Riverside officials will pay for an independent audit of the sewer fund, but they’ll use a private firm rather than asking state Controller John Chiang to do the review.
Council members are hoping the audit will clear up uncertainty about the city’s finances and help them to sell millions of dollars’ worth of bonds for sewer projects.
Several city critics have repeatedly alleged the city improperly spent earlier sewer bond money and illegally made loans from the sewer fund to other city funds.
City finance officials insist the handling of sewer funds was legal, but during a May discussion of a sewer rate increase, Councilmen Paul Davis and Mike Soubirous suggested audits by Chiang to put the questions to rest.
That appears to have forced the city’s hand. Public calls for an audit by the councilmen “called into question the validity of the sewer fund’s financial statements and made it very challenging for the city to issue debt at the lowest interest rate possible,” Assistant Finance Director Scott Catlett wrote in a report.
To address that concern, council members voted Tuesday, June 3, to ask their new outside audit firm to do a special audit of sewer fund transactions between 2000 to 2014, including use of loans and bond money. That new firm, Macias Gini & O’Connell, was hired Tuesday to replace Oregon-based Moss Adams.
Finance Director Brent Mason said Moss Adams wanted more than the fee negotiated in its contract. Davis and Soubirous said a company official also told them the issue was money rather than any problems with the city’s books.
Council members have said they believe the city’s finances have been handled properly, though some concede they are so complex it’s hard for a non-accountant to understand.
Councilman Mike Gardner said auditing the sewer fund will help “to try to reassure people who have some concern and demonstrate to ourselves that either things have been done correctly, or if something has not been done correctly, identify what it is so we can fix it.”
Council members said using a private firm rather than the state controller’s office gives them more control over the scope and timing of the audit, and they want it done quickly so the city can issue more sewer bonds.
Officials don’t know what the audit will cost, but Mason estimated it could be about $50,000 if done by a private firm, whereas a state controller audit could take more than a year and cost more than $250,000.Contact the writer: 951-368-9461 or firstname.lastname@example.org