HomeMy WebLinkAboutMINUTES - 10242000 - C70 T4. Board of Supervisors `- Contra
FROM: Finance Committee Costa
Mark DeSaulnier, Chair
Joe Canciamilla County
DATE: October 24, 2000
SUBJECT: Countywide Single Audit for Fiscal Year 1998-1999
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)I BACKGROUND AND JuSTIFIUM N
Recommendations:
1. Accept the report on the Countywide Single Audit for fiscal year 1998-1999.
Backa round:
On October 18, 2000 the Finance Committee considered the report on the Countywide
Single Audit for fiscal year conducted by Macias, Gini, and Company. The audit of
federally financed programs operated by the County found no material weaknesses
involving internal controls. The County Administrator tracked and adequately reported
on the six corrective actions indicated in the audit, as well as two corrective actions in
the 1997-1998 fiscal year.
CONTINUED OR ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMIIE=ToF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON OCTOBER 24, 2000 APPROVED AAS RECOMMENDED X OTHER
VOTE OF SUPERVISORS i HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT
COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF
X UWWlM0U3(ABSENT
NONE THE BOARD OF SUPERVISORS ON THE DATE SHOWN.
)
AYES: S:
ABSENT: ABSTAIN:
Contact
Cc: CAO ATTESTED OCTOBER 24, 2000
Audita PHIL BATCHELOR,CLERK OF THE BOARD OFSUPERVISORS
BY: DEPUTY
C .
TO: BOARD OF SUPERVISORS Coni .
Costa
FROM: INTERNAL OPERATIONS COMMITTEE County
DATE: July 18, 2000 J'
SUBJECT: STATUS REPORT ON CORRECTIVE ACTIONS TAKEN BY THE ;+ r
EMPLOYMENT AND HUMAN SERVICES DEPARTMENT ;
TO DETECT AND PREVENT WELFARE FRAUD i q
SPECIFIC REQUEST($)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
1. ACKNOWLEDGE the efforts of the Employment and Human Services Department
(EHS) in the implementation of its Internal Security Plan, which specifies steps to be
taken to enhance and improve the internal security environment.
2. ACCEPT the attached status report on corrective actions taken by EHS to detect and
prevent theft of County funds relating to benefit issuance.
3. DIRECT the EHS Director to return to the Internal Operations Committee on November
13, 2000 with a follow-up report that addresses:
a. Identification of the individual who monitors system security access in the EHS,
and the process and criteria used to determine security access levels.
b. Review and verification of appropriate system security access for existing staff, in
addition to new staff.
c. Clarification of the levels of managers who will review program compliance and
security reports, and how accountability will be established.
d. Progress on the implementation of the Comprehensive 2"d Party Review Process for
welfare cases and transactions.
e. Use of random sampling of benefit issuances to enhance fraud detection efforts.
f. Clarification of the mandated Electronic Benefit Transfer (EBT) Process for food
CONTINUED ON ATTACHMENT:-_ X_.,YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR X RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
A14
SIG N ATURE(c):�
JOLE B. UIL A MARK DeSAULNIER
ACTION OF BOARD ON July 18 , 2000 APPROVE AS RECOMMENDED XX OTHER
VOTE OF SUPERVISORS i HEREBY CERTIFY THAT THIS 15 A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
XX UNANIMOUS(ABSEN'I #1 ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES. NOES: SHOWN.
ABSENT: ABSTAIN:
ATTESTED July 18 , 2000
CONTACT: JULIE ENEA (925)335-1077 PHIL BATCHELOR,CLERK OF THE
cc: INTERNAL OPERATIONS COMMITTEE STAFF BOARD OF SUPERVISORS AND
COUNTY ADMINISTRATOR COUNTY ADMINISTRATOR p.
EMPLOYMENT AND HUMAN SERVICES DIRECTOR
AUDITOR-CONTROLLER
Bbm� DEPUTY
Icz P
TO: INTERNAL OPERATIONS COMMITTEE Contra
FROM: PHIL BATCHELOR, County Administrator CostaCounty
DATE: September 27, 1999
SUBJECT: REFERRAL OF CHECK WRITING AUTHORIZATION AND
PETTY CASH PROCEDURES FROM THE BOARD OF SUPERVISORS
,.i
SPECIFIC REQUEST(S)OR RECOMMENDATION{S)&BACKGROUND AND JUSTIFICATION r
RECOMMENDATION:
RECEIVE report from the Employment and Human Services Director, Auditor-Controller and
County Administrator on:
actions taken by the Employment and Human Services Department following the filing
of fraud charges against two employees,
the check issuance procedures of all County departments, and
accounting procedures currently in place to prevent inappropriate use of petty cash
funds.
BACKGROUND:
On April b, 1999, the Board of Supervisors approved a report submitted by Supervisor
DeSaulnier that requested the Employment and Human Services Director to report on actions
taken by the Department following the filing of fraud charges against two employees and
directed the County Administrator and Auditor-Controller to review all processes for the
issuance of checks by County departments. This matter was referred to the Internal
Operations Committee for discussion, and was expanded by a request from Supervisor
Uilkema to include controls and accounting procedures related to the appropriate use of petty
cash funds. The Internal Operations Committee was to report back to the Board of
Supervisors in three to six months of the referral.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION ARD COMMITTEE
APPROVE OTHER 4/1
SIGNATURE(S):
ACTION OF BOARD ON APPROVE AS RECOMMENDED fl
I Q��
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
UNANIMOUS(ABSENT ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES: NOES: SHOWN.
ASSENT: ABSTAIN: ATTESTED
PHIL BATCHELOR,CLERK OF THE BOARD OF
CC: COUNTY ADMINISTRATOR SUPERVISORS AND COUNTY ADMINISTRATOR
EMPLOYMENT AND HU SERVICES DIRECTOR
AUDITOR-CONTR
BY DEPUTY
INTERNAL OPERATIONS COMMITTEE September 27, 1999
Welfare Fraud, Check Issuance, Petty Cash Page 2
Actions Taken by the Employment and Human Services Department Following the Filing of
Fraud Charges Against Two Employees. The Department continues to implement specific
actions as detailed in Its August 1998 Internal Security Plan,which specifies steps to be taken
to enhance and improve its internal security environment.
Specific actions that have been implemented include:
1. Restrict Access to Closed Cases on the Case Data System (CDS). The department has
implemented special programming changes on the CDS to restrict staff's computer
access to re-open cases or take any action on closed uses. This restriction will lower
the overall exposure to fraud and enable monitoring to be focused on open cases. To
further reduce exposure on open cases, the Internal Security and'Compliance Unit
monthly reviews selected open cases to identify any cases that should be closed.
2. The Internal Security and Compliance Unit monthly monitors payments and food
stamps issuances for fraud alerts. Examples of fraud alerts include out-of-County
addresses, multiple payments to the same payee, or matches between payee and
employee addresses. These fraud alerts do not necessarily indicate that fraud has
occurred, but are possible indicators of fraud that should be investigated. it was
through this monitoring process that the recent incidences of fraud were detected.
3. The Department has implemented second-level approval of emergency benefits that
requires supervisors to approve, on-line, emergency benefits (immediate Need
Warrants) submitted for issuance by caseworkers.
4. The Department has conducted a review of CDS security access and has reduced by
350 the number of employees with payment issuance access and/or ability to open
new cases,thereby reducing potential fraud exposure. The Department also identified
and removed 384 obsolete users from the system. Security standards have been
applied more uniformly, based on security clearance models that are consistent with
employees' duties and the security system is now being managed closely.
5. The Department has restricted caseworkers' ability to input or change their case
assignments on CDS to firmly establish accountability for cases, as assigned by
supervisors.
8. The Department implemented new programming to reliably record the user ID for CDS
transactions in order to establish an audit trail and provide for close monitoring of
transactions.
7. Can a temporary basis, the Department has continued limited use of a rubber
authorization stamp that enables recipients (an average ten per month) with
inadequate identification to cash a County Warrant. Use of the stamp is being
monitored until arrangements are made to suspend It permanently.
The Department continues to work on remaining objectives geared to improving and
enhancing internal financial security. These objectives include:
1. Expansion of the training curriculum for first-line supervisors to specifically address
internal security procedures, and the roles and responsibilities of supervisory staff in
monitoring, detecting and preventing internal fraud. This would include
reinforcement of the zero fraud tolerance policy and password confidentiality issues
through instructional memoranda and possibly an instructional video.
2. Formation of an Internal Security Committee comprising Department program
operations, auditing,fiscal and information technology department staff. The mission
of this Committee will be to provide liaison and technical support to assist the
department in establishing and maintaining a secure internal control environment
consistent with the Department's and County's zero fraud tolerance policy; and help
to promote employee accountability and uniform compliance with departmental,
INTERNAL OPERATIONS COMMITTEE September 2 7, 1999
Welfare Fraud, Check Issuance, Petty Cash Page 3
County, State and Federal policies and procedures.
3. The Department maintains as a key objective the development of a structured internal
review process of cases by supervisors. It is expected that supervisors will be held
accountable for performing and documenting this function, which would be
formalized in written guidelines.
4. The Department Is poised to implement a Fraud Hotline and has developed guidelines
for staff regarding referral protocol and confidentiality. The Department will consider
extending the Fraud Hotline to the County Home Page.
5. The Department is planning to augment internal security staff to increase detection and
deterrent capabilities, assist in targeted site reviews, and handle anticipated "hotline"
and other referrals.
6. The Internal Security and Compliance Unit continues to monitor through periodic on-
site audits, the distribution of warrants and ATPS (Authorizations to Purchase) within
district offices. On-site audits of other functions are planned n the future as staffing
increases.
7. Possible development, in the longer term, of added CDS programming and operational
changes that would require some level of second level approval of high-risk
transactions (such as vendor payments, payee name and address changes,
supplemental issuances, and edits on dollar limits). However, it is clear that these
modifications will require a significant financial investment for programming,
widespread organizational changes, and support of staff using CDS.
The County Auditor-Controller's Office has reviewed the Department's progress in addressing
control weaknesses identified in the 1996 Audit Report. While it appears the Department has
made much progress in limiting potential exposure and strengthening preventative controls,
significant improvement can be achieved only with the training and endorsement of
supervisory staff, and a re-definition of some job duties of staff. These steps take time. in the
interim, the Department continues to develop detective controls such as activity reports and
exception reports to flag unusual activity for administrative follow-up.
Check Issuance Procedures of All County Departments. Until 1994,the focus of the work by
the Auditor-Controller's Internal Audit Division was primarily on collections and the fiduciary
activities of County departments. Most of the at-risk disbursements were funded with federal
and state moneys and there were aggressive audit efforts by those agencies to monitor them.
These moneys were also audited annually by independent Certified Public Accountants.
Around 1994, the routine monitoring efforts by the federal and state agencies were
significantly reduced. In response,the County's Internal Audit Division specifically included
the examination of these disbursement activities it its scope of work. Major projects in this
area included the Community Services Department In 1994,the Social Service Department
in 1996 and the District Attorney (including Family Support) currently nearing completion.
Of course, the Division completed many other examinations during this time including
quarterly reviews of the Treasurer's accountability and annual reviews of the Treasurer's
financial controls and investment activities.
In response to the Board's direction, the Internal Audit Division will continue to emphasize
reviews of disbursement activities until all significant areas have been covered at lean,once.
However, because the risk of loss is at least as great for collection activities, once
disbursement activities have been reviewed,the Division plans to return to a comprehensive
program to include reviews of procedures and controls for all the of the County's financial
activity.
It is important to note that even with an on-going control evaluation program, absolute
immunity to fraud or embezzlement is not possible. Collusion by two or more dishonest staff
can defeat the best of controls. For example, the San Francisco Chronicle reported on
INTERNAL OPERATIONS COMMITTEE September 27, 1999
Welfare Fraud, Cheek Issuance, Petty trash Page 4
September 15, 1999 that workers in San Francisco's General Assistance Program are under
investigation by the district attorney's office and the Department of Human Services for
alleged welfare fraud. The Chronicle reported that, "It's one of those cases where one person
couldn't have been doing it alone." Investigators are looking into a scam in which a worker
or workers invented phony clients to get general assistance,the workers or their accomplices
then cashed the checks.
Accvuntin Procedures Currently in Place to Prevent Inappropriate Use of PettyCash Funds.
The Internal Audit Division reviews requests for fund increase and for relief of shortages. The
Division also performs an accounting of petty cash and a review of petty cash expenditures
when it does a departmental audit. Although there is no established County policy defining
appropriate purchases using petty cash, the Board of Supervisors specifies by Order
permissible uses when it authorizes each new petty cash fund. When reviewing petty cash
expenditures, auditors look for the purchase of items that should have been obtained from
Central Supply or through Purchasing and for inappropriate "gifts of public funds" such as
birthday cakes for employees, etc. The transactions of the Employment and Human Services
Department Immediate Need Imprest Fund are reviewed concurrently with public assistance
disbursements. Attached is a list of petty cash funds and their balances as of April 12, 1999
for information purposes.
ff
Pettye en a and 'ne e a d,100300
Account 4 Title Amount
0020-0004 Building Inspection Petty Cash 1,200.00
0020-0005 Probation Petty Cash 4,400.00
0020-0006 Policy and innovation Institute Petty Cash MOM
0020-0008 Sheriff-Coroner Petty Cash 2,615.00
0020-0009 Social Service Petty Cash 12,000.00
0020-0012 Public Works Petty Cash 3,640.00
0020-0013 Personnel Petty Cash 700.00
0020-0014 Agriculture Petty Cash 450.00
0020-0015 General Services Petty Cash 630.00
0020-0016 Treasurer-Tax Collector Petty Cash 425.00
0020-0017 County Counsel Petty Cash 50.00
0020-0019 County Administrator Petty Cash 100.00
0020-0023 County Clerk-Recorder Petty Cash and Cash Difference Fund 1,140.00
0020-0026 Office of Revenue Collections Petty Cash 150.00
0020-0027 Health Services Petty Cash 1,000.00
0020-0029 Community Development Petty Cash 175.00
0020-0032 Auditor-Controller Petty Cash 100.00
0020-0035 Community Services Petty Cash 1,500.00
0020-0037 District Attorney Petty Cash 6,550.00
0020-0039 Public Defender Petty Cash 1,000.00
0020-0041 Office of Emergency Services Petty Cash 100.00
0020-0042 Private Industry Council Petty Cash 400.00
0020-0043 Animal Services Petty Cash 950.00
0020-0044 Cooperative Extension Petty Cash 100.00
0020-0045 Veterans Resources Center Petry Cash 50.00
0020-0046 Assessor Petty Gash 100.00
0020-0049 Social Service Immediate Need Imprest Fund 300.000
Total $33 625.00
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t r Petty ' sb__Md Cash Differgnog Funds
Fund and Account# Title Asno=t
120600-0020 County Library Petty Cash $ 2,460.00
131100-0010 Treasurer-Tax Collector Cash Diff. Fund (3,364.80)
140100-0020 Airport Enterprise Petty Cash 400.00
141500-0020 Contra Costa Club Enterprise Petty Cash 50000
145000.0020 HospfW Enterprise petty Cash 28,30,00
248900-0020 County Service Area M-17 Petty Cash 1,5u0.00
265100-0020 County Service Area P-1 Petty Cash 4,000.00
276000-0020 County Service Arra.R-10 Petty Cash 1,500.00
499800-0018 WC/Danville Superior Court Petty Cash&Cash Diff. Fund 1,050.00
499800-0022 Bay Superior Court Petty Cash& Cash Diff.Fund 925.00
499800-0024 Mt. Diablo Superior Court Petty Cash & Cash Diff. Fund 1,530.00
499800-0025 County Clerk Petty Cash&Cash Diff.Fund 2,125.00
499800-0028 .Delta Superior Court Petty Cash&Cash Diff Fund 965.00
499800-0033 Superior Court Admin Petty Cash 300.00
499800-0036 Jury Commissioner Petty Cash 10.00
816100-0020-0048 Law Library Trust Petty Cash 150,00
Total I 42,370.20
Fund Title Amount
111800 Superior Courts S. 564.05
100300 Probation 17.45
100300 Health Services 72.26
100300 Social Service 15.29
100300 Treasurer-Tax Collector 99.60
120600 County Library .�. �
Total 1_ X47.20
Shortages were replenished during fiscal year 1997-98 in accordance with Government Code Section 29390.1.
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SOCIAL SERVICE DEPARTMENT conn cosTA couNTY
To: lack Cooper,Principal Auditor May 17, 1999
Internal Audit
From: Leslie Gutie cc: Jim Takahashi
Administra iv yst Marilyn Burress
Subj: Social Service Revolving Fund Accounts
Following is the information you requested regarding the Social Service Department's
Revolving Funds.
SOCIAL SER'V'ICE REVOLVING FUNIS
The Revolving Fund is a master account authorized by the Board of Supervisors and
administered by staff in the Social Service Fiscal Unit. The revolving fund includes
twelve petty cash accounts at eleven different locations,three postage due accounts, one
Verifications checking account, and an unassigned portion that is used to replenish the
other accounts. The current authorized amount in this fund is$12,000. Attached is a
listing of how the fund is assigned within the Department.
Disbursements from the petty cash accounts are authorized for advances to clients for
transportation,work-related ancillary expenses, and emergency expenses for Child
Welfare Services clients. Disbursements are also authorized for employees to purchase
food and incidentals for Department sponsored meetings with other agencies and
counties,for Job Workshops for CalWORKs and General Assistance clients, and for
department employee recognition events and training sessions. Occasionally petty cash is
used to purchase office supplies that are too small in cost to be purchased with a check
through the purchasing process. For example, a building key,special paper,etc.
The postage due accounts are used to prepay for postage at the local post office. Our
"Postage Paid-Business Reply"mail is charged against these accounts.
The Verifications checking account is used to pay for birth,death,and marriage
certificates requested by Eligibility and Child Welfare workers.
Emergency Bene,�t�Issuance System tEBIS)
The Emergency Welfare Revolving Fund Account is under the control of the County
Welfare Director for the purpose of generating emergency payments to clients receiving
Temporary Assistance for Needy Families (TANF) and General Assistance. The
inaximum amount of$300,000 was established by authorized action of the Board of
Supervisors in 1988. The County Welfare Director authorized the use of three
commercial checking accounts with balances of$100,000 at Wells Fargo Bank locations
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Page 2 of 2
in Pittsburg,Martinez and Richmond.The locations were selected to accommodate the
client and County Welfare Department's issues regarding transportation, issuance and
cashing of warrants within East, Central and West Contra Costa County. Currently,
warrants are initiated at each Social Services District office on the Case Data System
(CDS). The CDS entries are checked daily by department supervisors and forwarded to
Auditor-Controller and Social Services staff for reconciliation. The County Auditor-
Controller replenishes the fund based on the previous month's activity and reconciliation.
If you have any questions regarding this information,please feel free to give me a call at
ext. 3-1652.
H.RevfundUntAudme .doc
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CONTRA COSTA HEALTH SERVICES
Prep"by C.McHugh PrM CASH ACCOUNTS
Upd+ued. I$April 1999
TYPE OF
srm LOCATION H CHAN01 3T AL
AS3632 SFECIAL.CHILDREIr"S PROGRAK 2425 BISSO LANE 0284 CONCORD 370 S7C
ACCO /AD INl 0z 0 i
A 2#
ANTIOCH CHILDRXNS MEMITSM 2404 SYCAMORE OR.933 ANTI 30 $C
BRENTWOOD CLINIC I I8 OAK ST. BRENTWOOD SO 5C
BRENTWOOD CLINIC 118 OAK ST.,BRENMOOD 23 25
CCH? 395 CENTER AVE. MARTINEZ 163 165
CCHP-CONCORD POST OFFICE 20 ALLEN ST.,MARTINEZ SO SO
CCRMC-ADMISSIONS 25M ALHAMBRA AVE. MARTINEZ $0 SO
CENTRAL CO CHILDRENS MH 1026 OAK GROVE RD,911,CONCORD 30 50
CENTRAL CO MH CLINIC CONCORD 1424 WILLOW PASS RD. 9200 CONCORD 140 100
CHECKING ACCOUNT 20 ALLEN ST.,MARTINEZ 14.853 14,855
CLINICAL LAB•CCRMC 2500 ALHAMBRA AVE. MARTINEZ 30 SO
COMMUNITY SUBSTANCE ABUSE 39S CENTER AVE, MARTINEZ 6$ 65
CONCORD HEALTH CENTER 3052 WILLOW PASS CONCORD 2$ 25
CONSERVATORSHIP 624 FERRY sT. MARTINEZ 175 S00 67$
CONTRACTS AND GRANTS 597 CENTER AVE SUITE 2113 MTZ, 2S 23
DATA CENTER $9S CENTER AVE. MARTINEZ SO 50
DISCOVERY HOUSE 11 4639 PACHECO BLVD MARTINEZ 300 2,700 31000
W.ERGENC`<'MEDICAL SERVICES 50 GLACIER DR.,MARTINEZ 100 100
EPSDT Program(Esub.7197 2450 STANWELL DR 9274 CONCORD So 50
FAM!:Y PARTNERSHIP(formerly I3P 2450 STANWELL DF 0270 CONCORD 75 75
GEORGE MILLER EAST 3020 GRANT CONCORD 1001 100
GEORGE MILLER WEST 2801 ROBERT MILLER D&RICH 7$ 73
HOSPITAL ADMINISTRATION 2500 ALHAMBRA AVE, MARTINEZ 100 100
HOSPITAL k RESIDENTIAL SERVICES 2425 BISSO LANE STE 2311 CONCORD 50 so
HOSPITAL CAFETERIA 2500 ALHAMBRA AVE, MARTINEZ 1,500 1,500
INPT PSYCH ADMIWISTRATION 2727 ALHAMBRA 04 MARTINEZ 230 210
MARTINEZ POST OFFICE 20 ALLEN ST. MARTINEZ i 000 1.000
MEDICAL SOCIAL SERVICES 3727 ALHAMBRA 93 MARTINEZ 30 50
MENTAL HEALTH•ADULT 595 CENTER AVE,STE 200 MTZ ),$00 1,500
MENTAL HEALTH•CHJLDRENS 2450 STANWELL OR 9270 CONCORD 1 500 t 300
MENIAL HEALTH ADMINISTRATION 595 CENTER AVE.,MARTINEZ 17$ 175
MH Crisis Services PES 2500 ALHAMBRA AVE. MARTINEZ 200 200
NURSING ADMINISTRATION 2500 ALHAMBRA AVE, MARTINEZ 50 14
NUTRITIONAL SERVICES 2300 ALHAMBRA AVE MARTINEZ 200 200
OP PHARMACY-CCRMC 2500 ALHAMBRA AVE. MARTINEZ 100 100
PATIENT ACCOUNTING $95 CENTER AVE.,MARTINEZ I00 100
PERSONNEL 597 CENTER AVE. SUITE 260 MTZ 100 I00
PITTSBURG HEALTH CLINIC 550 SCHOOL ST. PITTSBURG 100 100
PITT5 EAST CO MENTAL HEALTH 350 SCHOOL ST. PITTSBURG 30 SO
PITTSB'..'RC POST OFFICE 20 ALLEN ST. MARTINEZ 1:5 12$
PITTSBURG REGISTRATION $50 SCHOOL ST.,PITTSBURG 100 100
REHABILITATION THERAPY UW ALHAMBRA,MARTINEZ 70 70
RJCHMOND HEALTH CLINIC 10048TH ST.,RJCHMOND 100 100
RJCHMOND HEALTH CLINIC 100.311TH ST.,RJCKMOND SO SO
RICHMOND MENTAL HEALTH ADMIN 100.38TH ST,92400 RICHMOND 320 320
PUCHMOND O/P REGISTRATION 100-39TH ST.,RICHMOND 30 30
RJCHMOND POST OFFICE 20 ALLEN ST.,MARTINEZ 200 200
SOJOURN£CLINIC 3029 MACDONALD SUITE 102 RICHMOND 100 I00
SPECIALTY CENTER 2500 ALHAMBRA AVE.,MARTINEZ 30 30
SUMMIT CENTER (Estab,7197 204 GLACIER DPL.MARTINEZ 100 100
TRI-CITIES DISCOVERY CENTER 2386 APPIAN WAY PINOLE 30 50
VOLUNTEER SERVICES 2300 ALHAMBRA MARTINEZ 20 20
WkST%X OLDER ADULT CL 11720 SAN PABLO A 1'sL CERRITO 54J SO
WEST CO,CHILDRENS MH 303 41 ST STREET RICHMOND s0 30
"TOTAL
Authatixed Balance per AuditavCoatolla
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0mages
Overage Fund 810900
Account# Title Amount
OF 5000209 Office of Revenue Collections $ 238.92
OF 5000210 Mt. Diablo Superior Court 562.74
OF 5000211 Bay Superior Court 223.16
OF 5000214 Walnut Creek-Danville Superior Court 794.91
OF 5000215 Delta Superior Court 1,270.72
OF 5000355 County Clerk-Recorder 512.41
OF 5000366 Aminal Services 33.83
OF 5400373 Clerk's 342.36
OF 5000374 Building Inspection 33.21
OF 5000377 Hospital Pharmacy 12.16
Total $ 4.024.42
Overages were transferred to General Fund Revenue on August 4, 1998 as required by Government Code Section
29380.1.
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WELFARE FRAUD PREVENTION JULY 18, 2000
PAGE 2
stamp issuances, and an evaluation of the option for using EBT for cash issuances
and related effects on security.
f. Verification that new check stock is being used for Imprest Fund disbursements.
4. DIRECT the EHS Director to take the necessary actions to immediately implement the
Welfare Fraud Hotline, and to work with County Counsel to ensure that proper
protocols are developed to ensure confidentiality and promote use of the Hotline.
BACKGROUND:
On April 6, 1999, the Board of Supervisors referred to our Committee the issue of the theft
of funds from the EHS (formerly Social Service Department), which had recently taken place.
This referral was expanded to include concerns that had been expressed regarding the size
and number of petty cash funds which are in existence in the County, particularly the
Immediate Need Imprest Fund.
The 1999 Committee received and reviewed the attached reports dated September 27, 1999
and October 11, 1999 from staff. Based on its discussions, the Committee reported back to
the Board the theft of funds portion of the referral on October 5, 1999. We are now satisfied
that the Imprest Fund has been made as secure as is realistically possible, given the $1000
limit on checks and the need for two signatures on checks. The Auditor-Controller advised
us that he believes there are adequate controls on the use of the remaining petty cash funds
and we concur with that assessment.
The Board of Supervisors referred to the 2000 Internal Operations Committee the monitoring
of actions taken by EHS following the filing of fraud charges against two County employees,
and on County check issuance procedures and administration of petty cash funds. Our
Committee received a status report, attached, from EHS on June 26, 2000, that raised
additional questions and concerns. We have, therefore, asked EHS staff to return with a
follow-up report that addresses these questions and concerns.
We are also recommending that the proposed Welfare Fraud Hotline be immediately
established by EHS as a further means to deter and/or detect welfare fraud.
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Employment &.Human Services June 20, 2000
10C Status Report
2000 IOC Committee Status Report:
Steps Taken Since October 1999 to Detect/Prevent 'Theft of County
Funds Relating to Benefit Issuance
Since our previous report to the Committee, EHS has continued to work on a
series of goals, strategies and actions to improve intemal financial security and
increase fraud detection and monitoring capabilities. Our fundamental mission is
that we significantly lower the County's risk and exposure to internal fraud, and
meet our Federal, State and County program mandates. The following is a
summary of the steps taken,since the last IOC report in October 1999:
1. Maintain and Control Employees' Access to Computer Systems (CDS and
GIS) For Issuing Benefits:
EHS continues to closely monitor and control.security access levels assigned to
employees using the CDS/GIS computer systems. Without this basic entry
point of control, any other preventive measures would be diminished.
Currently, there are approximately 1,500 system users, with varying levels of
access.
Our standard for assigning (and deleting) security clearances is based on
matching access with the employees' job functions. Despite many new
program mandates in the last year, and changing job functions, the Department
has maintained a benchmark level of employee classifications assigned
sensitive monetary access on CDS/CIS. No new job classifications have been
assigned payment access, as a result.
2. Comprehensive Second Party Review process for welfare cases and
transactions:
After reassessing our control and organizational environment, we have again
concluded that it not reasonable or cost effective to fully segregate the cash aid
and food stamp issuance functions on CDS. While this would be an ideal
preventive measure, our operating environment presents special challenges that
require more innovative solutions. The Department maintains approximately
10,000 active welfare cases, and issues approximately 18,000 checks and
11,000 food stamps on CDS monthly, and approximately 4,000 checks on GIS.
On these cases, there are approximately 1,700 routine payee (client and/or
vendor) name changes, and 1,900 address changes occurring monthly.
Because of the volume and variety of transactions processed daily and
monthly, together with our mandate for timely service delivery, the
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Employment & Human Services June 20, 2000
10C Status Report
Department is not positioned to reorganize and increase staff for full
segregation.
Where we could fully segregate, as in the GIS Child Care, and CDS Immediate
Need payment functions, we have done so in the last year. For the other
remaining CDS issuances and transactions, however, we have concluded that it
is more reasonable and cost effective to focus on implementing an effective
Second Party Review process that involves unit supervisors, as well as
managers, a Corrective Action group, an independent Quality Assurance group
performing targeted reviews, and Internal Security staff's input., T'he multi
purpose focus will be to.
• Monitor program integrity and compliance
• Increase employee accountability and identify training needs and
performance issues
• Complement ongoing fraud detection/deterrent efforts
Since the last IOC report, we have developed a general model, but considerable
work remains to design the details for implementation. The reviews will cover
CDS and GIS benefit issuances, and transportation and ancillary payments. (A
process already exists for the Child Care function.) Our plan requires:
• Supervisors regularly review a systematic sample and minimum
number of welfare cases, transactions, and reports to assess pre-
defined program compliance and security issues.
• Full management reporting of review results.
• A formalized Corrective Action Process that is responsive and
effective, and includes proper follow-up to identify needed reforms,
increased training and other issues.
• Developing a new Quality Assurance 'Unit to perform targeted
reviews, based on corrective action and other issues.
• Creating an interface with supervisors, managers, Quality
Assurance, Quality Control and Internal Security.
Most recently, the Department assembled a work group of managers charged with
further developing, during the next 6-8 months, detailed policies and procedures
covering this Second Party Review process. We will also be involving EHS
Human Resources and Staff Development. Decisions will be made regarding how
best to select transactions and cases for review, and the number, variety and
frequency of transactions to be reviewed.
3
Employment & Human Services June 20, 2000
IOC Status Report
3. Expansion of the training curriculum for first-line supervisors to address
both program compliance and security issues:
As soon as the Second Party Review process is designed, we will involve our
EHS Staff Development Unit in devising comprehensive training for
supervisors and other employees.
In the meantime, a number of employees have attended a variety of program
and system training sessions, conducted by Staff Development, which have
included training on acceptable standards for computer password usage and
confidentiality, and proper sip on and off of computers.
A training session specifically relating to fraud prevention and detection is
planned for August 2000.
4. Formation of an Internal Security Committee:
In 1999, EHS proposed creating a "Security Committee" as an avenue to
promote and implement enhancements. S'ince the last IOC report, the
Department's alternative strategy has been to assemble a specialized work
group of managers that focuses on the design for a broad Second Party Review
process (referenced in above item#2).
5. Fraud Hotline:
EHS has not implemented this tool, as yet, in order to focus resources on other
key issues, such as the Second Party Review issue and fraud alert monitoring.
We are holding this as a future action item.
6. Augment Internal Security Staff:
The Board recently approved two added positions: one Fiscal Compliance
Accountant and one Accounting Technician that we will fill this year. With
this added staff, we hope to increase the number of targeted internal reviews.
EHS has also realigned its Quality Control and Special Projects functions.
These units now report to the Administrative Services Bureau Division, also
focusing on Internal Security/Compliance/Accountability issues. Our goal is to
develop, later this year, an independent quality assurance group to conduct
focused reviews, and interface with Internal Security and the Second Party
Review Process.
4
Employment & Human Services June 20, 2000
10C Status Report
7. Ongoing and New Fraud Monitoring Tools:
The Department has continued to create new automated reports to alert for
possible fraud. These reports are generated on an ad hoc basis from CDS/GIS,
and by using separate database software to query and review select
transactions.
The focus continues on monitoring high-risk transactions, including payee
changes, some types of supplemental and vendor payments, and case status
changes. As transactions are identified, Internal Security reviews the cases on-
line, and as necessary, reviews paper case files for transaction validity. The
development of more and enhanced monitoring tools will continue as a long-
term project.
In the last six months, HHS has obtained necessary approvals and procured
from the Oracle Corporation an "enterprise database" software system to
warehouse and extract data, from CDS/GIS, the Child Welfare system
(CWS/CMS) and from other sources, to be used for a variety of management
and fiscal reporting purposes. Expected implementation of the fraud
component is early 2001. In the meantime, EHS will continue using its existing
software database for fraud detection and monitoring.
Since the last IOC report, Internal Security has met quarterly with other
proactive northern and southern counties to share ideas for fraud detection and
prevention. State fraud representatives have joined in some of these meetings.
This sharing has also helped increase support for proposed security
enhancements for the planned replacement for CDS/GIS, referred to as the
CalWIN system(see item# 10 below).
Currently, we are aware of four other counties in the State that have established
full time Internal Security Units, while other counties continue to explore this
issue. During this year, both Alameda and Solano counties have visited our
Department to obtain information and ideas on starting their own Internal
Security Units.
The most recent quarterly meeting, attended in May, focused on "Background
Clearance" methods involving all new and existing employees. As a result, we
are studying the information gained and methods employed, with the intention
of revaluating our current process.
5
r.
Employment & Human Services June 20, 2000
IOC Status Report
S. Internal Compliance and Control Reviews:
In the fourth quarter of 1999, the Department's Internal Security staff
performed an internal control review covering two disbursement functions:
1) Hand distributed checks and food stamps and 2) Child Welfare service
payments. Additional reviews are planned in other areas, particularly as staff
positions are filled.
9. New Preventive GIS Controls and Improved Audit Trail:
The Department has purchased from EDS, the system vendor, significant GIS
security programming especially designed for our County. Installation of this
package: l) effectively segregates the payment function for Child Care
supportive services and 2) improves system audit trail reliability for all
supportive service payments (child care, transportation and ancillary) under
CalWQRKS/Welfare to Work programs.
With this programming, we have a reliable on-line audit trail that documents
employee accountability for authorization and issuance of payments issued on
GIS. Included is a feature to limit computer access to caseloads, based on job
functionality. Installation and testing is scheduled for completion in July 2000.
The .Department also proposed to EDS development of a feature for on-line
second level approval of selected high-risk transactions. The cost estimates
returned were high, but more problematic, was the expected, protracted
development period as EDS is now focusing its programming resources on the
replacement, CalWIN. Rather than pursue this path with CDS/GIS, the
Department elected to focus on promoting security enhancements for the new
CaIWIN system, such as automatically examining cases for high-risk
characteristics and flagging them to require supervisory approval and/or closer
monitoring. The Department and other counties are currently providing input,
in formal work groups, to the EDS project planning team. (See#10 below.)
By the year 2002, California counties are federally mandated to implement the
Electronic Benefit Transfer (EBT) process for food stamp issuances, and have
the option to also use this process for cash aid disbursements. The mandate,
and the County's decision on the cash aid option, will have security impacts
that remain to be evaluated and addressed. A preliminary review suggests that
the EBT processing of cash aid, in particular, could present an opportunity to
further control the disbursement function.
6
Employment & Human Services June 20, 2000
IOC Status Report
10. Future replacement of the CDS/GIS Systems and New Preventive
Controls:
The CDS/GIS systems are scheduled to be replaced by CalWIN, in year 2003.
Our County, along with the 17 other California counties in the consortium, will
be using CalWIN for welfare case management and benefit and supportive
service payment issuances. CaIWIN is currently under development and some
counties are formally participating in this process, including Contra Costa
County's EHS. For instance, there are 8 counties assigned to help plan
CaIWIN's Internal Security features, with our County included. Our Internal
Security staff participated in the Planning Phase just concluded this,month.
We have advocated for new security design features including "field level"
security on computer screens to increase segregation, an improved audit trail,
and extensive ad hoc reporting capabilities. One of the most significant
features recently included in the system plan is flexibility, at county option, to
require on-line supervisory approval of designated high-risk transactions. This
is a significant enhancement that would open more opportunities to EHS, in the
long term, to increase segregation and further lower risk and exposure. We
will be providing continued input in the next, Design phase in August.
11.Imprest Fund for Immediate Need Checks:
In response to the issue raised in the October 1999 report to the Committee,
EHS has ordered new check stock that deletes any references to dollar
limitations.
7
r•
TO. BOARD OF SUPERVISORSCONTR
{COSTA
FROM: INTERNAL OPERATIONS COMMITTEE COUNT
DATE: October 11, 1999
SUBJECT: CHECK WRITING AUTHORIZATION AND PETTY CASH PROCEDURES
WIEC.FK:R&WnT(3)OR ft00MMV0AT9"Si a SACKOROUND AND JUSTIMCATION
Recommendation:
1. ACCEPT the attached report from the County Administrator's Office dated October 11, 1999,
which summarizes information provided by the Auditor-Controller's Office and the Employmeni
and Human Services Department, of several issues on which we had requested additional
information.
2. ACCEPT the attached report from the County Administrator's Office dated September 27, 1999,
which summarizes information provided by the Auditor-Controller's Office and the Employment
and Human Services Department having to do with the theft prevention measures which have
been taken by the County and which addresses the use of petty cash by County departments.
3. AGREE with the steps which been taken to date, as outlined in the attached reports, to prevent
the misuse of the Employment and Human Services Department's Imprest Fund, including leaving
in place the$1000 maximum for which an Imprest Fund check can be written, but concur with the
recommendation that the maximum dollar amount be removed from the printed checks.
4. REMOVE this item as a referral to the 1999 Internal Operations Committee.
Backaround�
On April 6, 1999, the Board of Supervisors referred to our Committee the issue of the theft of funds from
the Employment and Human Services Department (formerly Social Service Department) which had
recently taken place. This referral was expanded to include concerns which had been expressed
regarding the size and number of petty cash funds which are in existence in the County, particularly the
Immediate Need Imprest Fund.
CONTINUED ON ATTACHMENT. I YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMMME
APPROVE OTHER
AA
r
SIGNATU S'
ACTION OF BOARD ON C iOb�t 1 APPROVED AS PP
9MMENDED_= OTHE
VOTE OF SUPERVISORS
I HEREBY C THAT TM 18 A TRUE
XX UNANIMOUS(ABSENT Y T Y I AND CT COPY OF AN ACTION TAKEN
AYES. NOES:_ _--- ENTERED ON MINUTES OF THE BOARD
ASSENT:, �„� ABSTAIN-- .,,., OF SUPERVISORS ON TM DATE SHOWN.
p.
Ce>rrt :
cc: Cwrdy Administrator ATTESTED QC tober 194 1999-
Audkor-C Ier PHIL BATCHELOR,CLERK OF THE BOARD OF
Director,E Hunan Servion Deptrt rwd SUPERVISORS AND COUNTY"ADMINISTRATOR
Jute Er", Deputy C*unty A*rkAftW
BY DEPUTY
Our Committee has received and reviewed the attached September 27, 1999 report from staff, Basec
on our discussion at that meeting, we reported back the theft of funds portion of the referral on October
5, 1999. We still had several questions about the petty cash funds and particularly the security of the
Imprest Fund, which consists of three $100,000 bank accounts in the three major areas of the County
which the Employment and Human Services Department staff use to meet the immediate needs of their
clients.
The attached October 11, 1999 report from staff responds to the questions we raised at our September
97 1 PCIc, meeting. We have met with the Auditor-Controller, members of his staff and the staff of the
Employment and Human Services Department and the County Administrator's Office. We are now
satisfied that the Imprest Fund has been made as secure as is realistically possible, given the $1000
limit on checks and the need for two signatures on checks. We do agree with the recommendation that
the fact that there is a$1000 limit on the checks be removed from the face of the checks since this may
actually encourage someone who wants to steal money from the County to write a series of $999
checks, knowing there is less likelihood of their being detected up front,
We are advised by the Auditor-Controller that he believes there are adequate controls on the use of the
remaining petty cash funds and we are prepared to concur with that assessment.
r.
2
r i j ■r �i
C ontr
TO: INTERNAL OPERATIONS COMMITTEE
Cot
FROM: PHIL BATCHELOR, County Administrator Count
DATE: October 11, 1999 _
SUBJECT: FOLLOW-UP REPORT ON CHECK WRITING AUTHORIZATION
AND PETTY CASH PROCEDURES
SPECIFIC REQUEST(S)OR RECOMMENDATIONS)&BACKGROUND AND JUSTIFICATION r
RECOMMENDATION:
RECEIVE follow-up report from the Employment and Human Services (EHS) Director, Auditor-
Controller and County Administrator on the following issues raised by the Internal Operations
Committee:
=> Placing additional controls on Imprest Fund disbursements including:
• A dollar cap on the check amount,to be controlled by the banking institution, and
• Multiple signatures on checks exceeding a pre-determined amount.
Additional recommendations for strengthening controls on petty cash expenditures, particularly
in relation to the Social Service Imprest Fund.
Update on possible utilization by EHS of an Oracle product to enhance fraud monitoring and
protection.
BACKGROUND:
At is September 27, 1999 meeting,the Internal Operations Committee received and accepted a status
report from the EHS Department, Auditor-Controller and County Administrator on actions
CONTINUED ON ATTACHMENT. Y YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR _RECOMMENDA-n BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S)-.
ACTION OF BOARD ON APPROVE AS RECOMMENDED OTHER
r /
VOTE OF SUPERVISORS EBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
UNANIMOUS(ABSENT ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE[SATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN: t,
CONTACT:)UUE ENEA(925)355-1077 ATT7:5'rEC!PHIL BATCHELOR,CLERK OF TME 60ARD
OF SUPERVISORS AND COUNTY
ADMINISTRATOR
CC: COUNTY ADMINiSTRA
AUDITOR•CONTR
EMPLOYMENT HUMAN SERVICES DIRECTOR
BY DEPUTY
a
INTERNAL OPERATIONS COMMITTEE October 11, 1999
Welfare Fraud, Check Issuance, Petty Crash Page 2
taken following the filing of fraud charges against two County employees, County check issuance
procedures and administration of petty cash funds. The Committee decided to recommend that the
Board of Supervisors refer these issues to the Year 2000 1/0 Committee for follow-up in six months.
However, the Committee asked for a follow-up response to several issues that arose during the
discussion on the 27".
Additional Controls on Imprest Fund Disbursements
Dollar Limits. A few years ago, EHS arranged with Wells Fargo Bank to have a limit on the amount
of each immediate Need check of$1,000 that is still in effect and is valid based on current statutory
welfare aid payment amounts. This limit is stated on the checks.
Multiple Signatures. Since.the last discussion,we learned that disbursements from the Imprest Funds
are not hand-written, but computer-generated checks using EHS's Case Data System (CDS). The EHS
Director's signature is stamped on the printed checks. However,the real approval "signatures" are
electronic, recorded in the CDS. The two required signatures are the caseworker who initiates the
transaction and the worker's supervisor, who approves it.
Additional Recommendations for Strengthening Controls on Petty Cash Expenditures
As a refinement to the dollar limit on each check, it is recommended that this limit should be known
to appropriate EHS personnel but not printed on the checks. Printing the limit on the checks will tell
potential check forgers the maximum amount they could write checks for, without the checks being
rejected by the bank.
Regarding revolving/imprest funds in general, we believe the existing policies and controls at each
department and the monitoring efforts by the Auditor-Controller represent an appropriate balance
between the risk of loss, amount of exposure and the cost of the controls and monitoring efforts.
Adequate detective controls are in place that would likely discover any substantial misappropriation
of funds. History has shown that employees are unlikely to risk loss of job and criminal sanctions to
misappropriate small amounts when they are likely to be discovered.
Update on EHS's Utilization of an Oracle Product to Enhance Fraud Monitoring and Protection
EHS is currently negotiating costs and services with Oracle Corporation to procure an "enterprise
database system" to extract and analyze data from mainframe systems, such as CDS, and other
sources. The Oracle product will essentially replace, consolidate and enhance databases now in use,
including Microsoft Access. After appropriate approvals and funding are obtained, and
implementation follows, this system will provide information retrieval tools to support management
and regulatory reporting and fiscal requirements under the CalWORKS (CDS/Gl5) and Child Welfare
(CWS) programs. There will be other significant departmental uses, including fraud detection and
prevention.
After negotiations conclude sometime this month, EHS will submit an "Advanced Planning
Document" to the State requesting funding; approval Is expected to follow by November. EHS
estimates installation of the fraud component by June 2000. This timetable will allow for technical
conversion and testing, and training of staff. In the meantime, EHS will continue to use its existing
Access database for fraud detection and monitoring.
r.
` OFFICE OF THE COUNTY ADMINISTRATOR
CONTRA COSTA COUNTY
Administration Building
651 Pine Street, 11 th Floor
Martinez, California
[TATE: July 31, 2000
TO: FINANCE COMMITTEE
FROM: PHIL BATCH E L(3-k,'County Administrator
SUBJECT: COUNTYWIDE SINGLE AUDIT FOR THE FISCAL YEAR
ENDING JUNE 30, 1999
On November 8, 1999, the Board established a policy and procedure for addressing the
annual findings and recommendations of the County's external auditors. The new procedure
directs that the Board refer the annual Single Audit findings to the Finance Committee, and
that the County Administrator make a report to the Finance Committee on the current- and
prior-year audit findings and recommendations that identifies what corrective action has been
taken or is planned to be taken on each recommendation. Inasmuch as the current year
Single Audit report encompasses all unresolved or pending audit issues from prior-year audits,
this report responds directly to the current-year Single Audit report (FY ending June 30, 1999,
excerpts attached for reference).
Please note that the external auditors found no instances of noncompliance or material
weaknesses involving internal control that are required to be reported under Government
Auditing Standards. The auditors did, however, find instances of noncompliance with OMB
Circular A-133, which is applicable to federal programs, that are required to be reported. The
auditor expressed the opinion that these compliance and internal control issues are
"reportable" but not "material" weaknesses. On the whole, the 1999 Single Audit report
reflected very positively on the County.
Following are the auditor's recommendations and the corrective action we have either taken
or plan to take on each recommendation.
CURRENT-YEAR ISSUES
Finding 99-1: Supportive Housing Program
Recommendation: The Health Services Department should establish and implement
formal subrecipient monitoring procedures. Performance of such procedures should be
evidenced through documentation.
Corrective Action: The results of all monitoring activities are nbw archived and available
for review at the Homeless Program office along with all appropriate supporting
Finance Committee 07/31/00
Page 2 Countywide Single Audit Follow-up
documentation. Documents on file now include client record reviews, site compliance
with safety policies, shelter conditions and operations, client satisfaction surveys, statistical
reports from service providers and payment dernands.
s Finding 99-2: Supportive Housing Program
Recommendation: The Health Services Department was unable to locate documents
supporting the financial data contained in the Grantee Annual Report. The Department
should maintain all records relating to the preparation of the Grantee Annual Report.
Corrective Action: In addition to the document copies used by the County program staff
to prepare the Grantee Annual Report (HUD-40118), a duplicate set of all documents are
now maintained by the Public Health accounting office staff in their files located at 20
Allen Street.
♦ Finding 99-3: Head Start Program
Recommendation: Parties responsible for contract negotiations at the County should be
made aware of projects funded through federal awards and the related compliance
requirements.
Corrective Action: The Community Services Department will include the source of
funding in the documentation for each project submitted to the General Services
Department for bid.
r Finding 99A: Block Grants for Prevention and Treatment of Substance Abuse
Recommendation. The County should establish procedures to ensure that required annual
site visits of all subrecipients are performed. If adequate staffing is not available, the
County should consider engaging an outside consultant to perform these visits.
Corrective Action: The Community Substance Abuse Program Director was not consulted
by the external auditor before the audit report was published and does not completely
agree with the report. The Director has indicated that staffing for the Community
Substance Abuse Program is adequate and that the reason two out of ten programs did not
receive an annual site visit was due to the failure of one of the program managers to visit
the programs in a timely manner. This issue is being addressed as an employee
performance issue.
Finance Committee 07/31/00
Page 3 Countywide Single Audit Follow-up
® Finding 99-5: Temporary Assistance to weedy Families
Recommendation: Due to caseload constraints, the Employment and Human Services
Department should hire sufficient staff in order to property monitor all Welfare-to-Work
participants. The Department should provide proper training to new staff and reinforce
policies and procedures to existing staff. Supervisors should receive continued training
in monitoring staff for performance issues.
Corrective Action: While the vast majority of CalWORKS clients with a Welfare-to-Work
requirement receive timely services, there are pervasive operational impacts within the
Workforce Services Bureau that adversely affect the continuous and timely provision of
these services during intermittent periods for a relatively few number of clients. These
impacts are the result of continuous staff changes within the Bureau, and the Bureau's
inability to address these changes and timely fill vacancies (Employment Services
Specialists). This situation is exacerbated by limits placed on the number of cases that can
be assigned to each staff member.
To meet this challenge, the Workforce Services Bureau continues to employ a number of
solutions including authorizing overtime as well as creative methods for caseload
reassignments.
e Finding 99-6: Child Support Enforcement
Recommendation: The County should recalculate the recoupment allocation among
sponsoring agencies for the other eleven months of fiscal year ended June 30, 1999. Also,
we recommend that procedures be strengthened and that staff receives training to avoid
similar errors in the future.
Corrective Action: The CS-600 report allocates the welfare recoupment among the
Federal, State and County governments according to fixed recoupment percentages. D.A.
Family Support Division (DAFSD) prepares the report and submits it to the State and the
County Auditor's Office. The Auditor's Office then prepares a journal voucher that
transfers the amounts accordingly. The State makes its own calculation and uses it to
determine the amount to transfer to the County. in the case of differing amounts, the
Auditor's Office issues correcting journal vouchers based upon the State's calculations.
In the past, the DAFSD figures have exactly matched the state figures. Beginning in April
1999, however, the figures have not matched. The discrepancies can be attributed to a
change by the State in the accounting for excess and pass-on amounts. Prior to April
1999, these amounts were not offset against recoupment Beginning April 1999, however,
the State apparently began offsetting these amounts against recoupment. Contra Costa and
several other counties did not immediately recognize and adjust for the change in the
calculation formula, thus resulting in a discrepancy in the allocation amongst the various
agencies.
Finance Committee 07/31/00
Page 4 Countywide Single Audit Follow-up
Upon learning of the change in the calculation formula, the DAFSD staff adjusted the
County's formulas to match the State's, which should prevent future discrepancies.
PRIOR-YEAR ISSUES
♦ Finding 96-1: Head Start Program
Issue: During the County's normal subrecipient monitoring process, the County identified
questioned expenditures by one of its subrecipients. Concurrently, the Inspector General
began an investigation of this same subrecipient to ascertain the total dollar value of the
questioned expenditures.
Status: The Office of the Inspector General has informed the County that the investigation
has been completed and the case has been closed.
♦ Finding-98-1: Temporary Assistance to Needy Families
Issue: On April 23, 1996, the County's Auditor-Controller's Office issued a report that
identified weaknesses in the Social Service Department's check issuance, and case
management systems and procedures. In response, the Department developed an internal
control plan (the Plan), an evolving documentation of the Department's goals and
strategies for strengthening internal controls.
During March 1999, the Department discovered that two of its eligibility workers were
embezzling special needs assistance funds. Despite the Plan, special needs assistance
payments were issued through the Case Data System in limited internal controls.
Eligibility workers had both duties and computer access that were not offset with proper
checks and balances.
The external auditor recommended that the Department complete and implement its
internal control plan and that a monitoring program be developed to ensure that the plan
is implemented properly.
Status: EHS has continued to work on a series of goals, strategies and actions to improve
internal financial security and increase fraud detection and monitoring capabilities. Its
fundamental mission is to significantly lower the County's risk and exposure to internal
fraud, and to meet Federal, State and County program mandates. EHS made several
reports, attached for reference, on corrective actions to the Internal Operations
Committee, which continues to monitor this issue.
COUNTY OF CONTRA COSTA
Schedule of Findings and Questioned Costs (Continued)
Year Ended June 30, 1999
Section I Summary of Auditor's Results (Continued)
Dollar threshold used to distinguish between type A and
type B programs: $3,000,000 �.
Auditee qualified as a low-risk auditee? Yes
Section II Financial Statement Findings
No matters were reported.
Section III Federal Award Findings and Questioned Costs
j Finding 99-1 U.S.DEPARTMENT OF HOUSING.AND URBAN DEVELOPMENT
Supportive Rousing Program,CFDA Number 14.235
Administered by the Contra Costa Health Services
Criteria Under the subrecipient monitoring guidelines, a grantee that passes federal awards
through to subrecipients is required to monitor the subrecipients' activities to
provide reasonable assurance that the subrecipient administers federal awards in
compliance with federal requirements.
Condition During our discussions with management and testing of the program,we noted that
there was no formal documentation available for review supporting the County's
subrecipient monitoring activities
Context Although the County has procedures in place to monitor subrecipient activities,
there is no evidence maintained that documents that those procedures were
performed.
Effect Without proper documentation to support monitoring activities there is no
evidence to support whether or not the subrecipient is in compliance with federal
requirements.
Recommendation The Health Services Department should establish and implement formal
subrecipient monitoring procedures. Performance of such procedures should be
evidenced through documentation.
Management's The Health Services Department has developed a plan to address its monitoring of
Response subrecipients, and is in the process of implementation.
COUNTY OF CONTRA COSTA
Schedule of Findings and Questioned Costs (Continued)
Year Ended June 30, 1999
Section III Federal Award Findings and Questioned Costs (Continued)
Finding 99-2 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
` Supportive Housing Program,CFDA Number 14.235
Administered by the Contra Costa Health Services
Criteria Under the reporting requirements, the grantee is required to submit a Grantee
Annual Report (HUD-40118) (the Report) 60 days after the close of its operating
year. The auditor is expected to test the financial data of this report in Part I —
Exhibit 3,Part II—Exhibit 7, and Part H—Exhibit 8,
Condition The County was unable to locate or provide support for the financial data
contained in the Report.
Context We were unable to reconcile the financial records examined during our audit to the
financial information contained in the Report, as this documentation was
unavailable for review.
'( Effect We were unable to determine if the financial information contained in the Report
is accurate.
Recommendation The Department should maintain all records relating to the preparation of the
Report.
Management's Due to turnover within the department, the person responsible for preparation of
Response the Report is no longer available. Records will be kept on file to support all future
reports.
Finding 99-3 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Head Start,CFDA Number 93.600
Administered by the Contra Costa County Community Services Department
Criteria Under the Davis-Bacon Act(the Act) requirements, grantees are required to ensure
that contractors and subcontractors are paying prevailing wage rates to all laborers
and mechanics who work on construction contracts in excess of$2,000 financed
by federal assistance.
Condition During the year, the County engaged a contractor to construct a playground
financed with Head Start funds. The contract amount was $597,054, however, the
County did not monitor the contractor for compliance with of the Act.
Effect The County has no evidence to support whether or not the contractor complied
with the Act. Failure to monitor this activity represents a compliance deviation.
Recommendation Parties responsible for contract negotiations at the County should be made aware
of projects funded through federal awards and the related compliance
requirements.
Management's The County will ensure that the General Services Department is aware of the
Response funding source for the facilities construction projects and other projects involving
the Davis-Bacon Act requirements and monitor the compliance with the Act. The
County has received assurances from the contractor that the contract in question
was in compliance with the Act and the contractor will provide certified payroll
records to the County as documentation.
1 (5
COUNTY OF CONTRA COSTA
Schedule of Findings and Questioned Costs(Continued)
Year Ended June 30, 1999
Section III Federal Award Findings and Questioned Costs {Continued)
Finding 99-4 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Block Grants for Prevention and Treatment of Substance Abuse,CFDA Number 93.959
Passed through the State of California, Department of Alcohol and Drug Programs
Administered by the Contra Costa Health Services
Criteria The County's substance abuse services policy requires annual site visits of all
subrecipients, in order to meet the federal requirements for subrecipient
monitoring, as contained in the ONM A-102 Common Rule.
Condition Two of ten subrecipients selected for testing did not have an annual site visit.
Context The County is not in compliance with its internal subrecipient monitoring policy.
Effect Without regular site visits, the County cannot effectively monitor subrecipients to
ensure they are using federal pass-through monies to meet program objectives.
Recommendation The County should establish procedures to ensure that required annual site visits
of all subrecipients are performed. If adequate staffing is not available the County
should consider engaging an outside consultant to perform these visits.
Management`s The County was unable to perform site visits at all locations due to staffing
Response constraints. Resources will be made available to make all required site visits in the
future.
Finding 99-5 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Temporary Assistance to Needy Families,CFDA Number 93.558
Passed through the State of California,Department of Social Services
Administered by the Contra Costa County Employment and Human Services(EHSD)
Criteria Under the eligibility guidelines, if an individual refuses to engage in required
work,the County must reduce assistance to the family,at least pro rata. California
Welfare and Institutions Codes, section 11327.4(b)(1), provides that when
noncompliance with activity requirements occurs, a notice proposing a 30-day
compliance period prior to the grant change must take place. The end of this full
30-day period must always occur at the end of a calendar month; this means that
depending on when the failure occurs, a delay of up to 60-days may occur before
the grant reduction is effective.
Condition During our eligibility testing for Welfare to Work, which is a component of
CaIWORKs, we noticed that a significant number of participants did not
participate in the Welfare to Work program as required. All participants reviewed
were enrolled in Welfare to Work prior to December 31, 1998, however did not
receive Welfare to Work services immediately after enrollment. This means that
some participants were receiving aid without fulfilling Welfare to Work
requirements.
1
16
COUNTY OF CONTRA COSTA
Schedule of Findings and Questioned Costs(Continued)
Year Ended June 30, 1999
Section III Federal Award Findings and Questioned Costs (Continued)
Finding 99-5 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (Continued)
Temporary Assistance to Needy Families,CFDA Number 93.558
Passed through the State of California,Department of Social Services
Administered by the Contra Costa County Employment and Human Services`(EHSD)
Context With the new implementation of the Ca1WORK.S program, an ai4 recipient is eligible to"
have 60-months of aid given by the State. Once all 60 months of aid are received, no
more aid will be paid for the needs of the participant. The Statute provided for a phase-in
period with the new Ca1WORKs program, as evidenced by permitting enrollment in the
program until December 31, 1998, a full two years after submission of the California State
Plan.
The County assigned Welfare to Work cases to staff,with maximum caseload limits of 75,
on an as-available basis until all 12,000 individuals enrolled in Welfare to Work could be
served. While the County attempted to hire adequate staff to support all Welfare to Work
participants in activities, the length of training time required and the percentage of staff
turnover meant inadequate staffing to support the number of cases.
Effect Many individuals receiving aid under Ca1WORKs, who were mandatory Welfare to Work
participants, did not receive Welfare to Work services immediately upon enrollment in the
program. In effect, some of these individuals may have been ineligible to the cash
assistance they received prior to assignment to an active caseload.
Recommendation Due to the caseload constraints, the Department should hire sufficient staff in order to
properly monitor all Welfare to Work participants. The Department should provide
proper training to new staff and reinforce policies and procedures to existing staff.
Supervisors should receive continued training in monitoring staff for performance issues.
Management's Fiscal Year 1998/99 was the initial implementation year for CalWORKS, a program
Response significantly different from its predecessor, Aid to Families with Dependent Children
(AFDC). Where AFDC focused entirely on welfare eligibility and grant entitlement,
Ca1WORKs focuses on the employability of participants on a case-by-case basis. This
new focus required skills and techniques new to our existing staff, who required extensive
training.
The County EHSD staff was successful in enrolling all potential Welfare to Work
participants by the deadline of December 31, 1998. However, at that time the Department
was unable to hire and train sufficient staff to fully and immediately serve the then 12,000
participants. The process was to bring participants on a flow basis into Employment
Specialist caseloads, which were capped at 75 cases (including both eligibility and
employment service cases).
Since the review period, EHSD has instituted policies to serve individuals in a timely and
appropriate manner. As the overall caseload has declined, space has been made among
existing caseloads to accommodate remaining participants and provide timely and
appropriate services. We are also developing and establishing an additional case
management review process to ensure that there are no gaps in services to remaining
participants.
17
COUNTY OF CONTRA COSTA
Schedule of Findings and Questioned Costs (Continued)
Year Ended June 30, 1999
1 Section III Federal Award Findings and Questioned Costs tContinued)
Finding 99-6 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Child Support Enforcement—Title IV-D, CFDA Number 93.563
Passed through the State of California,Department of Social Services
Administered by the Contra Costa County Office of District Attorney
Criteria The County is required to submit the Child/Family and. Spousal Support
Payments-Assistance Related DistributionJDisbursement Summary (the Report)
each month to the State. This report includes a summary of the child/family and
spousal support recovered (i.e., recoupment) along with how it is allocated to the
federal, State and County agencies (sponsoring agencies) responsible for funding
this program.
Condition The County incorrectly calculated how the recoupment was to be allocated to the
sponsoring agencies on the Report.
Context The error was discovered during our recalculation of the April 1999 Report.
Effect The calculation error resulted in a recoupment overallocation to the federal
government of$32,082 and a recoupment underallocation to the County and State
in the amounts of $15,786 and $16,296, respectively. Ultimately, the
misallocation resulted in reduced program funding at the County level.
Recommendation The County should recalculate the recoupment allocation among sponsoring
agencies for the other eleven months of fiscal year ended June 30, 1999. Also, we
recommend that procedures be strengthened and that staff receive training to avoid
similar errors in the future.
Management's The County will automate, to the extent possible, the preparation of all State and
Response federal reports and management will review all future reports for accuracy prior to
their submission.
�s
COUNTY OF CONTRA COSTA
Summary Schedule of Prior Audit findings
Year Ended June 30, 1999
The following is the status of audit findings reported in the prior year's audit summary schedule of prior
1 audit findings.
Finding 96-1 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Head Start,CFDA Number 93.600
1 Administered by the Contra Costa County Community Services Department
As noted in the prior year, during the County's normal subrecipieik monitoring process,
the County identified questioned expenditures by one of its subrecipients. In addition,
the Inspector General of the Department of Health and Human Services began an
investigation of the same subrecipient in November 1996. The County is currently
working with the Inspector General to ascertain the total dollar value of the questioned
expenditures by this subrecipient.
Status: The Office of the Inspector General has informed the County that the investigation has
been completed and the case has been closed. The County has not been advised of any
questioned costs arising from this investigation.
Finding 98-1 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Temporary Assistance to Needy Families,CFDA Number 93.558
Passed through the State of California,Department of Social Services
Administered by the Contra Costa County Employment&Human Services
On April 23, 1996, the County's Auditor-Controller's Office issued a report on its
examination of the County's Social Services Department's (Department) collection,
revolving fund, general assistance, timekeeping, fixed asset and trust fund functions
(1996 examination). Included in the report were significant findings.
In response to the 1996 examination, the Department developed an internal control plan
(the Plan). The Plan is an evolving document of the Department's goals and strategies
for addressing the 1996 examination findings and securing its financial control
environment. Although some of the findings in the 1996 examination have been
corrected, welfare aid checks are still being issued through CDS without any formal
review process.
Status: Since the 1997/98 Single Audit, the Department has continued to work toward
implementing its corrective action (security) plan, while also fulfilling extensive, new
and changing welfare program mandates. We are part of an 18-member consortium of
California counties functioning within existing programming designs of the CDS/GIS
(Case Data/Gain Information) computer system of issuing welfare benefits. However,
we have taken a proactive stance to build security features onto these aged systems, and
develop innovative strategies, including development and purchase of separate services
programming from the vendor, EDS. We also have the long term view in mind, for
innovation and control enhancement, and so are proving input at the State level in its
Development Phase on design of the new CaIWIN system that will be replacing
CDS/GIS approximately within the next three years.
19
COUNTY OF CONTRA COSTA
Summary Schedule of Prior Audit Findings
Year Ended June 30, 1999
Finding 98-1 U.S. DEPARTMENT OF I4EALTH AND IiUMAN SERVICES (Continued)
Temporary Assistance to Needy Families,CFDA Number 93.558
Passed through the State of California,Department of Social Services
Administered by the Contra Costa County Employment&Human Services
Within this context, our action plan incorporated all recornmendations from the last
Auditor-Controller's internal audit, and developed further control and monitoring
processes aiming to.
■ Increase segregation of duties and supervisory oversight.
■ Enforce employee accountability and compliance
■ Design and use fraud detection tools
■ Implement effective computer security controls
Under this plan, in addition to actions we previously reported in the 1997-98 Single
Audit Management Response, we have implemented the following controls during 1999,
with emphasis on enhancing computer controls and fraud detection capabilities:
■ Established a screening and monitoring process for assigning computer security
access levels to staff, in order to limit as much as possible the number of staff
with case maintenance and benefit issuance capabilities.
■ Improved the audit trail reliability on the GIS computer system used to issue
supportive service payments under the Ca1WORKS and Welfare to Work
(WTW) programs. We accomplished this by developing, with the system
vendor, security programming customized for Contra Costa County.
■ Purchased specialized GIS programming to effectively segregate the automated
payment function for Child Care supportive service payments.
■ Increased our fraud detection capabilities by creating a monitoring data base of
daily CDS and GIS benefit issuances, and expanding our querying and
monitoring of high risk transactions to address fraud and compliance issues.
■ Created automated fraud alert reports to monitor high risk transactions, including
payee name and address changes, and some types of supplemental payments and
case status changes. As a result, we expanded our sampling of case files and
transactions for validity.
■ Performed internal reviews of select disbursement functions to monitor the
control environment and detect control weaknesses.
■ Realigned the Department's Quality Control and Special Projects Units to report
to our Administrative Services Bureau for development of an independent
quality assurance group to conduct focused reviews, and interface with our
Internal Security Unit and a planned Supervisory review Process.
2U
r
.lM
COUNTY OF CONTRA. COSTA
Summary Schedule of Prior Audit Findings
Year Ended.lune 30, 1999
Finding 98-1 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (Continued)
Temporary Assistance to Needy Families,CFDA Number 93.558
Passed through the State of California, Department of Social Services
Administered by the Contra Costa County Employment&Human Services
j For the year 2000, our primary goal is to address the issue of increased supervisory
j oversight and approval of case transactions. This is an issue requiring wide participation
throughout the Department and changes to our operational structure. Currently,
■ Initial plans are for staff in our Administrative Services and Work Force Services
Bureaus to team up, in a joint work group, to design an effective supervisory
review process covering not only security concerns, but also welfare program
compliance issues. The design should also enable staff to meet defined
outcomes and performance objectives.
IAn optimum design, that will not adversely impact service delivery, will be
studied. We anticipate, to the extent feasible, it will include monthly case and
transaction sampling by supervisors, an accompanying corrective action process,
a checklist of actions requiring supervisory review/approval, required review of
case status and transaction reports, and interface with Quality Assurance and
Internal Security Units. The design may be partly modeled after a 2nd Party
Review process recently endorsed by the California Welfare Directors'
Association Board of Directors.