Resignation of Internal Auditor Reignites Oversight Debate

By Emily Margaretten

margarettene@gmail.com

 

After only eight months on the job, David James, Internal Auditor and Controller at City College, resigned, citing family reasons. His departure raises questions about who will monitor the financial situation of the college, which is struggling to resolve its structural budget deficit.

The Board of Trustees and faculty organizations, including the Academic Senate and the Higher Education Action Team (HEAT), have advocated for an independent auditor to oversee the college’s finances for years. Now, with the departure of James, they are concerned about what controls are in place to ensure the accurate review and reporting of financial information.

Illustration by Yuchen Xiao/The Guardsman.

Trustee Alan Wong expressed these concerns in an email correspondence with the Guardsman. “With City College’s past history of fiscal crisis, the Internal Auditor position that David James was in is critical to maintaining public confidence and trust. I believe that we must hire somebody into the position as soon as possible to ensure that City College has strong financial controls in place.”

Wong continued, “I would like to see the position take an expanded role when the new hire joins us. We need the Internal Auditor to ensure and demonstrate that City College is financially solvent and sustainable.”

Trustee Tom Temprano also addressed the importance of internal financial controls during the Aug. 26 board meeting, stating that the college needed to “get our internal controls and our internal excess spending issues solved,” to reach financial sustainability. He added, “It’s a three-pronged approach of enrollment growth, new funding, and a real focus on getting our financial house in order.

The college’s financial reporting has been a major point of contention for faculty union AFT 2121 and activist groups like HEAT. Labor organizer and HEAT member Steve Zeltzer conveyed this frustration in an email message to the Guardsman, writing, “The lack of transparency and failure to have accurate figures of the actual financial situation at CCSF is systemic and HEAT has challenged this and why the administration has failed to provide accurate figures week to week.”

Zeltzer further questioned the accuracy of the audits that James conducted on administrative management and faculty salaries and benefits. In an interview on Aug. 29, he reiterated HEAT’s position about malfeasance at City College and specifically cited the unreliability of the internal audits. “We don’t trust based on our examination of the budget and what they’ve been doing, we don’t trust the reliability of their audits.”

Similarly, the faculty union has disagreed with the administration’s budget numbers. During negotiations this spring to close the budget deficit under threat of layoffs, City College administration accepted AFT 2121’s readjustment of the deficit from $32 million to $22 million.

James acknowledged the need for more independent financial controls at City College. In an interview with the Guardsman on Aug. 24, he explained that reporting directly to the chancellor instead of the Board of Trustees placed limits on what kind of audits were being conducted. “I think if this position was reporting directly to the board and administratively to the chancellor that may give the position more independence so that the auditor would basically be more involved with the board, and the board would have more involvement in what audits were being done.”

Wong expressed support for the auditor to have more engagement with the board too. “I would like to see this person report more directly to the board,” Wong said in an interview on Aug. 31, “So that we’re able to give better direction and also ensure that, going forward, we’re taking steps ahead of time to have a balanced budget, ensuring that we’re not overspending in different parts of the budget, ensuring that we have cost controls in place.”

Wong described tumultuous cutbacks at City College, like the hundreds of class cancellations in 2020, that the board could have foreseen and monitored with more informed projections about the budget. He called for an improved “dotted-line” or “quasi-supervisorial” relationship that would provide additional oversight and “allow [the trustees] to have some level of influence over the projects that the [auditor] works on.”

During his tenure at City College, James conducted audits on consultant and contractor costs, and faculty, administrative, and classified salaries. His audit of administrator salaries revealed that “for key administrative positions at CCSF, salaries [were] among the highest of California single district community colleges.” The audit for faculty salaries and benefits revealed that full-time faculty salaries were slightly above average while part-time faculty, who qualified for health care benefits, “were paid at the highest rates, based on salary step rates.”

Fees paid for consultant positions, meanwhile, far exceeded allocated budgets. James noted in his interview with the Guardsman that there was 100% overspending on consultants in core roles like information technology and finance.

Outdated technology systems also made it difficult for James to conduct the audits, and he often relied on the cooperation of the payroll staff to help find information. “They were very helpful,” James remarked, “They provided information I needed and that helped me get my job done.”

With the departure of James, City College again will be lacking in financial oversight as it contemplates austerity measures and the longevity of the institution.

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