Final Report and Responses Counting Your Dollars: Contracting for the Services of an Independent Auditor

R1

The County of Santa Cruz Auditor should continue to actively seek and qualify new bidders for future invitations for proposals and should update the current list. Response: Santa Cruz County Board of Supervisors AGREES. This recommendation has been implemented. The Auditor-Controller’s Office continuously adds qualified CPA firms to the bidder list. Staff members attend professional meetings and conferences and maintain contact with other California Auditor-Controller Offices, both of which are excellent sources of information regarding qualified audit firms. Response: Santa Cruz County Auditor-Controller AGREES. This recommendation has been implemented. The Auditor-Controller’s Office continuously adds qualified CPA firms to the bidder list. Staff members attend professional meetings and conferences and maintain contact with other California Auditor-Controller Offices, both of which are excellent sources of information regarding qualified audit firms.

R2

Review of the contract for independent audit services or invitation to bid should be scheduled every three years with no one firm providing services for more than two consecutive three-year contracts. Response: Santa Cruz County Board of Supervisors AGREES. This recommendation has been implemented. Review of the contract for independent audit services or invitation to bid is scheduled every three years. Although there is a definite benefit to changing auditing firms at least every six years, it may not always be in the county’s best interest to prohibit a firm from submitting a bid for a third term. After reviewing the proposals for audit services with the Auditor-Controller, the County Audit Committee recommends to the Board of Supervisors the best-qualified and most cost-effective auditing firm. Response: Santa Cruz County Auditor-Controller AGREES. - 4 Counting Your Dollars: Contracting for the Services of an Independent Auditor of County Finances 2004 – 2005 Santa Cruz County Grand Jury Final Report and Responses This recommendation has been implemented. Review of the contract for independent audit services or invitation to bid is scheduled every three years. There is a definite benefit to changing auditing firms at least every six years. However, it may not be in the county’s best interest to prohibit a firm submitting a bid for a third term. That firm may clearly be the best qualified and most cost effective. For example, during the most recent audit selection process, the county was fortunate to have a well-qualified firm submit a competing bid that was comparable to the bid submitted by the incumbent firm. Only two other firms submitted bids; one firm was clearly unqualified and the other firm was $40,000 (62%) higher each year. If a competitive bid had not been received from a challenging firm, the county could have been faced with some difficult choices. Response: On behalf of the Santa Cruz County Audit Committee, the Auditor- Controller AGREES. This recommendation has been implemented. Review of the contract for independent audit services or invitation to bid is scheduled every three years. There is a definite benefit to changing auditing firms at least every six years. After reviewing the proposals for audit services with the Auditor-Controller, the County Audit Committee recommends to the Board of Supervisors the best-qualified and most cost-effective auditing firm.

R3

The County of Santa Cruz should continue to notify the Grand Jury of County Audit Committee activities. Response: Santa Cruz County Auditor-Controller AGREES. This recommendation has been implemented. The Auditor-Controller considers the Grand Jury an essential component of the audit process and the County Audit Committee.

R4

The County Audit Committee should continue to meet at least twice each year, more frequently if needed. Response: Santa Cruz County Board of Supervisors AGREES. This recommendation has been implemented. The County Audit Committee meets at least twice annually. The Comprehensive Annual Financial Report and the related Management Letter comments and responses are reviewed at one meeting, and the kick-off of the annual county audit is conducted at another meeting. The County Audit Committee holds additional meetings to review the request for proposal for audit services during years in which one is being prepared. Response: Santa Cruz County Auditor-Controller AGREES. This recommendation has been implemented. The County Audit Committee meets at least twice annually. The Comprehensive Annual Financial Report and the related Management Letter comments and responses are reviewed at one meeting, and the Counting Your Dollars: - 5 Contracting for the Services of an Independent Auditor of County Finances 2004 – 2005 Santa Cruz County Grand Jury Final Report and Responses kick-off of the annual county audit is conducted at another meeting. The County Audit Committee holds additional meetings to review the request for proposal for audit services during years in which one is being prepared. Response: On behalf of the Santa Cruz County Audit Committee, the Auditor- Controller AGREES. This recommendation has been implemented. The County Audit Committee meets at least twice annually. The Comprehensive Annual Financial Report and the related Management Letter comments and responses are reviewed at one meeting, and the kick-off of the annual county audit is conducted at another meeting. The County Audit Committee holds additional meetings to review the request for proposal for audit services during years in which one is being prepared.