The county of Ventura hired a compliance officer to help protect taxpayer money. Now, that former compliance officer is facing felony charges for allegedly steering county business to his wife’s company.
That irony should get every Ventura County taxpayer’s attention.
On July 31, the Ventura County District Attorney’s Office announced that Charles Flood, identified on the county’s Health Care Agency organization chart as the compliance officer, had been charged with two felony counts of conflict of interest. Prosecutors allege that Flood secretly steered public funds to AM Berry Consulting, a company owned by his wife.
Flood is entitled to the presumption of innocence, and the courts will determine the facts. But the allegations raise a question
that goes beyond one employee: Were the county’s financial controls in place — and were they working? That question matters because this is not the first time serious allegations of financial misconduct have surfaced within the county’s healthcare system.
In 2022, Ventura County agreed to pay $29 million to resolve federal and state allegations involving false Medi-Cal claims. The case originated with whistleblower allegations and resulted in a five-year Corporate Integrity Agreement requiring additional compliance and independent review.
That same year, the county hired Flood as an HCA compliance officer.
The irony is hard to miss. After a major healthcare fraud case prompted the county to strengthen its compliance structure, the person hired to oversee compliance is now accused of abusing his position of trust.
Again, this does not prove that the county’s controls failed. Nor does it prove that an internal-control audit would have prevented the alleged conduct. However, it does raise a reasonable question: Who is independently testing whether those controls actually work?
The answer is especially important because the county has not conducted an internal-control audit of HCA and VCMS in eight years.
The last such audit, conducted in 2018 by CliftonLarsonAllen, included a warning that should sound familiar today. Auditors wrote that “setting a tone at the top is one of the most important components of a strong internal control environment” and that “collectively, these concerns suggest an adequate tone at the top had not been established.” (Ventura County Star, Jan. 8, 2019.)
Eight years later, the question is whether that tone at the top has really changed.
The Ventura County Taxpayers Association has been asking for independent internal-control audits of the Health Care Agency and Ventura County Medical System for years. Those requests have consistently been rejected as unnecessary.
That deserves another look.
An internal-control audit is not the same as the county’s annual financial statement audit. A financial audit examines whether financial statements fairly present the county’s financial position. An internal-control audit examines the safeguards behind taxpayer money. Who can authorize a transaction? Who approves payments? Are duties properly separated? Are unusual transactions independently reviewed? Can an employee bypass the normal controls? And, most importantly, do the controls actually work in practice?
Good controls protect taxpayers — but they also protect honest employees and management.
The county has now replaced Flood with a new compliance officer. According to the current organization chart, that position continues to report to the VCMS Oversight Committee and the County Executive Office rather than through normal HCA management.
That may be an appropriate reporting structure, but it does not address the larger issue. A compliance officer is not a substitute for independently testing the financial controls surrounding the compliance function — or the rest of the healthcare system.
Two cases do not establish that misconduct is widespread within HCA or VCMS. They do, however, provide a compelling reason to stop assuming that the controls are adequate. They must be tested.
VCTA is asking the Ventura County Board of Supervisors and the VCMS Oversight Committee to do something straightforward: commission an independent internal-control audit of HCA and VCMS. Make the findings public. Identify weaknesses. Fix them.
Ventura County has demonstrated that it is willing to spend millions responding to problems after they are discovered. Why not spend a comparatively modest amount testing whether the safeguards protecting taxpayer money are working before the next problem occurs?
The question is no longer whether internal controls matter.
The question is whether the “tone at the top” has changed — and who is checking the controls.
Don Brodt is the Chair of the Board for the Ventura County Taxpayers Association.
This article originally appeared on Ventura County Star: Two cases, one question: Who is checking the controls? | Your Turn
