COUNTY — A county grand jury report ripped the San Diego Association of Governments for how the agency handled internal audits, contracts and the challenges facing the Office of Independent Performance Auditor.
The report reviewed the agency from 2020-24 and was filed with the San Diego County Superior Court on Nov. 18, 2024. It was the topic of discussion for the Board of Directors during Friday’s meeting.
Six recommendations and findings were presented by the grand jury including hiring appropriate staff for the OIPA. The report chided the agency for multiple failures such as unjustified severances and bonuses for departing executives, improper use of procurement cards, large contract amendments, missing and poorly kept paperwork, back-dated contracts and the problematic state Route 125 toll revenue software.
The agency was also recently cleared of wrongdoing in a U.S. Department of Justice investigation.
The report also addressed many unresolved issues from audits and the lack of independent legal counsel for the OIPA and the Audit Committee. However, the grand jury also had some harsh words for the committee and it lacking in addressing unresolved audits and recommendations to remedy those issues by the current and former independent auditors.
Dozens of current and former SANDAG staff and board members were interviewed by the grand jury.
“The Grand Jury (sic) posed the question to the interviewees on whether SANDAG has held any of its employees responsible for any possible malfeasance noted in the audits,” the report reads. “No interviewee professed to know of anyone who had been held accountable. The interviewees stated that holding staff accountable was the responsibility of the Executive Director (sic).”
The executive director during this period was Hasan Ikhrata, while the past chairs were former Encinitas Mayor Catherine Blakespear and former San Diego County Supervisor Nora Vargas. The executive staff consisted of Ikhrata, former Chief Financial Officer André Douzdjian and former Chief Legal Counsel John Kirk, among others.
SANDAG has until Feb. 15 to submit a written response to the court. SANDAG Chief Executive Officer Mario Orso said in a draft letter the agency partially agrees with three recommendations, while plans and action are ongoing with several others.
Orso said while the OIPA is understaffed, it doesn’t impact the department’s “effectiveness, thoroughness” or the work. He said the lack of staff makes it more difficult for the office to conduct more “high-risk” audit work, which is needed.
He said the agency has approved hiring more staff when requested, although sources, who asked not to be identified, said the OIPA has been requesting more staff for years only to be ignored.
Another issue is SANDAG’s general counsel reporting to the executive director rather than the board. The grand jury said changing the reporting structure would give the general counsel more autonomy and avoid the appearance of a conflict of interest.
Grand Jury report
The report states the OIPA, which audits the agency, has requested five additional positions — two associate management internal auditors, two entry-level auditors and one administrative support staffer. The report questions why the SANDAG executives did not execute on the hirings when the board approved the positions in March 2020.
At the time of the board’s approval, the office was staffed with the IPA, two principal management internal auditors and two audit interns, according to the report. As of October 2023, the audit team consisted of the IPA, two principal management internal auditors, two associate management internal auditors and one part-time audit intern.
“The entire board (minus a board member not in attendance) voted in favor of increasing the IPA staff,” the report reads. “Despite this approval by the board, staffing was not increased for the OIPA because ‘funding could not be found’ in the over $1 billion annual budget.”
The report also took aim at the reporting structure of the general counsel. Currently, the general counsel reports to the executive director, who also conducts performance reviews of counsel, and recommends the position report to the board.
The reasoning is when audits are being conducted, the OIPA may disagree with a position held by staff. This may create a conflict of interest is the general counsel is approached by an auditor because the counsel reports to the executive director.
The grand jury also recommending hiring independent counsel for the OIPA and Audit Committee. Those interviewed by the grand jury said there is a legitimate need for independent counsel and the OIPA and committee do not currently have access to outside counsel, which can present a conflict of interest with staff.
The Audit Committee voted to approve to move forward with acquiring independent counsel on Dec. 8, 2023.
Corrective action reports (CAR) and a lack of action from staff and the board were also a target of the grand jury. The OIPA, which was established in 2019 under Assembly Bill 805, has filed audit results and CARs since 2020, the report said.
Over the past four years showed a significant lack of movement for CARs, the report stated. One audit and CAR from October 2021 has not been corrected or updated since June 2023.
“The grand jury finds that SANDAG does not effectively ensure issues identified during audits are addressed, tracked and implemented,” the report reads. “The grand jury recognizes that auditing alone cannot correct all the issues in SANDAG’s corporate culture. SANDAG management and the SANDAG Board of Directors, as representatives of the San Diego County citizenry, are ultimately responsible for how SANDAG performs its mission and how carefully it uses taxpayer money.
“The grand jury suggests that the new executive director embrace a commitment to ensure that taxpayer money is used judiciously for the benefit of the county residents and that the entire organization has the same commitment.”
Next steps
The board discussed how to address the recommendations, while Orso said SANDAG is already implementing some of the recommendations. The main discussion centered on the agency hiring another attorney or whether the current general counsel, Amberlynn Deaton, should report to the board or have a new attorney report to the board while Deaton, or any general counsel, severs the agency.
SANDAG’s letter, meanwhile, “partially” disagrees with some of the findings it also agrees with the reporting structure recommendation. As for the OIPA counsel, Orso said the department was able to retain outside counsel in 2020 and theboard approved a “formal process” in December 2023 to ensure timely access to counsel. A request for proposal was released in January 2024.
However, Orso disagreed with the grand jury’s finding the agency is not actively updating CARs. He said the CAR has been presented ot the Audit Committee in 2020, 2021, 2022, 2023 and 2024.
Meanwhile, Alfred Smith was retained as independent counsel to the board as a pilot program last year, while Deaton is deputy general counsel. The general counsel position is vacant, and the pilot program was extended until September.
“We need someone impartial to represent us on the board,” San Marcos Mayor Rebecca Jones said. “I would like to see an attorney who represents SANDAG and reports to the board. I would (also) like to have the option to have someone represent us (outside counsel) with varying things like RHNA.”
Orso said SANDAG staff will bring more options back to the board, while some on the board support the Executive Committee forming the policy and a creating a committee to lead the hiring effort.
“For me this is a really large issue … it clearly seemed to me his (former General Counsel John Kirk) role was to support what the CEO wanted to vote,” Coronado Mayor John Duncan said. “It seemed like he was advocating. This change is purely for advice and not steered to an answer.”
As for the OIPA, current Independent Auditor Courtney Ruby said her office is currently working on recruiting for the open positions. She said the pandemic disrupted the talent pool, but so far her efforts are showing positive movement forward.
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