Missed deadlines put at least $5.4 million at risk.

Published online on Tuesday, Feb. 03, 2009

In the rural, low-income community of Fairmead about 10 miles north of Madera, some 800 people rely on a decades-old water pump that could fail at any moment. Last year it did, and for more than a day residents relied on bottled water.

A $1.6 million federal grant was supposed to help build a new water pump, but because of years of failures by the county Auditor's Office, that money may no longer be available.

It's just one example of how the Auditor's Office repeatedly missed critical deadlines for filing financial reports over the last five years, prompting state and federal officials to withhold millions of dollars -- including money that would have helped low-income residents with home repairs. Those grants will be particularly missed in the midst of the nation's ongoing economic crisis.

"It certainly impacts a sizable portion of the community," said Ray Beach, the county's top planning and development official. Some of the grants, he said, provided "the only money some people had to replace a hot-water heater, repair a roof or fix a bathroom."

Based on public records and interviews with dozens of county officials, residents, and nonprofit workers, The Bee found that:

* Madera County has either lost or faced delays in receiving at least $5.4 million in grants -- including money for housing repairs, water system improvements, life-saving tools for emergency crews, small-business loans and administrative expenses -- despite repeated warnings over the years that it would lose such grants if it continued to miss financial report deadlines.

* The Auditor's Office has not conducted internal audits for most of the county's departments for at least the last eight years -- a failure one auditor says creates the potential for mismanagement, embezzlement and fraud.

* Former county Auditor-Controller Robert DeWall blamed his office's shortcomings on a lack of personnel and a series of deaths and illnesses among his employees. But his staff size grew by 50% -- seven new employees -- and his budget nearly tripled since 2001.

* Problems with the Auditor's Office have been apparent since at least 2003, but even after DeWall allocated taxpayer money to his department without approval from the Board of Supervisors, the county's top administrator and elected leaders didn't take legal action.

It wasn't until the county grand jury received a complaint about the failures in the Auditor's Office that supervisors asked the District Attorney's Office to investigate.

Prosecutors filed a criminal complaint against DeWall in November, accusing him of violating state law. If convicted, his only punishment would have been to lose his job. Because DeWall resigned Dec. 31, the charges will likely be dropped later this month.

DeWall declined to comment for this article.

Stell Manfredi, the county's top administrator, said problems in the Auditor's Office have reverberated throughout county government, affecting everything from its ability to issue bonds to keeping its accounting records in order.

Manfredi and some supervisors said there was no way they could have addressed the dysfunction in the Auditor's Office earlier because DeWall was an independent elected official. They are now considering making the county auditor an appointed position.

"All we're in charge of is watching the budget," said Ronn Dominici, who has been a supervisor since 2001 and was board chairman last year. "As far as doing the audits and things, [DeWall] doesn't have to tell us a thing."

Supervisors Dominici, Tom Wheeler, and Max Rodriguez weren't aware of how severely the county had been harmed by problems in the Auditor's Office, and they said they didn't know that DeWall wasn't auditing all county departments.

"I don't know the details because nobody's told that to us," Wheeler said.

Supervisors Frank Bigelow and Vern Moss didn't return calls.

Dale Drozen, a self-appointed watchdog of Madera County government, said supervisors should have taken action much earlier.

"A lot of these issues have come up for a long time, and they were never addressed," Drozen said. "They just grumbled about it and moved on."

Warnings ignored

DeWall first ran for auditor-controller in 1986. No one opposed him then, nor in the next five elections.

At first, DeWall ran the department effectively, said Shirley Brunner, who worked in the office for 26 years before retiring in 2004 as an accounting supervisor.

In 2003, the office began filing financial reports months -- or sometimes more than a year -- late. In a letter DeWall sent to county officials last March, he offered an explanation:

In 2002, a senior accountant-auditor died of a heart attack. Later that year, DeWall suffered a heart attack and underwent quadruple bypass surgery. He also was injured in an auto accident.

In February 2006, the No. 2 person in the Auditor's Office, Karen Brough, died of a heart attack. Brunner said Brough was the only person in the office who knew how to use the office's computer system.

"Bob was relying too much on Karen's knowledge," Brunner said.

Those incidents, along with other staff illnesses, resulted in a "domino effect" that delayed reports year after year because the office was constantly trying to catch up with previous year's reports, DeWall's letter said.

County Administrator Manfredi said he sent 80 to 100 e-mails to DeWall, warning that he had to stop turning reports in late and telling him: "You need to eventually get your act together."

But instead of fixing the problems, DeWall grew stubborn. In 2005, 2006 and 2007, he refused to submit a budget to the Board of Supervisors, records show. The county funded his office the first two years but refused to do so last year. Nevertheless, DeWall spent the county's money without supervisors' permission. As auditor, he had direct control over allocating funds to county departments.

Over the past eight years, the Auditor's Office budget ballooned from $664,000 to $1.86 million, and workers were added whenever DeWall requested them, Manfredi said.

"We dumped staff into the system," he said.

But financial reports continued to be filed late. State and federal agencies didn't know how grant money was being spent by the county.

In April 2007, the state Controller's Office, which reviews the county's financial reports, started sending warning letters and threatening fines if the reports didn't arrive soon.

State and federal agencies had finally had enough.

That year, the U.S. Department of Transportation refused to give the Cal Fire division that covers Madera County a $111,000 grant for three "Jaws of Life" tools that help emergency workers remove crash victims from their vehicles, said Stan Craig, a deputy chief in Madera County.

After three years of issuing warning letters, the U.S. Department of Housing and Urban Development withdrew a total of $2.8 million in grants from the county Resource Management Agency, which oversees a host of planning and development departments, said Beach, the agency's director.

There were other grants totaling millions of dollars that the county didn't bother applying for because it knew it wouldn't receive them, Beach said.

With the economy reeling and the jobless rate on the rise, the lost state and federal funds have been a particularly tough blow to Madera County, one of the state's poorer counties, Beach said.

"We need money in this community right now," he said. "If we don't clear up the issue, we'll have the same problem next year."

A lack of oversight

In Fresno County, the Auditor's Office guards against fraud and mismanagement by examining each county departments' accounting records yearly. Vicki Crow, the county's elected auditor, treasurer and tax collector, said it's one of her most important jobs.

"Departments have that feeling of fiscal oversight -- that someone is looking over their shoulder," Crow said.

But in Madera County, no one can remember the last time the Auditor's Office conducted audits of all the county's departments, even though county officials say that is part of the office's job.

The only two departments regularly audited are the Department of Child Support Services and the Public Health Department -- and that's only because the audits are necessary for those departments to receive federal grants, said Jim Boyajian, the Auditor's Office's interim director.

The other 28 departments -- everything from the Department of Animal Services to the Sheriff's Department -- are not audited by the county, Boyajian said.

Departments that receive federal funds are audited by a private company each year, Manfredi said. But he said those audits, known as external audits, are "broad-brush" reviews that are not as effective at solving chronic accounting problems.

The lack of audits has led to several problems. Accounting errors starting in the early 1990s diverted $2 million from the county's Department of Behavioral Health Services, said Janice Melton, the agency's director. Melton said her staff discovered the error in October. It probably would have been recognized much earlier if there had been regular audits, she said.

The diverted money could have been used to move forward with plans for a new building -- plans that have since been scrapped, Melton said.

The lack of auditing and the late financial reports also made it harder for the county to secure a $22 million bond three years ago to help build a new government center. Investors wanted current financial information that the Auditor's Office didn't have.

"We had to scramble," Manfredi said. "We had to ask them to accepts drafts of the previous year's reports."

The county eventually issued the bond.

Later this month, supervisors will decide whether to appoint someone to fill the remainder of DeWall's term. Alternatively, they may ask voters to turn the position into an appointed post.

Boyajian, the interim director, said it will take some time for the Auditor's Office to fix its problems.

"That's not going to be done overnight," he said.

Drozen, the self-appointed watchdog, said he's skeptical there will be improvement without a full accounting of past mistakes.

"It's like a roof collapsing on a building and you give a guy a shovel and a couple of two-by-fours and tell him to go back to work," Drozen said of Boyajian's new job. "You need to do a full inspection and see what is right and what is wrong."