Report 2020-806
January 21, 2021

Corrective Action Plan and Assessment—City of West Covina

West Covina's Ineffective Fiscal Management Threatens Its Ability to Meet Its Financial Obligations and to Provide City Services

Subject January 2021
Continual diminishing of reserves Pending
Questionable use of city resources Pending
Financial decisions based on insufficient analyses Pending
Lack of formal financial recovery plan Pending

West Covina's Weak Enforcement of Its Procurement Policy Increases the Risk of Waste and Fraud

Subject January 2021
Inadequate management of purchase cards Pending
Lack of oversight to ensure that contracts provide best value Pending




Corrective Action Plan and Assessment—City of West Covina

January 21, 2021

View West Covina's Corrective Action Plan from January 21, 2021

The city of West Covina (West Covina) submitted its corrective action plan on January 21, 2021, in response to the audit report titled City of West Covina: Its Deteriorating Financial Situation Threatens Its Fiscal Stability and Its Ability to Provide City Services (2020-806) issued by the California State Auditor as part of its high-risk local government agency audit program. The corrective action plan states that the city will submit by July 1, 2021, a financial recovery plan that accounts for the city's rising costs and the actions that it will take to improve its financial condition. The financial recovery plan will also provide a long-term financial projection, prioritize the resources that the city will use to improve its financial condition, identify individuals responsible for monitoring the city's progress in implementing each action, and outline when the city anticipates completing key milestones related to each action. We will review the city's progress in its next update and will evaluate at that time the extent to which the city has made progress in addressing any of the risk areas.

West Covina's Ineffective Fiscal Management Threatens Its Ability to Meet Its Financial Obligations and to Provide City Services

Continual Diminishing of Reserves
California State Auditor's Assessment Status:
Pending
West Covina plans to perform the following actions to address its diminished financial reserves:
  • Set aside land sale revenue to compensate for any shortfalls in revenue that the city experiences as a result of the effects of the pandemic on the fiscal year 2020-21 budget. The city also plans to use any remaining revenue from the land sale not already committed to repay bond debt to replenish the city's general fund reserves.
  • Proactively mitigate risk and exposure to litigation through training and implementation of best risk management practices.
  • Address the excessive costs currently incurred providing fire and emergency medical services. The city also plans to review the current service delivery model of the fire department and consider other options for service delivery.
  • Implement a formal process for development of reasonable budget projections that adequately accounts for the impact that significant events may have on revenue.
Questionable Use of City Resources
California State Auditor's Assessment Status:
Pending
West Covina plans to perform the following actions to address its questionable use of resources:
  • Ensure that the fees and assessments charged for services align with costs and increase fees to reflect costs reasonably borne in the provision of city services.
  • Meet and confer regarding negotiation of employee union agreements once the effects of the pandemic subside.
Financial Decisions Based on Insufficient Analyses
California State Auditor's Assessment Status:
Pending
West Covina plans to prepare financial analyses that evaluate both the short-term and long-term financial implications of significant spending decisions.
Lack of Formal Financial Recovery Plan
California State Auditor's Assessment Status:
Pending
West Covina states that its financial recovery plan will be submitted by July 1, 2021. That plan will describe the intended corrective actions, timing, prioritization of resources, and the identification of resources responsible for monitoring progress toward implementing each action.

West Covina's Weak Enforcement of Its Procurement Policy Increases the Risk of Waste and Fraud

Inadequate Management of Purchase Cards
California State Auditor's Assessment Status:
Pending
West Covina plans to improve its internal purchasing processes and enforcement of those processes by effectively documenting management approval.
Lack of Oversight to Ensure That Contracts Provide Best Value
California State Auditor's Assessment Status:
Pending
West Covina plans to review, evaluate, and monitor all city contracts and seek opportunities for collaboration, reorganization, grants, and cost sharing to eliminate the city's reliance on general fund reserves to support operations. The city also plans to follow its competitive bidding policy to ensure that purchases and contracts secure the best value.