L.A. Officials Urge Audit Team for Rail Corridor

A top city official on Thursday asked the Alameda Corridor Transportation Authority to create an independent audit team to prevent financial irregularities, such as the recent transfer of $3 million in government funds into the personal bank account of one of the authority’s employees.

Jim Armstrong, the director of auditing for the Los Angeles city controller’s office, said the audit panel is needed to “protect and monitor” city assets earmarked to help build the $2.4-billion Alameda Corridor.

The corridor is a 20-mile rail and truck route along Alameda Street that is designed to speed cargo to and from the county’s fast-growing ports.

It is being built under a joint powers agreement involving the ports and cities of Los Angeles and Long Beach. Each port has committed almost $200 million to the project.

Armstrong, who appeared briefly at the authority’s board meeting, spoke on behalf of Los Angeles Controller Rick Tuttle, who has been calling for more oversight of the project.

Tuttle has said he is concerned about the high turnover of controllers at the authority as well as the recent transfer of corridor funds into the personal bank account of Nancy Schafer, the agency’s former controller.

Schafer was responsible for managing and accounting for the corridor’s financial assets. She was replaced in March after $3 million in bond proceeds ended up in her own bank account at the Bank of America. Schafer blames the problem on a computer error.

Tuttle has called for an independent audit committee under the supervision of his office and Long Beach Auditor Gary Burroughs.

Transit authority board members postponed any action on the request.

However, they announced the hiring of Carl Wolf as the agency’s internal auditor. Wolf, a certified public accountant with audit experience, will report to James Hankla, the authority’s chief executive officer.

Corridor officials have resisted any further oversight, contending that the project is already monitored by a host of local, state and federal transportation agencies.

In addition, they said, strong financial controls are already in place and the agency is undergoing a thorough audit by KMPG Peat Marwick, a major accounting firm.