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HomeMy WebLinkAboutMINUTES - 11062001 - C.175 CONTRA 't• TSO: BOARD OF SUPERVISORS �•'`�"���' 1�-=°��°� - .ice. ., �=-. COSTA FROM: FINANCE COMMITTEE ' COUNTY Federal Glover, Chair '°q Donna Gerber, Member °°s>q you `�v �• DATE: November 6, 2001 SUBJECT: Countywide Single Audit for Fiscal Year 1999-2000 SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION Recommendation: ACCEPT the County Administrator and County Auditor's report and recommendations on audit findings and corrective actions for the1999-2000 fiscal year. Background: The countywide single audit is performed by private accounting firms of County programs financed with federal funds. Since 1999, the Board has referred this audit to the Finance Committee for review. On October 15, the Finance Committee reviewed the attached report from the County Administrator's Office. The Committee took testimony from staff of the County Administrator and from the County Auditor-Controller. The report was approved as presented. ATTACHMENT: X YES SIGNATURE: 2 RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE \ APPROVE OTHER SIGNATURE(S): / ACTION OF BOARD ON /��'C- �/� !9. ��E-1/ APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: � :VOES: AND ENTERED ON MINUTES OF THE BOARD ABSENT: ABSTAIN:. OF SUPERVISORS ON THE DATE SHOWN. Contact: Cc:Auditor's Office ATTESTED John Sweeten,CLERK OF THE BOARD OF SUPERV ORS AND COUNTY ADMINISTRATOR BY DEPUTY O ffoun ntra-: os ° e' ntrAmr n: iceofth 'C , Mr r : :.:....:.:.. - MEMO U%,%-":: :. .:... :.... : DATE: October 8, 2001 TO: FINANCE COMMITTEE FROM: JOHN SWEETEN, unty Administrator By JULIE ENE for Deputy SUBJECT: COUNTYWIDE NGLE AUDIT FOR THE FISCAL YEAR ENDING JUNE , 2000 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 30,2000, 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 one instance of noncompliance with OMB Circular A-133, which is applicable to federal programs, that was required to be reported. The auditor expressed the opinion that this compliance and internal control issue is a "reportable" but not "material" weakness. On the whole, the 2000 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 00-1: Child Care and Development Block Grant Recommendation: The Employment and Human Services Department should modify the terms of its engagement with Daoro Zydel & Holland (DZH),Certified Public Accountants, to exclude a single audit opinion and data collection form for this grant and, thereby, eliminate a redundancy in audit reporting. a/ Finance Committee 10/08/01 Page 2 Countywide Single Audit Follow-up Corrective Action: The County concurs with this recommendation. The Employment and Human Services Department (EHSD) was requested to secure a full financial statement audit by the California Department of Education for the Child Development Programs. The due date for this audit is October, whereas, the Countywide Single Audit is usually completed in March/April. It may be that the regulations writers did not take in account the fact that government entities are required to have an annual external single audit. EHSD and the County's external auditor have requested guidance from the funding agency on the audit requirement. Until such time that the funding agency makes a ruling or provides guidance to the County on the audit requirement, the County cannot waive the requirement without jeopardizing program funding. However, EHSD will ensure that the DZH audit is prepared only for use by the State funding agency and not forwarded to the Federal audit clearinghouse. PRIOR-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 now archived and available for review at the Homeless Program office along with all appropriate supporting 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 demands. ♦ 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. Finance Committee 10/08/01 Page 3 Countywide Single Audit Follow-up Corrective Action: The Community Services Department now includes the source Qf funding in the documentation for each project submitted to the General Services Department for bid, and receives from the contractor certified payroll records to verify compliance with Davis-Bacon Act requirements. ♦ Finding 994: 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 did not completely agree with the report. The Director indicated that staffing for the Community Substance Abuse Program was 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 was addressed as an employee performance issue. ♦ Finding 99-5: Temporary Assistance to Needy 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 implemented a correction action plan involving random file selection and quarterly CaIWORKS/Welfare-to-Work client case reviews. The Workforce Services Director and staff continue to work with the Human Resources Department to ensure vacant positions are filled in an timely manner. ♦ 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, �/Y Finance Committee 10/08/01 Page 4 Countywide Single Audit Follow-up we recommend that procedures be strengthened and that staff receives training to avoid similar errors in the future. Corrective Action: The CS-800 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. Upon learning of the change in the calculation formula, the DAFSD staff adjusted the County's formulas to match the State's and automated the preparation of State and Federal Reports, which should prevent future discrepancies. .SOY 1 COUNTY OF CONTRA COSTA Summary Schedule of Prior Audit Findings (Continued) 1 Year Ended June 30, 2000 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 1 Administered by the Contra Costa County Office of District Attorney The County is required to submit the Child/Family and Spousal Support Payments- Assistance Related Distribution/Disbursement Summary each month to the State. The County incorrectly calculated the recoupment was to be allocated to the sponsoring agencies on the Report. Status: The County has now implemented the automation of the preparation of all the State and Federal Reports. Management will now review all future reports for accuracy prior to 7 their submission. 7 17 1 COUNTY OF CONTRA COSTA Summary Schedule of Prior Audit Findings (Continued) Year Ended June 30, 2000 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 Department The County's substance abuse services policy requires annual site visits of all sub- recipients, in order to meet the federal requirements for sub-recipient monitoring, as contained in the OMB Circular A-102 Common Rule. Two out of ten sub-recipients selected for testing did not have an annual site visit, therefore the County is not in 3 compliance with its internal sub-recipient monitoring policy. Status: Staffing constraints were the reason that site visits were not conducted in the prior year. The County is now able to perform site visits as resources are now available to do so. J 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 Conty Employment and Human Services Dept. There were inadequate staffing issues in the Ca1WORKS program as the County assigned cases to staff exceeding the caseload limit of 75. Therefore, the length of training time required and the percentage of staff turnover meant inadequate staffing to ] support the number of cases. Status: The County has implemented a Corrective Action Plan as of June 2000. The Plan involves random file selection and Ca1WORKS/Welfare to Work client case reviews. These reviews are held once every three months in each of the four CalWORKS/Welfare to Work district offices. The monitoring is performed by a Quality Assurance Staff under the auspices of the Department's Administrative Bureau. The results of the reviews are formally written up and discussed both collectively and individually with each of the Workforce Services Bureau Operational Managers for 7 follow-up, and where necessary, immediate corrective action.The Workforce Services Director, in conjunction with the Operational Division Managers, will continue to work with the Personnel Department to ensure that vacant positions are filled in a timely manner. COUNTY OF CONTRA COSTA Summary Schedule of Prior Audit Findings 1 Year Ended June 30, 2000 The following is the status of audit findings reported in the prior year's Schedule of Findings and Questioned Costs. Finding 99-1 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Supportive Housing Program, CFDA Number 14.235 Administered by the Contra Costa Health Services Department As noted in the prior year, during our testing of the County's sub-recipient monitoring, we noted that there was no appropriate documentation available for review supporting the County's sub-recipient monitoring activities. There was no evidence to show that these procedures were performed as required by the Single Audit Compliance Act. In response to the finding, the Health Services Department had developed a plan to address its monitoring of sub-recipients, and is in the process of implementation. Status: The Department has implemented formal subrecipient monitoring procedures with documentation kept on file. 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 Department Our prior year audit indicated that the County was unable to provide support for financial data incorporated into the Grantee Annual Report. Thus we were unable to 7 reconcile the financial records examined during our audit. Status: Adequate records are now being kept to support financial data reported in the Grantee 7 Annual Report. Finding 99-3 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 7 Head Start, CFDA Number 93.600 Administered by the Contra Costa County Community Services Department The County failed to monitor a contractor who was constructing a playground under the Davis-Bacon Act. Under this Act, the grantees are required to ensure that contractors and subcontractors are paying prevailing wage rates to all laborers and J mechanics who work on construction contracts in excess of$2,000 financed by federal assistance. Status: The County now ensures that the General Services Department is aware of the funding source for facility construction projects and other projects involving the Davis-Bacon Act requirements and monitor the compliance with the Act. The contractor now 1 provides the County with certified payroll records to ensure that Davis-Bacon Act requirements are monitored. 1 S 15 COUNTY OF CONTRA COSTA l Schedule of Findings and Questioned Costs (Continued) 1 Year Ended June 30, 2000 Section II Financial Statement Findings No matters were reported. 7 Section III Federal Award Findings and Questioned Costs J Finding 00-1 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Child Care and Development Block Grant, CFDA Number 93.575 Passed through the State of California, Department of Social Services Administered by the Contra Costa County Employment and Human Services Dept. Criteria Circular A-133 requires that single audits must cover the entire operations of the auditee. However, Circular A-133 provides auditees the option to meet the audit requirements of the circular through a series of audits that cover an auditee's departments, agencies, and other organizational units which expended or otherwise administered federal awards during a fiscal year. However, this option does not allow a program specific audit to be performed on a single program of the auditee's departments, agencies and other organizational units. Condition During the year, the County engaged Daoro Zydel & Holland (DZH), a CPA firm, to perform an audit of the child development programs, as required by the California Department of Education. In doing so, DZH performed a program specific audit on the federal pass-through funds related to the child development programs. Under the criteria above, conducting a program-specific audit on an individual program of a department is not an option. Context and Effect The purpose of the Single Audit Act is to eliminate redundant audit work on federal award programs. By engaging DZH to audit a program that is already covered by the County-wide Single Audit, the County is subject to a duplication of audit effort and staff time. Recommendation We suggest the County modify the terms of its engagement with DZH to exclude a single audit opinion and data collection form. Management's Response Management concurs. 144