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Audit Finds Fault in California Transit Agency's Accounting

Posted on: Friday, 1 July 2005, 18:00 CDT

Jun. 30--An audit of Omnitrans scheduled to be presented next week finds fault with some of the transit agency's accounting procedures but officials say most of those problems have been resolved.

The 2004 financial audit, which the Omnitrans board of directors will review Wednesday, comes at a time when the agency's financial management is under increased scrutiny. In January, two state legislators called for an outside audit, questioning whether the agency was overspending on contracts.

In response, the Omnitrans board agreed to have San Bernardino County Auditor Larry Walker compare its performance to other transit agencies and evaluate its personnel and purchasing procedures. A contract for that performance audit is expected to be awarded in August or September with a report to be finished two months later.

The financial audit, completed earlier this month, is a separate report and part of Omnitrans' annual review of its financial statements and oversight. The Rancho Cucamonga firm of Vavrinek, Trine, Day and Co., which charged about $61,000, offered a qualified endorsement, meaning that it could not answer questions to its satisfaction in some areas. An unqualified opinion is the best endorsement in an audit.

A key issue raised in the audit was record keeping when dealing with inventory control, grants and capital assets. In some cases, inventory ledgers did not reconcile, capital assets were recorded manually and grants were not recorded in a timely manner, according to the audit.

Jessica Tafolla, an executive analyst for Supervisor Paul Biane, who led efforts to call for a performance audit, said the report raises troubling questions about the reliability of the agency's data.

For an agency of Omnitrans' size, manual data keeping and software reliability should not be an issue, she said.

"Those are things you should not have to worry about in an audit," she said. "This should be a given in this type or organization."

Finance Director Mel Drown said the audit covers the fiscal year that ends June 2004 and includes problems that had been discovered in the 2003 report and since corrected.

"We think we've come a long way from where we were at the end of June 2003," he said.

In the past year, Omnitrans has conducted a physical inventory of all its assets -- valued at $114 million -- going so far as to locate boxes of invoices held by a Riverside company that bought old bus shelters in the 1990s, Drown said.

Drown said the audit clears up an issue raised in the 2003 audit in which a $4 million discrepancy between two accounts was discovered. Officials now know that no money was missing but that some transactions were not properly recorded.

Durand Rall, the general manager of Omnitrans, said most problems were caused by high employee turnover -- as much as 46 percent in 2002 -- and software that wasn't capable of handling tasks such as grant accounting.

The agency is taking steps to reduce turnover by offering salaries that are competitive and has been working with the company that maintains its software to upgrade its systems, Rall said.

Redlands Councilwoman Pat Gilbreath, who takes over as Omnitrans chairwoman in July, said the audit and Omnitrans' response goes a long way in addressing the criticisms leveled at the agency.

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Source: The Press-Enterprise

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