Audit of Antelope Valley Fair Reveals Misuse of Funds, Labor Problem : Inquiries: State makes 196 recommendations. Event officials say many changes are already made.

LANCASTER —  The Antelope Valley Fair used state funds to buy alcohol and then tried to cover the purchase in accounting records; kept hundreds of thousands of dollars in a bank for which one of the fair’s directors served on the board, and worked temporary employees more days than allowed by the state, according to a state audit released Wednesday.

The audit, which covers a two-year period beginning Jan. 1, 1991, delineates 196 specific recommendations requiring immediate attention at the state-run fair in Lancaster.

Bruce Latta, general manager of the Antelope Valley Fair, and Charla Abbott, president of the board of directors, said at a news conference Wednesday that many changes have already been implemented as a result of the audit.

“The board . . . views this audit as educational, not punitive,” Abbott read from a prepared statement. It was the fair board and Latta who requested that the audit be done.

The audit reveals that the fair bought alcohol with state funds, which is not allowed. And a failed attempt to hide the purchase was also discovered. Abbott said the alcohol was bought for the VIP reception room that is open during the fair. It was supposed to be paid for by a pool of money supplied for the purpose by the nine fair directors.

Abbott said the fair directors are aware that buying alcohol is not a permitted use of state funds. At the directors’ annual Christmas dinner, which the audit also found was improperly paid for with state funds, Abbott said the diners pay for their own alcoholic beverages. The fair paid a total of $650 in 1991 and 1992 for the holiday dinners.

According to the audit, the fair also improperly invested funds by putting as much as $300,000 in a bank for which fair Director Clyde Golding served as chairman. Not only was it a conflict of interest, the audit said, but the fair earned a lower interest rate by as much as three percentage points in the Antelope Valley Bank than if it had followed a 1991 audit recommendation to put surplus funds in a state investment account. Latta said the fair closed its last account at Antelope Valley Bank earlier this year.

Records of so-called 119-day employees, or temporary workers, were found to be inadequate. The records were not kept of the employees’ working days and many worked more than the prescribed number of days. Kim Myrman, assistant director at the Department of Food and Agriculture, said this is a common practice but one that is usually quickly corrected.

Latta, who was hired as fair manager in March, said, “We need to categorize it as a tool, as an opportunity.”

Many of the problems uncovered in the audit involve contracts, including their award, the language of the documents and their execution. Latta said that to ensure the problems are corrected “I’ve told my people to assume they’re not doing it right.”

When Latta began working at the Antelope Valley Fair, he said, he quickly realized that there were many practices that were not in line with state policy. Part of it, he said, was simply due to the heavy workload and small staff. In the coming fiscal year’s budget, Latta said, he is including a new position--accounting supervisor.

While the audit found no criminal activity, there are 29 areas considered “major weaknesses in the administration of the fair,” said Myrman, who oversees the department’s Division of Fairs and Expositions. “Within 30 days I expect on my desk a full implementation strategy on how they expect to address these.”

Some of the main areas of concern found in the audit involve the fair’s poor reconciliation of bank accounts, inadequate separation of duties, improper use of public funds and conflicts of interest with board members and at least one former employee having benefited through actions of the fair.

Numerous areas that the audit found in need of correction at the Antelope Valley Fair were also noted as violations of state policies and regulations in a 1991 agriculture department audit and 1990 review by the state auditor general.

“Prior notations that have not been followed up on is a concern,” Myrman said. This time, however, she is confident that the fair will follow through.

“Bruce Latta knows the state system,” she said. “He understands the fair industry. He will be using this (audit) and the board will be using this as their primary management tool over the course of the next six months to make sure they have an administrative structure that provides for the appropriate protections.”