The man in charge of auditing the financial and management practices of the South SLO County Sanitation District’s former administrator said he needs more money to complete the work.
Carl Knudson, a former IRS auditor, asked for an additional $22,000 from the district in an Aug. 10 letter. The money would allow an additional 150 hours of work on the audit, and raise its total cost from $55,000 to $77,000.
The board hired Knudson May 6 to perform an audit of the organization’s finance management practices from 2004 to February 2013. Those years cover the end of district’s previous administrator, John Wallace. Wallace, whose tenure began in the mid 1980s, resigned from the position in February 2013 amid accusations about a conflict of interest because he was not only the district’s administrator, but was also head of the Wallace Group, a firm contracted to provide engineering services for the district.
Knudson and his staff already reviewed 56 boxes of records provided by the Wallace Group, interviewed 26 people, and reviewed the district’s computer and vendor files. Since they began, Knudson said the scope and complexity of the audit had “substantially increased.”
“This additional amount will allow me to follow up certain interviews and leads … and to finalize the review of voluminous records we have obtained in our investigation,” he wrote
According to Knudson, available accounting evidence showed that the Wallace Group received more than $3.4 million between July 2008 and June 2013. Knudson said that accounting records from 2004 to July of 2008 were missing, and had been “wiped clean” when the district’s plant switched over to using Microsoft’s Quick Books software. In his letter, Knudson said he believes the amount Wallace group received from the district between 2004 and 2013 could be “well over” $5 million.
Wallace said previously that he would cooperate with the audit. In an email to New Times on Aug. 19, Wallace said he and Knudson were trying to arrange a meeting, but no date had been confirmed, and asserted that his company had been transparent in its billing practices.
“The monies received over the years of service were fair, open to the public, and agreed upon and approved though a public process,” Wallace wrote. “It’s as simple as that.”