Wednesday, October 23, 2013
Following numerous attempts by the City of Garden Grove to reach an agreement with the Union of Vietnamese Students Association (UVSA) for the UVSA’s operation of the 2014 Tet Festival, UVSA representatives today rejected the City’s final proposal. As a result, the City has terminated all negotiations with the UVSA for a 2014 Tet Festival.
“We hoped to continue the positive partnership we had established with the UVSA, however, in light of their inadequate bookkeeping and lack of support for very worthy non-profit organizations in the Garden Grove community, we had a responsibility to ensure that a new agreement would be fair, and like any other contract, protect the City from any financial risks,” said Garden Grove Mayor Bruce A. Broadwater.
Severely deficient and overdue financial reports that leave significant revenues unaccounted for, along with a history of minimal proceeds contributed back to the Garden Grove community, prompted the City’s final proposal.
In a report written by Garden Grove Finance Director Kingsley Okereke, he states, “The current state of affairs (of the UVSA) paints a picture of an entity with a very dysfunctional financial operation, which in particular, has questionable accounting systems and practices that cannot be relied upon...”
Key points of the City’s proposal included:
· A one-year agreement to operate the Tet Festival.
· Payment to the City of $145,000 to cover direct and indirect costs by the City as a result of the Festival; the loss of use of Garden Grove Park (Festival venue) to the community; and benefits to the Garden Grove community.
· Additional provisions relating to financial procedures and compliance with state and federal financial reporting laws.
In addition to the three key points of the proposal, the City agreed to give the UVSA discretion as to which non-profits would receive Festival contributions, but the City would continue to require disclosure of those non-profits and the amounts donated by the UVSA to each organization.
Since 2002, the first year the UVSA conducted the Tet Festival in Garden Grove, the UVSA was required to provide an annual financial review to the City. Not until mid-2012 did the UVSA conduct the financial reviews for 2010, 2011, and 2012. Due to the UVSA’s lack of documentation provided to the CPA, on October 1, 2013, the three-year financial reviews were finally provided to the City.
According to Okereke’s report, the CPA’s three-year financial reviews showed “manifest disregard of basic bookkeeping principles and accounting practices.” This was of significant concern to the City when considering the UVSA’s festival proceeds amount to approximately $500,000 per year.
Other items detailed in the Finance Director’s report were transaction records appearing to be lost or never created; bank account records not being made available for review and appearing to not be reconciled regularly; no record of 1099’s being issued to UVSA “employees” who were paid as independent contractors, suggesting potential violation of labor laws and regulations; and disbursements to community non-profit groups not properly documented and distinguishable from payments to individuals.
In 2012, the Garden Grove City Council requested that all festival boards begin to pay a full cost recovery to the City. The City’s direct costs for the Tet Festival have exceeded $100,000 each year. In addition, the UVSA has provided only minimal support to Garden Grove-based non-profit organizations.
As a comparison, the Strawberry Festival Association provides approximately 85% of their proceeds directly to Garden Grove non-profits, with an overall benefit in 2012 of approximately $250,000 to Garden Grove–based non-profits. In 2012, the UVSA provided only 15% of their income to Garden Grove non-profit organizations and/or county-wide non-profits that support Garden Grove residents, or approximately $12,000.
During subsequent negotiations, the City Council held to the idea of reaching a mutually agreeable amount of proceeds returned to the Garden Grove community, however, the UVSA consistently failed to meet the City Council even halfway.
“We have a responsibility to this community to look out for the interests of our city first and foremost. Given the facts and potential consequences, we feel we’ve made the right decision. We’re sorry to see the festival move to another city, but we sincerely wish the UVSA well,” said Mayor Broadwater.