Grand jury assails lack of audits

County Executive Officer Johnny Johnston wields too much budgeting power over individual departments, leaving the auditor’s office scrambling for dollars to perform internal audits, the Ventura County Grand Jury said Wednesday.

In a strongly worded report, grand jurors concluded that an embezzlement scandal uncovered in the public guardian’s office in 2005 might have been detected earlier if the Board of Supervisors had given Auditor-Controller Christine Cohen enough money to conduct regular audits.

Instead, Johnston recommended, and the supervisors approved, across-the-board budget cuts in the early part of this decade as the county limped through an economic downturn. That left Cohen with insufficient staff and dollars to scrutinize operations within departments, the grand jury concluded.

At a news conference to release the report, grand juror David Grau said that while oversight of the public guardian’s office is the primary responsibility of Treasurer-Tax Collector Larry Matheney, Johnston and the Board of Supervisors should share in the blame for a breakdown in financial controls within the office.

“The Board of Supervisors and the CEO have ignored repeated warnings” by Cohen about the lack of money for audits, Grau told reporters. “That contributed to an environment where the thefts were made possible.”

The county has spent $685,000 to investigate and prosecute employees in the public guardian’s office accused of stealing checks and other items from the elderly clients they were charged with protecting, the grand jury said. An additional $81,000 was paid back to those who lost money.

Matheney has apologized for the lapses within the office, which the treasurer-tax collector oversees, and said he has instituted changes.

But the grand jury’s report, “Ventura County: A Failure to Audit,” makes the case that the fiasco might have been avoided if Cohen had been provided the necessary resources to do her job.

Much of the problem lies in a 2001 ordinance adopted by the Board of Supervisors that transferred authority over the county’s budgeting and fiscal affairs from Cohen’s office to the county executive’s office, the grand jurors said.

The result has been a reduction in the effectiveness of the audit function and a “weakened checks and balances needed to ensure public confidence in county government,” the report concludes.

Cohen said she welcomed the grand jury’s spotlight and agreed with its findings. She has tried repeatedly in recent years to get more auditor positions approved, she said.

Despite juggling a higher workload, Cohen said, she has nine fewer positions since most of the budgeting functions were transferred to the CEO’s office.

Three of the six auditor jobs in her office are unfilled because the county’s starting salary of $38,000 does not compete with the $50,000 offered by private industry, Cohen said.

“I had an auditor who worked for me for two days, then she got a call from a firm in Texas that offered a signing bonus that was enough to pay for a down payment on a house,” she said. “I can’t compete with that.”

Johnston said he found the grand jury’s findings bewildering. There was a failure by the auditor’s office to monitor the public guardian’s office, but it had nothing to do with a staffing shortage, Johnston said.

“She hasn’t even spent the money she’s got,” he said, noting that Cohen reported a $200,000 surplus for her department at the end of the last fiscal year.

catherine.saillant@latimes.com