Report 2018-110 Recommendation 6 Responses

Report 2018-110: City of Lincoln: Financial Mismanagement, Insufficient Accountability, and Lax Oversight Threaten the City's Stability (Release Date: March 2019)

Recommendation #6 To: Lincoln, City of

By June 2019, Lincoln should establish accounting procedures to ensure that it records all costs of city maintenance from the appropriate funds, including apportioning the general benefit costs to the general fund.

Annual Follow-Up Agency Response From October 2020

This has been completed and has been reported on several times now.

Expenditures for each zone within the lighting and landscaping district were tracked by zone for the entire 2018/2019 Fiscal Year. The transfer of funds in an amount equal to the General Benefit and zone deficit was made from the General Fund to the Lighting and Landscaping District Fund, consistent with state law.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Although Lincoln states that it has repeatedly reported on the completion of its efforts to implement this recommendation, its previous responses did not demonstrate full implementation. However, this most recent response addresses our earlier concern that the city had not shown how it is apportioning the general benefit costs of electricity, sewer, and solid waste services to the general fund similar to its approach for water costs.

1-Year Agency Response

This has been reported on twice now.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Lincoln has demonstrated that it accounts for water expenditures in each landscaping and lighting zone and apportions the general benefit costs of water to the general fund. However, it has not demonstrated that it has taken similar action for electricity, sewer, and solid waste services.

6-Month Agency Response

Expenditures were tracked appropriately for the entire 2018/2019 Fiscal Year. The journal entry to transfer the required funds associated with the cost of the General Benefit/Zone Deficit was completed as required.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although Lincoln has made efforts to record the costs of city maintenance from the appropriate funds and has established written accounting procedures, those procedures indicate that the city has not yet been able to track electricity costs by zone. Additionally, the procedures and tracking records do not demonstrate that Lincoln accounts for sewer or solid waste expenditures. Lincoln informed us that it is discretely tracking these expenditures for fiscal year 2019-20. We look forward to reviewing Lincoln's one-year response, along with reviewing its updated tracking records and procedures, to assess its progress on implementing this recommendation.

60-Day Agency Response

The implementation of this recommendation was initiated prior to the initiation of the state audit. Full implementation of the recommendation cannot be substantiated until the end of the fiscal year (June 30, 2019). Upon completion of the fiscal year, a transfer of funds from the General Fund to the Lighting and Landscaping Fund will be made in an amount equal to the General Benefit and the cumulative zone deficit.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2018-110

Agency responses received are posted verbatim.