$2,000,000. in missing funds*

FSC does not properly account for large amounts of county (and other governmental) funding. This makes it impossible to follow the money. Disagree: FSCNC accounts for and tracks all incoming and outgoing funding, grant payments, project status, and contractual obligations individually per the originating source funding requirements and agreements. All funding is tracked at multiple levels by the Grantor, project partner/s (i.e. County), and FSCNC. For example, the Grand Jury claim of "$2,000,000. in missing funds" in the GJ report and multiple related public media stories was identified immediately as an accounting error, explained and corrected. It is unplausible if not impossible that $2,000,000, in grant funding could "go missing" within the multiple layers of fiscal scrutiny.

FSC does not publish all and may not have conducted some annual financial audits. This makes it more difficult to follow the money. Partially Disagree: FSC acknowledges being behind on internal audits attributed to past Finance Dept. staff performance limitations and has employed a new Director of Finance who is currently working with independent Auditors to bring all past and recent financial reporting current through FY-2023. Completion is expected by the end of July 2024. All past and current legally appropriate financial documents have been and will continue to be published and accessible to our partners and the public. This has been a standard practice of FSCNC in the past and will continue. Note: FSCNC previously cooperated with the County on multiple requested external, independent, and forensic audits which produced no significant negative findings within FSCNC fiscal practices. FSCNC welcomed Audit input on all possible improvements and the Board directed staff to consider implementing new best practices where appropriate. The staff time and related expenses dedicated to assisting the County and auditors with these multiple external audits made it difficult to undertake and complete FSCNC's own internal audits, which, as stated, are currently being updated.

FSC's Board of Directors has allowed other questionable financial practices, such as voting on large non-agenda purchases, voting on audit documents not before the Board, and having pre-signed checks. Disagree. FSCNC is not currently subject to nor has ever been subject to the Brown Act. Nonetheless, our practice continues to adhere to the best practices of the Brown Act, including properly capturing, in our minutes, decisions, and action items. We acknowledge that the minutes may make it difficult at times to understand and decipher what was approved by the Board of Directors. Documents and presentations are provided at the meeting for consideration by the voting board of directors. These documents are not always found in the board packet but may be provided under separate cover. As an independent 501c3 non-profit organization, many documents should not be shared publicly due to privacy concerns and potential for fraud. All documents are made available to the Board of Directors for review when requested outside of meetings.

FSC's day-to-day financial practices do not adequately protect against the risk of fraud. Disagree: There have been no indications or evidence of any fraudulent activities of any type within FSCNC. No valid threats of fraud have been brought to the attention of management or the Board of Directors by any staff member/s of FSCNC, the public or any partnering agency at the Federal, State or County levels. No internal, external, independent and/or forensic audit has demonstrated any findings of fraud related to FSCNC fiscal operations, management practices, field operations or grant management. FSCNC's recently appointed Board Treasurer is actively engaged in assisting and oversight of current internal Audits and reviewing past fiscal practices w/the newly hired Director of Finance, along with the recently hired Management Analyst. FSCNC instituted additional separation of duty mandates in 2021 to assure transparency and reduce the risk of any fraudulent activities. The Board of Directors, Executive Director and Finance Team regularly review and update these as new positions and are added. An additional safety measure already in place is that all FSCNC Board members, Management and staff submit annual Fraudulent Activity Questionnaires which are collected, submitted and assessed by an external independent auditing firm. This allows every FSCNC employee at every level an opportunity to submit anonymous reports on agency activities without fear of retribution or job security. Aside from this measure, all FSCNC staff have been offered open-door access to their immediate supervisor, middle management, upper management/ED and Board Chairman to discuss any concerns or give input on FSCNC policy, operational standards, and/or especially field safety procedures on all grant project work sites. FSCNC strives to make staff feel comfortable to give their input openly in a private and/or group setting.

FSC does not appear to have appropriate California contractor's licenses for the work that it performs. Disagree: FSCNC, as with the majority of NPOs and public agencies (CAL FIRE etc.) is an authorized, exempt entity that does not require a contractor's license to operate. In the past the CSLB denied FSCNC a license due to FSCNC's organizational structure, which does not allow an NPO w/o "entity ownership" to qualify. FSCNC is currently listed as a qualified exempt entity with the Federal and State governments and has and will continue to complete legally qualified grant project work without a typical contractor's license, which is required mainly of privately owned entities. If/when FSCNC becomes aware of any required licensing that they are required to possess and legally allowed to apply for and receive, they will do so without hesitation. There remains a lack of clarity on this issue. Recent extensive communications between FSCNC and both the CSLB licensing advisor and CSLB legal department requesting detailed confirmation regarding licensing requirements, have provided only generalized responses to our requests. Ultimately, the CSLB response was that fire prevention work performed in a Rural District or County is exempt from the requirement of a CSLB issued contractor's license. Following is the text of a June 18th, 2024, CSLB correspondence with FSCNC Management Analyst Duane Strawser: "Mr. Strawser, Our CSLB legal counsel has informed me that the work performed by the Fire Safe Council of Nevada County meets the definition of a contractor, and a contractor's license is required, unless the work is performed in rural districts, then it may qualify as exempt under BPC-7049 (see below), pursuant to BPC 7059(b)." If a weed abatement/brush clearing project does not alter the grade of the land and/or no trees are trimmed/removed or stump grinding is done by the primary agency/Grantee, then a contractor's license is not required. Weed abatement done by mowing, masticating attachments, weed eaters and hand tools ш would not require a license. = There is a license exemption for clearing of land for fire prevention purposes in rural districts. § 7049. Ditch work and agricultural or fire prevention work: = This chapter does not apply to any clearing or other work upon the land in rural districts for fire prevention purposes. § 7059. (b) (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public ш Contract Code). Added Stats 1939 ch 37 § 1. Amended Stats 1941 ch 971 § 9; Stats 1945 ch 1159 § 5; Stats 1957 ch 2084 § 21; Stats 1966 ch 4 § 1; Stats 1983 ch 891 § 5; Stats 1987 ch 485 § 1. If the cost of a weed abatement/brush clearing project is $500 or more, including labor and materials, and you are trimming/removing trees or grinding/removing stumps the C61/D49- Tree Service or C49-Tree and Palm classification is required. The C27-Landscaping classification is also acceptable, unless performed in a rural district for fire prevention purposes rendering the work performed as exempt."

FSC has reduced transparency, making it difficult for the public and the county to monitor and verify the proper use of county funding. Disagree: The FSCNC Board, Management, past Controller(s) and staff have been required to follow all Generally Accepted Accounting Principles (GAAP). Moving forward, the new Director of Finance is establishing a set of protocols for approval by the Board of Directors as required best practices. Moving forward, this will ensure continued accurate, thorough and transparent fiscal management, tracking and reporting. All funding agencies require funding to be tracked independently in accordance with the source grant contractual obligations. This accounting detail and project tracking of funds are provided to the County through the mandated financial reporting. All such documents are available to the public.

From at least April 2019 through January 2022, FSC, knowing it was subject to the Brown Act, appears to have violated it numerous times. Disagree: FSCNC is not currently subject to nor has ever been subject to the Brown Act. Nonetheless, our practice continues to adhere to the best practices of the Brown Act.

FSC has violated its own bylaws. Disagree: FSCNC bylaws, standard for most non-profits and posted on our website, state, "Any Director may be removed, with or without cause, by a 75% majority consent of our Board at any time." We legally removed a Director, for cause, 3 years ago in 2021. This is an internal, private HR matter as is standard practice for agencies and employers in California.

Fire Safe Council of Nevada County is not a responsible, accountable, or appropriate recipient for county (and other governmental) funding. Disagree: This statement is an opinion, not a finding. There is absolutely no viable evidence presented by the Grand Jury to support anything within this statement. These unfounded accusations are outrageously inappropriate, inaccurate and unfounded, potentially containing libel, defamation, and slander. Despite lack of authority by the Grand Jury over the FSCNC and other similar NPOs (please see attached legal communication dated February 5, 2024), FSCNC Board and/or Management staff have agreed to voluntarily appear before the Grand Jury for in-person interview/s to address the false statements leveled against them and provide accurate, detailed responses to the Grand Jury report contents.

FSC has had frequent, unexplained turnover of key financial personnel. Disagree: Explaining the cause of termination is not prudent because potential claims that could be made by the separated employee. Separation of two key finance personnel in a three-year period, though regrettable, would not be an uncommon occurrence in similar agencies. Past key financial personnel turnover is attributed to a lack of competent job performance of two past fiscal staff despite thorough resume/background checks being performed before hiring, which is standard in any agency's hiring practices. A new Director of Finance with a reputable track record and no past relationship with FSCNC was hired in April 2024 to assist in accelerating independent Audit completion and presenting the Board of Directors with a comprehensive report of past, current and future status of all fiscal operations. The recently hired Management Analyst searched for references from the County of Nevada, City of Grass Valley, and City of Nevada City, plus private sector inquiries to find qualified candidates with no previous FSCNC association to be considered for the open position. B. RESPONSES TO RECOMMENDATIONS