Los Osos GM again blames bad audit on past staff

November 7, 2015
Kathy Kivley

Kathy Kivley

Los Osos Community Services District General Manager Kathy Kivley is maintaining her stance that accounting errors detected in a recent audit of the CSD came as a result of mistakes made by former district staff. [Tribune]

An audit of the district’s 2013-2014 fiscal year found Kivley engaged in questionable accounting practices during her first year on the job. Auditing firm Moss, Levy and Hartzeim stated the district’s accounting was difficult to track due to a large number of journal entries, many of which were cancellations of previous entries.

Many of the journal entries were made directly by Kivley, according to the audit. The entries should have been made solely by the district accountant, with Kivley signing approval of them, the audit states.

The auditor also found the district disbursed extra overtime pay to at least two employees.

The audit prompted San Luis Obispo County Auditor-Controller Jim Erb to send a letter to Los Osos CSD board members saying the findings should be of great concern to them. Erb stated his main concern was the excessive journal entries detected by auditors.

On Thursday, Kivley delivered a report to the board in response to the audit findings. Kivley’s report stated, while reconciling financial software, district staff found “numerous discrepancies in the bankruptcy, liabilities reserves, bank statements etc. from prior years.”

Kivley made a similar statement to the Tribune following the release of the 2013-2014 audit. Kivley said the district accountant and she were responsible for correcting numerous accounting discrepancies from previous years, including the time when the district was in bankruptcy.

Los Osos board member Chuck Cesena responded Thursday by saying district staff was throwing darts at people from the past. Cesena noted former staffers produced finances which received clean audits.

The district board voted 3-1, with Cesena dissenting, to receive and file Kivley’s report. Board member Marshal Ochylski abstained.

Kivley is currently under fire for a separate accounting issue, as well. A CalCoastNews analysis found Kivley has overcompensated herself by more than $4,000.

Kivley has been collecting pay for more administrative leave days than her contract allows. She has also been receiving more holiday pay than her contract allows, documents show.

Last month, the CSD board voted in closed session to hire an independent investigator to examine the allegation that she misappropriated district funds. Private investigator and former San Luis Obispo police chief Jim Gardiner is conducting the investigation.



  1. Mariposa says:

    Please, Los Osos, come to your senses and “join” the other unincorporated County communities that do not have a community services district. Dump LOCSD. LOCSD is good for nothing. Enough already!

    (6) 14 Total Votes - 10 up - 4 down
    • Pelican1 says:

      Oh come on, why would they even consider that idea. Look at their track record since their inception. They are batting 1000%…they have failed at EVERYTHING they have done while costing the taxpayers millions upon millions of dollars.

      (4) 4 Total Votes - 4 up - 0 down
      • Mariposa says:

        An accident or casualty victim who opts to become an amputee following a severe injury to their limb finally experiences relief [from the pain and suffering] after they get past the loss of their limb. LOCSD is unscrupulously draining the resources of decent Los Osos residents. It is crucial that Los Osos lose the useless, damaged-beyond-salvage, deadweight [CSD] and get on with life. Period.

        (4) 4 Total Votes - 4 up - 0 down
  2. Dexter says:

    Maybe the Los Osos CSD should consider replacing Kively with Dee Torres who I heard was really good when it came to keeping track of the books before she left CAPSLO (wink, wink)

    (13) 35 Total Votes - 24 up - 11 down
  3. achillesheal says:

    Can we bring back tarring and feathering of government officials? It might be the taxpayers last chance.

    (12) 22 Total Votes - 17 up - 5 down
  4. PacoFR says:

    Audit management letters are suppose to professionally written. This District Manager must be very desperate to have to do something like this. She is the responsible person for all of this. These employees have not been employed for approximately two years. They were not employed by the district at the time of this audit preparation. There are clear guidelines for preparing this document and she chooses not use this but try to damage others for her shortcomings. It is too bad that she feels that she has to resort to this rather take the blame for her inadequacies. What kind of leader would stoop so low. The District seems to think that she was a great find when they hired her being fired many times for financial misconduct.
    People do not change. Her bad traits are really showing up but for some reason some of the Board members protect this incompetent leader.
    There is no way that all of this will turn out positive for the Los Osos Community Services District. The bubble has not yet popped.

    (23) 43 Total Votes - 33 up - 10 down
  5. jimmy_me says:

    The word on the street is: Come work in SLO county government, do a crappy job, get a giant severance package, then move on. Next…

    (36) 48 Total Votes - 42 up - 6 down
  6. Pelican1 says:

    First of all they need to stop with the finger pointing as they are ALL guilty of the misappropriation, and misuse of the taxpayers hard earned dollars. Los Osos is a shambles because of improper governance and lack of professionalism.
    I trust Jim Gardiner will get to the bottom of this mess while leaving no stone unturned.
    He was the best Police Chief SLO ever had.

    gardiner will get to the bottom of this

    (-19) 49 Total Votes - 15 up - 34 down

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