Audit Finds Myriad Woes in Department of Mental Health

The Los Angeles County Department of Mental Health has sloppy bookkeeping, weak controls over its expenditures and spotty compliance with county contracting regulations, according to an audit released this week.

Conducted by county Auditor-Controller J. Tyler McCauley, the review uncovered problems so pervasive that “it will take a significant effort on the part of [the department’s] management to implement the improvements recommended in this report.”

The audit examined the department’s finances for fiscal years 1998-99 through 2001-02.

Among the problems cited were overbudgeting of revenue and expenditures for three of the four years reviewed. The department also undercalculated how much it owed at year’s end by $13.5 million in 1998-99, $10.3 million in 1999-2000 and $13.1 million in 2000-01.

The report found that this resulted in misstatements of the county’s financial position and distorted the fund balance available to finance the next year’s budget.

Susan Kerr, the department’s chief deputy director, said the agency agreed with most of the recommendations in the report and was addressing them.

Although Kerr has been on the job only four weeks, she said many of the problems were due to employees being unaware of rules and procedures.

“It was essentially a lack of training and lack of adequate controls,” she said. “We need to make sure that our staff understands what the requirements are and follows them.”

The review also faulted the department for awarding just three of 108 contracts for mental health services through competitive bidding. Under county regulations, competitive bidding is the preferred method by which departments should procure services.

“Clearly, in the past, it was not believed that they had to be competitively bid,” Kerr said.

She added that the county’s attorneys had approved the contracts but that the department has referred the issue back to them for further clarification.

With nearly 3,000 employees and an annual budget of $1.3 billion, the department is responsible for providing inpatient care, outpatient services and case management to people with severe and disabling mental illnesses or disturbances.