State Agency Files Complaint Against Great Park Auditor for Shoddy Work

Palm Court Arts Complex (Under Construction) – Photo: OC Great Park

This post is a two-fer: a Press Release from Great Park contractor Gafcon who had their work misrepresented by the Great Park Auditor of Hagen, Streiff, Newton & Oshiro (HSNO) in a forensic audit of the Great Park that was so bad, the auditors withdrew the initial findings but not before it could be used to flip the Irvine City Council from Blue to Red.  The cost of the audit was originally $240K and soared to about six times that much before all was said and done.  The final result — lots of money was spent, all on public votes and not a dime was unaccounted for.
Now the California Board of Accountancy will be conducting a hearing in which its possible HSNO may have its license pulled.  First, the press release from Gafcon is below and then the Voice of OC did a fantastic story on this issue and the links and excerpts come after the press release:
California Board of Accountancy that protects the public from violations of accounting laws and regulations to conduct a hearing concerning a formal complaint filed against the City of Irvine’s accounting firmSAN DIEGO, CA (January 16, 2018) – The City of Irvine’s accounting firm Hagen, Streiff, Newton & Oshiro, Accountants, PC (“HSNO”) disseminated false information, committed repeated acts of negligence, and failed to comply with professional standards in its review of the Orange County Great Park, according to a formal complaint filed before the California Board of Accountancy Department of Consumer Affairs (“Board of Accountancy”). This action is a result of a complaint Gafcon Inc. filed with the Board of Accountancy in 2014 demanding HSNO completely exonerate the company from false allegations contained in a preliminary report presented to the City and the Public by HSNO on the Great Park project.

In 2013, the Irvine City Council formed a two-member audit subcommittee consisting of Christina Shea and Jeff Lalloway to conduct a “forensic audit” of $250 million of Great Park expenditures and the contracts of the companies working on the Great Park project. Gafcon, a construction management firm, was a key member of the Great Park Design Studio that oversaw the Great Park’s Master Plan and design preparation work. The audit committee hired consultants, including HSNO, to perform the audit and issue two reports. Both reports were widely criticized by the media and the public as having numerous factual inaccuracies, incorrect assumptions, and speculative conclusions.

In 2016, the California State Auditor also issued an independent investigative report which criticized the City of Irvine and its audit subcommittee for exercising poor governance during the audit of the Great Park and not following appropriate industry standards which “needlessly compromised” the audit’s credibility.

“We are extremely proud of our work on the Great Park project, which continues to be recognized for innovative and efficient planning and management, and we are pleased that the California Board of Accountancy has investigated our complaint and has decided to file a formal complaint against the City of Irvine’s accounting firm. We have always maintained that the audit was severely compromised,” said Gafcon CEO Yehudi Gaffen. “We hope that the Board of Accountancy process sets the record straight and provides a more complete picture of events and decisions surrounding the Great Park.”

Since the release of the City of Irvine’s audit, Gafcon has disputed every allegation contained in the report that concerned the company by providing video footage and written documentation refuting each false claim and demonstrating the extent to which councilmembers were involved in decision-making related to the Park. In the interest of transparency regarding Gafcon’s work on the project, the company posted all of the evidence for public viewing at www.greatparktruth.com.

“Since the beginning of this audit, we have cooperated with the City of Irvine and its auditors, providing thousands of documents and responding to every question posed to us,” said Gaffen. “We were always confident that the findings in the audit would ultimately be discredited. In the wake of this latest development, we hope the City of Irvine will formally exonerate Gafcon and all the contractors who worked tirelessly to provide the residents of Orange County with the award-winning Master Plan for the Great Park.”

Gafcon began working on the Orange County Great Park project in 2006, in conjunction with Ken Smith Landscape Architect, Inc. The two entities joined together to form the Great Park Design Studio, which served as the primary contractor during the Master Plan Design Phase and the Schematic Design Phase. Since beginning work on the Great Park project, Gafcon cooperated with the requests of the City of Irvine, including prior audits commissioned by the City that found no material issues regarding the Design Studio or Gafcon’s performance. The Design Studio followed its contractual requirements and related directions given by the City of Irvine and the Great Park Board of Directors in a professional manner, completing the work on time and within budget. There was full oversight of the public funds for this project, and all spending was approved by the City Council and Great Park Board of Directors.

The Great Park master plan and schematic design have received numerous national awards from key organizations for planning and vision, including the Southern California Association of Governments 2010 4th Annual Compass Blueprint Recognition Award-Honorable Mention, American Institute of Architects 2009 AIA Honor Award in Regional and Urban Design, the American Society of Landscape Architects 2009 ASLA Professional Honor Award for General Design, the American Planning Association (National) 2009 APA Focused Planning Issue Award, the American Society of Landscape Architects 2009 National Award for Research, the American Institute of Architects 2008 AIA Honor Award in Regional & Urban Design, the American Society of Landscape Architects 2008 ASLA National Honor Award for Analysis & Planning, American Planning Association (California and OC Chapters) 2008 APA Focused Planning Issue Award, California Society for Ecological Restoration 2007 SERCAL Members Award, and selected as part of the 2008 Sustainable Sites Initiative Case Study.

About Gafcon

Gafcon is a globally respected program and construction management consulting firm with more than 130 employees with offices in San Diego and Los Angeles. A family-owned business, Gafcon has a long history of involvement in the region and has successfully overseen more than $4 billion worth of construction projects on time and within budget, providing continual transparency to clients, public entities, oversight committees, and taxpayers. To learn more about Gafcon please visit www.gafcon.com.

From the Voice of OC story, much denial from Irvine Mayor Pro Tem Christina Shea:

The California Board of Accountancy issued a scathing report on two separate audits of spending and contracts for Irvine’s Great Park and is recommending the accountant firm that performed the audits have its license suspended.

An attorney for the accounting firm strongly denied the accusations. But former Irvine Mayor Larry Agran, whose political career was damaged by the Great Park audits said “for heaven’s sakes, if you can’t trust auditors to be honest and straightforward, then who can the public trust?”  

Agran was on the City Council and the Great Park Board of Directors during the time of the first audit and was criticized by the city-hired auditors for underestimating the cost of developing the Great Park.

The Irvine-based accountant firm, Hagen, Streiff, Newton & Oshiro (HSNO) reviewed spending and Great Park development contracts awarded between July 2005 and the end of 2012. The firm released the audits in two phases: the first in January 2014 and the second in March 2015.

The city spent over $1.4 million on the audits that examined why more than $250 million was spent to develop 88 of the Great Park’s 1,300 acres.

Mayor Pro Tem Christina Shea defended the audits Tuesday evening and said Gafcon, one of the Great Park contractors the accounting firm dinged in their audits, was trying to exonerate itself. Gafcon filed a complaint with the California Board of Accountancy (CBA) nearly three years ago.

“It’s just another political operation to justify what they did at the Great Park,” Shea said. “I think they’re just doing everything they can to exonerate themselves … we stand behind our audit, the city does and I do.”

According to the California Board of Accountancy report that was released Friday afternoon, the HSNO accountant firm violated numerous public accounting standards. There aren’t any criminal findings in the report, but the board is recommending HSNO reimburse the state an unspecified amount for the cost of the over two-year long Board of Accountancy investigation and pay an administrative penalty. It’s also recommended HSNO and its lead accountant in the audits have their accounting licenses revoked, suspended or restricted.

The California Board of Accountancy is responsible for regulating over 97,000 accounting licenses of both firms and individuals. The board also sets statewide industry standards.

Note to Ms. Shea, Gafcon doesn’t have to exonerate itself because it did nothing wrong.  The auditing firm you put so much trust into did.

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