MERCED — An independent review found no evidence of mismanagement or fraud on the part of the Merced Irrigation District finance department. A member of the board of directors had requested an investigation.
In August, board Kevin Gonsalves told staff he received anonymous information that the district was keeping two sets of books, according to MID meeting minutes.
The district hired Peter Wrobel of the Berkeley Research Group, a certified fraud examiner and public accountant, to investigate the claim. The results of Wrobels inquiry were presented to the board of directors in a public meeting on Tuesday.
Following nearly two months of investigation, Wrobel concluded that it cannot legitimately be suggested that the MID keeps a second set of books ... , the report says. Wrobel attributed the allegation to a lack of understanding about standard accounting practices.
Gonsalves raised the question after receiving a copy of an email written by the MID Controller Kandi Ramos. The email, dated April9, 2012, discussed internal and external versions of the budget and said if anyone externally requests a copy of our budget, please run these requests through me since we have a different version prepared for the public, the report says.
Gonsalves copy of the email was attached with a note that said: MID is running two sets of books, the report says.
It appears that the individual who placed the Post-it note on Ms. Ramos email was suggesting that the MID was in some way manipulating its financial records by presenting one budget to the public that was materially different from the internal budget maintained the by the MID, Wrobel said.
Wrobel said he asked Gonsalves if there was anything besides the email that triggered Gonsalves concern. Gonsalves responded in an email, saying: Nope, thats all, the report says.
Wrobel said the numbers in both copies of the budget were identical. He said the only difference between the two budgets was that the public budget excluded certain confidential information regarding ratepayers and the MID employee payroll.
Wrobel told the board of directors that was a standard practice in public accounting.
It appears that the person who placed the Post-it note on Ms. Ramos email and delivered it to Mr. Gonsalves simply did not understand that it is not unusual, and in fact is regular practice, to have have budgets containing the same financial information presented in different formats to different audiences for different purposes, the report says.
Confusion persisted about Wrobels report during Tuesdays meeting.
So what youre saying is that this email and the information I received is accurate; there are two sets of books, Gonsalves said.
No, Wrobel responded. The only difference is the way the information is presented. This does not mean there are two sets of accounting records.
Wrobel restated that the financial information in both versions is identical and both are available for public inspection. Board member Scott Koehn agreed that the practice was well known and said anyone familiar with public accounting would have been familiar with it. Koehn suggested that it would have been easier and less costly for Gonsalves to simply ask either the MID Finance Director Brian Stubbert or General Manager John Sweigard to explain the books before seeking an pricey outside audit.
The MID has been billed for $2,010.67 for the investigation and additional billing is expected, according to documents obtained by the Merced Sun-Star.
Responding to a question from Koehn, Stubbert and Sweigard confirmed that Gonsalves never contacted them about his concerns before requesting the review.
Dave Long, board vice president, praised the MID staff, saying its records were some of the cleanest sets of books Ive ever seen.
Stubbert told the board the independent investigation vindicated the staff of any accusations of mismanagement or wrongdoing.
This report shows what I knew all along, Stubbert said.
Gonsalves said he considered the issue closed.
Staff writer Rob Parsons can be reached at email@example.com or (209) 385-2482.