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South SLO County Sanitation District audits former administrator's financial managment

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A Southern California auditor will review the financial and management practices of the South SLO County Sanitation District’s former administrator, who resigned in 2013 after a series of controversies.

The district’s board voted unanimously May 6 to hire Knudson and Associates, of Thousand Oaks, to perform an audit of the organization’s finance management practices from 2004 to February 2013. The board agreed to pay the firm $55,000 to conduct the audit.

That audit will cover the final nine years of the district’s previous administrator, John Wallace. Wallace, whose tenure began in the mid 1980s, resigned from the position in February 2013 amid questions about his management of the district and accusations about a conflict of interest.

“I am very happy that the Knudson audit contract is moving forward,” said Jim Hill, the Arroyo Grande mayor and current board chairman.

In 2012, water quality officials slammed the district with a $1.1-million fine for negligence and improper maintenance that caused a raw sewage spill at the district’s Oceano treatment plant in 2010. In 2011, a SLO County grand jury issued a report stating that Wallace had 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. The report stated that 50 percent of the district’s labor costs were either paid to Wallace or resulted in his assigning services to the Wallace Group’s employees.

Calls for an investigation and audit followed soon after Wallace’s 2013 departure. Arroyo Grande City Councilmember Tim Brown—an alternate board member for the sanitation district—was among the vocal proponents of an audit. Brown told New Times that hiring the firm was a good start to winning back the public’s trust in the district.

“You want people to see what was happening,” he said. “We really won’t know until somebody digs into it and finds out.”

Knudson and Associates was one of two firms that submitted proposals to conduct the audit. Knudson was reviewed and recommended by a nine-person review committee prior to the board’s May 6 vote.

In an email to New Times, Wallace said he was proud of the work that the Wallace Group did for the department, and said his company would cooperate with the audit.

“We will help the Knudson folks look over any of the paperwork or assist them by answering any questions that may arise,” Wallace said. “We’ve said from the beginning that all our services were approved by the board of directors, and our invoices for those services were accounted for and open to the public.”

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