LAS VEGAS -- Time is running out on an organization that was designed to coordinate federally funded job training and retention programs in Southern Nevada but got bogged down with poor record-keeping and alleged inefficient use of funds.
Workforce Connections, formerly known as the Southern Nevada Workforce Investment Board, grew out of the federal Workforce Investment Act of 1998 and was created in 2000. The organization, which also serves Clark, Esmeralda, Lincoln and Nye counties, received tens of millions of dollars in recent years as the state struggled to recover from the Great Recession.
But a state audit prepared in May for the Nevada Department of Employment, Training and Rehabilitation found that an additional $1.9 million could have been available in fiscal 2011 for job training in the southern part of the state if Workforce Connections hadn't spent 26 percent of its budget for administration, program monitoring and other reasons. The audit found that an additional $700,000 could have been added to job training this fiscal year if Workforce Connections reduced its unobligated fund reserve from 15 percent to 10 percent of its total funding, the same percentage of unobligated funds set aside by the Northern Nevada workforce board.
The audit also found unexplained variances of $2 million in Workforce Connection's financial records for fiscal 2009 through 2011. "Reconciling expenditures would ensure accurate reporting and improved financial reliability," the audit stated.
Armed with the audit, the Governor's Workforce Investment Board on June 14 endorsed a
proposal to fold Workforce Connections and the Northern Nevada workforce agency Nevadaworks into the state board so that an additional $5 million in federal funds could be used for job training.
The Nevada News Bureau reported that the recommendation will be submitted to the U.S. Labor Department and that a final decision can be expected by the end of the year. The news bureau also reported last month that while Nevadaworks supports the proposal Workforce Connections opposes the consolidation plan because of concerns over local control and the potential loss of job training funds in Southern Nevada.
Money problems at Workforce Connections were revealed as far back as September 2006, when the Las Vegas Review-Journal reported that an audit commissioned by the city of Las Vegas and Clark County found that the organization may have mismanaged millions of dollars. The problem is that nonprofit groups that received money from the organization to train unemployed individuals and at-risk youths refused to account for their spending.
"Other than a complete disregard for government accounting standards and financial principles, ignorance or disdain for the taxpayer, the consultants know of no legitimate reason for...allowing for these deplorable practices," the auditors were quoted as saying.
The newspaper followed up in February 2007 by reporting that local taxpayers may have to pay the federal government as much as $1 million to make up for money misappropriated by the Workforce Board.
Shortly thereafter John Ball was brought in as the new executive director. The Las Vegas Sun reported in an interview with Ball in February 2008 that when he joined the Workforce Board it had just endured several audits that found fouled up financial records, with one accountant stating that the organization had had a hard time tracking $30 million in federal money. The state Employment, Training and Rehabilitation Department grew so concerned that it took over the Workforce Board's finances for a time before ceding control back to the board in November 2007.
But money problems continued to haunt Workforce Connections after Ball took over. The CPA firm Piercy Bowler Taylor & Kern of Las Vegas has issued negative audits of the organization for the past five years.
In an April 29, 2011, letter to the Workforce board, the CPA firm complained that it was difficult to even perform the audit because of delays in receiving vital information from Workforce management. The delays escalated the cost of the audit.
The audit uncovered "significant deficiencies" in two primary areas:
Financial accounting and reporting -- While noting some improvement in this area from the prior year the audit found that "there continues to be an apparent lack of effective policies and procedures designed to provide reasonable assurance that transactions are accurately recognized and financial statements, free of material errors, are presented using the appropriate basis of accounting as required by GAAP (generally accepted accounting principles)."
Financial reporting skills, knowledge and resources -- Although noting improvement in this area from the prior year the audit concluded that "those delegated the primary responsibility for the accounting and reporting function continue to lack sufficient skills, knowledge and other resources to afford reasonable assurance of the appropriate application of GAAP in recording transactions and preparing financial statements.
"We recommend the retention of personnel who possess an appropriate level of knowledge and skill to provide reasonable assurance of the appropriate application of GAAP or provide sufficient training and other resources to those delegated the primary responsibility for the accounting and reporting function such that reasonable assurance of the acquisition of such knowledge and skills can be attained."
The Workforce Connections response to those findings was that it had begun to comply with policies designed to ensure appropriate accounting practices. Workforce Connections also indicated it was in the process of retaining personnel who possess an appropriate level of accounting skill.
But at a Jan.18, 2012, Workforce Connections Budget Committee meeting in Las Vegas, staffer Carol Turner reported that a search for a chief financial officer had been suspended. According to minutes from that meeting the "staff is focused on the recruiting for the Finance Manager that will bring that additional expertise in the area of GAAP as well as processes and policies. The Finance Manager position is currently filled by MaryAnn Avendano in an Interim capacity."
Piercy Bowler's last audit, for the year that ended June 30, 2011, was released in February. The firm reported finding financial accounting problems similar to those discovered in each of the previous four years.
But Ardell Galbreth, interim executive director of Workforce Connections, announced at an April 4 meeting of the organization's Budget and Finance Committee that the audit contract with Piercy Bowler had been terminated. Galbreth said a request for a proposal for a new audit firm was issued and that seven firms responded. An audit review committee was assigned to rank six of the firms based on their qualifications and experience, fees they would charge and an executive summary they prepared for the contract competition. The audit committee ranked L.L. Bradford & Co. of Las Vegas at the top of the list. Piercy Bowler, which also applied for the contract, was ranked only fourth.
At the May 2 Budget and Finance Committee meeting, Piercy Bowler co-founder Ralph Piercy stated his understanding that his firm was still under contract with Workforce Connections. He also defended the fees that his firm had charged for audits in the face of criticism that the fees were excessive.
Piercy said that Workforce Connections didn't have a credentialed accountant on its staff until February, implying that any additional fees charged by his firm was necessary because of the lack of accounting staff within the organization.
He complained that during previous audits, Workforce Connections "has not really been able to hold up its end of what a normal agreement would be."
Despite Piercy's comments, the Budget and Finance Committee recommended that a new audit contract be awarded to L.L. Bradford. But the Workforce Connections Board at its May 22 meeting rejected all the bids for a new audit contract after some board members, including Henderson City Councilwoman Gerri Schroder and Las Vegas City Councilman Bob Coffin, expressed support for Piercy Bowler and its audit expertise.