Grant Thorton Reports

A couple months ago the City of Fullerton hired Grant Thorton to investigate a handful of financial transactions that resulted in an vast overstatement of the city’s General Fund.

Last night they reported on Task 1: investigating the awkward General Fund balance fuck up.

As expected was the conclusion that no nefarious intent was involved. Just some good old fashioned negligence and/or incompetence (these were not used by Grant Thorton who was completely diplomatic).

But all you had to do was read between the lines and the conclusions were, and are, damning.

According to the consultants these few transactions were the only thing they looked into; they were not hired to perform a full forensic audit. Well, okay. But the conclusions that they drew, and that informed their recommendations should have been perceived as a serious indictment of how the City’s finances operate, were accepted by a clueless city council without a whimper.

One transaction alone, the $2.9 million from redevelopment, should have sufficed to alarm all involved. The funds were moved without a concomitant debit to at least a temporary holding account – a basic principle of accounting called double book keeping, a fundamental concept of Accounting 101.

The big recommendation was to hire a competent Chief Financial Officer – a CPA knowledgeable in government accounting. There’s another $300,000 per annum. It seems like the budget and reporting reforms recommended by our consultant may not be able to be applied to the upcoming budget due to lack of time, which just seems so typical of Fullerton Futility.

The little that Grant Thorton did delve into suggests a fundamental failure of practices and procedures that is the result of years, if not decades of organization entropy because of lack of managerial leadership. When we consider the completely unqualified City Managers like Chris Myers, Joe Felz, Ken Domer, and Eric Levitt – appointed for reasons of political maneuvering or convenience – things start to make more sense. Combine that with the fiscal and budget responsibilities being rolled up to Administration Directors whose professional accounting abilities were (and are) dubious, you get a process running on inertia.

Naturally, nobody at the meeting had the courage to say any of that, although the Grant Thorton folks sure must have spent a lot of time trying to figure out how not to say it.

Grant Thorton has decided that someone else should perform Task 2 – the generation of revenue to bail the City out of its fiscal embarrassment. They say it will save the City money to hire somebody else with a better “wheelhouse” to perform this task, a generosity foolishly lauded by one councilmember, but that begs the question of why Grant Thorton was hired to perform the task in the first place, a question whose answer will not be forthcoming.

My guess is that GT doesn’t want to have anything to do with talking about new taxes and there’s an end to it.