Responses to the 2010-2011 Stanislaus County Civil Grand Jury Final Report

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Continued attention by the City to the letter and spirit of the Brown Act in all matters that come before the City Council. AB1234 Ethics for Public Office Training, Government Code 53235 AB1234 (Training in Ethics) is required for all elected and appointed officials every two years, beginning January 1, 2006. Newly elected or appointed officials must receive the training within one year. The 2010-2011 SCCGJ recommended: “All Patterson City Council members shall post their AB1234 Ethics Training results on the City website to ensure compliance. The City Clerk shall monitor this requirement and place upcoming AB1234 expiration dates on the public agenda.” The City of Patterson currently posts the Mayor's and each councilmember's compliance with AB1234 on its website (http://www.ci.patterson.ca.us). The SCCGJ notes the constructive measures taken by the City to implement AB1234 training, and recommends:

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Further monitoring and public notice toward full and continuous compliance. The 2011-2012 SCCGJ suggests that the measures implemented by the City of Patterson be followed by all public entities and officials in the county, with regard to disclosure to the public each legislative member's compliance with AB1234 (Ethics Training). This training is available online at no cost. Use of the term fiduciary by the SCCGJ The September 28, 2011 response by the City of Patterson took issue with the use of the term fiduciary by the 2010-2011 SCCGJ. "… states in pertinent part that Council Member A failed to disclose a fiduciary conflict of interest with a landlord/commercial developer. (The word 'fiduciary' is clearly misused here and throughout the document. We will respond to this finding as though you meant the word "financial.")". The City of Patterson response does not address the findings. The 2011-2012 SCCGJ finds that the term fiduciary used in the 2010-2011 SCCGJ reports is appropriate. [Fiduciary Law. A person to whom property or power is entrusted for the benefit of another.] The 2011-2012 SCCGJ reviewed the 2010-2011 SCCGJ City of Patterson Reports (11-01C, 11-02C, 11-03C, 11-04C, 11-05C, 11-06C, 11-07C, 11-08C, and 11-18C), and finds they are supported by facts and evidence. All other 2010-2011 SCCGJ findings, not specifically addressed in this response have been forwarded (by the 2011-2012 SCCGJ) to the Stanislaus County District Attorney. No response is requested. Stanislaus County Civil Grand Jury Review of the Special District Audit Requirement Case 12-28GJ Continuity Report Summary: The 2010-2011 Stanislaus County Civil Grand Jury (SCCGJ) submitted report Case #11-32GJ, a review of the Special District Audit requirements per California Government Code (CGC) Section 26909. There are thirty-six districts within Stanislaus County that the Civil Grand Jury has authority to conduct audit reviews. The Special Districts are on a two-year audit cycle. The 2010-2011 report found seven districts out of audit requirement compliance and in varying phases to meet those requirements. As of April 2012, the following two of these seven special districts have completed the audit requirements.  Woodland Fire Protection District – Unqualified Opinion  Sand Creek Flood Control – Unqualified Opinion Five are still pending completion.  Monterey Park Tract Community Service  West Port Fire Protection District  Riverdale Park Community Service  Knights Ferry Community Service  East Stanislaus Resource Conservation Glossary: CGC Section 26909 California Special District Audit Requirements. Unqualified Opinion: Auditor's opinion of a financial statement, given without any reservations. Such an opinion basically states that the auditor feels the company followed all accounting rules appropriately and that the financial reports are an accurate representation of the company's financial condition. Qualified Opinion: Qualified Opinion report is issued when the auditor encountered one of two types of situations which do not comply with generally accepted accounting principles; however the rest of the financial statements are fairly presented. Methodology Of Investigation: The 2010-2011 Stanislaus County Civil Grand Jury requested that the Stanislaus County Auditor- Controller contact these Special Districts to develop a timeline and to ensure completion of the required audits. The Stanislaus County Auditor-Controller contacted each Special District and maintained a detailed log of all contacts with each Special District and their audit firms in an effort to ensure the completion of these audits.

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Riverdale Park Community Service should submit a time-line for completing its audits to the SCCGJ and the Stanislaus County Auditor-Controller with a progress update every 30 days until the audits are completed.

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Knights Ferry Community Service should submit a time-line for completing its audits to the SCCGJ and the Stanislaus County Auditor-Controller with a progress update every 30 days until the audits are completed.

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The East Stanislaus Resource Conservation should submit the completed, Board-approved audits to the SCCGJ and the Stanislaus County Auditor-Controller.

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An audited financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. These Special Districts are responsible to their public. CGC Section 26909: A special district may, by unanimous request of the governing board of the special district, with unanimous approval of the board of supervisors, replace the annual special audit with a biennial audit covering a two-year period or, if the district’s annual budget does not exceed an amount specified by the board of supervisors, an audit covering a five-year period. A two-year audit cycle provides ample time for the submission and completion of this responsibility. No extensions of audit time frames should be entertained.

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CGC Section 26909, provides: If, after considering identified conditions and events and management’s plans, the auditor concludes that substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time remains, the audit report should include an explanatory paragraph to reflect the conclusion. A special district’s inability to produce auditable financial statements, and/or a habitual audit non-compliance status, places reasonable doubt as to the entity’s ability to continue as an independent going concern. The 2011-2012 SCCGJ recommends that the Stanislaus County Board of Supervisors review and take action to consolidate or dissolve Special Districts that do not comply with audit requirements.