Garibaldi has developed an action plan to address deficiencies in the city’s finances related to the fiscal year 2018-2019 audit. An action plan was presented during a city council meeting Monday, Nov. 15. Problems include material weaknesses, deficiencies and internal controls.

Mayor Tim Hall said the city’s wellbeing depends on its financial health. After some financial irregularities he saw in 2019, he had called for a financial report to be called to the city before he came on council.

“The information being presented tonight – I assure you – that there will be steps put in place working with the city council to ensure that such financial mismanagement and deception do not happen ever again,” Hall said.

Linda Bade, a volunteer city resident and former auditor, presented the financial review and action plan. Last month, Bade had presented a preview of the fiscal year 2018-2019 audit to the council. The audit arrived in May but council did not seem to receive it. Independent auditing firm Accuity Certified Public Accountants performed the audit.

“There’s a new requirement from the Secretary of State’s Office,” Bade said. “They want a plan.”

Bade said she drafted a plan that goes to the heart of the comments from the auditor. The plan includes having the council involved and having controls in place the right way.

The action plan required by the Oregon Secretary of State’s Office requires an action plan in response to financial statement audit findings of either material weakness or significant deficiency. The action plan was drafted for the council’s comments, review, approval and signature. The action plan states the city council will provide oversight by monitoring city manager and staff activities through staff reports, approving policies and procedures, and reviewing financial reports such as budgets and monthly financials.

Bade will assist City Manager Juliet Hyams in an assessment of all policies and procedures related to the financial affairs of the city and its accounting system. This review will include looking at staff descriptions to ensure all financial and accounting processes are accounted for, assigned and have been reviewed and updated as necessary.

Internal controls are an issue. Internal controls are policies and procedures designed to prevent and/or detect and correct errors, omissions or misstatements. A deficiency in internal controls exists when the design or operation of a control does not allow management or employees to prevent or detect and correct misstatements.

The audit for 2019 came out May 26 of this year, Bade added.

Bade said the auditor noted the council’s monitoring and review of the city’s financial processes were not effective. The action plan includes having an organized process and a monthly review of financial statements. The council will look at policies and procedures over financial processes that are the starting point for all activities. As they are drafted, financial reports will be put before the council for review and approval.

The auditor also noted that obtaining a complete and accurate final general ledger was problematic, Bade said. The auditor noted the city lacks personnel in the accounting department. The action plan reports changes in staffing. At the time of the audit, the city did not have a city manager and the finance officer was the only lead, covering multiple duties. Since then, the city has hired Hyams, who began in July. The finance officer at the time left employment with the city in September. The city hired a new finance officer this month.

Work will begin in December to review, create or update policies and procedures and is expected to take six to 12 months to complete. City management plans to begin including financial reports or financial information for discussion in the city council meeting for December and moving forward.


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