County auditor: state designates Mariposa County 'high risk' after late single audit; energy and block grants at stake

Mariposa County Auditor Luis Mercado told the Board of Supervisors on July 8 that the California Department of Community Services and Development (CSD) has designated the county “high risk” after the county failed to complete its fiscal year 2022–23 single audit by the July 1, 2025 deadline.

The designation carries three immediate conditions, Mercado said: payments on affected grants will be made on a reimbursement basis rather than in advance; CSD will impose additional project monitoring; and Mariposa must obtain technical or management assistance from CSD or a designee. The board heard that those conditions apply to federal programs administered by the county’s Health and Human Services Agency, including the Low Income Home Energy Assistance Program (LIHEAP).

Why it matters: County Administrative Officer Joe Lynch told the board the change is primarily a cash-flow and staff-work issue in the near term but could become a loss of contract funding if the audits are not completed. Lynch estimated the combined at-risk funding for LIHEAP and the Community Services Block Grant (CSBG) is in the neighborhood of roughly $750,000 for LIHEAP and about $100,000 for CSBG, with precise figures to be provided later.

Mercado and Lynch outlined the county’s near-term plan: complete the outstanding single audits for fiscal years 2022–23 and 2023–24 and renew the county’s contract with its current independent auditor to complete audit work for fiscal years 2023–24 and 2024–25 with firm deadlines. Mercado said the '23 audit is “near completion,” and recommended renewing with the current auditor for 2024 and 2025 to ensure timely completion and continuity of work.

Lynch described the scheduling risk and the county’s target dates. He said that if the 2022–23 audit were completed immediately the county would be removed from the high-risk list, but that the 2023–24 audit is also late and could cause the county to be designated again. “However, the ’24 is also late. So as of August 3, we would be put back on the high risk designation,” Lynch said, and recommended contracting with Smith & Newell for specific completion dates (an Oct. 31 target was discussed) and contractual deadlines for both sides.

Board members pressed for clarity on operational impacts. Joe Lynch said the shift from advance funding to reimbursement is manageable from a cash perspective but will create more paperwork and staff time: “It’s a cash flow issue but it’s also a staff time issue,” he said. That change will require the department to pay eligible vendor or client costs first, collect receipts and submit claims for approval before being reimbursed by CSD.

Several supervisors stressed the programmatic importance of LIHEAP to very-low-income county residents and urged staff to bring a discussion-and-direction item back to the board laying out what resources are needed to meet audit deadlines and to avoid losing contracts on Jan. 1, 2026. Mercado said he will coordinate with county administration and bring proposed agreements and a timeline back to the board.

No formal board action was taken during the presentation. The board asked staff to prepare a focused discussion item with specific resource needs and timelines.

Ending: County staff said they will return with procurement documents to extend or renew the independent-auditor contract and a board-level discussion item that lists required resources and staff assignments to bring the county back into compliance and protect the affected programs.