Thursday, January 12, 2012

AIRPORT: Audit says contracts not executed, vendors overpaid

Several companies hired by the public agencies redeveloping Norton Air Force Base were either overpaid or didn’t actually have a contract, according to an annual financial audit for the year ending June 30, 2011.

In one case, the airport paid the city of San Bernardino’s fire department a total of $724,117 but didn’t execute a contract for the agency to be on hand while Boeing tested its massive 747-8 freighters and other aircraft at the airport.

In another, the contract for former executive director of the San Bernardino International Airport Authority and Inland Valley Development Agency – Don Rogers – was never renewed. It was an oversight, according to the agencies. Rogers was paid $87,738.75 to oversee the airport authority and was overpaid $373 on a $60,000 contract to lead the IVDA, according to the auditor’s report.

“I was appalled when I saw this,” said Highland councilman and airport authority board member Sam Racadio at the agency’s Wednesday afternoon meeting. The agencies are also overseen by elected officials from the city and county of San Bernardino, Colton and Loma Linda to direct the use of property tax revenue and government grants for developing the former base.

A.J. Wilson, the interim executive director of both public agencies since Rogers resigned in late September, said that the chief financial officer is now “directly in the stream” of communication within the agency, among other changes to prevent the same thing from happening again.

It was the first time the San Bernardino-based CPA firm Rogers Anderson Malody & Scott had reported such an error since conducting the annual audits for the agencies since the early 1990s. Kirk Franks, a partner with the firm, said Wilson had asked auditors to match every single payment with a contract. For the first time, the firm also pointed out that the agencies were using antiquated accounting software from 1995 that wasn’t designed for more complex government use.

A San Bernardino County Civil Grand Jury report released last year was critical of the agencies’ oversight, including the diminished role of the agencies chief financial officer. The grand jury report also criticized the longtime employment of Rogers Anderson Malody & Scott as the agencies’ auditor.

Rogers, a former partner in the CPA firm who was receiving retirement payments through at least 2007 and rented an office inside the firm’s former headquarters, had led both the authority and IVDA since at least 2002.

“They won’t be the auditor anymore,” Wilson said during a recent interview in his office, describing the appearance of a conflict of interest as “obvious.”

“They understand full well that they shouldn’t be engaged here,” he said.

The firm had conducted the agencies annual audits since both public agencies were started in the early 1990s.

Rogers officially “disassociated” from the CPA firm on Jan. 1, 1997, but continued to receive retirement payments from the firm through at least 2007 worth between $10,000 and $100,000 annually based on a financial disclosure form provided to the state.

He rented office space inside RAMS’ headquarters at 290 North D St. in suite 300 in San Bernardino in Vanir Tower.

In October 2005, Rogers was among a group that proposed developing areas around the Salton Sea with funding from Citigroup. In the proposal submitted to the Salton Sea Authority, the CPA firm’s name was underneath Rogers’ name on a page listing the members of the New River Development Company LLC and listed his 33 years of experience with the firm under his qualifications.

Even if there hadn’t been the perception of a conflict of interest, Wilson said it would behoove the agency to rotate auditors anyway, a recommendation the grand jury suggested.

“It would be irresponsible to not get a fresh set of eyes,” he said.

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