In March 2015, the Culver City’s Independent Auditor informed the City Council that it found deficiencies in Culver City’s internal controls, e.g., “Deficiencies in controls over cash receipts at the Police Department,” “Deficiencies in controls over bank reconciliations.”
Culver City’s July 2015 Request for Proposals # 1570 (Internal Auditing Services) sought, in part: “[A CPA firm to] Assist the City in establishing a tip line (fraud hotline) where employees could anonymously report areas of concern to them. … Provide recommendations for strengthening internal controls in order to … improve fraud detection and prevention.”
Moss-Adams LLP’s winning bid states, in part: “Moss Adams is experienced at establishing and managing a fraud hotline for city governments. … The cost of these programs has been tailored to the budgets of our clients, as well as the amount of hotline activity.”
Within one year of commencing Internal Auditing Services for the City of Santa Monica, Moss-Adams LLP published its “Enterprise Risk Assessment.” It states, in part: “It is a best practice to have an ethics hotline to provide a mechanism for employees and citizens to anonymously report potential instances of fraud, waste, or abuse. … [T]he City [of Santa Monica] established an ethics hotline and … provided fraud training….” (Emphasis added.) Santa Monica posted this report on its website.
In September 2016, Paulette Greenberg publicly addressed our City Council, requesting that it agendize a discussion of adopting an ethics hotline. The then City Council yawned.
Culver City’s June 30, 2017 Single Audit and Independent Auditors’ Report states, in part: “The City engaged an external audit firm to conduct a thorough review of its internal controls and enterprise risk assessments. … [T]he City will then modify its relevant policies and procedures to establish adequate controls and adhere to best practices. [¶] John Nachabr (sic), City Manager will be responsible for the planned corrective actions and the expected implementation date is June 30, 2018.” (Emphasis added.) Please recall, per Moss-Adams LLP, “best practices” includes “an ethics hotline … to anonymously report instances of fraud, waste, or abuse.”
Unlike Santa Monica, three years after engaging Moss-Adams LLP and paying near $100,000 for services, Culver City has NOT received an “Enterprise Risk Assessment.” Who is responsible for the humongous delay? Has Culver City been misleading its Independent Auditor as to the effectiveness of its internal controls and the use of “best practices”? Will there be an independent investigation? Will any heads roll?
At a minimum, this City Council should promptly agendize (for public discussion) the establishment of an anonymous-fraud-waste-abuse hotline. A City-of-Kindness veneer is no shield from those who are tempted by easy access to public funds, e.g., numerous-multi-year misuses of Culver-City-issued-credit cards.
Hopefully, there is a new Sheriff in town. To be continued.
Les Greenberg, Esquire