Orange County Great Park auditor surrenders accounting license after legal battle with state oversight agency

An Irvine firm that conducted two audits of the Orange County Great Park surrendered its accounting license on Monday after the California Board of Accountancy said it “failed to comply with professional standards, engaged in numerous acts of negligence, and disseminated false and misleadingly information.”

The state agency had filed a complaint in January 2018 — later updating it in March 2019 — against Hagen, Streiff, Newton & Oshiro (HSNO). In addition to the license forfeiture, the firm agreed to pay a $150,000 penalty and a reimbursement of $400,000 to the state accountancy board.

”... the reports prepared by Respondent HSNO contained misleading statements and failed to meet minimum professional standards that required due professional care, objectivity, and sufficient relevant data to support many of its findings and opinions,” the complaint says. “Respondent HSNO’s findings and conclusions included falsely portraying that certain parties had failed to cooperate with Respondents HSNO’s engagement, and that one party had double billed the city.

“Respondent HSNO used its own deficient findings to justify Respondent HSNO performing further work for the City.”

Randall Dean, an attorney representing HSNO, emailed a statement on the firm’s behalf.

“Nothing in the voluntary settlement with the board invalidates any of the findings by HSNO,” the statement says. “HSNO one hundred percent stands by its reports which were issued in connection with the Great Park for the city of Irvine. The reports are an important part of the history of the development of the Great Park.

“HSNO settled with the board without admission only because it no longer required its accounting license, it desired to avoid the ongoing tremendous costs of litigation, and the board’s accusations were dropped against HSNO’s individual accountants. HSNO is pleased the matter was resolved so that it can now focus on its present endeavors.”

The city of Irvine hired HSNO in 2013 to conduct an investigation into why more than $250 million was spent to develop 88 acres of the 1,300-acre Great Park.

For years, the Great Park had been mired in controversy, with residents claiming that the park hadn’t remotely reached its expectation as a larger version of New York City’s Central Park.

HSNO conducted an initial audit for $240,000, then withdrew it in 2015, replacing it with a second audit. Costs climbed to $1.7 million.

According to the complaint, HSNO misleadingly claimed that the contractors involved in developing the Great Park weren’t cooperating with the auditing process. However, the complaint states that the contractors had made themselves available to respond to questions and provide documents.

The complaint also alleges that HSNO then used the “lack of cooperation” of the contractors to ask for further funding from the city.

San Diego-based Gafcon, which was tasked with helping design the Great Park, was named in the audit as one of the contractors that was unwilling to cooperate. HSNO also said in its audits that Gafcon billed the city of Irvine twice for rendering the same services.

The complaint states that HSNO’s finding “was not based on an objective evaluation of the available data.”

“I am really pleased that the shadow has been removed,” said Yehudi Gaffen, chief executive of Gafcon. “The truth has come out and we have been vindicated.”

HSNO and the city of Irvine were also criticized in a 2016 review by state auditor Elaine Howle, who said that the city risked the integrity of the audit by agreeing to a contract that largely ensured that the winner, HSNO, would be able to agree to an additional contract without having to engage in a competitive bidding process.

“...Irvine risked that the winning bidder would structure its work to promote the need for additional work through a sole‑source contract, raising further questions about the credibility of the park review,” Howle said.

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