A new state auditor’s report spells out  “gross mismanagement” of an agricultural district and cites the California Department of Food and Agriculture for not performing biannual compliance audits of the district. The district is not named in the report.

“We found that the association’s chief executive officer and maintenance supervisor grossly mismanaged state resources and neglected their duties to ensure that employees comply with state laws governing supervision and time and attendance reporting,” noted California State Auditor Elaine Howle.

The report also noted that the California Department of Food and Agriculture "did not perform biannual compliance audits of the association that could have discovered and addressed many of these improper governmental activities.”

The State’s 54 district agricultural associations are responsible for holding local fairs, expositions, and exhibitions that highlight the industries, enterprises, resources, and products of the state. Each district agricultural association has a nine‑member, governor‑appointed board that also hires and evaluates a CEO.

The state audit report found the following improprieties from 2016 to 2018:

  • $132,584 of credit card purchases for which the association had no supporting receipts.
  • $130,396 of individual credit card purchases exceeding $100 for which the CEO did not sign preapproved purchase orders.
  • $30,048 for excessive and illegal out‑of‑state travel expenses.
  • $14,170 of credit card purchases for which the association did not have itemized receipts to verify that they were for legitimate, business‑related expenses.
  • $5,859 for airline tickets that employees purchased on their CAL‑Cards, even though state policy prohibits the use of CAL‑Cards for travel‑related purchases.
  • $5,188 for late fees and interest because the association did not pay its credit card bills on time.
  • $1,986 of wasteful tips that far exceeded the maximum allowable reimbursement rate.
  • $1,259 for inappropriate purchases of alcohol.

Several employees were cited for working at side jobs while employed by the district. In one case, “Employee A used a state vehicle, state‑owned materials and equipment, and state time—both his own and that of several other association maintenance employees—to perform at least three side jobs. Several witnesses told us that Employee A and the other employees left work for almost the entire day nearly every day for weeks or even months at a time, depending on the side jobs on which they were working.”

For several years, three employees regularly stored and—after their shifts had ended—drank alcohol at their place of work on state‑leased property, in violation of CDFA policy.

“CDFA takes the findings of the state auditor seriously and work is already underway to address many of the recommendations. We also take seriously our responsibility to ensure each district agricultural association (DAA) is aware of its obligation to uphold public trust and is audited accordingly,” said CDFA Director of Public Affairs Steve Lyle. “Recent investments and funding restoration will support CDFA’s compliance auditing efforts and sustain core programs. This includes adding additional auditors, legal support and training for DAA’s.”

CDFA’s audit office has not performed a compliance audit of the district since 2009. A high‑level manager in the Fairs and Expositions branch stated that the audit office did not conduct any compliance audits from 2011 through 2017 because CDFA laid off its audit staff due to budget cuts. However, the auditor reviewed the Governor’s budget acts from 2010 through 2019 and determined that the Legislature had, in fact, appropriated funds for this purpose. “Therefore, CDFA must have allocated those funds for other purposes besides compliance audits,” the report noted.

The audit recommends the department take the appropriate disciplinary action against the district association's CEO, maintenance supervisor and other staff who engaged in improper activities and recoup funds from all of the people who misused state resources. In addition, the audit recommends that CDFA’s audit office conducts biannual compliance audits for all district agricultural associations with priority given to auditing DAAs on the watch program.

The full report is available here.

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