California water district says it was already fixing problems cited in audit

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West Valley Water District, California, officials say they have made great strides toward fixing issues outlined in an audit State Controller Betty Yee released.

The controller's report, released Friday, outlined lapses in controls for operations, financial reports, assets and proper use of public funds in an audit that covered the period from July 1, 2016 to June 30, 2018 at the Rialto-based water district.

"I’ve heard our community loud and clear and that is why we’re making significant improvements,” said Channing Hawkins, president of the district’s board.

“This report represents a very dark time for the water district, but I’ve heard our community loud and clear and that is why we’re making significant improvements,” said Channing Hawkins, president of the district’s board, who was sworn in December.

The board and management have been working hard to implement the changes suggested by Yee since Hawkins appointment, according to water district officials.

Yee has requested a progress update in six months on the findings from the audit.

The district retains its AA-minus rating with a stable outlook from S&P Global Ratings. S&P first assigned the rating when the district refunded $22 million in water revenue bonds in 2016.

Since Channing took office in December, he said he has “taken swift and decisive action to increase accountability and transparency for our ratepayers.”

The district hired Liebert Cassidy Whitmore and the Special Leadership Foundation to help improve and conduct unbiased investigations and assessments of the district’s operations, according to a district spokesperson.

The organization received the SDLF’s district transparency certificate of excellence on June 6, an award recognizing outstanding efforts to promote transparency and good governance.

The designation required all board members to complete ethics training, which they did this past quarter.

Rickey S. Manbahal, the district’s CFO, said it has hit a turning point in efforts to ensure financial responsibility and accountability.

“We are taking all the necessary steps to ensure ratepayer funds are invested responsibly,” Manbahal said. “As directed by the board, I will hold our management and staff accountable for their actions, because it’s what our ratepayers deserve.”

The water district has made significant enhancements to internal control practices, according to a spokesperson. As part of bond disclosures, the statement of indentures requires that the budget includes funding to satisfy debt services and the set the minimum bond ratio, which it does.

The proposed fiscal year 2020-21 budget would use existing cash flow to find infrastructure improvements, and will not require the issuance of new debt, according to the district spokesperson.

Among the improvements the board has instituted since January was the selection of The Pun Group, a CPA firm, to conduct an annual audit.

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Audits California