RANCHO MURIETA, CA (MPG) - Rancho Murieta Community Services District has completed two more overdue annual audits, moving the district closer to catching up after years of delayed financial reporting and accounting problems.

Auditors from Richardson & Company presented the fiscal 2022-23 and 2023-24 audits to the CSD Finance Committee Aug. 24, telling directors that they had seen significant improvement in the district’s accounting and preparation for the audits. Two days later, the full board voted unanimously to receive and file both audit reports.

The district now has completed three audits in about a year and has two more fiscal years to finish. The 2024-25 audit is overdue, while the 2025-26 audit is not yet past its filing deadline. Finance Director Cecilia Min told the Finance Committee that staff is working on both years simultaneously and hopes to have the accounting work for both completed by the end of the year.

At the Aug. 26 board meeting, Director Linda Butler noted the change.

“We’ve gotten to the point where we have one that’s still past due and one that’s current,” Butler said. “Which is really great.”

Auditors Cite Measurable Improvement

Ingrid Sheipline of Richardson & Co. said one indication of the improvement was the number of adjustments auditors had to make to the district’s financial statements. The auditors made seven adjustments for fiscal 2022-23 and four for 2023-24.

“That’s a significant improvement compared to nearly 40 adjustments that we’ve had in previous audits,” Sheipline said. “Definitely an improvement in the processes for preparing for the audit.”

She specifically credited Min for the change.

“I definitely want to recognize that Cecilia did a lot of work to get to that point,” Sheipline said.

Later in the presentation, Sheipline returned to Min’s role in getting the district caught up, noting that Min has had to reconstruct financial records for years when she was not the district’s finance director.

“The fact that we’re almost current” represents significant improvement, Sheipline said. She commended Min “for all the excellent work that she’s done in preparing for the audits,” adding that Min was working on fiscal years “that she wasn’t here doing the accounting,” which required her to reconstruct and clean up earlier records. Sheipline also said Min had been “very responsive during the audit process.”

The audits still list three material weaknesses involving keeping the accounting system current, year-end closing procedures and accounting for developer-donated infrastructure. The findings relate to the earlier fiscal years covered by the audits; district management reported that the accounting had been brought current as of January 2026.

Four findings previously classified as significant deficiencies were considered adequately addressed and removed from the current audit reports.

The auditors did identify other areas where additional work is needed. Among them are the district’s procedures for voided checks, inconsistencies between its reserve policy and accounting records, and an investment policy that has not been updated since 2016. State law requires the investment policy to be reviewed annually by the board.

One new control is an audit-preparation checklist requiring balance-sheet accounts to be reconciled before records go to the auditors. Min linked that process to the reduction in audit adjustments.

Auditors also discussed the accounting for infrastructure built by developers and later turned over to the district. Although no money changes hands when the infrastructure is transferred, it becomes a district asset that CSD ultimately must maintain. Min said staff is continuing to make sure developer-donated infrastructure dating back to 2007 has been properly recorded.

Resident Asks How It Happened

The discussion prompted Rancho Murieta resident Maryjane Fatigati, who has a finance and accounting background, to question how previous boards could have made financial and budget decisions when basic accounting processes were not functioning reliably.

She pointed to bank reconciliations that had not been reviewed, inadequate transaction review and duplicate accounting.

“Who was watching the house here?” Fatigati asked.

Director Bill Gere acknowledged the extent of the past problems.

“If you look back for the last seven to 10 years, it’s beyond comprehension,” Gere said. “But in the last 16, 18 months since Cecilia’s been here, we’ve come a long, long way,” he said.

Director John Merchant said staff essentially had to rebuild five years of accounting records.

“We’re getting financial statements at this point that we can trust,” Merchant said.

Min described the completion of the audits in more personal terms.

“When I see the financial statement, the finalization, I felt really relieved. So is my team,” Min said.

She described the accounting she inherited as “so chopped up,” citing the absence of bank reconciliations and problems in accounts payable.

“The AP person was a security guard,” Min said. “AP ... is the first step of the accounting. If she’s entering things incorrectly, I have to go back and recreate the whole thing.”

The employee Min referred to had previously worked as a CSD gate officer before transferring to an office position, according to previous River Valley Times reporting. Min’s broader point was that financial positions require employees with appropriate accounting expertise.

“I felt like we had not been having the right person in the post who can do financial reporting,” Min said. “You need the financial reporting, the GASB, the GAAP knowledge to do the accounting right. So not having the right person in the post hurts the organization.”

Min expressed relief that the work had reached this point.

“What a relief that we’re done,” she said.

When she was praised for the accomplishment, Min quickly added, “My team, too. My team, too. They’ve gone through a lot.”

Staff also has been addressing duplicate accounts-payable transactions. While reconstructing the fiscal 2024-25 accounting, staff found instances in which checks apparently had been voided but the associated transactions remained in the accounting system, potentially leaving duplicate expenses on the books. Staff identified and removed the duplicates.

Beginning in fiscal 2026-27, the district plans to prepare a monthly voided-check report, maintain documentation of voided checks and track check numbers sequentially.

Preliminary 2025-26 Figures Show $819,000 Operating Loss

Along with the audits, Min presented the Finance Committee with preliminary financial results for the fiscal year that ended June 30, 2026.

She cautioned that the figures are preliminary because staff still must complete bank reconciliations and reconcile balance-sheet accounts.

Operating revenue totaled about $9.4 million, compared with a budget of about $9.6 million. Operating expenses were approximately $7.1 million, compared with a $6.9 million budget, while general and administrative expenses were approximately $3.1 million, compared with $2.6 million budgeted. Total expenses were about $10.2 million, or 107% of the $9.5 million budget.

The preliminary figures show an $819,000 operating loss before property-tax revenue. About $990,000 in property-tax revenue covered the loss, leaving a positive operating result of $171,000.

Min said that is not the position she ultimately wants the district to be in. Utility revenue should pay for operations, she said, allowing property-tax revenue to be retained as a reserve rather than used to cover an operating shortfall.

Unexpected repairs and maintenance were a major contributor to the higher spending. Min said operating expenses were at 103% of budget largely because of repairs and emergencies for which money had not been budgeted.

“When you look at the 103, it’s all the repair and maintenance that we have, which was never budgeted,” Min said. “All those emergencies that we had in the last so many months, we don’t have the budget for it.”

Min said the district changed that approach in the new budget.

“In the fiscal year 27, we did budget for some emergency, you know, contingency,” she said.

The preliminary year-end figures show the Water Fund with the largest operating deficit, about $1 million, attributed primarily to higher repair and maintenance, consulting and salary expenses.

Wastewater had operating income of $245,000. Drainage had an $81,000 loss, with repair and maintenance costs $55,000 over budget. Solid Waste had operating income of $35,000, and Security had operating income of $101,000, primarily because salary and benefit costs were lower than expected.

Other expenses also exceeded their budgets. Consulting costs included temporary staffing for vacant district positions as well as about $16,000 for work on the district’s Great Plains accounting system. Human resources and recruitment expenses included HR to Go and $18,000 for the general manager recruitment. Some legal expenses related to developer activity are expected to be reclassified as non-operating expenses.

Work Continues on Remaining Audits

For fiscal 2024-25, staff has had to enter accounting records for March through June because the district’s financial reporting for that year stopped in February 2025. Staff also has been correcting duplicate accounts-payable transactions, completing bond accounting and reviewing repair and maintenance expenses to identify expenditures that should be recorded as fixed assets.

Preparation for the 2025-26 audit began in August, with bank reconciliation about 30% complete at the time of the report.

“We have two years down, three audits down, but we have two more years to go,” Min told the Finance Committee.

At the board meeting two days later, Merchant said the goal is for the district to be current by the end of the year. Min was more cautious, saying she hopes to have the accounting for the two remaining years completed by then but cannot control the auditors’ schedule.