9 p.m., Feb. 10
Nov. 2 Memo Doesn't Mention Computer Glitch
Last evening, as reported below, the City said that its audit would be delayed half a year and it was suspending bond sales because of computer problems. The statement was not believable on its face. Now a new internal document shows that on election day, Nov. 2, a memo went out alerting the staff to audit delays, but not mentioning a computer problem. On Nov. 2, Chief Financial Officer Mary Lewis wrote to members of city council about the financial reports for fiscal years 2010 and 2011. "These delays are due to staff working through a detailed and complex correction of labor distribution charges posted in the financial system," wrote Lewis. "The problems are in the posting of labor charges in the financial system." She talks about "timecard entry errors," or time being charged to the wrong account by employees. She says that the City saw the problem and took a different approach in the fall. "This schedule indicates that labor postings for both fiscal year 2010 and 2011 will be corrected by mid January," Lewis wrote. The fiscal year 2010 year end report and the fiscal year 2011 mid-year budget monitoring report would be out by Feb. 23.
On Nov. 9, Councilmember Kevin Faulconer wrote to John McNally, the City's bond disclosure attorney, referring to "data management problems" and promising full disclosure of the problems.
These discrepancies raise the question of whether "enterprise funds are being used to pay pension" expenses, says former City Attorney Mike Aguirre, drawing comparisons with the infamous city of Bell, California. The Securities and Exchange Commission and state auditor should step in, he says. "It's obvious we can't trust the people at City Hall."
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