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Home My WebLink AboutMINUTES - 06172008 - C.120 sE_,L Contra TO: BOARD OF SUPERVISORS FROM: John Cullen, County Administrator V Costa ` '4 CountyDATE: June 17, 2008 °s'A covK G SUBJECT: Audit Report on the County Treasury SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: ACCEPT the audit from the County Auditor-Controller on the activities of the County Treasurer and the Treasury Oversight Committee as required by Government Code Section 27134. FISCAL IMPACT: None r BACKGROUND/REASON (S) FOR RECOMMENDATION (S): Per Government Code Section 27134 and at the request of the Treasury Oversight Committee, the County Auditor-Controller audited the County Treasury for the period of January 1 , 2007 through December 31, 2007. The audit was reviewed and accepted at the Treasury Oversight Committee meeting of May 20, 2008. Although the audit.contained one finding, the Treasurer's Department had already implemented a policy of further verification and authorization when differences in interest earnings are present. A copy of the Auditor-Controller's audit is submitted to the Board of Supervisors for review and acceptance. WJP:mb CONTINUED ON ATTACHMENT: .�� YES SIGNATURE: 14+1 ✓ RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATIO O OARD COMMITTEE APPROVE OTHER r SIGNATURE(S): ACTION OF BOR ON ��n�i '�'� APPROVED AS RECOMMENDED V #ER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF / THE BOARD OF SUPERVISORS ON THE DATE SHOWN. V UNANIMOUS(ABSENT ) AYES: NOES: Contact: ABSENT: ABSTAIN: Cc: Treasurer-Tax Collector's Office ATTESTED JOHN CULLEN,CLERK OF THE BOARD OFSUPERVISORS AND COUNTY AD"NI TRATOR BY: , f �� 'DEPUTY r • Contra Costa County Office of ------6Stephen J.Ybarra Auditor-Controller COUNTY AUDITOR-CONTROLLER f —'•; Elizabeth A.Verigin Assistant Auditor-Controller 625 Court Street `z Martinez, California 94553-1282 ' = v` Telephone (925) 646-2181 Fax (925) 646-2649 May 09, 2008 TO: Alfred M. Granzella, Chairperson, Treasury Oversight Committee FROM: Stephen J. Ybarra, Auditor-Controller Audit Staff: May SM Romero, Auditor III SUBJECT: Examination of the Activities of the County Treasurer and the Treasury Oversight Committee as Required by Government Code Section 27134 EXECUTIVE SUMMARY We have examined the accounts, records, and procedures of the County Treasurer (Treasurer) and the records and procedures of the Treasury Oversight Committee (Committee) for the period of January 1, 2007 through December 31, 2007. We conducted the necessary audit tests and procedures to determine if, within our scope, the following conditions existed: ➢ There was compliance with Government Code Sections 27131 through 27132.4 that govern the establishment, membership, and meetings of the Committee. ➢ There was compliance with Government Code Section 27133 that governs the establishment, review, and monitoring of investment policy. ➢ The quality of the Treasurer's investment portfolio complied with applicable laws and administrative requirements governing investments, including Government Code Sections 53601-53607 and 53646 governing authorized investments and the County's Investment Policy. ➢ Internal controls were adequate to ensure the safeguarding of the financial assets under the Treasurer's control. ➢ The Treasurer has contracted with financial entities for investment services and safekeeping and restricted investing transactions to brokers and issuers allowed by the County's Investment Policy. ➢ The Treasurer's Quarterly Investment Reports were accurate. Alfred M. Granzella, Chairperson, Treasury Oversight Committee May 9, 2008 Examination of the Activities of the County Treasurer and the Treasury Oversight Committee as Required by Government Code Section 27134 (continued) Based on the results of our audit tests and procedures, we concluded that, in all material respects, these conditions existed with exception of the following procedure that needs improvement: Ensure that the return (interest earnings) received from the bank upon an investment's maturity is correctly calculated in accordance with the agreed interest calculation methodology. We appreciate the excellent cooperation and assistance of the Treasurer staff, especially Brice Bins, Aurora Lee, and Beverley Rellar during this audit. 2 Alfred M. Granzella, Chairperson, Treasury Oversight Committee May 9, 2008 Examination of the Activities of the County Treasurer and the Treasury Oversight Committee as Required by Government Code Section 27134 (continued) RECOMMENDATION Recommendation: Ensure that the return (interest earnings) received from the bank upon an investment's maturity is correctly calculated in accordance with the agreed interest calculation methodology. Condition: The total interest received from Citibank for a $20M Certificate of Deposit that matured on December 10, 2007 appeared.to be $810.74 more than the estimated interest earnings. In response to inquiries with the bank at that time, the bank indicated the statement was correct, which convinced the Treasury staff to accept the overpayment. Upon further investigation by the bank, it was later determined that an error in the interest calculation was made that triggered the overpayment. Criteria: Pursuant to Contra Costa County Investment Policy, June 2007, pg. 2 (Standards and Objectives), and Government Code Section 53600.5 (Trustee's Objectives Regarding Funds), to achieve a return is one of the objectives of the investment policy. Good internal control over the investment return includes the establishment of the methodology on how returns are calculated, verification of its application, and immediate investigation of any discrepancy. Effect: The County Treasurer makes investment decisions and manages the return on the investments. The County Treasurer could be viewed as less than prudent and diligent if the return appeared to be overstated or understated on the Earned Income Summary and was not verified for its accuracy. Cause: The Treasury staff indicated that they take whatever the bank states the return should be and do not normally pursue investigation when the return exceeds the expected amount. Possible Solution: The Earned Income Summary can be utilized to identify variances between the actual returns received and the estimated returns based on established calculation methodology. The regular review should be performed by a staff other than the person entering the data into the Sungard database from where the Earned Income Summa7y is generated. This procedure should be a part of the Treasury's daily operations. 3 Alfred M. Granzella, Chairperson, Treasury Oversight Committee May 9, 2008 Examination of the Activities of the County Treasurer and the Treasury Oversight Committee as Required by Government Code Section 27134 (continued) STATUS OF PRIOR AUDIT RECOMMENDATION Recommendation Status Review all local agencies' investment requests to determine if Implemented. the amount to be invested is in compliance with Government Code Section 53635 and the County's Investment Policy on allowable concentration limits prior to making an investment. cc: William J. Pollacek, Treasurer-Tax Collector 4