Audit of EIDC uncovers spending sprees, $1 mil deficit
The city is following the money.
Los Angeles City Controller Laura Chick has joined the fray over the embattled Entertainment Industry Development Corp., finding $1.3 million in questionable spending by the agency.
The findings, released Thursday as part of an outside audit of the film-permitting agency’s contract compliance, include, among other things, spending sprees on concert tickets, alcohol, country club memberships and tours of Havana.
Report underlines the ongoing embarrassment that the 8-year-old EIDC has created for public officials. It also found that inadequate internal controls had led to a deficit of nearly $1 million.
“Our audit reconfirms the very clear success of EIDC in streamlining the government processes that production companies must navigate,” Chick wrote. “However, out audit revealed several areas of needed improvement and change.”
The audit by Thompson, Cobb, Bazilio & Associates, found inadequate support for payments to consultants; inappropriate accounting; detailed expenditure and revenue budgets not being prepared; late and questionable billings; and untimely payments.
The questionable spending revisited some of the disclosures that emerged following September’s announcement of a criminal investigation into the EIDC and prexy Cody Cluff for alleged misuse of $700,000 in public funds. Probe by the L.A. District Attorney’s Office remains active though no charges have yet been filed.
The new audit, covering two years through last June, said the questionable expenses included $357,743 in tickets for sporting events and concerts; $24,840 for gifts, cigars and liquor; $22,253 for limos; $138,729 for Sundance expenses; $91,207 for meals and drinks at business meetings; $20,000 for Staples Center membership; $20,675 for Grand Havana Room membership; $14,348 for Via Verde Country Club membership; $24,752 for American Music Awards; $7,968 for the Havana tour; $60,090 for the Independent Film Festival; $69,024 for the Assn. of Independent Commercial Producers show; and $152,869 in contributions and donations.
“Many of these expenditures now appear abusive to the product person,” the audit said. Cluff insisted that the spending was necessary to lure producers to Los Angeles.
“The city must immediately begin rewriting its contract with the EIDC,” Chick wrote in a cover letter, noting that City Councilwoman Wendy Greuel recently made such a motion. “Let the change begin.”
Keith Comrie, the former city administrator appointed late last year to help oversee the EIDC and a yet-to-be-completed KPMG audit, questioned the accuracy of Chick’s audit and said many of the changes suggested have already taken place. The EIDC was never allowed to respond, he noted.
“We have cut expenses by $1 million a year and the financial situation is improving every day,” he added. “This audit just inflames the situation.”
Comrie said the KPMG audit should be completed in June.