Saturday, January 8, 2005

EX-MTA AUDITOR CRITICAL OF AGENCY
By Lisa Mascaro , Staff Writer

The chief auditor for Los Angeles County's massive transportation agency accuses top managers of thwarting his efforts to check on agency spending and says he was finally forced into retirement last week after he wrote stinging reports on a new computer system that is overbudget and behind schedule.

Auditor William Bernsdorf said in an interview that Chief Executive Officer Roger Snoble, who was brought in to reform the Metropolitan Transportation Agency after the scandals over subway construction, has retreated on his commitment and allowed the auditing division to be weakened.

"I'm quite concerned about my auditors getting punished for doing their jobs. I'm equally concerned about the agency being hoodwinked, the taxpayers,' said the 71-year-old Bernsdorf, whose staff was cut from 68 to 24 auditors since 2001-02 and his budget trimmed from $11.7 million to $5.5 million as the number of construction projects dwindled.

"What we're up against lately is there's just an immense amount of pressure not to do the audits, or to call the audits inefficient and ignore them.'

Snoble and his staff dismiss those claims, saying the MTA relies immensely on auditors to oversee the agency's $3 billion operations. They deny the auditor raised concerns until after he left the agency.

"I've always believed in my auditors,' said Snoble, declining to comment specifically on the personnel matter.

"We are one of the most audited places you'll find. How he feels is how he feels. I have a lot of need for good audit services. I've always believed in the way the thing works. ... My door's always open.'

Snoble announced plans days after Bernsdorf's retirement to fundamentally change how the Management Audit Services Department decides which internal audits to undertake in the future.

Right after Bernsdorf retired, Snoble introduced a policy he described as novel, turning over to his top six deputies the authority to determine which audits are conducted, rather than having the annual work plan drawn up by auditors as has been past practice.

The six deputies who are the heads of construction, bus and rail operations, planning, communications and other departments will serve on the new Audit Review Committee to be headed by Snoble.

Snoble said some auditors want to tackle the big investigations at the expense of more mundane audits, which can be just as important addressing how agency money is spent.

"I want to have an audit plan that is workable for everybody,' Snoble said. "They know exactly what is going on and I have some accountability to the process. This group would look at the audit plan, have input into the audit plan and make it more of a collaborative effort with our managers.

"It'll be a more open process where more people will have input.'

Bernsdorf, who retired after 10 years at the MTA and a 40-year career in government oversight, earned $125,711 annually and retired with a package that included six months of salary.

Speaking out because he says he's worried about the direction of the department, he warned that further weakening of the department could lead to problems as the agency is now building the $330 million Orange Line in the Valley and the $898 million extension of the Gold Line into East Los Angeles.

"It's the money,' Bernsdorf said. "The contractors. There's millions of dollars involved in whether they can submit invoices and get them paid without a lot of review and people looking at them to see if they're really valid.

"It really takes someone with enough courage and tenacity to say, hey, these really need to be done. Because all the pressures are against doing them.'

The MTA's Office of Inspector General, which sets audit policy for the agency, declined to comment on "any ongoing investigations or reviews,' said Deputy Inspector General Jack Shigetomi.

Board members said they were looking into the situation.

"This should not be swept beneath the rug,' said Michael Cano, the transportation deputy to county Supervisor Michael Antonovich. "The supervisor fully expects that these claims and these problems be investigated thoroughly, be discussed thoroughly.'

Los Angeles County Auditor- Controller J. Tyler McCauley said the county's audit committee is made up of staff members for the Board of Supervisors and he would not allow department heads to serve on its audit committee because they might not be able to provide independent input since they might be audited.

"They're usually outside people. They're not part of the organization, so they have sufficient independence,' said McCauley, adding he could not comment directly on the MTA's operations.

MTA board member John Fasana said he was still reviewing Snoble's new plan which also calls for a peer review of the audit department.

But he said the agency is struggling to streamline cumbersome audit procedures for construction projects while ensuring oversight of taxpayer dollars.

"We have to be willing to adjust our processes, but we still need an audit function that gives management what they need and the board what they need,' Fasana said.

"I don't want to make the process so burdensome that you continue the way MTA used to build projects compared to how the Gold Line was built in Pasadena,' he said, referring to the Pasadena line's on-time, on-budget project under a separate agency headed by Rick Thorpe, now the construction manager at the MTA.

"On the one hand, it's a management tool for Roger to make sure departments are working correctly. On the other hand, the auditors have to have some degree of autonomy. There's a balance there.'

Bernsdorf said his downfall came after a series of reports his auditors did over the past year on a massive new computer system, dubbed M3, which is now at least $4 million overbudget and nearly a year behind schedule.

The reports repeatedly raised questions about management of the system, which is designed to track maintenance and inventory for the agency's fleet of buses and trains. The computer project is under CFO Richard Brumbaugh, who was Bernsdorf's direct administrative boss.

In November, Bernsdorf initiated new audits on five big agency contracts including the Orange Line busway, where he said preliminary reports raised concerns about questionable billing.

"It was the announcement we were going to do more work that set them off,' said Bernsdorf, whose job title was managing director, Management Audit Services Department. "They didn't like the principle of having these nosy auditors come in and poke around.

"It's just a prerequisite that the auditors be independent of the people they're auditing.'

Snoble and Brumbaugh said the new audits were beyond the scope of what was spelled out in the department's annual work plan.

"He had unilaterally decided this is something he wanted to go off and do. We don't have a situation where people can go off and do what they feel like doing,' Brumbaugh said. "I think the public would be outraged if they thought we had people in this organization wandering around doing what they wanted to do.'

Brumbaugh said he never told the auditor to stop the new reports, adding Bernsdorf could have taken the issue up with Snoble.

"He should have gotten up and walked up and had a conversation with the CEO.'

Brumbaugh said that in the future, auditors will be more tightly monitored.

"I think every senior manager is going to take a more active role in making sure the auditors adhere to their work plan. Every time there's an initiation of an audit, every senior manger is going to ask, is this part of the internal work plan?'

Bernsdorf said he's worried his forced departure sends a bad message: "Suppress your audits or get out.'

-- Lisa Mascaro can be reached at (818) 713-3761 or by e-mail at lisa.mascaro@dailynews.com.

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