Response Procedure Response to Grand Jury Report The governance of responses to the Grand Jury Final Report is*

The Finance Manager will replace the Auditor-Controller, but it is not yet clear what the job description for the new position will be. Auditor-Controller's Response: We agree that the job description for the new Director of Finance is not yet available. However, this position will not become effective until my term ends on December 31, 2014. A team of finance managers is currently designing the new financial management structure and will make a recommendation to the Board of Supervisors in September 2013. Once the Board approves the structure, the job description for the head of finance will be developed.

Requisite financial reporting is late and bank reconciliations have been from three to six months late because finance operations are understaffed. Auditor-Controller's Response: We agree that the issuance of the county annual financial report has taken more than six months from the end of the fiscal year and that bank reconciliations were also performed late. It should be noted that all ASSURANCE OF ACCOUNTABILITY Honorable Daniel P. Maguire May 31, 2013 financial reports complied with statutes and that there were other compensating controls that mitigate the late bank reconciliations. We have reorganized resources where possible and requested additional resources to improve timeliness in the future.

The County uses multiple systems to collect "hours worked." Auditor-Controller's Response: We agree. Of the 20 county departments, 16 use the countywide E-Schedule to track absences and 4 use their own systems. In addition, some departments use time sheets to certify time worked. The County realizes the need for a more uniform and robust timekeeping system and is preparing request for proposals for a payroll/HR system that includes automated timekeeping.

Some finance personnel lack requisite accounting, finance or software backgrounds. Auditor-Controller's Response: We disagree partially. Most finance and accounting personnel in the County possess the basic skills and abilities required by their respective job classifications. What has gradually happened over time is that the nature of the work has evolved while the skill sets contained in the job classifications have not been updated. The Human Resources Division is presently engaged in the tasks of reviewing fiscal classifications countywide, as well as enhancing the training program for fiscal skills.

The external auditor has found repeated, uncorrected conditions of non- compliance in grant reporting. Auditor-Controller's Response: We disagree partially. The independent auditors found uncorrected conditions related to the untimely verification of eligibility in the In Home Support Services program, not related to grant reporting. It should be noted that although the findings represent a non-compliance issue, they were within the exception rate allowed by the California Department of Social Services.

A Request for Proposal (RFP) for a new external auditor has not been issued in a timely manner. Auditor-Controller's Response: We disagree. The contract with the current audit firm does not expire until 6/30/13. A request for proposal for audit services was issued on 3/7/13 and an independent audit firm was approved by the Board of Supervisors on 5/7/13. The new audit firm will begin fieldwork on 6/18/13.

Internal audits need to be performed regularly in all departments. The last internal audit was two years ago. ASSURANCE OF ACCOUNTABILITY Honorable Daniel P. Maguire May 31, 2013 Auditor-Controller's Response: We agree partially. The Internal Audit staff have been conducting small audit projects in various departments (such as cash and equipment audits) while also being pulled away to help out in other understaffed areas in the Auditor-Controller department. The last major audit project was a countywide payroll audit that was completed two years ago. The Internal Audit division does not have a manager who can regularly lead the charge on these large countywide projects. We have requested additional resources to remedy this gap.

Financial off-line adjustments are made without formal supervisory sign-off, as required by good business practice. Auditor-Controller's Response: We disagree partially. Although we agree with the nature of the finding it should be noted that this deficiency was corrected in the FY 2011-12 financial audit.