Academic journal article Journal of Accountancy

Orange County to Be Back in the Black

Academic journal article Journal of Accountancy

Orange County to Be Back in the Black

Article excerpt

In mid-May, a federal judge approved a plan for Orange County, California, which had declared bankruptcy in December 1994, to emerge from bankruptcy protection by the end of June. The earlier-than-expected announcement of the turnaround was a triumph for the county's CPA treasurer, who had wanted to save the county from fiscal disaster but was only able to pick up the pieces afterward.

Months before the crash, John M. W. Moorlach, CPA, had argued during an unsuccessful campaign for county treasurer that the county's fiscal policies were excessively risky. (See "Be Skeptical, Dig for Facts, Orange County CPA Urges," JofA, Mar. 95, page 14.) The county had, in fact, invested heavily in derivatives that provided high returns but were imprudently volatile. But, in March 1995, several months after the resignation of the man who defeated him, Moorlach found himself in the treasurer's office anyway, appointed by the county's board of supervisors. (Moorlach subsequently was elected treasurer in 1996 for a two-year term.) What has Moorlach been up to since then?

A new ball game

"We've made this a completely different shop from what it was. We mitigated more than 30 internal control weaknesses identified by Arthur Andersen. We developed a three-volume policy and procedures manual, and ensure segregation of duties--all this should satisfy not only any auditor but any bond trader as well," Moorlach told the Journal. …

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