HomeMy WebLinkAboutMINUTES - 06101997 - D4 D4
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TO: , BOARD OF SliPERVISORS Contra
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FROM: SCOTT TANDY, DIRECTOR f _ Costa
4 COMMUNITY SERVICES DEPARTMENT „u 'z
��• � :County
DATE: JUNE 10, 1997 cosy--._
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SUBJECT: STATE AUDIT REVIEW OF COMMUNITY SERVICES BLOCK GRANT, EMERGENCY HOMELESS
AND WEATHERIZATION PROGRAMS, 1994, 1995 AND 1996
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
I. RECOMMENDATIONS
1. ACKNOWLEDGE receipt of the State Department of Community
Services and Development certified letter dated June 2, 1997.
2 . ACKNOWLEDGE corrective actions to date in responding to both
the program review and fiscal audit.
3 . DIRECT staff to review the State findings and recommendations
and prepare a response.
II. BACKGROUND
The State Department of Community Services and Development recently
conducted a fiscal audit of the department's contracts for
Community Services Block Grant, Emergency Homeless and Weatheriza-
tion programs for calendar years 1994, 1995 and 1996. The
objective was to determine if the accounting system and internal
controls utilized were adequate to safeguard funds and assure that
contractual obligations were met. Two State audit staff members
conducted the review between December 2, 1996, and February 14,
1997. This fiscal review followed a State programmatic review in
August 1996 and independent review by KPMG Peat Marwick in November
1996.
On June 3, 1997, we received the results of this review in draft
form, including their findings and recommendations. The State
expects a written response as to corrective actions taken on the
recommendations.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON June 10, 1997 APPROVED AS RECOMMENDED X OTHER
i
VOTE OF SUPERVISORS
1 HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS(ABSENT r"------- i AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
CC: Community Services Department ATTESTED June 10, 1997
Lloyd Madden, Human Resources Department
PHIL BATCHELOR,CLERK OF THE BOARD OF
SUP AND COUNTY ADMIN STRAT
M382' '(10/88)
BY Y
PAGE 2, STATE AUDIT REVIEW, JUNE 10, 1997
Page 19 of the audit review contains a note that County management
began taking actions to address the State's concerns while they
were conducting their field work. Additional corrective actions
have been taken and planning is underway to improve systems and
procedures. Significant personnel changes have also occurred. .
The total amount of disallowed costs contained in this review is
$491,477. The Board of Supervisors has previously approved
remittances to the State of $57,908 for unspent 1995 CSBG grant
funds and $36, 347 for unsupportable claims charged to the Emergency
Homeless Program in 1994 and 1995, leaving outstanding claims in
the review of $397, 192 .
Of the outstanding State claims every effort will be made to reduce
the liability to the General Fund. However, in view of the
conditions previously described in staff reports, the State program
review and independent reports by the firm of KPMG Peat Marwick,
the potentially contestable amount may be limited.
Recommendations address the following issues: Separation of
duties; accounting system not documented; employee time reporting;
contract expenditures; contracting problems; various weatherization
contract problems; various Community Services Block Grant contract
problems; unauthorized subcontractors; questionable personnel
services costs charged to CSD contracts ; public liability
insurance; and travel costs.
The 24-page audit and the specific findings and recommendations are
attached.
• _ 1 � f
STATE OF CALIFORNIA-HEALTH AND WELFARE AGENCY PETE WILSON. Govemor
'DEPARTMENT OF COMMUNITY SERVICES AND DEVELOPMENT
A Quality Management Department
700 North 10th Street, Room 258
a Sacramento, CA 95814
(916)322-2940
(916)327-3153(FAX)
(916)327-6318(TDD)
ecelve
JUN 3 - 1997
COMMUNffY 'RN��N VICES �tMENT
ADMJune 2 , 1997
CERTIFIED LETTER - RETURN RECEIPT REQUESTED
Scott Tandy, Director
Contra Costa County Community Services Department
1220 Morello Avenue, Suite 101
Martinez, CA 94553
SUBJECT; Review No. AR96-002 (DRAFT)
Mr. Tandy:
The audit staff of the Department of Community Services and
Development (CSD) conducted a review of Contra Costa County
Community Services Department (CCCCSD) during the period 12/2/96
to 2/14/97 . This review was conducted in accordance with Public
Law 97-35, the California Government Code, and other laws and
regulations as appropriate.
The primary objective of our examination was to determine if
the accounting system and internal controls utilized by the
agency were adequate to safeguard the funds and to assure that
contractual obligations were met .
Our examination included a review of financial records and
other documents, observation of procedures, testing of
transactions, interviews with agency staff, and other tests as we
determined to be necessary. The period covered by our testing
varied depending upon the area of review and the type of
transactions involved. Our review focused on: testing of
current procedures; and, transactions completed during the 1994 ,
1995, and 1996 calendar years . Preliminary findings and concerns
were discussed with responsible agency staff during the review
and at the exit conference .
The following represents our findings and recommendations
based on our review of CCCCSD. This report presents information
Scott Tandy
June 2, 1997
Page 2
on weaknesses which were noted during our review. Other issues,
even though they are not material, are presented to aid
management in improving controls .
A. INTERNAL CONTROL ISSUES
SEPARATION OF DUTIES
The elements of a satisfactory system of internal accounting
and administrative control include (but are not be limited to) :
o A plan of organization that provides segregation of duties
appropriate for proper safeguarding of assets .
o A plan that limits access to assets to authorized personnel .
o A system of authorization and record keeping procedures
adequate to provide effective accounting control over
assets, liabilities, revenues, and expenditures .
Our review of CCCCSD' s internal control structure,
especially in terms of separation of duties, disclosed weaknesses
because of the small number of employees . Reasonable checks and
balances are- key elements to an internal control structure . A
control system designed with proper segregation of duties reduces
the opportunities of allowing any one employee to be in a
position to both perpetuate and conceal errors or irregularities
in the normal course of his or her duties . Many functions,
currently performed by individual employees, can be delegated to
employees in other units to maintain proper segregation of
duties .
Currently, payroll checks are distributed by an employee
performing other payroll functions . The Executive Secretary
performs numerous functions including computing payroll,
distributing payroll checks, and also maintaining the
personnel/payroll files .
The Accounting Supervisor performs numerous duties which are
not compatible with proper internal controls . This employee
prepares journal entries, prepares financial statements, reviews
financial statements and trial balances, and prepares the
monthly/quarterly reports to CSD.
YI
Scott Tandy
June 2 , 1997
Page 3
Recommendations:
1 . Review the workflow and responsibilities of the
Executive Secretary and the Accounting Supervisor, and provide
for reasonable separation of duties . Consideration should be
given to using employees from other units to provide for
essential checks and balances .
2 . Comply with Contra Costa County (CCC) Administrative
Bulletin 105 which establishes procedures for receiving,
safeguarding, and reporting money received.
ACCOUNTING SYSTEM NOT DOCUMENTED
Proper internal controls should include an established
system of practices to be followed in the performance of duties
and functions .
CCCCSD does not have an accounting system procedures manual
documenting the agency' s accounting system. According to the
agency, when an accounting issue arises, the agency refers to the
County Auditor Controller' s Office Accounting Manual . This
manual, however, does not reflect the accounting procedures used
by CCCCSD.
A related issue is the need for a, written policy and
procedures manual documenting administrative policies and
procedures currently used by CCCCSD.. This manual should provide
uniform guidance for routine assignments and assure compliance
with internal control procedures set forth by the agency. As new
procedures and methods are developed and existing ones improved,
the policies and procedures manual will need to be revised.
Another related issue is the lack of written desk procedures
documenting the duties performed by CCCCSD staff on a daily
basis . This lack of written procedures could result in work not
being adequately performed when employees are terminated _or are
absent .
Recommendations:
3 . Develop and implement an accounting system procedures
manual . Another county department may already have a manual
which may be emulated by CCCCSD.
Scott Tandy
June 2 , 1997
Page 4
4 . Ensure that a policy and procedures manual is developed,
implemented, and subject to periodic, intensive review and
modification.
5 . Document existing desk procedures and update, as needed.
EMPLOYEE TIME REPORTING
A--sampling of employee time sheets disclosed the following:
o Expenditure reports were not always supported by time sheet
records .
o Accounting unit allocated costs which circumvented
allocations made by employees on their time sheets .
o Total payroll hours did not equal the hours shown on the
time sheets .
o Timesheets were not always complete or accurate.
o Supervisors did not always sign off on time sheets .
We also noted that costs claimed for accounting (hours) on
Contract No. 96B-8003 Assurance 16 were based on the time worked
by the weatherization crew, and not on the actual hours worked by
the Accountant Supervisor.
Additionally, we were informed by the Executive Secretary
that the former Director did not complete time sheets . Her time
was allocated to various contracts based on an undocumented
method (40% charged to CSBG) . The Administrative Services
Officer (ASO) stated that the former Director' s hours were
charged based on the ASO' s charges (4001 to CSBG) since her duties
closely followed the ASO' s duties . However, the ASO' s time
allocation method was undocumented.
Recommendations:
6 . Submit monthly/quarterly expenditures reports based on
actual costs, including employee .time charges .
7 . Ensure time sheets are properly completed and
signed/certified by both the employee and the supervisor.
8 . Document allocation methods used to charge time to
various contracts . Cost allocations need to be updated routinely
to ensure accuracy.
Scott Tandy
June 2, 1997
Page 5
CONTRACT EXPENDITURES
Our review of contract expenditures reported to CSD
disclosed the following:
o Expenditures were charged to activities/line items that were
not approved in the contract budget .
o Charges by the County General Services Department (GSD) to
CCCCSD were not routinely reviewed for accuracy and
propriety.
o Authorization was not always requested from funding sources
to expend funds which required advance approval; such as
out-of-state travel, subcontracting, etc .
o Cost allocations policies and procedures were not
documented, and allocation methods were not consistently
applied.
o Salaries and benefits of employees working on more than one
program were charged to CSD contracts based upon allocations
that did not reflect the actual work effort of the
employee (s) .
o Salaries and benefits of employees on administrative leave
have been charged to CSD contracts .
o Labor costs were charged under a "storage" line item for a
number of contracts . (This appears to be a direct result of
CCCCSD' s attempt at reducing administrative costs . )
o Funds earned from the sale of scrap/salvage weatherization
materials which were bought with CSD weatherization contract
funds were not closely monitored.
Recommendations:
9 . Refrain from charging expenditures to unapproved
contract line items .
10 . Review charges made by GSD for reasonableness and
correctness .
11 . Do not claim personal services costs based on the
budget or funds available .
_ 12 . Require employees working on more than one program to
maintain detailed time distribution records . As an alternative,
CCCCSD may charge personal services costs based on an approved
cost allocation plan. The methodology used to allocate salaries
Scott Tandy
June 2 , 1997
Page 6
and benefits must be documented, reasonable, and consistently
applied.
13 . Review cost allocations (including personal services
charges) for accuracy, propriety, and supporting documentation.
[See Attachment Nos . 1 and 2 for cost allocation examples . ]
14 . Determine if charges made against CSD contracts are
appropriateand amend the expenditure reports, as necessary. .
This should include salaries and benefits of employees charged to
CSD contracts while on administrative leave and unauthorized
expenditures .
15 . Monitor funds earned from the sale of scrap/salvage
- weatherization materials to ensure that the proceeds are used to
offset the costs of the appropriate CSD contracts .
CONTRACTING - GENERAL
Our review of contracts revealed the following weaknesses :
o Contracts were awarded without an open competitive bidding
process (e .g. - Paradigm) .
o Contracting procedures manual needs to be developed which
documents all contracting policies and procedures .
o Inadequate budget controls resulted in numerous budget line
items and the total contract amounts being overexpended.
See Attachment No. 3 for a list of CSD contracts which were
overexpended by CCCCSD at 2/14/97 .
Recommendations:
16 . Refrain from limiting the bidding process to only a
limited number of bidders . Promote open and free competition.
17 . Implement budget controls to prevent deficit spending,
i .e. , incurring obligations in excess of the total contract funds.
or budget line items .
18 . Establish a mechanism to identify budgeted costs and
actual costs, and keep a running balance of expenditures by line
item and the total contract balance .
Scott Tandy
June 2 , 1997
Page 7
19 . Develop procedures to track and control budget line
items, and report results to operating/program units on a monthly
basis .
20 . Centralize the accounting staff at the Morello
Administrative Office to maintain control of contract
expenditures . Expenditure controls should be under the direction
of the ASO and not under individual program managers .
B. OTHER FINDINGS
CONTRACT NO. 96B-8003
Federal regulations do not permit claims for reimbursement
to be based on the contract budget or the availability of funds .
We observed various problems during our review of Contract No.
96B-8003 "WX" , including the following:
o Cost allocations were not consistently applied. For
example, during 5/96, Marie Roberts ' salary and fringe
benefits were charged at 25% to administration. Normally,
only 10% is charged to administration for this employee.
.Additionally, the Program Costs Pool which consisted of
numerous charges (GSD charges, rent & leases, telephone,
office expenses, etc . ) was allocated based on the contract
budget ratios/percentages between intake, outreach, dwelling
assessment, and storage . Costs should have been charged
based on services or goods provided to each activity.
o Building Occupancy Costs were claimed at loo to
administration. The Accountant Supervisor was unable to
support how the allocation was developed.
o Weatherization Program labor costs (Jim McEvoy and Willie
Ridgle) were charged to outreach (33 . 330) , dwelling
assessment- (33 .33%) , and storage (33 . 330-o) . These costs were
evenly allocated without regard to the actual time spent on
each activity. Charges should have been based on services
(labor time) provided to each activity.
In addition, costs normally charged as "intake" costs were
charged as "storage" costs to reduce total administrative
costs (which is limited to 8% of the budget) . CCCCSD
Scott Tandy
June 2 , 1997
Page 8
claimed $10, 125 of WX intake labor costs as storage costs
during the period 1/96 to 7/96 .
o For the "Assurance 16" Program, we noted that accounting
costs were charged to Contract No. 96B-8003 based on the
hours worked by the weatherization crew. Accounting costs
should have been based on the actual time the accounting
staff actually worked on the program.
Recommendations:
21 . Document cost allocation methodology. Cost allocations
must be consistently applied.
22 . Remit $10, 125 in disallowed costs claimed as
Weatherization Program storage costs .
23 . Charge labor costs based on the actual time employee (s)
work on each program.
CONTRACT NO. 96F-1333
The results of our .review of Contract No. 96F-1333 disclosed
that personal services costs charged to the contract were
improperly allocated. The three employees affected were Al
Prince, Administrative Services Officer; Joan Sparks, Director;
and, Janelle Millar, Executive Secretary.
Al Prince ' s salary and benefits were not properly allocated
during the months of 6/96 and 8/96 . Normally, his salary and
benefits were charged at 401 to the above contract . However,
during 6/96 and 8/96 , he was charged at 1006 to CSBG; without
substantiating documentation. The total overcharge was 54, 588* .
(* Includes an 8/8/96 adjustment to correct the 6/96 overcharge .
No adjustment was made for 8/96 . )
[Note: Joan Sparks ' salary and benefits are discussed in the
finding titled "Questionable Personal Services Costs Charged to
CSD Contracts . "]
Janelle Millar' s salary and benefits were charged 1006 to
CSBG for 9/96 . Normally, her salary was allocated at 206 to
CSBG. The overcharge for 9/96 was $3 , 942 .
Scott Tandy
June 2, 1997
Page 9
Additional findings related to personal services were also
noted. The Personnel Activity Report (PAR) was not utilized by
all employees working on more than one program. The PAR is used
by CCCCSD to record time distribution for employees who worked on
more than one program. Employees allocating time between
different programs need to document their time worked on each
program or have an approved cost allocation plan. We also noted
that supervisors did not always sign-off on staff time sheets .
Recommendations:
24 . Ensure proper salary allocations are made prior to
reporting monthly/quarterly reports to CSD.
25 . Refund $8, 530 for overclaimed costs, identified above,
to CSD.
26 . Require all employees who work on more than one program
to maintain time distribution records .
27 . Ensure all supervisors review and sign-off/certify all
time sheets . This should be done before distributing the payroll
checks .
CONTRACT NO. 95BD-7013
Weatherization program materials are kept in a warehouse
which is leased from Contra Costa County at a rate of $2 , 550 per
month, during 1995 . Our review of these charges disclosed that
the CCC General Services Department billed CCCCSD twice for the
month of 7/95 . These costs were charged to Contract No. 95BD-
7013 ECIP ($1, 530) and WX ($1, 020) .
Recommendation:
28 . Remit $2, 550 to CSD for duplicate charges claimed under
Contract No. 95BD-7013 ECIP ($1, 530) and WX ($1, 020) .
CONTRACT NO. 95C-8012
We identified problems with labor costs (salaries and
benefits) charged to Contract No. 95C-8012 . 20% of the labor
costs for Jim McEvoy and Willis Ridgle were charged as "storage"
P4
Scott Tandy
June 2 , 1997
Page 10
costs . The other 800-o was charged to outreach (200) , intake
(200) , client education (20%) , and assessment (200-.) .
We also noted that 10% of Marie Roberts ' and Sharon Sydney' s
salaries and benefits were arbitrarily charged as administrative
costs . The costs appear to have been charged as administrative
costs based on the budget or the availability of funds .
Recommendations:_
29 . Determine if the method used to allocate labor costs
charged were properly allocated as administrative costs .
30 . Do not claim administrative costs based on the
availability of funds or the budget .
CONTRACT NOS. 94J-9808 AND 95J-1008
$24, 598 and $11, 749 were charged to Contract Nos . 94J-9808
and 95J-1008 , respectively, without adequate supporting
documentation. According to the Accountant Supervisor, the
former CCCCSD Director had instructed him to report that all
funds for the contract (94J-9808 : $24, 598) had been expended even
though no documented expenditures were made against the contract .
A 11/8/96 memo from the Accountant Supervisor to the current
CCCCSD Director recommended that $24, 598 be returned to the State
due to the lack of documentation to support the expenditures
claimed for Contract No. 94J-9808 . A field review by the CSD
Program Monitor also disclosed that no expenditures were made
against Emergency Homeless Program (EHP) activities .
The Accountant Supervisor also indicated that the $11, 749 in
reported costs against Contract No. 95J-1008 was based on the
budgeted amount and not on actual expenditures . The Program
Manager, however, stated that work was performed against the
contract; but, CCCCSD did not have substantiating documentation
to support the amount claimed.
In 1/97, CCCCSD asked CSD to bill the agency for the above
disallowances . CSD invoiced the agency on 1/27/97 for $24, 598
(Invoice No. 11595) and $11, 749 (Invoice No. 11596) for Contract
Nos. 94J-9808 and 95J-1008 , respectively.
Scott Tandy
June 2, 1997
Page 11
Recommendations :
31 . Remit $36,347 for unsupported costs charged to Contract
Nos . 94J-9808 ($24 , 598) and 95J-1008 ($11, 749) . (Note : On
5/30/97, CSD received payment of $36 , 347 from CCCCSD. )
32 . Implement controls to verify that only actual/allowable
expenditures are charged against CSD contracts .
CONTRACT NO. 94C-7012
Our review of Contract No. 94C-7012 disclosed the following
discrepancies :
0 100 of Marie Roberts ' and Sharon Sydney' s salaries and
benefits were arbitrarily charged as administrative costs
based on the budget or funds available. The contract limits
administrative charges to 80 .
o Program Costs Pool was allocated between outreach, intake,
client education, assessment, and storage based on funds
available . This allocation appears to be based on the
budget or available funds .
o Jim McEvoy and Willis Ridgle ' s salaries and benefits were
allocated evenly between outreach (250) , intake (25a) ,
education (250) , and assessment (250) . There was no
evidence that each worker actually spent 250 of his time on
each type of service .
o Miscellaneous Port Chicago building costs were allocated
arbitrarily between the ECIP (400-.) and WX (600) programs .
Recommendations:
33 . Document the methodology use to allocate above costs .
34 . Submit the results (of the allocation study) to CSD for
review and comment .
UNAUTHORIZED SUBCONTRACTORS
During our analysis of subcontractors, we noted that three
subcontractors were unauthorized to perform work on CSD
Scott Tandy
June 2, 1997
Page 12
contracts . These subcontractors were Pittsburg Preschool
Coordinating Council, Paradigm Innovations, and Family and
Community Services . A discussion of each subcontractor follows :
Pittsburg Preschool Coordinating Council:
CCCCSD was unable to find documentation supporting the
approval of Pittsburg Preschool Coordinating Council (PPCC) by
CSD as--a subcontractor on Contract No. 94F-1173 . Subcontract
funds were to be used for funding child care services rendered in
1994 as part of the County' s Head Start Family Day Care Research
and Demonstration Project . Prior to using CSBG funds, CCCCSD
tried to obtain funding from other sources, including Head Start .
All other sources refused to fund the project .
According to the CSD Field Operations Unit, a subcontractor
is authorized to perform work on a CSD contractor if the agency
was listed on the original contract or if the subcontractor was
added to the contract through a contract amendment . Our review
disclosed that PPCC was paid $40, 000 for (unauthorized) work
performed on the above contract .
CCCCSD also did not perform a contractor evaluation of PPCC
even though the independent auditor cited material findings in
the single agency-wide audit report for the FYE 6/30/94 . The
findings included a going concern statement, significant
operating losses, material reportable conditions, and material
instances of noncompliance with various program requirements .
Furthermore, PPCC reported $2. 292 in audit costs for Subcontract
No. FCC94-20-01; but, no payment was ever made to the CPA firm.
In addition, CCCCSD did not make a request to the CCC Board
of Supervisors for approval of CSD Contract No. 94F-1173 until
5/4/94 . The contract term had ended on 4/30/94 .
PPCC claimed costs based on the budget rather than at actual
costs, as required by the contract . The $40, 000 contract was
divided by 4 months and claimed at $10 , 000 per month.
Paradigm Innovations :
CCCCSD entered into two subcontracts with Paradigm
Innovations (PI) to provide consultation regarding the
acquisition of Balboa School as a Head Start Child Care Center
Scott Tandy
June 2 , 1997
Page 13
and for the preparation of grant proposals to secure funding.
These subcontracts were not approved by CSD on Contract Nos . 95F-
1207 and 96F-1173 . In addition, the above activities were not
approved in the 1995-96 Community Action Plan. $23 , 865 was paid
by CCCCSD to PI on Contract Nos . 95F-1207 ($4, 995) and 96F-1333
($18, 870) . [Note : The agency has made adjustments of <$4, 335>
and <$3, 285> to Contract No. 96F-1333 . 1
PI was considered by CCCCSD as a sole source contractor_.
Therefore, the above contracts for services were awarded without
an open-competitive process . Additionally, the agency failed to
document PI as a sole source contractor.
Family and Community Services:
Family and Community Services (FCS) was not an approved
subcontractor on Contract No. 95F-1207 . CCCCSD paid FCS $4, 828
for services performed on the above subcontract .
Recommendations:
35 . Disallow $61, 073 in unapproved subcontractor costs
claimed for Pittsburg Preschool Coordinating Council ($40, 000) ,
Paradigm Innovations ($16 , 245) , and Family and Community Services
($4 , 828) .
36 . Ensure that all future subcontractors are approved by
CSD before payment is made using CSD funds .
37 . Implement controls to verify that expenditures are not
charged against contracts unless allowable under the contract
terms .
38 . Monitor subcontractors on a routine basis to ensure
that they are meeting the performance standards set by the
subcontract . Subcontractors who do not meet minimum standards
should not be reimbursed for expenditures made and/or not be
funded in the following period.
39 . Perform a contractor evaluation of all subcontractors
to provide assurance that the services provided were consistent
with the priorities and objectives of the subcontract, benefited
the agency, and a report was received in a timely manner.
Scott Tandy
June 2 , 1997
Page 14
40 . Provide documentation to substantiate sole source
contractors . Policies for sole source subcontractors should be
established.
QUESTIONABLE PERSONAL SERVICES COSTS CHARGED TO CSD CONTRACTS
During our review of personal services, we noted that
salaries and benefits of a number of employees were
inappropriately charged to CSD contracts . The employees involved
were Joan Sparks, Darnell Turner, James McEvoy, Sharon Sydney,
Ron Fray, and Bettye Jones . A discussion of each employee
follows :
Joan Sparks:
Joan Sparks, (former) Director, was on paid administrative
...leave .from CCCCSD during the period of 4/96 to 12/96 . The agency
charged approximately 400 of Ms . Sparks ' salary and benefits
($47, 876) during the above period to CSD Contract No. 96F-1333 .
Since the contract derived no benefit while this employee was on
extended leave, all salary and benefits claimed for this employee
for the above period are disallowed.
CCCCSD has undertaken corrective action by adjusting the
amount already claimed for this employee for the period 7/96 to
12/96 (by an unspecified amount) . However, an additional
adjustment is also needed for the period 4/96 to 6/96 . According
to the agency, adjustments have not been made for the period 4/96
to 6/96 since it affects the prior fiscal year (FYE 6/30/96) .
CCCCSD is waiting for the adjusting figures, from the independent
auditor, before proceeding.
Darnell Turner:
. Darnell Turner, CSBG Program Coordinator, worked on numerous
contracts/programs during 1995 and 1996 but only charged the CSBG
contracts for his time . Unless CCCCSD -can substantiate costs
- claimed for Darnell Turner, CSD will disallow $81, 941 for Darnell
Turner' s salary and benefits . ($30, 258 was charged to Contract
No. 95F-1207 for the period 3/95 to 12/95 ; and, $51, 683 was
charged to Contract No. 96F-1333 for the period 1/96 - 12/96+ . )
Scott Tandy
June 2, 1997
Page 15
Below is a listing of contracts/programs on which Darnell
Turner worked:
CSBG 11/92 - Current
LIHEAP WX/DOE 3/95 - Current
EHP 9/95 - Current
Head Start 10/95 - 6/96
ECIP 9/96 - 11/96
James McEvoy:
James McEvoy, Lead, Assessment Specialist, was on
administrative leave from 2/95 to 6/96 . Yet his salary and
benefits were still being charged to CSD contracts . $7, 290 was
charged to Contract No. 95BD-7013 WX and $4, 935 was charged to
Contract No. 95C-8012 .
Sharon Sydney:
Although Sharon Sydney, Housing and Energy Division Manager,
was on administrative leave for the period 2/95 to 8/95, the
agency still charged her salary and fringe benefits to the CSD
contracts . $17, 926 was charged to Contract No. 95BD-7013 WX
($7, 556) and ECIP ($10, 370) ; and, $3 , 821 was charged to Contract
No. 95C-8012 .
Ron Fray:
Ron Fray, EOP Specialist I, worked for the Housing and
Energy Division (weatherization program) during the periods of
4/95 to 12/95 and 1/96 to 9/96 . All of Mr. Fray' s salary and
benefits were charged to CSBG contracts . During this period,
$37 , 823 was charged to Contract No. 95F-1207 (4/95 - 12/95) and
$39, 585 was charged to Contract No. 96F-1333 (1/96 - 9/96) .
Bettye Jones:
Bettye Jones, EOP Specialist II, only worked for the Housing
and Energy Division ECIP/Assurance 16 Programs; but, her salary
and benefits were charged to the CSBG Program for the periods of
4/95 to 12/95 and 1/96 to 9/96 (plus an 11/96 lumpsum retro-
payment for 7/96 - 9/96) . CCCCSD charged $30, 195 to Contract
No. 95F-1207 and $6, 940 [$28 , 364 less an adjustment of $21, 4241
Scott Tandy '
June 2, 1997
Page 16
to Contract No. 96F-1333 .
Recommendations:
41 . Ensure that all funds charged ($47, 876) to Contract No.
96F-1333 for Joan Spark' s salary and benefits for the period of
4/96 to 12/96 are either repaid to CSD or adjusted out of the
final contract close-out report .
42 . Remit to CSD, $81, 941 in disallowed costs claimed for
Darnell Turner under Contract Nos . 95F-1207 ($30, 258) and 96F-
1333 ($51, 683) ; OR, CCCCSD must substantiate the salary and
benefits claimed based upon allocations that represent this
employee ' s actual level of effort for work performed on the above
contracts .
43 . Use time distribution records to document/record
employees working on more than one program.
44 . Disallow $12, 225 in costs claimed for James McEvoy
under Contract Nos . 95BD-7013 ($7, 290) and 95C-8012 ($4 , 935) .
45 . Disallow $21,747 in costs claimed for Sharon Sydney
under Contract Nos . 95BD-7013 ($17, 926) and 95C-8012 ($3 , 821) .
46 . Disallow $77,408 in costs claimed for Ron Fray under
Contract Nos . 95F-1207 ($37, 823) and 96F-1333 ($39, 585) .
47 . Disallow $37, 135 in costs claimed for Bettye Jones
under Contract Nos . 95F-1207 ($30, 195) and 96F-1333 ($6 , 940) .
48 . If CCCCSD disagrees with. the above personal services
-.disallowances, the agency must research and provide documentation
which substantiates the proper charges/allocations made against
. each CSD contracts and submit the detailed results to CSD for
review and evaluation.
PUBLIC LIABILITY INSURANCE
Our review of expenditures reported to CSD under Contract
No . 96C-9003 revealed that CCCCSD claimed $2 , 515 as ".Public
Liability Insurance" costs for the month of 9/96 . This was, in
reality, liability claims against Contra Costa County for the
Yl
Scott Tandy
June 2 , 1997
Page 17
period 7/1/86 through 6/30/93 . The amount shown above represents
CCCCSD' s share of the County' s liability claims that was prorated
and charged against the DOE contract .
A further review of the Expenditure Detail Report for the
period 7/12/96 to 12/31/96 showed that $11, 584 was charged to
Contract No. 96B-8003 under the category of "Community Services
Liability Loss" . Also, $1, 920 was being charged to Contract No.
96F-1333 as "Community Services Liability Loss" .
(Note : The above charges were not public liability insurance
costs/premiums and are therefore unallowable. Contra Costa
County being "self-insured" does not make periodic insurance
premium payments . The budget line item "Public Liability
Insurance" was budgeted as $-0- under Contract No. 96C-9003 . )
Recommendation:
49 . Remit $16, 019 to CSD for costs claimed as public
liability insurance and disallowed under Contract Nos . 96C-9003
($2 , 515) , 96B-8003 ($11, 584) , and 96F-1333 ($1, 920) .
(Note : An adjustment to Contract Nos . 96B-8003 and 96F-1333
may already have been made for the above expenditures by the
Accountant Supervisor. )
TRAVEL COSTS
Our review of the 1994 , 1995, and 1996 Employee Travel
Demands disclosed material weaknesses in the internal controls
.-for travel costs . Our examination included a review of files
located in the CCCCSD accounting office and interviews with
employees regarding their travel demands .
During our review, we noted that meals were claimed for
local area travel . Meals were also claimed at rates that
exceeded the State rates. Contra Costa County policies
(Administrative Bulletin Nos . 9 . 8 and 11 .4) differed from State
travel policies and procedures for authorized expenses, expense
reimbursement, and travel of County employees, board members, and
advisory commissioners . County regulations do not permit
reimbursement for meals of supervisors/managers when travel is
within county lines .
Scott Tandy
June 2, 1997
Page 18
Our tests of Employee Travel Demands disclosed the following
discrepancies :
o Staff meetings were held 'at local restaurants and the meals
were charged to both State and Federal contracts .
o Refreshments during other staff meetings were charged to CSD
.contracts after being rejected by the County Auditor
Controller' s Office for reimbursement . (When the term
"refreshments" was removed from the travel claim, the claim
was resubmitted, approved, and charged to CSD. )
o CSBG Program Coordinator claimed 3 lunches in 1 day and 2
lunches per day for 3 other days during 9/94 .
o $35 was claimed for a NAACP banquet by the CSBG Program
Coordinator.
-o CCCCSD charged out-of-state travel expenses to CSD contracts
without prior written approval from CSD. (Note : CSD
contracts require prior written authorization for out-of-
state travel unless specifically identified in the contract
budget . Listing the name of a conference in the contract
budget does not categorize a conference as out-of-state . )
Travel rates were claimed at higher rates than allowed by
the State . The State rates are :
Lodging $79 . 00 with receipt + tax
Breakfast $ 5 . 50
Lunch $ 9 . 50
Dinner $17 . 00
Incidentals $ 5 . 00
Mileage $ 0 . 24/mile or up to $0 . 30/mile with certification
Our test sample disclosed that CCCCSD claimed lodging at up to
$98 . 61/night and meals up .to $55 . 20/day. These figures are in
excess of State rate maximums of $79 . 00/night and $32 . 00/day.
Mileage was claimed at $0 . 30/mile without certification. [See
Attachment No. . 4 for the Summary Of Out-Of-State Travel (1/94 -
12/96) . ]
Scott Tandy
June 2 , 1997
Page 19
Recommendations:
50 . Remit $20, 563 to CSD for the disallowed amounts claimed
as out-of-state travel on Contract Nos . 94F-1107 ($11, 923) , 95F-
1207 ($6, 772) , and 96F-1333 ($1, 868) .
. 51 . Refrain from charging expenditures for unapproved .line
items .
52 . Develop and implement formal travel policies and
guidelines that are in accordance with State and Federal travel
regulations .
53 . Implement controls to assure conformance with existing
rules, regulations, and procedures .
CONTRACT NO. 95F-1207
The balance remaining on the above contract has been repaid
by CCCCSD. We received a check from the agency in the amount of
$57, 908 on 2/21/97 for CSD Invoice No. 11582 .
Please submit a written response within thirty (30) days of
this notice as to corrective actions taken on the recommendations
in the report . The implementation of the recommendations
presented in this report will assist CCCCSD in improving controls
in the areas identified. A copy of this report has been
submitted to CSD management for their review.
It should be noted that when advised of areas for
improvement during our fieldwork, CCCCSD' s management began
taking actions to address our concerns . While we could not test
the effectiveness of the actions prior to the completion of our
fieldwork, we were pleased with CCCCSD' s commitment to improving
its internal controls . This provides an indication of
management ' s significant commitment to improving operational
policies, procedures, and controls .
Scott Tandy
June 2, 1997
Page 20
We would like to extend our appreciation for the cooperation
and courtesy extended during the review. If additional
information is needed, please contact me at (916) 323-8683 .
Sincerely,
(° (V,
U
Wayman Yee, M.B.A. , C.G.F.M.
Management Auditor
Audit Services Unit
Attachments (4)
CC : Al Prince, Administrative Services Officer
0472302
Attachment No. 1
EXAMPLES: INDIRECT COST ALLOCATION STATISTICAL BASES
Indirect Cost Item Example Statistical Basis
Accounting and Auditing Ratio of cost center direct cost to total direct cost
Administrative Salaries Ratio of cost center direct salaries to total direct
salaries (exclusive of administrative salaries).
Data Processing Ratio of cost center units of service to total units of
service.
Depreciation - Building Ratio of cost center square footage to total building
square footage.
Dietary Ratio of cost center meals served to total meals
served.
Legal Ratio of cost center direct cost to total direct costs.
Payroll Ratio of cost center assigned employees to total
employees.
Rent Ratio of cost center building square footage to total
building square footage.
Supplies Ratio of cost center purchase orders to total
purchase orders.
0472302c
Attachment No.2
EXAMPLES OF BASES USED FOR COST DISTRIBUTION
Type of Service Suggested Basis for Allocation
Accounting Number of transactions processed.
Auditing Direct audit hours.
Budgeting Direct hours of identifiable services of employees of
central budget.
Building lease management Number of leases.
Data processing System usage.
Disbursing service Number of checks or warrants issued.
Employees retirement Number of employees contributing.
system administration
Insurance management service Dollar value of insurance premiums.
Legal services Direct hours.
Mail and messenger Number of documents handled or service
employees served.
Motor pool costs including Miles driven and/or days used.
automotive management
Office machines and equipment Direct hours.
maintenance repairs
Office space use and related Sq. ft. of space occupied.
costs (heat, lights,janitor service, etc.)
Organization and management services Number of employees.
Payroll services Number of employees.
Personnel administration Number of employees.
Printing and reproduction Direct hours,job basis, pages printed, etc.
Procurement service Number of transactions processed.
Local telephone Number of telephone instruments.
Health services Number of employees.
Fidelity bonding program Employees subject to bond or penalty amounts.
0472302d
�i
Attachment No. 3
SUMMARY INFORMATION ON CSD CONTRACTS AS OF 2/14/97
Contract Amount Percent Line Items
Number Over Expended Expended Over Expended
94BD-6013 E $ 5, 767 1020-o 4
94BD-6013 WX $ 39, 009 1120 7
94C-7012 $ 578 1010 7
94F-1107 $ 13 , 815 1030 8
94F-1173 $ -0- 1000 0
94J-9808 Expenditure Information Not Available
95BD-7013 E $ 22, 162 1089. 8
95BD-7013 WX $ 16, 751 1110 11
95C-8012 $ 45, 156 1570 15
95F-1207 $ -0- 850 . 6
95J-1008 Expenditure Information Not Available
96B-8003 WX $ 8, 772 1050 11
96B-8003 A16 $ -0- 676 4
96C-9003 $ 45, 145 .30306 16
96F-1333 $ -0- 860 12
RECAP:
A. Contract budget line items were overexpended due to a lack of
budgetary controls .
B.. Monthly/Quarterly reports submitted to CSD did not always
reflect actual costs . On numerous occasions, these reports were
later adjusted to reflect actual costs . However, in a number of
cases, no adjustment was made .
C. Total contracts were overexpended leading to a deficit
balance and forcing Contra Costa County to use its General Fund
to cover excess expenditures .
0472302a
r
1
i
Attachment No.4 C472302n
SUMMARY OF OUT-OF-STATE TRAVEL (1/94 - 12/96)
TRAVEL DATES EMPLOYEE DESTINATION EXPENSES
Contract No. 94F-1107
3/15 - 3/20/94 D.Turner Washington DC $ 1,660.14
3/15 - 3/20/94 H.Collins Washington DC $ 1,571.66
4/09 - 4/14/94 J. Sparks Washington DC $ 1,567.57
5/11 - 5/14/94 J. Sparks Salt Lake, UT $ 632.71
6/08 - 6/12/94 J.Sparks Phoenix, AZ $ 45.00
6/21 - 6/25/94 J. Sparks Sparks,NV $ 1,019.69
D.Turner
R. Fray
7/24 - 7/31/94 D.Turner Washington DC $ 1,663.25
9/19 - 9/25/94 H.Collins New Orleans, LA $ 1,305.97
9/19 - 9/25/94 D.Turner New Orleans, LA $ 1,259.51
9/25 - 9/30/94 J.Sparks Scottsdale, AZ $ 1,197.22
Subtotal: $11,922.72
Contract No. 95F-1207
3/14 - 3/19/95 H.Collins Washington DC $ 1,358.20
3/14 - 3/19/95 D.Turner Washington DC $ 1,521.75
5/21 - 5/25/95 D.Turner Syracuse,NY $ 1,475.00
9/04 - 9/10/95 J.Sparks Boston, MA $ 695.00
9/04 - 9/10/95 H.Collins Boston, MA $ 1,315.40
11/27 - 12/3/95 W.Davisson Washington DC $ 406.21
Subtotal: $ 6,771.56
Contract No. 96F-1333
3/23 - 3/29/96 W.Davisson Washington DC $1,868.20
Subtotal: $ 1,868.20
TOTAL: $20,562.48