The Rialto, California-based West Valley Water District either lacked nearly half of its internal financial control measures, or they were not functioning effectively, leading to questionable hiring, spending and contracting practices, according to State Controller Betty Yee’s
Of the 48 fundamental components, principles, and attributes of effective internal control systems — as established by the federal Government Accountability Office — West Valley Water District demonstrated only 27 were present and functioning. Two were not present, while 19 were present but not functioning.
The district agreed with six of nine findings, according to the audit, but did not respond to SCO recommendations to recover funds spent erroneously.
Yee has requested a progress update in six months on the findings from the audit, which covers the period from July 1, 2016, through June 30, 2018.
Despite, the audit, the district has been able to maintain a AA-minus rating with a stable outlook from S&P Global Ratings. S&P first assigned
S&P most recently affirmed the water district in a national report issued on the municipal utility sector in December 2019.
The most significant findings in the controller’s audit were:
— West Valley entered into millions of dollars in financial, legal, and consulting contracts without competitive bidding, and made some large purchases with no written contract at all, failing to exercise due diligence to ensure public resources were spent in a cost-effective manner.
— More than $70,000 was spent on two meetings at a golf resort outside of district boundaries, in violation of a government code.
— District board members spent far more than their operating budgets and reimbursable rates for travel, lodging, and meals. SCO auditors questioned the spending of $1,897 for an election victory party for three members in 2017. Travel claims for $4,563 were reimbursed without documented approval or were self-approved by the claimant.
— West Valley compensated board members for numerous outside meetings held without prior board approval or documented business purpose, sometimes for more than one meeting a day in violation of the water code. These included lunch meetings, teleconferences, and “public meetings” at the farmers' market.
— The district overrode its own hiring policies and could not provide documentation to justify hiring decisions, promotions, or excessive pay increases.
The West Valley Water District is an independent special district that serves more than 80,000 residents in a 31-square-mile region of southwest San Bernardino County and northwest Riverside County. It is governed by a five-member elected board.
