Popejoy Aide Questions Merits of $450,000 Audit : Bankruptcy: The committee was formed to draw up plans for the county overview, but it’s called unneeded and costly.

A blue-ribbon committee formed by the Orange County Board of Supervisors drew criticism Friday for pursuing a government management audit that could cost the bankrupt county $450,000--or more.

During a meeting Friday of the Audit Oversight Committee, the top adviser to County Chief Executive Officer William J. Popejoy also questioned the wisdom of taking the time to audit a government whose budget is expected to be slashed even further later this year.

“We can’t recommend moving forward with that kind of expenditure,” Paul Nussbaum said. “That type of money can’t be justified at a time like this.”

But committee members, including Supervisor Marian Bergeson, say an independent audit is needed to rebuild a leaner government in the wake of the county’s unprecedented bankruptcy. Bergeson said the committee will do all it can to limit audit costs, and other members say they are looking into ways to gather private funding for the audit.

“I’m very mindful of the cost, but I don’t think we can give up the opportunity here for change,” Bergeson said after the meeting.

Several committee members were absent Friday, but those present voted to move forward with plans to have Price Waterhouse study county government for inefficiencies.

After the meeting, Nussbaum stressed that the county’s operating budget, which already has been slashed 41%, is expected to undergo further cuts later this year.

“The county is in an unstable situation and we can’t justify spending this much to do a management study of a fluid situation,” he said, adding that he is concerned that the audit could end up costing even more than the stated amount.

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Ultimately, the supervisors must decide whether to accept or reject a recommendation of its oversight committee, which was created in early February and directed to plot strategy for a $450,000 management audit.

“We were directed to oversee an audit and given an amount and that’s what we’re doing,” said Mary Ann Schulte, the committee chairwoman. “It’s up to the board to decide whether to spend the money.”

Since the committee’s inception, critics have complained about the county moving forward with a costly audit at the same time employees are being laid off and health and welfare services are being slashed. Others fear the audit results will wind up in a dusty file cabinet and fail to result in meaningful change.

Also at the meeting, committee member Gary Hunt, executive vice president of the Irvine Co., said he was concerned that hiring Price Waterhouse could pose a conflict of interest. Price Waterhouse is serving as the accountant for a committee representing the cities, school districts and other government entities that had money in the county’s collapsed investment pool.

The pool lost nearly $1.7 billion last year in risky investments, precipitating the county’s plunge into bankruptcy in December.

Schulte said she will meet with the county counsel in the next few weeks to discuss the issue and will also meet with Price Waterhouse officials to narrow the scope of the audit. A presentation to the Board of Supervisors is expected within weeks.

Bruce Whitaker of the Committees of Correspondence, a vocal taxpayers group, said he was opposed to spending money on the audit when he was first appointed to the committee, but has changed his mind.

“Now, I think it’s a very useful tool,” Whitaker said after the meeting. “I think that relative to some other expenditures being made around here, it’s a much smaller amount of money.”