforts to prevent delays and despite the best efforts of department staff to compile and prepare the work that was assigned to them in the performance of their duties, the county as a whole failed to close fiscal years 19-20 and 20-21 timely," she said.
That's according to allegations Paz Dominguez brought against various departments within county government at a Humboldt County Board of Supervisors meeting Tuesday. Among the biggest allegations were that 1st District Supervisor Rex Bohn pressured county staff to rush permits, payments and other transactions for his friends and the County Administrative Office forged a financial report that was sent to the State Controller's Office.
"That report was submitted to the State Controller's Office without auditor-controller knowing about it," Paz Dominguez.
Paz Dominguez detailed issues reconciling the county's assets. She gave the example of the county's Department of Health and Human Services, which she said doesn't regularly reconcile petty cash.
When receipts were requested, the auditor-controller said her office learned about instances when an employee accidentally destroyed cash and another when cash and other items were stolen. The latter was reported to the police, but not the auditor-controller, she said.
Paz Dominguez singled out the Sheriff's Office, County Administrative Office, Public Defender's Office and DHHS for failing to submit timely reports. There were also unauthorized expenditures, unapproved timesheets and non-contractual payments, she said.
Within the administrative office, she said accounting tasks and the responsibility of administering "millions worth of public funds were assigned to brand new and untrained employees."
"They misapplied the cost-burden of shared utilities to departments," Paz Dominguez said. "When I brought it up, I was threatened and told that they would reduce my General Fund contribution."
The picture painted by Paz Dominguez was quite different than the one painted by department heads and some supervisors, who have scapegoated the Auditor-Controller's Office for failing to submit the 2019-2020 report to the State Controller's Office.
State Attorney General Rob Bonta sent a letter to Paz Dominguez on Thursday stating the report was delinquent and needed to be submitted within 20 days to avoid legal action. However, Paz Dominguez said that letter was sent in error and that it confused both the State Controller's Office and the county Auditor-Controller's Office since they've been working together.
The State Attorney General's Office directed a request for comment to the State Controller's Office, which did not immediately respond.
The accounting function is decentralized. Departments often use varying software and sometimes external bank accounts, which Paz Dominguez said makes it difficult for the Auditor-Controller's Office to keep track of county finances.
Supervisors complained that Paz Dominguez blindsided them and department heads contested the notion they were engaging in fraud or mismanagement. Several members of the public contested Paz Dominguez's claims, at times getting hostile, while department heads said the issues brought up by Paz Dominguez were the result of human error.
"There's a difference between fraud and a mistake," said County Administrative Officer Elishia Hayes. " # Fraud is the wrongful or criminal deception intended to result in financial or personal gain, that is fraud. This word continues to be thrown out in an accusatory fashion toward your staff and it's tearing their morale down."
Hayes did not address any of Paz Dominguez's comments, but said "there was not one single instance" of fraud and that not one of the things mentioned by Paz Dominguez was news to her. Hayes lodged accusations back at Paz Dominguez, saying the issue was lack of communication with the Auditor-Controller's Office.
"She has mandates that are not being met," Hayes said. "She has not met her mandates for years. This includes interest apportionment, cash reconciliations, completing the external audits, and the list goes on and on."
Officials with the Department of Health and Human Services challenged the idea that it was being sued by the state. What the auditor-controller was referring to is routine and procedural, they said.
Bohn said Paz Dominguez had made these allegations against him before and that he wanted to see the evidence corroborating the auditor-controller's story. Bohn said the auditor-controller launched an investigation over a $23,000 payment several years ago that resulted in no findings.
"I get a little nervous when things are fabricated about me," he said.
He challenged the notion that Paz Dominguez was an expert, though she said her experience and education made her one.
County resident Kent Sawatzky was one of the few voices speaking in support of Paz Dominguez. Sawatzky suggested he witnessed county staff shouting obscenities and being hostile toward the auditor-controller's staff, which may have stymied communication with some departments.
Fourth District Supervisor Virgina Bass asked why these issues weren't brought to the supervisors by the external auditor in the past.
"That's a lot of expectation to place on an external auditor," Paz Dominguez said, adding that's the responsibility of an internal bookkeeper.
Fifth District Supervisor Steve Madrone suggested discussing Paz Dominguez's claims at a different time since the focus of their vote was supposed to be whether to approve a contract extension with CliftonLarsonAllen to conduct an external audit of the county's 2019-2020 finances.
About an hour later, the supervisors unanimously approved the contract extension.