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HomeMy WebLinkAboutMINUTES - 10152002 - C.60 r��-- a� TO: BOARD OF SUPERVISORS CONTRA �' {� COSTA FROM: FINANCE COMMITTEE � COUNTY Gayle B. Uilkerna, Chair °®r;` � Donna Gerber, Member DATE: October 15, 2002 SUBJECT: Countywide Single Audit for Fiscal Year 2000-2001 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 the 2000-2001 fiscal year. Background: The countywide single audit is performed by private accounting firms and examines County programs financed with federal funds. Since 1999, the Board has referred this audit to the Finance Committee for review. On July 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 Committee approved the report but requested that the Community Services Department return with a revised policy controlling payments to contractors. On September 16, the Finance Committee reviewed and approved the policy submitted by the Community Services Department. Attached is a report of the single audit and the Community Services Department contractor payments policy. CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMEND TION OF BOARD COMMITTEE: APPROVE OTHER # ° tT1I� A CA YJ B. _ ACTION OF BOARD ON v¢4( it ;� APPROVED AS RECOMMENDED OTHER i VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT J AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Contact:Tony Enea at 5-1094 Cc: Auditor's Office ATTESTED Community Services John Sweeten,CLERK OF THE SOARZ OF SUP�IORSD COUNTY ADMINISTRATOR BY k ,DEPUTY County of Contra Costa Of'f'ice of the County Administrator MEMORANDUM DATE: July 15, 2002 TO: FINANCE COMMITTEE FROM: JOHN SWEETEN my Administrator By JULIE EN for Deputy SUBJECT: COUNTYWIDE SI E AUDIT FOR THE FISCAL YEAR ENDING JUNE 30, 0 1 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 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, 2001, excerpts attached for reference). Financial Reporting. Government Auditing standards require the eternal auditor to obtain reasonable assurance that the general-purpose financial statements are free of material misstatement. The external auditor found no reportable instances of non- compliance or internal control with regards to financial reporting. Program Requirements. Government Auditing Standards and OMB Circular A-'133 (whichis applicable to federal programs) require the external auditor to report on both compliance and internal controls over the major federal programs carried out by the County. While the external auditors found reportable conditions involving internal control over compliance with OMB A-133, they found no material weaknesses involving internal control that are required to be reported. The auditors did, however, find one instance of material noncompliance with OMB Circular A-133 that was required to be reported. This reportable condition relates to subrecipient monitoring of grantees of the Workforce Development Board, and is described in the following report. On the whole, however, the 2001 Single Audit report reflected very positively on the County. Finance Committee July 15, 2002 Page 2 Countywide Single Audit Follow-up 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 01-1: Workforce Investment Act Recommendation: The County adhere to its policies over the monitoring of subrecipients to ensure that subrecipients are complying with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Corrective Action: In the future, the Workforce Development Board (WDB) and its fiscal agent, EHSD, will perform the required monitoring visits. The WDB Executive Director and the EHSD Director of Administrative Services will personally oversee the monitoring of subrecipients' use of federal awards for the affected contracts. The periods under review included both FY 1999/2000 and FY 2000/2001 because the external auditor did not monitor FY 1999/2000 in prior audits. The most significant incidences of noncompliance with subrecipient monitoring requirements occurred in FY 1999/2000. FY 1999/2000 was a period of transition between the old Job Training Partnership Act program and the new Workforce Investment Act program, in which the fiscal agent and the (then) Workforce Investment Board transferred staff, as well as repositories of record. In the instance in FY 2000/2001 where the external auditor had found fiscal monitoring deficient, there was only one contract that was found to be out of compliance for subrecipient monitoring. This particular contract was established in FY 2000/2001, but was discontinued mid-year and was not monitored. ♦ FindingOl-2: Foster Care—Title IV-E Recommendation: The County strengthen its controls governing the eligibility determination of the participants to ensure that proper eligibility has been determined. Also, files should be maintained and forms completed in accordance with program guidelines. Corrective Action: The EHS Department concurs with the recommendation and will make every effort to improve eligibility determination and to keep files/forms complete and accessible. Specifically, the EHSD Foster Care Program committee, under the direction of the Program Analyst, is in the process of developing a new Department Manual section (policy guidance) with specific worker procedures for the initiation of redetermination by Child Welfare Services staff and processing by Benefits staff. These procedures will ensure that the redetermination due date is aligned with the six month review. These processes are to be in effect by August. Finance Committee July 15, 2002 Page 3 Countywide Single Audit Follow-up ♦ Finding 01-3: Adoption Assistance Recommendation: The County strengthen its controls governing the eligibility determination of the participants to ensure that proper eligibility has been determined. Also, files should be maintained and forms completed in accordance with program guidelines. Corrective Action: The Adoption Assistance Service cases have been copied and duplicate case created to serve as the new Benefits record. The "whole„ record will comprise both the Service and Benefits case folders. Procedures have been developed clarifying the forms to be sent between Eligibility and Social Workers. Charts have also been developed specifying forms to be kept in Eligibility and Social Worker case folders. ♦ Finding 01-4: Head Start Recommendation: The County closely monitor the submission of certified payroll records of contractors paid with federal funds. Corrective Action: The Community Services Department (CSD) concurs with the recommendations and has developed a draft contract policy to comply with OMB A- 133 and Davis Bacon Act requirements to keep an active certified payroll list. By July 15, the department expects to have the draft contract policy reviewed by key department staff and capital project managers in the General Services Department (GSD), to determine coordinated steps to keep certified payroll lists active for Community Services department contracts for operations and capital projects. The department also hopes to receive input from the Board's Finance Committee on the outline of the draft policy. By the end of August, key staff from both CSD and GSD will be trained on the requirements of the Davis Bacon Act, the Contract Policy, and the implementation plan for the Contract Policy. By the end of September, the CSD commits to having an active payroll list for all contracts including capital projects, monitor staff time cards provided under contracts, and track contract payments monthly to determine appropriate payment levels. ♦ Finding 01-5: Workforce Investment Act Recommendation: The County strengthen controls over maintaining documentation for all disbursements in order to be in compliance with OMB Circular A-133 as well as the General Provisions and Standards of Conduct of the Grant provided to all Finance Committee July 16, 2002 Page 4 Countywide Single Audit Follow-up grantees. Controls over maintaining supporting documentation should be strengthened to ensure that disbursements are adequately supported. Corrective Action: The EHS Department concurs with the recommendation, and its executive level management will personally ensure that staff strictly adheres to the department's policy of reviewing supporting documentation for all demands submitted for reimbursement. They will also ensure that safeguards are followed to maintain the files that archive this supporting documentation. Finding 01-6: Workforce Investment Act Recommendation: EHSD perform timely inventory counts to ensure that equipment being used is recorded and accounted for. In addition, EHSD should implement an equipment check out system to keep track of equipment out of the office. Corrective Action: EHSD management has strengthened the inventory process. The department recently acquired bar-coding technology to simplify identification and location of its capital equipment. Additionally, the WDB Office will institute an equipment checkout system to keep track of equipment that is borrowed from the office. With regards to the old equipment on the inventory, the department will identify, and salvage and remove obsolete equipment. PRIOR-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. 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. Finance Committee Judy 15, 2002 Paige 5 Countywide Single Audit Follow-up cc: Employment and Human Services Director Community Services Director Principal Auditor,Auditor-Controller's Office Dorothy Sansoe,Senior Deputy County Administrator-Health&Welfare COUNTY OF CONTRA COSTA Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2001 Section 11 Financial Statement Findin s No matters were reported. Section III Federal Award Fin and­questioned Costs Finding 01-1 U.S. DEPARTMENT OF LABOR Workforce Investment Act, CFDA Number 17.255 Passed through the State of California, Economic Development Department Administered by the County's Employment and Human Services Department(EHSD) Criteria In accordance with OMB Circular A-133, a grantee is required to monitor subrecipient's use of federal awards through site visits, limited scope audits, or other means. In addition, grantees are responsible for ensuring that the required audits are performed,and required appropriate corrective action is taken concerning monitoring and audit findings. Condition During our audit, we noted that the EHSD was not adequately monitoring its subrecipients as required by OMB Circular A-133. The County has established written policies over subrecipient monitoring, however, did not perform the monitoring procedures required. In addition, EHSD did not have all required single audit reports on file for four of the five subrecipients we selected for testing. Context and Effect Due to the lack of monitoring, the County is unable to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Recommendation We recommend the County adhere to its policies over the monitoring of subrecipients to ensure that subrecipients are complying with laws, regulations, and the provisions of contracts or.grant.agreements and that performance goals are achieved. Management's The Program Manager was new to the program and in the future will see that two Response on-site monitoring visits are performed annually for each contract. Management will pursue the missing reports, improve its filing system and ensure that audit reports are kept for at least three years. The County's internal auditors have scheduled an examination of EHSD later this year and will include a review of its subrecipient monitoring practices in their scope of work. 14 { COUNTY OF CONTRA COSTA Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2001 Section III Federal Award Findings and Questioned Casts (Continued) Finding 01-2 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Foster Care - Title 1V-E, CFDA Number 93.658 Passed through the State of California, Department of Social Services Administered by the County's Employment and Human Services Department Criteria In accordance with OMB Circular A-133, a grantee is responsible for documenting eligibility determinations. Under the eligibility requirements of this grant, eligibility workers should review judicial determinations every six months to ensure that the child is eligible for foster care services. Condition During our audit, we noted that one out of the forty cases selected for testing did not have a current redetermination form (Form FC2). In addition, one out of the forty cases selected for testing was not available. Context and Effect By ensuring that the forms are updated and files maintained, the risk of providing foster care services to children not eligible to receive these benefits will be reduced. Recommendation We recommend the County strengthen its controls governing the eligibility determination of the participants to ensure that proper eligibility has been determined. Also, files should be maintained and forms completed in accordance with program guidelines. Management's The reason for the missing files/forms is due to the moving of the files/paperwork Response from one department to another. Management concurs with the recommendation and will make every effort to keep the files/forms complete and easy to locate. Finding 01-3 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Adoption Assistance, CFDA Number 93.653 Passed through the State of California, Department of Social Services Administered by the County's Employment and Human Services Department Criteria In accordance with OMB Circular A-133, a grantee is responsible for documenting eligibility determinations. Under the eligibility requirements of this grant, recertifications are required to be performed every two years. 15 COUNTY OF CONTRA COSTA Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2001 Section III Federal Award Findings and (questioned Costs (Continued) Finding 0I-3 (Continued) Condition During our audit, we noted the following out of the forty case files selected for testing. • Two case files were missing. • Three case files did not have the current recertifications (Form AAPS). • One case file did not have a signed Adoption Assistance Agreement _ (Form AD4320) and one was not current. • One case file was being paid at an incorrect rate. * Twenty-one case files were missing the Income and Property Checklist (Form FC 10). s Seven case files were missing the Health Insurance Form (Form DHS6155). Context and Effect By ensuring that the forms are updated and files are maintained, the risk of providing adoption assistance to children not eligible to receive these benefits will be reduced. Recommendation We recommend the County strengthen its controls governing the eligibility determination of the participants to ensure that proper eligibility has been determined. Also, files should be maintained and forms completed in accordance with program guidelines. Management's Management concurs with the recommendation. Management indicates that the Response Child Welfare Services and Income Maintenance portions of the Adoptions Assistance cases are residing in one folder, which is in the custody of the Child Welfare Services worker. This process does not facilitate the proper maintenance of records related to the payment portion. Management will be taking steps to improve the current system. 16 COUNTY OF CONTRA COSTA Summary Schedule of Prior Audit Findings Year Ended .Tune 30, 2001 Section III Federal Award Find!glps and Questioned Costs (Continued) Finding 01-4 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Head Start, CFDA Number 93.600 Administered by the County's Community Services Department Criteria In accordance with OMB Circular A-133, a grantee is responsible for compliance with the Davis Bacon Act. Condition During our audit, we noted that the Community Services Department of the County was not actively maintaining records of certified payroll of contractors paid with federal funds. Context and Effect By ensuring, that certified payroll is submitted in a timely manner, the County may be able to verify whether contractors are in compliance with the Davis Bacon Act. Recommendation We recommend the County closely monitor the submission of certified payroll and project managers made aware of specific compliance requirements with the Davis Bacon Act. Management's Management concurs and will make every effort to maintain certified payroll Response records of contractors paid with federal funds. Finding 01-5 U.S. DEPARTMENT OF LABOR. Workforce Investment Act, CFDA Number 17.255 Passed through the State of California, Economic Development Department Administered by the County's Employment and Human Services Department (EHSD) Criteria In accordance with OMB Circular A-133, a grantee is responsible for internal control over compliance with the activities allowed or unallowed and allowable costs/cost principles requirements. Condition During our audit, we noted that the EHSD was not maintaining adequate supporting documentation for disbursements relating to the Workforce Investment Act. Of the forty disbursements selected for testing, six did not have adequate documentation, such as invoices, related for review. 17 COUNTY OF CONTRA COS'T'A Summary Schedule of Prior Audit Findings Year Ended June 30, 2001 Section:III Federal Award Findin s and Questioned Casts (Continued) Finding 01.-5 (Continued) Context and Effect By ensuring that support is maintained for all disbursements, EHSD is able to document that they are spending grant funding on allowable activities. Recommendation We recommend the County strengthen controls over maintaining documentation for all disbursements in order to be in compliance with {SMB Circular A-133 as well as the General Provisions and Standards of Conduct of the Grant provided to all grantees. Controls over maintaining supporting documentation should be strengthened to ensure that disbursements are adequately supported. Management's The support for these disbursements were not properly archived and were Response apparently misplaced. Management will improve its filing system to ensure that supporting documentation is readily accessible. finding 01-6 U.S. DEPARTMENT OF LABOR. Workforce Investment Act, CFDA Dumber 17.255 . Passed through the State of California, Economic Development Department Administered by the County's Employment and Human Services Department(EHSD) Criteria In accordance with OMB Circular A-133, a grantee is responsible for compliance with the equipment and real property management requirement. Condition During our audit, we noted that the EHSD was not accurately reporting Workforce Investment Act equipment inventory. A projector, valued at $10,213, could not be located upon our request for physical inspection. In addition, computers considered obsolete and no longer being used are still reported as current on the equipment inventory listing. Context and Effect Because of this condition, the EHSD is unable to locate certain assets and the inventory listing includes obsolete assets. Recommendation We recommend the EHSD perform timely inventory counts to ensure that equipment being used is recorded and accounted for. In addition, EHSD should implement an equipment check out system to keep track of equipment out of the office. Management's The Program Manager believes that the missing projector may be at one of the Response sites for a presentation. Management will strengthen its equipment inventory control procedures to ensure that records are reliable and equipment is being used appropriately. 18 COUNTY OF CONTRA COSTA Summary Schedule of Prior Audit Findings Year Ended June 30, 2001 The following is the status of audit findings reported in the prior year's schedule of findings and questioned costs. 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 Education Administered by the Contra Costa County Employment and Human Services Dept. As noted in the prior 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 submitted the data collection form, duplicating the one submitted by Macias, Gini and Company LLP, the CPA firm who performed the County-wide Single Audit. Status: DZH will not submit a data collection form. 19 Community Services Department Contracts and Grants Policy for Contractor's Payment Demands 1.) In accordance with OMB A-- 133, contractors providing services to the Community Services Department will include a certified payroll list as a required attachment to the contract. The list will contain the names and positions of those contractor's staff members who will work under this contract. The list will be kept by the Contracts and Grants Specialist, and a copy will be provided to the Department's Personnel Services Unit and to the General Services Department Project Manager. 2.) If during the term of the contract, Contractor adds other staff members to provide services under this contract or Contractor removes staff members from the list, Contractor will notify the Community Services Department of the change. The Contracts and Grants Specialist will note the change in the payroll list to keep it active and will update the copy provided to the Personnel Services Unit. 3.) The Contracts and Grants Specialist will maintain certified payroll lists for each contract. Payment demands listing Contractor's staff members will-be verified against the payroll list. 4.) There is an established 45-day period for which demands for payment must be submitted. The Contracts & Grants Specialist will review the demands to determine whether demands meet this timeline. Demands providing expense documentation, which are outside the 45 —day submittal period and demands without documentation listed in Section (5) of this Policy are subject to be exempted from reimbursement. 5.) Upon receipt of payment demand, the Contracts &Grants Specialist will verify that original documentation for the provision of services to include the following: a. Description of staff service provided. b. Date service was provided. c. Time (time period) service was provided. d. Location where service was provided. e. Name and position of individual providing the service. f. The signature and verification by a department staff member with internal signature authority and the position of this individual. g. For construction projects, prevailing wages for construction employees as required by the Davis Bacon Act. 6.) The Contracts &Grants Specialist will forward payment demands and related documents that meet review criteria to the department's accountancy unit for payment processing. The Contracts and Grants Specialist will; a. Match payment demands submitted to warrants issued and posted on the Auditor-Controller's intranet site; b. Track payments made to contractors against payment limit of the contract to determine whether payments are above or below target and notify the contractor and the Department's the Fiscal Officer when the payments have reached 70 percent of the contract's total payment limit. c. Determine monthly variances on payments to contracts and report variances exceeding 15 percent to the Fiscal Officer. 7.) The Fiscal Officer will review contracts exceeding with a monthly reimbursement variance of 15 percent or more to determine the efficiency of the service plan. Upon review, the Fiscal Officer will make a recommendation for discontinuance, or amendment of the contract. In the case of an amendment, the Service Plan needs to be strengthened for greater efficiency including service benchmarks, timelines and measurable outcomes. 8.) Results of contracts monitoring will be part of the Department's Annual Performance Report.