Audit of Poverty Program Disallows Some Expenditures

An audit of Orange County’s largest anti-poverty program has found $92,000 in “questionable expenditures” and another $52,000 in disallowed expenditures that may have to be paid back, officials for the Community Development Council confirmed Monday.

Clarence (Buddy) Ray, who took over as CDC’s president and executive officer in May, 1987, defended the council’s overall $7-million-a-year program and denied that any malfeasance had occurred under the agency’s fiscal control.

Ray and other officials at the council--which provides free food, weatherization of homes, energy crisis intervention, a mobile health clinic and housing for Orange County’s low-income residents--attributed the audit’s findings, in part, to improper recording techniques.

“Less than 1% of the agency’s total budget is being questioned here. It could be, and I’m not saying that it is or isn’t, simply the way we’re reporting the transactions,” Ray said.

But Ray did concede that the audit, conducted by Peat Marwick Mitchell & Co. for fiscal 1986-87, does place doubt on the program’s ability to control its finances, especially because $92,000 in expenditures were undocumented.

As a private, nonprofit agency that receives about $1.3 million a year from the state, the CDC must have an annual audit.

The audit report, which has only been received by a handful of the agency’s board members, will be up for review on Wednesday when the full board meets at its regular meeting.

A Community Development Council manager, who did not wish to be identified, said: “We’ve got the same old problems. The department heads here never know how much money is in our budget. We don’t know how much is being spent on travel, or for other expenses. The (financial) system has collapsed.”

But an official from the state Department of Economic Opportunity, which allocates to the agency about $1.3 million annually in community block grants, described the Orange County agency as a “solid program.”

Ronald Joseph, chief deputy director for the Department of Economic Opportunity, said that in the past, state auditors have identified “management inefficiencies” with the Orange County program.

“We developed a rather detailed listing at that time. We feel they have a long way to go to finish making corrections, but we believe they are capable of doing it,” Joseph said.

One expenditure the auditors disallowed was $52,000 that was spent in the agency’s weatherization program. Ray acknowledged that “we could end up paying it back.”

Jim Hamlett, the agency’s spokesman, said the dispute about the weatherization funds for low-income people was a result of expenses “not being charged to the right funds.”