Board orders new audit on contracts, SWC Foundation

An Irvine-area accounting firm hired by a former vice president to review college finances announced its finding of "clean audits" covering the period from July 1, 2009 through June 30, 2010, but members of the Southwestern College governing board were unsatisfied and asked for deeper investigations by another film.

Governing board president Tim Nader said trustees had questions and concerns brought to their attention by the public and press.

"Somebody involved in the contracting process provided information that I passed on to college administration and will be provided to the administration," he said.

"Plus I think we've all heard concerns raised and that includes what was in the Southwestern College Sun, San Diego Reader and the Union-Tribune."

Bob Temple, recently hired as interim vice president for business and financial affairs, said members of the board had concerns and questions that could not be answered by the audits conducted by Kenneth Pun of Caporicci & Larson, an accounting firm hired by former vice president Nicholas Alioto, who resigned in February.

"For the current year, fiscal year 2010-11, the board has asked that we look at some Prop R items, some general fund items, and some SWC Foundation items," Temple said. "I call it a focused review."

Temple said the focused review would be intensive, but fairly narrow.

"We're going to look at those items the board has asked that we look into," he said. "I'm not at liberty to identify them, but reasonable people can probably figure out what they are. It will be an examination of records. We'll be reporting back to the board as we get information."

Nader said the board had to consider the possibility that some of the issues might have occurred over more than one fiscal year.

"The issues surrounding the timing of consultant contracts, the Napa Valley trip, and so forth – some of that obviously took place in the last fiscal year," Nader said. "I believe some of the contracts were awarded during this current year.

There may be an overlap or a crossover of fiscal years involved and that needs to be looked at."

Last fall Alioto, the former vice president for business and financial affairs, was embroiled in controversies involving construction contractors who treated him to a weekend of golf and wine tasting at an exclusive Napa Valley resort, as well as nearly $50,000 in campaign contributions from contractors to incumbent board candidates Yolanda Salcido and Terri Valladolid. Salcido was defeated in the November election, while Valladolid won in a very close race.

Alioto hired Caporicci & Larson in 2009 and directed its work while it audited various components of the college budget and fiscal workings. Alioto was instrumental in awarding multi-million dollar contracts to architects and construction firms prior to the 2010 elections.

He and former college superintendent Dr. Raj K. Chopra also involved contractors in fund raisers for the Southwestern College Foundation, the college's non-profit auxiliary.

Caporicci & Larson gained notoriety in December 2007 when the Federal Securities and Exchange Commission settled a fraud suit with an auditor for violating securities laws in the San Diego municipal bonds case.

A New York Times report said SEC regulators accused auditor Thomas J. Saiz of "issuing clean audit reports when in fact the city was shortchanging in pension fund and covering up the shortfall with fraudulent accounting."

Temple said his objective was to finish the new audits as soon as possible.

"My goal is to address the questions, shed light on them, report to the board and then make those findings public,"

Temple said. "But that would be the board's prerogative to do that."

Interim Superintendent Denise Whittaker said the focused review was a method to bring trust back to the office of superintendent/president and did not necessarily reflect on the work of the previous vice president of business and financial affairs.

"In light of previous negative comments on campus and in the community regarding Prop R, we owe it to the public to dispel rumors or identify problems and fix them," she said.

Whittaker also said that she wanted to bring in an external expert in the fields of bonds and construction projects to review the Prop R progress along with the general fund and the SWC Foundation.

"A third-party review is a standard operational procedure to bring credibility to the review process."

Nader agreed about the importance of hiring an outside consultant to review the funds.

"I hope we can hire an expert in fraud or someone with a background in forensic accounting," he said.

Nader said any expert hired would begin working with Temple immediately and would first look at the current fiscal year, but would not be limited to that.

"I think they know what to look at," Nader said. "But there is the option of expanding the review, if warranted, to include activities from the previous fiscal year."

Temple said that though auditors may know where to look, he would not be able to make any guesses about what he expected to find.

"I can't speculate until we get into that," he said, "but we may find bad judgment, we may find a lack of transparency and though I don't expect it, we may find some illegality or wrongdoing or violation of statute. If that's the case, it will be disclosed to the board and appropriate action will be taken.

This is not to just do some kind of whitewash and put it behind us. That's not the board's objective."

Nader said the board's goal was not to take this lightly or conceal the results.

"Obviously I'd rather save money," he said, "but if you look at the total amount of tax dollars and project money involved in Prop R and the types of issues that have been raised, I think that assuring the contracting is being done properly is worth it."