Corrective Action Plan and Assessment—City of Lynwood

November 22, 2021

View Lynwood's Corrective Action Plan from November 22, 2021

In December 2018, we published an audit of the city of Lynwood (Lynwood) under the high risk local government agency audit program. The 2018 audit identified Lynwood as high risk because of its inadequate financial and organizational management, weak oversight of financial operations, and violations of state law. State law requires the State Auditor to issue audit reports at least once every three years until we determine that the high-risk local government entity has sufficiently addressed the identified areas of risk. Accordingly, we issued our follow-up audit report titled City of Lynwood: Despite Taking Some Action to Improve Its Management Practices, the City Continues to Risk Financial Instability and Violations of State Law (2021-808) in September 2021.

This follow-up audit determined that Lynwood has taken some action to address the risk areas identified in our 2018 audit, although the city still has more to do. Lynwood submitted its corrective action plan to the follow-up audit on November 22, 2021. The city stated that it is committed to providing full transparency as it addresses the issues identified in the report. We will review Lynwood's progress in its next update and will evaluate at that time the extent to which the city has made progress in further addressing any of the risk areas.

 

Inadequate Financial Management Hinders Lynwood's Fiscal Stability

Ongoing Budget Deficits and Uncertain Future
California State Auditor's Assessment Status: Partially Addressed (same status reported in September 2021)	Lynwood plans to perform the following actions to address its ongoing budget deficits and uncertain financial future: Update its budget and fiscal policies, including its reserve policy. Develop an annual budget calendar with due dates for various processes in the budget development cycle. Update its policy to provide monthly reports to the city council for budget monitoring that align with best practices.
Inadequate Budgeting Practices
California State Auditor's Assessment Status: Partially Addressed (same status as reported in September 2021)	Lynwood plans to update its budget and fiscal policies, including establishing a requirement for five-year forecasting of revenue and expenditures.
Questionable Salary Increases
California State Auditor's Assessment Status: Partially Addressed (same status as reported in September 2021)	Lynwood plans to enforce and adhere to its salary-setting policy and will retain personnel action forms related to any salary increases. It also plans to use comparable data when conducting classification and compensation studies.

Violations of State Law, Weak Oversight, and Policy Breaches Make Lynwood Susceptible to Fraud and Waste

Violations of State Law in the Use of Water and Sewer Funds
California State Auditor's Assessment Status: Partially Addressed (same status reported in September 2021)	Lynwood cited its previous disagreement with our recommendation that it dissolve the utility authority but did not comment on whether its current position has changed. The city plans to conduct a cost allocation study to determine whether the city's funds are being appropriately charged.
Poor Contract Administration
California State Auditor's Assessment Status: Partially Addressed (same status as reported in September 2021)	Lynwood plans to consult with its city attorney to amend relevant portions of its municipal code and purchasing ordinance to address competitive bidding. The city also plans to conduct training to ensure that city staff understand their contract processing responsibilities.
Inadequate Controls Over Its Financial Operations
California State Auditor's Assessment Status: Fully Addressed (same status as reported in September 2021)	We determined in our follow-up audit that Lynwood fully addressed this risk area.

Ineffective Organizational Management Diminishes Lynwood's Ability to Provide Public Services

Lack of Strategic Plan
California State Auditor's Assessment Status: Pending (same status reported in September 2021)	Lynwood is in the process of developing a strategic plan.
Inability to Effectively Measure Staffing Needs
California State Auditor's Assessment Status: Pending (same status as reported in September 2021)	Upon completion of the strategic plan, Lynwood intends to use it to measure the city's goals and determine whether they are met.
Significant Turnover in Key Positions and No Plan for Identifying Future Leadership
California State Auditor's Assessment Status: Partially Addressed (same status as reported in September 2021)	Lynwood plans to update its records retention policy so that it can maintain institutional knowledge and ensure that staff understand decisions made by the city.