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HomeMy WebLinkAboutMINUTES - 12022003 - C169 TO: BOARD OF SUPERVISORS Contra FROM: JOHN SWEETEN, County Administrator Costa DATE: NOVEMBER 20, 2003 ,�- _ County SUBJECT: RESPONSE TO THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES FINDINGS ON ANNUAL COUNTY FINANCIAL AUDIT 2001-2002 SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE response to the U. S. Department of Health and Human Services on findings and recommendations on the County's annual financial audit for the fiscal year ended June 30, 2002, and AUTHORIZE Chair of the Board of Supervisors to sign response transmittal letter. BACKGROUND: The U. S. Department of Health and Human Services (HHS) annually reviews the County's annual financial audit report to ensure that it meets Federal audit requirements. After its review, HHS makes findings and recommendations to the County that require written comment and follow-up action. The attached response letter communicates to the HHS the status of actions taken in response to HHS's findings and recommendations of the County's fiscal year 2001-2002 financial audit. CONTINUED ON ATTACHMENT: YES SIGNATURE: r `'RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMEN�iTk N OF BOARD COMMITTEE APPROVE OTHER f q � , SIGNATURE(S): 1 ACTION Of BOA�{D-N December 2,~2003 APPROVE AS RECOMMENDED X �--OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN X UNANIMOUS(ABSENT NOne AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN: ATTESTED: DECEMBER 2,211}3 CONTACT: JULIE ENEA (925)3351077 JOHN SWEETEN,CLERK OF THE BOARS?OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: COUNTY ADMINISTRATOR AUDITOR-CONTROLLER COUNTY PROBATION OFFICER EMPLOYMENT AND HUMAN SERVICES DIRECTOR ,DEPUTY The Board of Supervisors Contra Costa John Sweeten Clerk of the Beard County Administration Building County and 651 Pine Street, Room 106 County Administrator Martinez, California 94553-1293 _ - - (925) 335-1900 V-925-335-1080 F-925-335-1098 JOHN GIOIA, 1"7 DISTRICT GAYLE B. UILiKEMA,2N6 DISTRICT MILLIE GREENEERG, 3R°DISTRICT MARK DESAULNIER,4'DISTRICT FEDERAL D. GLOVER, 5r"DISTRICT November 20, 2003 HHS Resolution Official Office of Audit Resolution and Cost Policy Department of Health and Human Services Room 522E, Humphrey Building 200 Independence Avenue, S.W. Washington, DC 20201 Attention: John H. Fisher, Manager RE: CIN A-09-04-75943 Dear Mr. Fisher. Contra Costa County is in receipt of your summary of the findings and recommendations of the County's 2001/02 audit report (prepared by Macias, Gini & Co.). Following are the County's responses to the recommendations. Recommendation 004935100. Audit Submitted Untimely. An acceptable audit reporting package was not received by the Federal Audit Clearinghouse until May 12, 2003. OMB Circular A-133 Audits of States, Local Governments, and Nonprofit Organizations-1997 revision requires recipients of Federal funding, to submit copies of the audit report within nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant agency or oversight agency for audit. We recommend procedures be established to ensure audits are performed and submitted in a timely manner. Corrective Action: In accordance with OMB Circular A-133, Contra Costa County requested and, on March 28, 2003, was granted an extension of the audit reporting package deadline until May 15, 2003 by the U. S. Department of Health and Human Services (please reference attached letter). As the Federal Audit Clearinghouse received the County's package on May 12, the submittal should have been deemed timely. In any case, the events that prompted our County to request a deadline extension were one-time in nature, and the County fully anticipates meeting the standard March 31 , 2004 deadline for the audit for the period ending June 30, 2003 with no difficulty. HHS 2001/2002 Audit Response - 2 - November 20, 2003 ♦ Recommendation on Finding 02-I: Foster Care - Title IV-E. The auditor recommended that the County strengthen its controls governing the periodic eligibility redetermination process to ensure that it is performed. Background. In accordance with OMB Circular A-133, grantees are required to abide by the eligibility requirements as documented in the individual grant agreements of the respective programs. For the Foster Care Program, eligibility requires that a redetermination be performed every six months on participants to ensure that they still qualify for the federal program benefits. During the performance of the audit, the auditor noted that for 24 out of 40 case files selected for testing, the six-month eligibility redetermination (evidenced by Form FC2) had not been performed. This is a repeat finding from the prior year. Last year, EHSD committed to 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, developed a new Department Manual section (Department Memorandum No. 158, attached) with specific worker procedures for the initiation of redetermination by Child Welfare Services staff and processing by Benefits staff. These procedures, which were effected in September 2002, were to ensure that the redetermination due date is aligned with the six month review. Since that time, EHSD has reduced the backlog of overdue reinvestigations from 1 ,312 to 886, approximately 33%. Despite these improved procedures, however, the auditor found that for 24 out of 40 case files selected for testing this year, the periodic six-month eligibility redetermination (Form FC2) had not been performed. Corrective Action/Response. in response to the auditor's new finding, the department was considering tying the initiation of reinvestigations to the six- month court review hearing as a means of ensuring that reinvestigations were done timely. Upon further consideration, however, it was determined that the court hearing date would not be completely reliable because it can be rescheduled independent of the redetermination deadline. Therefore, the department has reassigned responsibility for initiating the reinvestigations from Children's Services Program to the Foster Care Program, which is directly accountable for ensuring that the investigations occur timely. To facilitate the timely initiation of reinvestigations, the department is evaluating whether the Foster Care Case Data System can prompt the Eligibility Worker in Foster Care to generate the reinvestigation form, and; forward it to the Social Worker for review and processing. Additionally, recognizing that the current decentralization of Clerical Specialists who support the reinvestigation process may be contributing to the reinvestigation backlog, the department added a new Clerical Supervisor position under the Foster Care Program to provide central supervision of the Clerical Specialists. With a more concentrated focus on the reinvestigation backlog, the department is now monitoring not only the completion of HHS 2001/2002 Audit Response - 3 - November 20, 2003 investigations, but also the initiation of new investigations. This is expected to significantly reduce the backlog of investigations. The County Administrator's Office will continue to monitor this issue to determine if these corrective actions produce the required results. t Management Letter Recommendation on Year-End Closing and Financial Reporting Process. The County issued its Comprehensive Annual' Financial Report (CAFR) approximately eight months after the end of its fiscal year. Normally, the County's audit is completed within approximately five months of year-end. The additional three months delay appears to have been caused by: • The implementation of Governmental Accounting Standards Board (GASB) Statement No. 34,which dramatically changed the County's data accumulation and financial statement presentation process,' • Unanticipated accounting and reporting issues related to the County's net pension assets, government-wide reconciliation/consolidation entries and fund classifications requiring specialized expertise, and • The reliance by the Auditor-Controller's Office on other County departments and component units to record certain transactions that were not reported in accordance with generally accepted accounting principles. From a control standpoint, the County should emphasize the importance of timely financial reporting to avoid the potential for material errors going undetected for extended periods of time. We recommend that the County: • Evaluate the process used to prepare its GASB Statement No. 34 compliant CAFR and define key milestones necessary to accelerate the year-end reporting process; • Clearly define and document roles, responsibilities and expectations during audit planning and throughout the audit process; and • Consider its decentralized accounting structure and determine If it can be improved or if it should be changed to allow for more centralized oversight and control of key accounting areas. Corrective Action/Response. Implementation of GASB Statement No. 34 ("the most significant change in governmental accounting, since governmental accounting„ - Tom Allen, Chairman, GASB) was a significant new challenge. All of the counties who had to implement it for the first time required greater than expected effort, as did the external auditors who serviced them. Several other large California counties experienced similar delays in the issuance of their CAFRs. With the experience gained from the first-year implementation behind us, and the effects from the new independence standards brought about by the Andersen/Enron debacle, key milestones were established and we are proceeding to completion of the fiscal year 2002/2003 CAFR on schedule and timely. HHS 2001/2002 Audit Response - 4 - November 20, 2003 Additionally, the County has selected a new audit firm for fiscal year 2002/2003, and during the contract process, roles, responsibilities, and expectations were clearly defined. Independent certified public accounting firms familiar with GASB Statement No. 34 were contracted to prepare the financial statements of the component units on an acceleratedschedule so that they could be incorporated into the County's CAFR timely. ♦ Management Letter Recommendation on Temporary Assistance to Needy Families Program, funded by the U.S. Department of Health and Human Services. In accordance with OMB Circular A-133, grantees are required to maintain adequate financial records in support of all expenditures'that are claimed for reimbursement under federal programs. A key control is the performance of a reconciliation of program expenditures reported to the federal agency to the amounts recorded in the grantee's financial accounting system. During our testing of the reconciliation of Temporary Assistance to Needy Families (TANF) Program expenditures to the County's general ledger, we noted the following: • The federal expenditures for the probation department's share of TANF federal expenditures was double counted on the inventory sheets listing expenditures for inclusion in the Schedule of Expenditures of Federal Awards (Schedule). • The aid claim expenditures for the TANF program was understated due to the improper offset of interdepartmental transfers received against federal expenditures in the Employment and Human Services Department. • The aid claim expenditures for the Emergency Assistance component of the TANF program was not included as part of federal expenditures to be reported in the Schedule. The Auditor-Controller's Office relies on information from the County's departments to prepare the Schedule; therefore, if information provided from the departments is not accurate and the programs are not subjected to an audit, the risk that program expenditures reported in the Schedule are incorrectly stated is not reduced to a relatively low level. We recommend that controls be instituted to eliminate the errors noted above. For example, the departments should assign a supervisor the responsibility of reconciling the federal expenditures reported to the Auditor-Controller's Office to the financial reports submitted to federal agencies awarding the grants. Corrective Action/Response Next year, when the Auditor-Controller solicits departments for information on federal programs, he will include a request that they assign a supervisor the responsibility of reconciling the federal expenditures reported to the Auditor-Controller's Office to the financial reports submitted to federal agencies awarding the grants. Meanwhile the Auditor's staff has taken the following additional steps to verify the reported expenditures: o review of prior year reported grants, including a determination if they are discontinued; o analysis of the reported grants for similarities that might';indicate duplication; and ......... .111.1 ........ ........ ........ ._....... _ ............ _.. ...1 .._111.. ......................_......._. .. ... __ .........__..... HHS 2001/2002 Audit Response - S - November 20, 2003 o reviews of the U S Government website listing federal awards. Please contact us if you should require further information. Sincerely, MARK DeSAULNIER Chair, Board of Supervisors Attachment cc: John Sweeten,County Administrator Scott Tandy,Chief Assistant County Administrator Julie Enea,Senior Deputy County Administrator Ken Corcoran,Auditor-Controller Jack Cooper,Chief,Internal Audit Services _...... ......... _.. _...._ ... ....... ....... ........ .......................... __...._. . ....._.. . ........ ..........__.. .. _.. .._._.. 11/13/2003 29:44 19256462480 PAYROLL. PACE 02 ��ysxvrtrs.L Office of inspector general DEPARTMENT OF HEALTH & HUMAN SERVICES office of Audit Services �4 National External Audit Review Center ��li,rr�o Lucas Place,Room 514 323 West 8th Street Kansas City,Missouri 64105 MAR 2 zftj Jack B. Cooper,Jr. , Chief Auditor Contra Costa.County 625 Court Street Martinez, California 94553-2181 Dear Mr. Cooper: This letter is in response to the request for an extension in submitting the Single Audit for the year ending June 30, 2002, for the Contra Costa County. We I-.ave approved your request for an extension until May 15, 2003, if the Department of Health and Human Services provided the preponderance of direct funding to your entity. Please note this office does not have authority to grant an extension for the submission of the Financial Status Report. Please note that the audit reporting package and data collection form for fiscal.year 1997 and beyond should be submitted to: Federal Audit Clearinghouse Bureau of the Census 1201 East 10`l' Street Jeffersonville, IN 47132 Also, send a copy ofthis letter to each Federal Agency that provided funding to the Contra Costa. County. If you have questions, contact our office at(816)374-6714. Sincerely, John cher, Manager, National CExternal Audit Review Center