RANCHO MURIETA, CA (MPG) - When accountant Mark Matulich was hired as director of finance and administration for the Rancho Murieta Community Services District on Oct. 30, 2023, he appeared poised to bring order to the district’s troubled finances and complete its long-overdue audits.

Since his departure, however, board and Finance Committee meetings in May, June and July have revealed an increasingly murky picture of his work.

Although the 2022-23 and 2023-24 audits took far longer than Matulich initially estimated, his explanations were generally accepted by the board and meeting attendees. He said the financial records for those years were in such disarray that it was better to re-enter all transactions from scratch than to try to untangle them. He also told the board he was improving the day-to-day accounting practices based on lessons learned. As the same time, Matulich  was handling myriad other issues that included taking over the security department. 

Following Matulich’s resignation on May 1, the board promptly hired an interim director of finance and administration to complete the audits and manage daily accounting operations. 

Cecelia Min, a certified public accountant and temporary employee from the Robert Half consulting firm, was assigned to the role. She began working on the district’s books with the assistance of existing staff and two junior accountants from Robert Half who had been hired earlier to help Matulich re-input financial data for 2022-23 and 2023-24.

At Min’s request, Board President John Merchant also approved the hiring of a third junior accountant to begin work on the 2024-25 fiscal year records earlier this month. 

As Min began presenting detailed audit updates to the board and finance committee in May, June and July,  her reports revealed an increasing list of issues that were delaying the process. 

Financial Reports

Min delivered her first report on May 6, just days after being hired. She said the 2021-22 audit was underway and that preparation for the 2022-23 and 2023-24 audits was only about 40% complete: a surprising revelation, given that Matulich had reported in April that most of that work was finished.

Min’s June updates raised further concern when she reported significant challenges with the 2021-22 audit, which had already been submitted to the auditing firm. After sending a list of outstanding items to the district in February, the auditors received no response and were preparing to move on to another client until Min intervened. To keep the auditors engaged, she suspended all work on the 2022-23 and 2023-24 audit preparations and redirected all accounting staff and other district employees to focus on resolving the 2021-22 audit issues.

Min’s update at the July 10 Finance Committee meeting – which she repeated at the July 16 board meeting – painted an even more troubling picture. She reported additional problems with the 2021-22 audit and outlined a series of ongoing financial issues. These included reconciling about $800,000 in discrepancies in the already completed 2020-21 audit, database problems and inadequate fixed asset accounting that required a $1 million adjustment. Other issues included mishandled developer fees, unread fire hydrant meters, a $263,000 overstatement in the accounts payable aging report and a $78,000 understatement in the Water Treatment Plant loan balance.

On a happier note, Min reported that she should wrap up the last piece needed for the 2021-22 audit by the first week in August. She also provided an eight-page list of recommendations to fix the significant problems that she and the staff encountered so far.

Min’s recommendations included having front office staff enter miscellaneous deposits and payroll directly into the district’s existing Great Plains accounting system, rather than using Excel spreadsheets: a practice Matulich had continued after his arrival. Min said direct entry would eliminate the need for the district accountant to re-enter spreadsheet data into the system, freeing him to resume monthly balance sheet reconciliations, which had not been occurring regularly.

Her recommendations about improving developer deposits accounting will require far more work.

Min emphasized at both July meetings that her top priority remains completing the audit work – including the 2024–25 fiscal year – which will delay the implementation of her recommended improvements.

Speaking at the July 10 Finance Committee meeting, audience member Richard Gehrs expressed shock at the size of the adjustments and asked what they meant for the district’s financial position.

Min and Merchant, who chairs the committee, assured him that the issues involved accounting reconciliations – not missing funds – and that efforts were underway to clean up the records and strengthen financial processes.

“I want to make it clear that there’s not a million dollars floating around out there that we can't find,” Merchant said. “That’s not what we're doing here.”

Min’s detailed reports can be viewed online in the packets for the May, June and July board and Finance Committee meetings on the district’s website.