Audit Finds “Gross Mismanagement” and Waste at Government Agency

One of the state’s 58 taxpayer-funded county fair association has wasted significant money and other resources due to “gross mismanagement” that allowed employees to work side jobs on state time, purchase alcohol and make questionable purchases with government credit cards, State Auditor Elaine Howle reported August 20.

The audit report, which includes the graphic below, does not identify the fair association or the names of the individuals who engaged in the wrongdoing.

“The chief executive officer and the maintenance supervisor of one district agricultural association allowed – and often participated in – the gross mismanagement of state resources,” the auditor wrote. “The CEO’s and maintenance supervisor’s inexcusable neglect of their duty to ensure that employees comply with state law resulted in several employees repeatedly misusing state time, vehicles, equipment, and materials, in part to support one of the employee’s construction‑related jobs for private clients (side jobs).”

The lack of oversight allowed at least one employee to take state-owned materials, several employees to regularly drink and store alcohol at the workplace (the county fairgrounds), and others to store personal property free of charge on state-leased property, the auditor stated.

“Moreover, the CEO grossly mismanaged the association’s funds and did not put into place critical internal controls to prevent inappropriate and excessive travel-related purchases, unnecessary charges for interest and late fees, and a waste of state funds,” according to the audit.

During a span of just two years, the county association engaged in questionable spending including:

  • $132,584 of credit card purchases for which the association had no supporting receipts.

  • $30,048 for excessive and illegal out-of-state travel expenses.

  • $5,188 for late fees and interest because the association did not pay its credit card bills on time.

  • $1,986 of wasteful tips that far exceeded the maximum allowable reimbursement rate.

  • $1,259 for inappropriate purchases of alcohol.

Several recommendations in the report were met with unsatisfactory responses by the fair board (which is comprised of gubernatorial appointees), the auditor said: “The association did not report any planned disciplinary action against the CEO. Instead, it reported that it had cautioned the CEO to prioritize training and directed him to reinforce to staff their responsibilities to safeguard state resources properly and report time worked accurately. It reported that the remaining employees would receive appropriate discipline with guidance from CDFA’s human resources staff, but it did not identify the progress it had made in those efforts, despite having received our draft report on April 17, 2019.”

A recommendation to recoup money from the CEO, the deputy manager and the maintenance supervisor for their inappropriate spending also received a tepid response. “The association stated that the CEO and the board would work with CDFA to come up with a fair and equitable method for determining the amount and manner of reimbursement to the State for any inappropriate expenditures,” the auditor said. “However, because our recommendation includes potential collections from the CEO, it is inappropriate for the association to allow him to participate in any decisions that involve his own interests. … The association stated that, based on our report, it concluded that the maintenance supervisor used a state vehicle for clearly personal use ‘on a few occasions,’ and it sought guidance from CDFA because it did not know how to recoup the cost to the State without knowing the number of occasions or the miles driven related to the misuse. However, we are puzzled by the association’s conclusion that the misuse occurred on only a few occasions because, as this report describes, we obtained credible evidence that the maintenance supervisor misused a state vehicle for commuting purposes on a daily basis for several years.”

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