In the `Most Ironic' Category. . . . Bankrupt California County Gets Awards for Financial Reporting
1994, Bloomberg Business News, St Louis Post-Dispatch (MO)
Guess which local municipality won awards from the Government Finance Officers Association for excellence in financial reporting 16 straight years?
It's the same one that's the owner of an Award of Recognition from the National Federation of Municipal Analysts for its commitment to the kind of disclosure requirements that analysts like best.
Need a hint? It's also the place where the county treasurer had to resign after losing $2 billion making bad bets on interest rates, jeopardizing county services and the jobs of county workers.
Yes, folks, it's Orange County, Calif., site of the nation's largest municipal bankruptcy, where one wall in the reception area at Orange County auditor-controller Steven Lewis' office is covered with plaques attesting to the county's rectitude in matters of financial disclosure.
The award-bedecked office was a strangely discordant background when Lewis was served with lawsuits by a process server last week.
Still, neither the organizations that bestowed the awards nor the accountants who certified the financial statements admit to any sense of incongruity over the county's sterling financial reports and its dismal financial performance. In fact, the county probably will win the finance officers' association award again this year, if the county's accountants ever finish their audit.
Auditor KPMG Peat Marwick suspended its work on the county's audit for the fiscal year that ended June 30 this year and it may not finish it until June 30 next year, said KPMG spokesman Kevin Kelly. That's acceptable under the rules published by the Governmental Accounting Standards Board, a privately funded accounting standard-setting agency based in Norwalk, Conn. Governments aren't required to publish their financial results quarterly, the way companies are. Once a year is enough, and they can wait a year to prepare them.
Kelly said that even though an audit is supposed to look at what happened in the past, the audit of Orange County's 1994 fiscal year has been suspended because of things that have happened since the fiscal year ended: namely, the county's filing for bankruptcy protection under Chapter 9 of the Bankruptcy Code.
"The audit has been suspended in light of the bankruptcy," Kelly said. "They have not been able to give us completed financial statements."
Lewis didn't return phone calls seeking comment.
The finance association gave its Certificate of Achievement for Excellence in Financial Reporting to 2,078 of the 2,168 governments that applied for it in 1992, said Steven Gauthier, technical director for the group. The award has been given since 1946.
After a while it becomes a rubber stamp. …