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Extracted from Consolidated Report

This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.

Shasta County Grand Jury • 2001-2002

Sugar Pine Conservation Camp Reason for Inquiry:

Published: June 30, 2001 90 pages

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⚠️ 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 16 findings

The Shasta County Administrative Officer has the primary responsibility to distribute the contract auditor’s report to all county offices affected by

The contract auditor’s “tests” of the general-purpose Financial Statements “ for the fiscal year ended June 30, 2001…disclosed no instance of noncompliance that are (sic) required to be reported under Government Auditing Standards…”.

The contract auditor found no material weaknesses involving the internal controls regarding financial reporting

Federal funding for county programs was audited using the required federal guidelines, OMG Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations. The contract auditor found Shasta County complied “…in all material respects…” with the requirements for each major federal program.

The contract auditor made five recommendations as a result of the audit. On February 6, 2002, the County Auditor/Controller told the Joint Audit Committee all recommendations had been implemented except one, (Inventory, Fleet Management), which is in the implementation process. The pending

There were four recommendations made by the contract auditor during the previous audit (fiscal year ended June 2000). The current year contract auditor’s Management Report shows all four recommendations have been implemented.

During the exit interview on February 6, 2002, the contract auditor stated the Shasta County Auditor-Controller’s Office provided all required information and has established “…excellent…” internal control systems.

There are no policies and procedures directing the activities of the Joint Audit Committee. The Shasta County Grand Jury identified the need for policies and procedures for the committee and related the need to the CAO.

The Audit and Finance Committee of the Shasta County Grand Jury drafted proposed Policies and Procedures for the Joint Audit Committee. The proposed policies and procedures have been provided to the County Administrative Officer for submission to the Joint Audit Committee for consideration and adoption.

F10

The Joint Audit Committee has not, to date, adopted a policy regarding the longevity of a contract auditor’s contract.

F11

Vavrink, Trine, Day and Company have been conducting contract audits of Shasta County for over five years.

F12

The Office of Auditor-Controller has had a personnel turnover rate of over 60 percent during the past three years, which is twice the county average of 10% per year. In 1999, four new employees were hired and six left the office. In 2000, seven new employees were hired and six left the office. In 2001, four new employees were hired and three left the office. This does not include those who transferred to other county departments. Of the 26 staff members who were in this department in 1999, only nine remain.

F13

The Auditor-Controller’s office has failed to process claims for payment for numerous departments and individuals in a timely manner. The Accounting Procedure Manual of the Shasta County Auditor-Controller, page CH-7, issued in 2002, states, “Orders for Payment forwarded to the Auditor-Controller will be processed for payment within three to four days of receipt”.

F14

During the course of this investigation, the Grand Jury found that there has been a lack of communication and cooperation between the Auditor-Controller and at least six county departments and agencies. County departments/staff have indicated the Auditor-Controller does not sufficiently communicate in writing with departments regarding fiscal decisions and accounting procedures.

F15

The Auditor-Controller has made decisions that unnecessarily conflict with departmental needs and has not resolved issues in a timely or efficient manner. These decisions have resulted in adverse financial consequences to the departments’ budgets. Some of the Auditor-Controller’s accounting policies have had an adverse effect on fiscal operations of county departments and agencies. In one example, the Auditor-Controller failed to resolve two accounting issues in the Fleet Management Division of the Department of Support Services. In 1994 and subsequent years, the California State Controller made a finding that the co- mingled funds for vehicle replacement and vehicle maintenance in Shasta County needed to be separated. As of March 30, 2002, neither the previous Auditor- Controller nor the current Auditor-Controller had separated the funds. The second issue has to do with how rates are established to charge the various departments for vehicle maintenance. Because of the lack of resolution of these issues, as of February 28, 2002, the Auditor-Controller had not processed any of the billings from the Fleet Management Division to the county departments for vehicle maintenance for the fiscal year which began July 1, 2001. The lack of resolution of these issues by the Auditor-Controller has been detrimental to the fiscal health of Shasta County because it resulted in unbilled expenses that were not being reimbursed by Federal and state agencies.

F16

California Government Code 26883 provides that the board of supervisors “…shall have the power to require that the county auditor-controller shall audit the accounts and records of any department…” in the county. This option has not been exercised by the Shasta County Auditor’s Office during the current auditor’s term.

Recommendations 16

R1

Shasta County Ordinance No. 477, enacted May 12, 1969, and still in effect, made California Government Code Section 26945 apply to Shasta County, but that ordinance has not been amended to reflect any of the subsequent changes to Government Code 26945.
R2

The Shasta County Board of Supervisors shall ensure that the County Administrative Officer submits proposed policies and procedures to the Joint Audit Committee at its first meeting during Fiscal Year 2002/2003.
R3

The Joint Audit Committee should initiate a Request for Proposal to establish a contract with a new auditing firm.
R4

The Joint Audit Committee shall annually review the performance of the contract auditor to determine if the contract should be continued for another year. RESPONSE REQUIRED: Shasta County Board of Supervisors RESPONSE INVITED: Shasta County Administrative Officer Shasta County Auditor-Controller
R5

California Government Code Section 25303 provides that the board of supervisors shall supervise the official conduct of all county officers and see that all county officers faithfully perform their duties. However, the Board of Supervisors cannot direct the specific manner in which these duties are performed.
R6

For the past 20 years, incumbents running for re-election to the office of Auditor- Controller have run unopposed.
R7

A board of supervisors has more control over an appointed department head than an elected one. Under state law, a board of supervisors may establish an office of Director of Finance (which would consolidate the offices of Auditor-Controller and Treasurer-Tax Collector) if approved by a majority vote of the electorate. The voters could designate that the Director of Finance would be appointed rather than elected. State law also allows the elective position of Auditor to be made appointive, without the consolidation with another office, again by majority vote.
R8

California Penal Code Section 927 provides that the grand jury may, and when requested by the board of supervisors shall, investigate and report upon the needs for increase or decrease in salaries of county-elected officials.
R9

The Board of Supervisors is the sole authority to approve budget reviews and salary adjustments for the office of Auditor-Controller. Since the 1998 election of the current Auditor-Controller, the Board of Supervisors has approved eight salary increases for Shasta County’s elected officials in four separate packages, with the raises for the Auditor-Controller through January 12, 2003, reflected in the following chart: Approved by Effective Date Annual Salary Percentage Board of Supervisors Auditor-Controller Increase November 10, 1998 January 3, 1999 $75,348 3.50% November 10, 1998 July 4, 1999 77,580 2.50% November 10, 1998 September 26, 1999 79,580 2.50% January 11, 2000 January 16, 2000 81,864 3.00% December 19, 2000 January 14, 2001 84,300 3.00% December 19, 2000 January 13, 2002 88,524 5.00% January 15, 2002 January 13, 2002 91,152 3.00% December 19, 2000 January 12, 2003 94,800 4.00%
R10

While investigating this department, it was reported to the Grand Jury during numerous interviews that the Auditor-Controller spends an insufficient amount of time in his office. This makes him unavailable to supervise his staff or respond immediately to needs of departments or districts.
R11

The current Auditor-Controller has reported on his Statement of Economic Interests (California Form 700) that he holds outside employment.
R12

The Office of Auditor-Controller has had a personnel turnover rate of over 60 percent during the past three years, which is twice the county average of 10% per year. In 1999, four new employees were hired and six left the office. In 2000, seven new employees were hired and six left the office. In 2001, four new employees were hired and three left the office. This does not include those who transferred to other county departments. Of the 26 staff members who were in this department in 1999, only nine remain.
R13

The Auditor-Controller’s office has failed to process claims for payment for numerous departments and individuals in a timely manner. The Accounting Procedure Manual of the Shasta County Auditor-Controller, page CH-7, issued in 2002, states, “Orders for Payment forwarded to the Auditor-Controller will be processed for payment within three to four days of receipt”.
R14

During the course of this investigation, the Grand Jury found that there has been a lack of communication and cooperation between the Auditor-Controller and at least six county departments and agencies. County departments/staff have indicated the Auditor-Controller does not sufficiently communicate in writing with departments regarding fiscal decisions and accounting procedures.
R15

The Auditor-Controller has made decisions that unnecessarily conflict with departmental needs and has not resolved issues in a timely or efficient manner. These decisions have resulted in adverse financial consequences to the departments’ budgets. Some of the Auditor-Controller’s accounting policies have had an adverse effect on fiscal operations of county departments and agencies. In one example, the Auditor-Controller failed to resolve two accounting issues in the Fleet Management Division of the Department of Support Services. In 1994 and subsequent years, the California State Controller made a finding that the co- mingled funds for vehicle replacement and vehicle maintenance in Shasta County needed to be separated. As of March 30, 2002, neither the previous Auditor- Controller nor the current Auditor-Controller had separated the funds. The second issue has to do with how rates are established to charge the various departments for vehicle maintenance. Because of the lack of resolution of these issues, as of February 28, 2002, the Auditor-Controller had not processed any of the billings from the Fleet Management Division to the county departments for vehicle maintenance for the fiscal year which began July 1, 2001. The lack of resolution of these issues by the Auditor-Controller has been detrimental to the fiscal health of Shasta County because it resulted in unbilled expenses that were not being reimbursed by Federal and state agencies.
R16

California Government Code 26883 provides that the board of supervisors “…shall have the power to require that the county auditor-controller shall audit the accounts and records of any department…” in the county. This option has not been exercised by the Shasta County Auditor’s Office during the current auditor’s term. RECOMMENDATIONS: