Would it surprise you…
-That despite the outside auditors sending the 2022 financial statements and audit report to the Councilmembers, council may not actually have received it until it was sent to them by the Finance Department two months later?
-That it then took the Audit Committee an additional seven months to complete its review of the statements and the report?
-That it would take another month for the committee to present its report to the council?
-That ten days before the scheduled presentation of the Audit Committee findings on the 2022 audit report to the council, the outside auditors sent the 2023 financial statements and audit report to councilmembers?
-That had anyone reviewed the available 2023 report, they would have known that assertions made to council in the presentation of the 2022 financial statements and audit report (specifically that 2022 audit findings had been satisfactorily addressed and that the city’s financial reporting processes and internal controls are adequate) were definitively refuted by the 2023 report?
-That the erroneous assertions have never been corrected?
-That now four months after receiving the 2023 report from the outside auditors, neither the Audit Committee nor the Council have formally reviewed the statements or the report?
-That the solution, driven unilaterally by the Finance Department, is to change auditors, ostensibly so that we can get our audit report earlier?
-That the firm selected to replace the auditors can’t deliver the audit report any earlier than the auditors being replaced?
Do you wonder how changing auditors will help in addressing audit findings and eliminate the identified material weakness in financial reporting and closing procedures? Do you wonder why the Council and Audit Committee voted to give its stamp of approval to this flawed process? Do you wonder whether there might be other problems lurking beneath the surface?
You’re not alone.
Mary Locatelli, Laguna Beach
Mary raises important and troubling questions about the handling of the city’s financial audits. It’s concerning that there seems to be a lack of urgency and transparency in addressing these critical issues. However, I believe that with the recent appointment of City Manager Dave Kiff, who has already shown a commitment to improving internal controls in the Finance Department, we have a real opportunity to correct course. It’s crucial that the Council and the Audit Committee fully engage with the findings in both the 2022 and 2023 reports and ensure that any flaws in the process are addressed. The residents of Laguna Beach deserve clear, timely, and accurate financial reporting. Let’s hope that with new leadership, we can restore confidence in how our city’s finances are managed.
As troubling as the issues surrounding the financial audits are, they may only be the tip of the iceberg. If our city’s leadership is struggling to manage something as fundamental as financial reporting and audit processes, we must ask ourselves: what other areas of governance might be slipping through the cracks? This concern becomes even more pressing when we consider the many large capital infrastructure projects currently being proposed. Projects such as new parking structures, the purchase of Laguna Canyon Road and the Pacific Coast Highway from Caltrans, and the myriad risks and unknown costs associated with these undertakings could potentially compound existing problems. Without strong leadership and robust internal controls, we risk making costly mistakes that could burden the city for years to come.
What we’re seeing with the audit process could be a symptom of a larger leadership problem, one that might be affecting every area of city governance. This is why it may be time for a comprehensive evaluation of all city staff and departments. A ‘report card’ from our new City Manager, Dave Kiff, on how Laguna Beach’s government and services compare to those in other cities where he has served could provide invaluable insight. Such an evaluation would help identify strengths to build on and weaknesses that need immediate attention, ensuring that we are on the right track, especially with so many important decisions looming on the horizon.
This kind of transparency and accountability is vital for voters to make informed decisions in the upcoming election. We need to know that our city is being managed effectively and that the people in charge are capable of steering Laguna Beach through the challenges ahead. Let’s encourage the City Manager and the Council to take this step—our city’s future depends on it.
In today’s complex world, financial data isn’t just a set of numbers on a spreadsheet—it’s the lifeblood of informed decision-making for any community, especially one like Laguna Beach that faces significant challenges and opportunities ahead. The sophistication of modern financial reporting tools allows us to present data in ways that are easily understandable, acting much like a captain’s navigation dashboard. When done right, these tools can help city leaders and residents alike see the full picture—where we are, where we’re headed, and the potential consequences of our decisions.
However, if the financial data is not timely, accurate, or presented in a format that everyone can understand, it’s like trying to sail a ship or fly a plane without a clear view of the horizon. The impact of decisions made today, whether it’s taking on new debt or investing in long-term infrastructure projects, will have far-reaching consequences. If we don’t have clarity in our financial reporting, we risk making choices that could burden not just our generation but future generations with debt and obligations they may not be able to easily service.
As Laguna Beach faces major projects like parking structures and the purchase of key roadways, it’s more important than ever that our financial reporting be accurate, transparent, and accessible. We need to ensure that all stakeholders—from city leaders to everyday residents—have the information they need to make wise decisions. By making financial data more user-friendly and actionable, we can better navigate the complexities of our future, ensuring a sustainable and prosperous community for ourselves and our children.