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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.
San Mateo County Grand Jury
• 2024-2025
“failure of ANY Contributes to Public Distrust of All” Issue San Mateo County, Cities, Special Districts, Joint Power
⚠️ 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 3 findings
F1
Page 31
When an entity does not have a process to identify organizational risks, and the entity does not demonstrate how its internal controls address identified risks, the likelihood of a failure in internal controls that results in fraud or waste increases. City response: The City agrees with the finding. In addition to formal risk assessments, the City recognizes the importance of established procedures and routine oversight activities, relying on the experience and judgment of management and staff, and a strong organizational culture that emphasizes ethical behavior, accountability, and responsiveness to deter fraud and waste.
F2
Page 31
When an entity does not periodically assess its internal controls and the entity cannot demonstrate that it is monitoring its internal controls, the likelihood of a failure in internal controls that results in fraud or waste increases. City response: The City agrees with the finding. In addition to periodically assessing and monitoring internal controls, the City recognizes that supervisory activities, employee training, and fostering a strong organizational culture also serve as critical safeguards against fraud and waste. A practical and tailored approach is also needed when conducting these assessments to ensure they are both efficient and effective City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 menlopark.gov Docusign Envelope ID: 90E5E58A-DAE1-4376-887A-533C703B1B5A 2 for the City.
F3
Page 32
When management does not report the results of its assessments of internal controls to its governing board and the entity has not communicated externally, the likelihood that others see this as an opportunity to commit fraud or waste increases. City response: The City agrees with the finding. In addition to communicating the results of these assessments to the governing board, the City recognizes the importance of ensuring internal controls are effective through robust ongoing monitoring and taking corrective actions in a timely manner while balancing the limited resources and staff time on these internal efforts. Response to Grand Jury Recommendations
Recommendations 3
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R1Page 29Beginning by no later than December 31, 2024, and at least annually thereafter, each entity will document its organizational risks and address those risks in its annual Assessment of Internal Controls. Response: The City of Half Moon Bay has not recently formally assessed and documented its organizational risks, also known as an Enterprise Risk Assessment. The City agrees that regular Enterprise Risk Assessments are a best practice. Docusign Envelope ID: 9ACC356B-8FEE-4D9B-BF93-0BA635C6F327 While the City does not have a formal internal controls assessment process, it does conduct an annual audit that includes a high-level review of internal controls by an outside auditing firm. The City agrees that a formal internal controls assessment, separate from the external audit, would help prevent fraud and waste. The City is currently evaluating firms to provide both services in an effort to comply with this recommendation. Due to the City's small size and current cost constraints, it is considering performing an Enterprise Risk Assessment every three years and conducting an internal controls assessment annually.
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R2Page 30Beginning by no later than March 31, 2025, and at least annually thereafter, each governing board will require its management to complete its annual assessments of internal controls. Response: The City Council will work with Staff to adopt a schedule of assessments of internal controls.
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R3Page 30Beginning by no later than June 30, 2025, and annually thereafter, each governing board will require management to report the results of its annual assessment of the entity’s internal controls. Response: The City Council will work with Staff to schedule annual reporting of assesment of internal controls. While the City does not have a formal interal control assessment process, the City does have procedures to help prevent fraud and waste,including separation of duties, public reporting of all warrants, and rountine reconcilations. In addition, the City prepares an Annual Comprehensive Financial Report (ACFR) that is audited by an independent auditor using generally accepted government auditing standards. In closing, the City of Half Moon Bay thanks the Civil Grand Jury for its efforts to address one of the biggest challenges that face local governments throughout the state and we appreciate the opportunity to share our perspective. Sincerely, Joaquin Jimenez Mayor City of Half Moon Bay Docusign Envelope ID: 90E5E58A-DAE1-4376-887A-533C703B1B5A City Council September 24, 2024 The Honorable Amarra A. Lee Judge of the Superior Court c/o Bianca Fasuescu Hall of Justice 400 County Center; 2nd Floor Redwood City, CA 94063-1655 Empty RE: Civil Grand Jury Report: “Assessing and Reporting Internal Controls in San Mateo County Agencies and School Districts” Empty Dear Honorable Judge Lee, Thank you for the opportunity to review and respond on the above-reference Grand Jury Report filed on June 27, 2024. The City Council of the City of Menlo Park (City) voted at its public meeting on September 24, 2024, to authorize this response to the