Cascadia “Preliminary Forensic Accounting Diagnosis”

Multnomah County released a May 2 draft of the Cascadia Behavioral Healthcare “Preliminary Forensic Accounting Diagnosis” yesterday afternoon. It was posted deep in the Oregonian web site at 7:15 PM.

DOWNLOAD – Preliminary Forensic Accounting Diagnosis – PDF 3 MB

Though a draft, as the first independent review of Cascadia as a business, it is a revealing and fascinating document. Hiding this document, at best, was patronizing.

EXTRA – OPB – State Officials Review Cascadia’s Financial Problems
EXTRA – KGW.com – County mental health provider audited amid financial mess
EXTRA – Oregon Health Forum – State officials demand release of Cascadia draft audit after weeks of resistance to make it public
EXTRA – Oregon Health Forum – Advocates, case managers grill Cascadia, county officials about mental health limbo
EXTRA РEmail from Derald Walker, CEO of Cascadia to all staff, June 11, 2008 РSubject: Multnomah County’s forensic audit
EXTRA – Statement Releasing the Preliminary Forensic Accounting Diagnosis of Cascadia, by LaVonne Griffin-Valade, County Auditor

Cascadia draft audit details disarray

Mental health – Multnomah County had resisted releasing the incomplete report

from the Oregonian, June 11, 2008

Multnomah County abruptly reversed course late Tuesday and released a draft audit of Cascadia, the struggling nonprofit responsible for mental health services to thousands.

Pressure on county officials to release the audit had been mounting since the near collapse and government bailout of the state’s largest caretaker of the mentally ill.

County Attorney Agnes Sowle said Tuesday that public interest in the audit now outweighed earlier concerns about releasing the incomplete report.

Earlier Tuesday state Sen. Avel Gordly demanded its release during a briefing on Cascadia Behavioral Healthcare before the Senate Health and Human Services Committee.

“The committee would like to see the document, because it’s public, and would like to see it as soon as possible,” Gordly said. “Like, within the next 24 hours.”

The audit report also had been requested by mental health advocates, who said they were seeking a more complete picture of why Cascadia failed.

“We all agreed that there was no longer the need to withhold the document,” said Auditor LaVonne Griffin-Valade, who oversaw the $40,000 independent forensic audit and made the decision to keep it under wraps. She was emotional while talking about the decision, which she described as a big mistake.

“I don’t want to seem obstructionist or not transparent because that is a primary concern of mine,” she said.

Griffin-Valade said she did not release the audit on the advice of the county attorney. She said she canceled the audit after the county received the financial information it required. She said she feared the draft document could contain errors.

Darrell D. Dorrell, the forensic accountant who led the audit, warned that the findings were not ready for publication, Griffin-Valade said.

While the May 2 draft report is already outdated and breaks little new ground, it adds some detail to what’s known about Cascadia’s deteriorating financial situation. It is the result of a two-week study of the nonprofit’s struggles and the prospects for stabilizing it. That information was supposed to be used by county officials to determine whether to intercede financially on behalf of Cascadia and to serve as a blueprint for future decision making.

The report says that Cascadia’s financial situation appears to have been deteriorating since 2005, and perhaps as far back as 2002, when it formed through the merger of three nonprofits. Significantly even as the company grew to a $60 million operation that dominated the local mental health market, its financial systems were never able to catch up, leaving it struggling to track daily cash flow and close out its year-end books. The financial problems were aggravated by high employee turnover, a change in the way it was paid for services, and delays in annual audits.

The report also details three years’ worth of board minutes suggesting that Cascadia’s longtime executives — led by former Chief Executive Officer Leslie Ford — may not have fully grasped the severity of the financial struggles or conveyed them to the board. The board, in response, appears to have rarely asked questions probing the information they were provided, according to the minutes.

In September, the board discussed a pay raise and bonuses for Ford. In December, the finances were still being presented with optimism. In February, the board was told that they were on the verge of securing yet another bank loan.

That changed in March following the arrival of a new chief financial officer who sounded the alarm as he began to unravel the company’s finances.

The board was told that Cascadia could not meet payroll without securing another advance from the county, one of at least nine that year. It also learned that it had been rejected for the bank loan, and a bookkeeping error put it another half-million in the red.