Score: +6 (7/0/1)
Ventura County Grand Jury • 2016-2017

Ventura County Performance Auditing

Published: April 05, 2017 24 pages
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Findings and Recommendations 15 findings

F01
Performance audits examine County programs and departments by using nationally recognized auditing principles. They recommend service delivery improvements, identify savings and revenue opportunities, identify poor performance, and detect fraud. Performance audits do not develop procedures or establish policies. An audit can take anywhere from two months to two years to complete. A typical audit is comprised of three steps: planning, field work, and report writing. A draft report is reviewed for errors by the audited department. The Internal Audit Division’s objective is to reach a consensus with the auditee in respect to the findings and recommendations. Disagreements are noted in the final report. (Ref- 03, Ref-07)
No recommendations for this finding
F02
The Auditor-Controller in Fiscal Year 2016-17 has a $13.4 million budget and 71 Full Time Equivalents (FTE). There are seven employees in the Internal Audit Division; six auditors and one Fiscal Manager. They are overseen by the Deputy Director Auditor-Controller who reports directly to the Auditor-Controller. Of the six auditors, one is assigned full-time to investigate calls to the County’s Fraud Hotline. Another auditor is assigned full-time to the Treasurer’s office. In Fiscal Year 2016-17 $800,000 was allocated in the budget for Audit Division salaries. All costs associated with the Internal Audit Division come from the General Fund. Auditor Controller Staff Allocation FTE % Controller 64 90% Auditor 7 10% (Ref-04)
No recommendations for this finding
F03
The Auditor-Controller makes fiscal year budget requests through the office of the CEO. In Fiscal Year 2016-17, the Auditor-Controller’s budget was reduced by $100,000 while the overall County budget was increased. The FTE was increased in Fiscal Year 2013-14 in order to upgrade the Ventura County Financial Management System. With the completion of the project, staff has been gradually reduced from a high of 77 FTE in Fiscal Year 2013- 14. In Fiscal Year 2015-16, the Auditor-Controller used $50,000 in Department savings to hire the external audit firm, Moss Adams, to examine physician’s contracts at the Health Care Agency, an engagement staff auditors would not have been able to complete. In September, 2016 Ventura County Performance Auditing 3 the Auditor-Controller requested the addition of three, full-time internal audit positions at a projected cost of $409,519. The needs described in the request were to provide additional scrutiny of information technology (IT) issues and the Ventura County Medical Center. The additional staffing would increase available audit hours by 4,302 or 55%. This request was not presented as a way to generate cost savings for the County. (Ref-04)
No recommendations for this finding
F04
A risk-based Internal Audit Plan is prepared at the beginning of each fiscal year. A risk level is assigned to every County department. Risk assessment uses 22 criteria including staff size, the number of transactions, evidence or suspicion of theft, substantiated Hotline tips, and the date of the last audit. Generally, the bigger the department, the greater the risk. After the risk assessment is completed, the Internal Audit Division staff selects a number of Planned Engagements to be conducted during the fiscal year. The Internal Audit Plan also lists Future Potential Audit Subjects which are described as potential audit subjects to be pursued in future years as Internal Audit Division staff resources allow. These Future Potential Audit Subjects have also been described as “placeholders”, “reminders”, or “something that has traditionally appeared in past Internal Audit Plans”. There are no expectations as to how many, if any, of these engagements will become Planned Engagements. (Ref-02, Att-01)
No recommendations for this finding
F05
The number of auditor hours that would be needed to conduct the Future Potential Audit Subjects has increased steadily in each of the last 5 years. It would take over 5 ½ years to complete all of the Fiscal Year 2016-17 Future Potential Audit Subjects based on the number of available auditor hours not committed to mandated cash and compliance audits. The Fiscal Year 2016-17 Internal Audit Plan lists 99 Future Potential Audit Subjects, totaling 37,070 planned audit hours. The Fiscal Year 2006-07 Internal Audit Plan listed 30 Future Potential Audit Subjects. The number of Future Potential Audit Subjects has increased 230% since Fiscal Year 2006-07. In the same ten year period, the County budget has increased by 43%, the number of county employees has increased 16% and the population of the County has increased 9%. Fiscal Year Future Potential Audit Subjects Audit Hours 2016-17 99 37,070 2015-16 94 35,770 2014-15 86 32,770 2013-14 84 31,030 2012-13 83 30,510 (Ref-02, Ref-13, Ref-14, Ref-15, Ref-16, Ref-17)
No recommendations for this finding
F06
The Internal Audit Plan includes goals, objectives, and performance measurements for the Internal Audit Division. Fiscal Year 2012-13 is the only year of the last four where the Internal Audit Division met or exceeded its goal of the number of audit reports to be issued during the fiscal year. In Fiscal Year 2016-17, the goal is to issue 12 reports. Ventura County Performance Auditing Number of Audit Reports Issued Fiscal Year Goal Issued Follow-ups 2015-16 12 9 1 2014-15 15 9 0 2013-14 15 13 0 2012-13 15 18 2 (Ref-02, Ref-13, Ref-14, Ref-15, Ref-16, Ref-17)
No recommendations for this finding
F07
The Internal Audit Plans’ performance measurements state that 80% of performance audits should “result in additional revenue and/or cost savings to the County”. The last five fiscal year Internal Audit Plans include a performance measurement goal of identifying $500,000 in cost savings or revenue enhancement opportunities for the County. (Ref-02, Ref-07, Ref- 13, Ref-14, Ref-15, Ref-16)
No recommendations for this finding
F08
There is no record or other evidence of the Internal Audit Division measuring its performance in meeting the stated goal of identifying cost savings.
No recommendations for this finding
F09
Among the Internal Audit Plan’s performance measurements is the statement, “100% of corrective action…has been initiated by management [of the audited department] during the course of the audit.” This is to be confirmed by follow-up audits. (Ref-02, Ref-13, Ref-14, Ref-15, Ref-16)
No recommendations for this finding
F10
Many audit programs of other counties, examined by the Grand Jury, monitor and follow-up on all audit recommendations to ensure audit findings are being addressed. However, according to County policy, “Follow-up audits will be performed on selected reports to ascertain the implementation of improvement efforts and the accomplishment of corrective actions. Follow-up will be accomplished by the Audit Division generally after six months, or as deemed appropriate, after improvements have been implemented and deficiencies corrected.” (Ref-05, Ref-07, Ref- 10, Ref-11, Ref-12, Ref-18, Att-02)
Related Recommendations (1)
R04
The Grand Jury recommends the Auditor-Controller publish an annual report evaluating the Internal Audit Division’s success in meeting all its goals, objectives, and performance measurements. The report should share key metrics with stakeholders and the public including:  The number of recommendations made.  The percentage of recommendations with agreement or disagreement  The percentage of recommendations implemented.  Cost savings or revenue enhancements  The number of follow-up audits conducted. (C-01, C-07)
F11
According to County policy, “Agencies and departments are required to provide written status reports to the CEO on items where corrective action [suggested during the audit] was not completed when the audit report was issued. The initial status report is due within 90 days of the audit report or when corrective action is completed. The CEO will evaluate the corrective actions taken and provide the results to the Auditor-Controller’s Office for scheduling follow-up audits.” The audited department is not required to send a copy of their status report to the Auditor-Controller, although some departments have copied the Auditor-Controller on their responses to the CEO. (Att-02)
No recommendations for this finding
F12
For at least the last five years, the Auditor-Controller’s office has not been regularly informed of the results of the CEO’s evaluation of departmental corrective actions.
Related Recommendations (2)
R04
The Grand Jury recommends the Auditor-Controller publish an annual report evaluating the Internal Audit Division’s success in meeting all its goals, objectives, and performance measurements. The report should share key metrics with stakeholders and the public including:  The number of recommendations made.  The percentage of recommendations with agreement or disagreement  The percentage of recommendations implemented.  Cost savings or revenue enhancements  The number of follow-up audits conducted. (C-01, C-07)
R05
The Grand Jury recommends the BOS direct the CEO, per existing County policy, to consistently provide the Auditor-Controller with written results of Ventura County Performance Auditing 7 evaluations of the corrective action taken by all audited County departments and agencies. (C-05, C-06)
F13
The BOS focuses on the controller function of the Auditor-Controller’s office, particularly at budget preparation time. There is less awareness of Ventura County Performance Auditing 5 the audit function of the office and they look to the CEO and his fiscal team for analysis of program effectiveness. There was little expectation by the BOS that audits would result in cost savings. Alternatively, many of the audit programs in other counties provide information to stakeholders, as well as to the news media and the public, about their audit programs and plans. They focus on the results of audits. An IIA survey of 36 government auditors found most make significant efforts to build understanding and support for their audit programs. Despite their efforts, fewer than half of those interviewed nationally agreed that they enjoyed the support and understanding of all key stakeholders. (Ref-07, Ref-09, Ref-10)
Related Recommendations (1)
R06
The Grand Jury recommends the Auditor-Controller make regular presentations to key stakeholders, such as the BOS and the CEO. These presentations would highlight and promote the work of the Internal Audit Division and increase its perceived value, particularly in the area of saving taxpayer’s money. (C-01, C-07)
F14
Many of the audit programs outside of the County that were examined by the Grand Jury issue annual reports which highlight the value they add to the community. Most will detail the status of implementation of the auditor’s recommendations. Some also identify cost savings generated from the implementation of audit recommendations. (Ref-07, Ref-09, Ref- 10, Ref-11, Ref-12)
Related Recommendations (2)
R04
The Grand Jury recommends the Auditor-Controller publish an annual report evaluating the Internal Audit Division’s success in meeting all its goals, objectives, and performance measurements. The report should share key metrics with stakeholders and the public including:  The number of recommendations made.  The percentage of recommendations with agreement or disagreement  The percentage of recommendations implemented.  Cost savings or revenue enhancements  The number of follow-up audits conducted. (C-01, C-07)
R06
The Grand Jury recommends the Auditor-Controller make regular presentations to key stakeholders, such as the BOS and the CEO. These presentations would highlight and promote the work of the Internal Audit Division and increase its perceived value, particularly in the area of saving taxpayer’s money. (C-01, C-07)
F15
Two key measures of the general effectiveness of an audit program are the organization’s audit recommendation acceptance rate and implementation rate. These two rates clearly indicate whether audited entities are using the information provided by audit reports to mitigate identified risks and to enhance the performance and efficiency of their operations. Other key measurements include the number of audit reports issued, the cost effects or savings, and the number of follow-up reports. (Ref-10, Ref-11, Ref-12) Conclusions C-01. There is no written evaluation or reporting available on the cost savings or revenue enhancing opportunities derived from audits conducted. These items are not routinely discussed with the CEO or the BOS. Budget requests for additional Internal Audit Division resources, including personnel, are rarely, if ever, presented as potential cost savings for the County. (FA-01,
No recommendations for this finding

Conclusions 2

Agency Responses 2

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No Responses Found 3

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County of Ventura Agency
Ventura County Auditor-Controller Elected County Office
Ventura County Board of Supervisors Elected County Office