Orange County Grand Jury
• 2007-2008
• Agency Response
Response to:
Bankruptcy Controls – Going, Going, … 03/25/08, 38K
Bankruptcy Controls-Going, Going....*
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 3 findings
F1
Organizational Structure of the Internal Audit Department: The current organizational structure of the Internal Audit Department satisfies the most rigid of requirements for independence and objectivity required by the U.S. Government Accountability Office and the Institute of Internal Auditors. These organizations specifically state that audit organizations must be free from organizational impairments to independence with respect to the entities they audit. Response: Agrees with the finding.
Related Recommendations (1)
R1
Organizational Structure of the Internal Audit Department: Preserve the current organization structure of the Internal Audit Department. This is defined in Resolution 95-271 as a separate independent department removed from the Auditor-Controller and Ĺ reporting directly to the Board of Supervisors. Response: The recommendation has been implemented. Resolution 95-271 instituted the current reporting structure wherein the Internal Audit Department reports directly to the Board of Supervisors. At its February 6, 2007 meeting, the Board of Supervisors reaffirmed the existing reporting structure.
F2
Audit Oversight Committee: The Audit Oversight Committee structure lacks representation from two of the primary stakeholders of the County Investment Pool: the educational institutions and other governmental entities in Orange County. Response: Disagrees partially with the finding. Cities are not primary stakeholders of the County Investment Pool. There are currently only two cities in the pool. Collectively, they represent less than $1 million of a $6 billion pool.
Related Recommendations (1)
R2
Audit Oversight Committee: Add additional members to the Audit Oversight Committee such as one appointed by the Orange County Board of Education to represent school districts and one appointed by the Orange County League of Cities to represent cities. Response: The recommendation requires further analysis. The nature and scope of the Audit Oversight Committee extends far beyond the investment pool. Audits of the pool account for less than 5% of the total audit activity within the county. The Orange County Board of Education actively participates on both the Treasury Oversight Committee and the Treasury Advisory Committee. Cities have minimal funds in the investment pool. A proposal to add four public members in addition to the one public member representing the five supervisors' districts was approved by the Audit Oversight Committee and is currently awaiting submittal for approval by the Board of Supervisors. Any change to the current and proposed membership would require further analysis.
F3
State Mandated Audits: After a resolution to revoke County Resolution 95-271 and return the Internal Audit Department to the Auditor Controller's office failed to pass, the Auditor-Controller refused to renew the existing contract with IAD to perform audits mandated by state statutes. Response: Agrees with the finding.
Related Recommendations (1)
R3
Mandated Audits: Authorize the Internal Audit Department to perform separate Quarterly Audits of the Statements of Assets held by the County Treasury for the Board of Supervisors to re-establish the Board's independent audit presence in the Treasurer's Office, even though the Auditor-Controller has statutory authority to conduct these mandated audits. Response: The recommendation will not be implemented because it is not warranted or is not reasonable. Although the Auditor-Controller has statutory responsibility to conduct the quarterly audits of the Statements of Assets, the Auditor-Controller contracted with the Internal Audit Department to perform these audits from 1997 to June 30, 2007. During the fiscal year 2007-08 budget hearings, the Board of Supervisors took under consideration transferring the quarterly Treasury audits to the Office of the Auditor-Controller. At that time, the Board voted unanimously to transfer the function to the Auditor-Controller.
* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.