Dear Benicia Residents,

I would like to start with an amazing story. Saturday night the Fire Department was dispatched to a woman in labor in a vehicle northbound on Interstate 680 just past Lake Herman Road. Engine 11 and Truck 11 responded and found a full-term mother in active labor with a complicated delivery. Benicia Fire Paramedics delivered the baby on scene and provided care to both the baby and the mother. As of writing, both are doing well! Our firefighters demonstrated advanced skills and professionalism on this complex incident. The department was able to provide exceptional service by providing two advanced life support engines to this call. Historically the department would only send one, however in 2019 the department applied for and received a federal grant that paid for increased staffing that allowed us to staff a third engine! With this change we began dispatching two engines to all incidents on the interstate…perhaps contributing to this amazing outcome. Great job Benicia Fire!

On a more difficult issue, I discussed with the community in my note last week the importance of recruiting and retaining quality staff throughout the City. Yet another real-world example was reflected during the August 16, 2022, City Council meeting where we discussed the 2020/2021 fiscal year Annual Comprehensive Financial Report (ACFR). The City is required to have an independent audit of its financial records conducted on an annual basis. In a typical process, this analysis begins with pre-audit work that occurs towards the end of the fiscal year and all audit related work continues until the final report is issued, which typically occurs in late December/early January. As can be seen from the timeline of this report to council, the City is well beyond that timeline.

To provide context for this delay, the City has experienced significant vacancies at all levels of positions within the city, including the Finance Department. As part of the financial audit the external auditors also issue a Memorandum of Internal Control (MOIC). The purpose of the MOIC is to report the auditor’s review of the City’s internal controls over financial reporting. As described earlier, the level of vacancies due to the lack of ability to recruit and retain highly qualified staff in key positions impacted these controls significantly.

In 2021, when I was asked to step into the City Manager’s position, I found the Finance Department in disarray. Due to resignations throughout the department, the City was left with no one running the department. While what we discovered was incredibly challenging, I feel it is our absolute duty to tackle these challenges for the long-term sake of our community. Thus, enter our new Finance Director Bret Prebula (effective July 2021). With the support of the City Manager’s Office, Bret and his team have been systematically and thoughtfully rebuilding the Finance Department from the ground up, tackling every element. Creating policy and procedure that will stand the test of time. He and his team have also successfully tackled the ERP (finance software) which had lingered on for 10 years, but is now on the path to completion with many modules up and running.
 
To address the audit specifically, Bret, working with Beauchaine Consulting Group, has dived in, pushed hard, in a truly transparent way, to bring these structural issues into the light of day where we can fix them. I am incredibly pleased by the work as it identifies a legitimate path forward to creating a truly stable Finance Department. Although there are currently many corrective initiatives in action, I want to specifically outline the items of internal control weakness presented by our audit as a clear reflection that the city is not afraid to tackle these vital pieces clearly and transparently. The auditors identified five (5) material weaknesses that are addressed in this FY 2020/21 report but have existed before that time. Those weaknesses are:

  • Account Reconciliation and Financial Reporting
  • Untimely or not completed balance sheet reconciliations.
  • Corrective action in progress as monthly, quarterly and annual reconciliation processes are being developed.
  • Cash and Investment Reconciliations
  • Untimely or not completed bank reconciliations, unbalanced pooled cash and stale checks.
  • Corrective Action in progress, working with the City’s new auditor to develop a monthly bank reconciliation process inclusive of the use of the City’s new financial software.
  • Accounts Receivable Management
  • Lack of reconciliation of Utility Billing aging or adjustments made to reconcile billings monthly, quarterly, or annually as appropriate.
  • Corrective action in progress, working on developing custom reports to allow for the applicable reconciliation review.
  • Notes Receivable Management
  • Inconsistent documentation of loans due to the City.
  • Lacking policy and process for record retention and loan management.
  • Corrective action in progress developing policy and procedure for all loan documents and creating digital loan files.
  • Grant Management
  • Lack of policy and procedure.
  • Grant documentation/reconciliation inconsistent or nonexistent citywide.
  • Lack of training.
  • Corrective action is complete, new policy and procedure was developed inclusive of citywide training.

Over the past months staff have identified these issues, even prior to the audit, and are making improvements to rectify these weaknesses, including an official corrective action plan. I am confident in our ability to make these corrective actions, which among many other citywide changes and improvements will continue to allow the City to do business better and put the City in an efficient and sustainable place moving forward.

Finally, the Mayor and City Council are united in their resolve to not only address these issues but to make sure our community is made aware of these accounting challenges and the steps the City has been taking to correct them.  


Erik Upson
City Manager