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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 76
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. Response: RethinkWaste agrees with this finding. By design, the South Bayside Waste Management Authority outsources much of the tasks requiring internal control processes to ensure proper controls. Most notably the majority of accounting functions are currently outsourced to one of our Member Agency’s municipal finance department.
F2
Page 80
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. Response: The Town agrees with the finding. However, the Town regularly assesses its internal controls and monitors its processes and procedures. The Town conducts an annual audit that includes a high-level review of internal controls by an outside auditing firm.
F3
Page 80
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. Response: The Town agrees with the finding. However, the Town assesses and reports its internal controls process through its Fiscal Year end Memorandum of Internal Controls reporting with its reporting of 80 FAIR OAKS LANE | ATHERTON, CALIFORNIA 94027 | PH: (650) 752-0500 www.ci.atherton.ca.us Annual Basic Financial Statements. The Town conducts an annual audit that includes a high-level review of internal controls monitoring of it processes and procedures by an outside auditing firm.
Recommendations 3
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R1Page 48Beginning 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. This recommendation relates to “each entity.” The District cannot respond on behalf of any other entity, and responds only as to this District. The District appreciates this recommendation, recognizing the importance of regular review of organizational risk. California Education Code Sections 41000 - 41024 governs the District’s accounting practices, budget controls and audit practices. Notably, Education Code Sections 41000-41003 outline the general provisions related to the financial operations of school districts, including the management of school funds and the responsibilities of school district officials. Education Code Section 41020 mandates that each school district must prepare and submit a budget to the county superintendent of schools, which should include detailed financial information and adhere to state regulations. Education Code Sections 42100-42105 pertain to a district’s financial audits, including the requirement for school districts to undergo regular audits and the specific requirements for audit reports. Additionally, Education Code Sections 42120- 42129 regulate and govern the manner in which a district completes, reviews, publicizes, and submits budgets and financial reports. Moreover, California Code of Regulations Title 5, Sections 19800-19808 provide detailed financial reporting and accounting procedure requirements for school districts. The District must adhere to the above-noted non-exhaustive list of statutes and regulations which govern the District’s internal controls and accounting and reporting practices. Because the District must adhere to the above-noted non-exhaustive list of statutes and regulations which govern the District’s internal controls and accounting and reporting practices, the intent of this recommendation is already met. Docusign Envelope ID: 8BD9DFE3-ED13-4667-8D98-F817126CCB5B
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R2Page 81Beginning 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: Staff will strive to schedule annual reporting of assessment of internal controls by March 31, 2025 or a future date in 2025.
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R3Page 81Beginning 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: Staff will strive to report results of its annual assessment of internal controls by June 30, 2025 or a future date. With respect to all recommendations, the Town believes that its current process to review and plan for its internal controls is adequate for our agency profile. The Town does have procedures to help prevent fraud and waste, including separation of duties, limit on access to financial software, public reporting of all warrants, IT overview assessment, risk management, and routine reconciliations. In addition, the City prepares an Annual Basic Financial Statement Report that is audited by an independent auditor using generally accepted government auditing standards and performs internal control environment review and questionnaires on Town accounting processes and procedures. A Memorandum of Internal Controls report is produced and reviewed during review of the Audited Basic Financial Statements. Should you have any questions concerning the response, please contact City Manager, George Rodericks at (650) 752-0504. Sincerely, Diana Hawkins-Manuelian, Mayor TOWN OF ATHERTON 80 FAIR OAKS LANE | ATHERTON, CALIFORNIA 94027 | PH: (650) 752-0500 www.ci.atherton.ca.us