Grant Elementary School District Reason for Inquiry: Grant Elementary School District

Recommendations 2

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  None RESPONSE REQUIRED: None MANAGEMENT AUDIT OF THE SHASTA COUNTY AUDITOR-CONTROLLER’S OFFICE REASON FOR INQUIRY: Shasta County Auditor-Controller California Penal Code Section 925 Shasta County Courthouse, Room 104 authorizes the Grand Jury to investigate 1500 Court St Redding, CA 96001 and report on operations, accounts, and records (530) 225-5771 of the officers, departments, or functions of the county. California Penal Code Section 928 authorizes the Grand Jury to investigate and report upon the needs of all county officers in the county, including the abolition or creation of offices and the method or system of performing the duties thereof. BACKGROUND: The Shasta County Auditor-Controller (Auditor-Controller) is the chief accounting officer of the county. The Auditor-Controller is entrusted by the citizens of this county to prescribe and exercise general supervision over the accounting process and the method of keeping the accounts of all county offices, departments and institutions under the control of the Shasta County Board of Supervisors (the Board) and of all districts whose funds are kept in the county treasury. The Auditor-Controller, an elected official, is ultimately answerable to the voters. However, the Board has authority to supervise the official conduct of county officers such as the Auditor-Controller. In response to the 2001-2002 Grand Jury recommendation, the Board authorized a qualified outside contract auditor to conduct a management audit of the Auditor- Controller’s Office. The Board initiated the recommended audit process in the year 2003. METHOD OF INQUIRY: The Grand Jury interviewed: • Two members of the Shasta County Board of Supervisors • The Shasta County Administrative Officer The Grand Jury met with: • The Auditor-Controller • The Assistant Auditor-Controller • The County Budget Officer The Grand Jury reviewed: • The Limited Scope Management Audit of County of Shasta Office of the Auditor-Controller, February 13, 2004 • The Review of Limited Scope Management Audit of County of Shasta Office of the Auditor-Controller, March 23, 2004 FINDINGS: A. The recommendations contained in the Limited Scope Management Audit of County of Shasta Office of the Auditor-Controller, February 13, 2004, prepared and presented by Harvey M. Rose Accountancy Corporation, are as follows: 1. Financial Oversight. The Auditor-Controller should: 1.1. Conduct a survey of County departments to assess their financial management needs, and enhance the Auditor-Controller’s training programs and Accounting Procedures Manual to better meet the needs of County departments. 1.2. Prepare written policies and procedures for the Auditor- Controller’s Office regarding oversight of the County-wide fee setting process, including assistance to departments in relation to the establishment, review and updating of rates and charges. 1.3. Assess and review training provided to accounts Payable staff to increase consistency in claims processing. 1.4. Increase analytical support provided by the Auditor-Controller’s Office to the County departments and to the Board of Supervisors. 2. The Purchasing and Accounts Payable Processes. The Auditor-Controller should: 2.1 Tighten and expand existing internal controls over the Accounts Payable process, including ensuring that: (a) Supporting documentation is submitted with all claims; (b) A County employee cannot provide more than one authorizing signature on each purchasing or payment document; (c) The same person in the Auditor-Controller’s Office does not authorize the claim as a department designee and as a Deputy Auditor-Controller; and (d) Explanations on the claim form are sufficient for a third party to ascertain the nature of the expenditure. 2.2 Evaluate, in coordination with the Purchasing Agent, the purchase order process to determine why purchase orders are being issued after invoice dates, develop an action plan to rectify the situation, and report back to the Board of Supervisors on that plan by June 30, 2004. 2.3 Develop procedures, in coordination with Purchasing Agent, to identify and resolve instances of non-compliance with purchasing policies and procedures, including enforcement provisions, and submit such procedures to the Board of Supervisors for review by June 30, 2004. 2.4 Enforce purchasing policies and procedures through the procedures developed pursuant to Recommendation 2.3 above. 2.5 Work with the Purchasing Agent to develop a procedural or system solution to the duplicate review of purchase orders by the Auditor-Controller’s Office and report back to the Board of Supervisors of that solution by June 30, 2004. 2.6 Survey departments on issue areas, develop and implement an action plan for addressing these areas, update policies and procedures and internal training manuals, and report back to the Board of Supervisors on the survey findings and the Auditor- Controller’s Office action plan by June 30, 2004. 2.7 Train staff in Accounts Payable to process all types of claims and assign work based on departments rather than claim type so that departments and Auditor-Controller staff can develop a more constant and productive relationship. 3. Board Claims. The Board of Supervisors should: 3.1 Eliminate use of the Board Claims listing and delegate authority to pay all normal and customary claims to the Auditor- Controller. 3.2 Delegate appropriate staff to clearly define exceptions to the normal and customary criteria and to develop written policies for approval or review of these exceptions by the Board. The Controller should: 3.3 a) Analyze recent Board Claims to identify areas of non- compliance with the County’s purchasing policies and procedures or sound business practices, b) Work with the Purchasing Agent to develop procedures to enforce compliance with the County’s purchasing policies and procedures, and c) Report back to the Board of Supervisors on those procedures by June 30, 2004. 3.4 Refocus the attention of Accounts Payable staff on enforcing the County’s purchasing policies and procedures. 4. Cost Allocation Plan. The Auditor-Controller should: 4.1 Work with the County Administrator’s Office to identify possible midyear budget reductions, resulting in actual FY 2003-2004 costs that are less than estimated FY 2003-2004 costs included in the cost allocation plan; work with County departments to reduce remaining quarterly reimbursement claims for the remaining quarters of FY 2003-2004, as necessary; and report adjustments to the Board of Supervisors. 4.2 Report to the Board of Supervisors the status of implementing systems to increase County Departments’ direct billing of central support services, the total amount of direct billing of support services for the prior fiscal year, and the anticipated effect on the estimated cost allocation plan, as part of the annual budget review. 4.3 Convert to the single cost allocation plan in FY 2005-2006 and report to the Board of Supervisors prior to December 31, 2004, on the conversion to the single cost allocation plan. 4.4 Reassign responsibility for developing the county-wide cost allocation plan to staff assigned to the Financial Reporting and Audit Division. 5. Employee Retention. The Auditor-Controller should: 5.1 Develop a training program and protocol, in conjunction with Human Resources, for working with new employees to ensure that they have the greatest probability of success and report back to the Board of Supervisors on that program and protocol by June 30, 2004. 5.2 Develop biweekly training checklists that detail new employees’ areas of competency, areas that have improved, and areas that continue to need improvement. 5.3 Institute quarterly department-wide staff meetings that include discussion between employees and management regarding the Auditor-Controller’s Office policies and practices. 5.4 Re-institute the pilot program for alternative work schedules, including working with employees regarding coverage problems, and differences between divisions on the application of alternative work schedules. 5.5 Develop and communicate policies regarding incremental leave without pay, reduced workweek, and job sharing. 5.6 Along with the Assistant Auditor-Controller and all management and supervisory staff, take a training class on the principles of good management and supervision by June 30, 2004. The Human Resources Department should: 5.7 Develop a training program and protocol, in conjunction with the Auditor-Controller’s Office, for working with new employees to ensure that they have the greatest probability of success and report back to the Board of Supervisors on that program and protocol by June 30, 2004. 5.8 Conduct a compensation and classification study for all managerial and staff positions in the Auditor-Controller’s Office and report back to the Board of Supervisors by June 30, 2004 with recommendations. B. In the Review of Limited Scope Management Audit of County of Shasta Office of the Auditor-Controller prepared by the Auditor-Controller, Assistant-Auditor, and the County Budget Officer, the recommendations as presented in the audit were classified into three categories: 1. Recommendations supported by County Administration are: • Enhance Auditor-Controller (A/C) training programs and Accounting Procedures Manual to better meet the needs of County departments. • Expand existing internal controls over the Accounts Payable process to ensure that explanations, supporting documentation, authorizations and purchasing policies and procedures are understood and complied with. • Board Authorization to eliminate the Board Claims listing for customary claims to the A/C and develop written policies and procedures for review and approval of exceptions. • Work with the County Administrative Office (CAO) and County General Fund departments to identify possible midyear spending reductions/increases and present adjustments to the Board for approval. • Improve employee retention through training and support of new employees, increase communication between employees and management, establishing a more professional work environment and implementing more flexible working conditions. 2. Recommendations that may have merit, but are too costly to adopt: • Convert to a single cost allocation plan and reassign responsibility for developing the countywide cost allocation plan to the Financial Reporting and Audit Division. 3. Recommendations that are not applicable to Shasta County: • Conduct a compensation and classification study for all A/C managerial staff positions. • By policy, Shasta County should “expand the current role of the Auditor- Controller to serve as an independent chief financial officer, including providing independent budget projections to the Board of Supervisors.” • Prepare written policies and procedures regarding oversight of the County- wide fee setting process. C. The Grand Jury has determined that the recommendations set forth in Finding B1, above, adequately address the findings made by the Harvey M. Rose Accountancy Corporation in its management audit of the Auditor-Controller’s Office.
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  The Auditor-Controller should place into action the recommendations listed in Finding B.1. The Auditor-Controller should report back to the Board of Supervisors by December 1, 2004, that these recommendations have been implemented. RESPONSES REQUIRED: The Shasta County Auditor-Controller The Shasta County Board of Supervisors