Stanislaus County Grand Jury
• 2001-2002
Reason for Investigation Section 925 of the California Penal Code mandates that the Civil Grand Jury A...shall
⚠️ 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 and Recommendations 18 findings
F1
The Grand Jury received the full cooperation from the County and its employees in requests for information and documentation.
No recommendations for this finding
F2
BBR validated the financial statements of the County which had been prepared by the Auditor-Controller for the fiscal year ended June 30, 2001.
No recommendations for this finding
F3
The Stanislaus County Mid-Year Report presented to the SCBOS indicates the need to make budget adjustments due to increasing costs, as well as anticipated revenue reductions. Adjustments are necessary, primarily due to the State=s projected financial deficit, which will greatly affect the revenues the County will receive.
No recommendations for this finding
F4
Those employees interviewed and those whom the Grand Jury visited during the internal purchasing card audit procedure were aware of the County Purchase Card Program and Policies.
No recommendations for this finding
F5
There are thirty-one (31) departments in the County that have purchase cards. As of February 26, 2002, there are 1,673 employees that have active purchase cards. Some employees have more than one active card.
Related Recommendations (2)
R4
The County develop criteria to reduce the number of outstanding credit cards - thirty-four percent (34%) of all County employees currently have a credit card. A review of card limits with appropriate reductions should occur annually.
R5
The internal auditors review the process for cancellation of purchase cards when a County employee resigns, retires, or transfers to another department, or when a card is lost or stolen. These cards are to be returned to the Auditor-Controller=s office and immediately de-activated.
F6
The CEO has verbally directed the Auditor-Controller=s office to obtain his approval for all purchase card limits over $10,000.
Related Recommendations (2)
R3
Purchase cards with limits of $5,000 or more must be approved in writing by the department head, the Auditor-Controller, and the CEO. This written policy needs
R7
Travel and purchase card transactions of all department heads, including the CEO, be approved by their respective supervisor(s).
F7
As of February 2002, eighteen (18) departments had issued 1,677 purchase cards with a combined credit of $5,168,500. Sixty-seven (67) of those cards have limits exceeding $5,000 distributed as follows: 1 at $ 6,000 = $ 6,000 6 at 7,000 = 42,000 4 9 at 7,500 = 67,500 2 at 8,000 = 16,000 34 at 10,000 = 340,000 1 at 15,000 = 15,000 2 at 20,000 = 40,000 1 at 25,000 = 25,000 4 at 30,000 = 120,000 6 at 50,000 = 300,000 1 at 70,000 = 70,000 67 $1,041,500
No recommendations for this finding
F8
The majority of the departments= purchase cards are kept in a locked drawer or cabinet as recommended by the County. These cards are maintained by a designated employee.
No recommendations for this finding
F9
Two (2) of the Library personnel interviewed allowed another person to use their credit card and a third person knew of the practice.
Related Recommendations (2)
R2
Management enforce the policy that no employee shall allow another to use their purchase card. 8
R10
The Purchase Card Audit Report, prepared by the internal auditors with departmental responses, should be forwarded to the SCBOS for their review.
F10
All Library credit cards are kept in a locked safe and employees are required to sign for them.
No recommendations for this finding
F11
The fiscal impact of the County Purchasing Card Program as reported by the SCBOS Action Agenda Summary dated August 7, 2001 is as follows: a. The program purportedly saved $2,000,000 per year in transaction costs and an additional $2,000,000 in discounts. b. This $4,000,000 total savings had been extrapolated from a September 27, 1994 action to implement a Total Quality Management (TQM) program. c. In 1994, the estimated savings was to be between $189,000 and $207,000 per year. d. The TQM program included a recommendation that employees use credit cards to purchase items costing less than $1,000.
Related Recommendations (1)
R9
A complete analysis of the Purchase Card Program be conducted to determine actual savings to the County, if any. Cost factors should include time spent researching and approving purchases, ordering, checking invoices, approving payments, and checking with the appropriate departments (MIS, Purchasing, or Emergency Dispatch) to determine the best price/vendor. Internal audits, inventory control, and any other relevant costs associated with the purchase should also be determined.
F12
Contrary to County policy, employees failed to obtain competitive quotes prior to 5 making credit card purchases.
Related Recommendations (2)
R1
The County continue to educate employees on purchase card policies and emphasize the necessity to reconcile, review, and approve the Transaction Detail Reports within ten (10) days of receipt. This should be the number one priority of each department.
R14
Each department have one (1) employee assigned to purchase office supplies. More expensive items should be ordered through the Purchasing Department. 9
F13
Those interviewed who use credit cards instead of the Purchasing Department listed the following major reasons for use: a. Convenience: Prior to credit card use, an employee had to prepare a purchase order and a check request. The Library Accounting Department typed it and sent it to the Audit-Controller=s office to have a check prepared and mailed. The transaction had to be entered into two (2) computer software systems--Dynex and Oracle. b. Timely transaction: Prices change rapidly which is costly. c. Responsiveness: The Purchasing Department has not been responsive in the past. d. Employee time: Follow-up is redundant, time consuming and non- productive.
No recommendations for this finding
F14
The County has eleven (11) satellite libraries. With the exception of Denair, each has a non-interest bearing checking account at a local bank. a. Funds collected from book sales and fines are deposited in these accounts. b. Checks are written on these accounts and deposited in the County treasury. c. Denair delivers their funds directly to the County treasury. d. A delay of up to six (6) months has occurred before library funds were transferred to the County=s interest bearing account. e. An estimated $40,000 was being held in these non-interest bearing accounts.
Related Recommendations (1)
R12
Satellite library funds and any other funds held in departmental bank accounts must be transferred into the County treasury on a monthly basis.
F15
Of the five (5) Library employees interviewed, only one (1) uses the Purchasing Department services.
No recommendations for this finding
F16
The internal purchase card audit discovered two (2) transactions for meals that were charged by a Library employee on a purchase card. These same transactions were also reimbursed through the payroll system in the same amounts.
Related Recommendations (3)
R6
Travel and expense forms be consistent within all County departments. The Sheriff=s Department has established an excellent model for expense reports that could be used.
R8
Receipts for all meals showing date, place and amount must be attached to time cards when requesting reimbursement. An explanation of the business activity should be included along with names of others in attendance.
R15
Timecards that request expense reimbursement should be reviewed by internal auditors to insure proper documentation. RESPONSE REQUIRED per Section 933[c] and 933.05 of the California Penal Code: Stanislaus County Chief Executive Officer Auditor-Controller Stanislaus County Librarian This Final Report will be available for public review on the Civil Grand Jury website located at: http://www.co.stanislaus.ca.us/COURTS/courts/grandjury/index.html and at the Stanislaus County Main Library, 1500 I Street, Modesto, California 95354. '933. Comments and Reports on Grand Jury Recommendations [c] No later than 90 days after the grand jury submits a final report on the operations of any public agency subject to its reviewing authority, the governing body of the public agency shall comment to the presiding judge of the superior court on the findings and recommendations pertaining to matters under the control of the governing body, and every elective county officer or agency head for which the grand jury has responsibility pursuant to Section 914.1 shall comment to the presiding judge of the superior court, with an information copy sent to the board of supervisors, on the findings and recommendations pertaining to matters under the control of that county officer or agency head and any agency or agencies which that officer or agency head supervises or controls. In any city and county, the mayor shall also comment on the findings and recommendations. All such comments and reports shall forthwith be submitted to the presiding judge of the superior court who impaneled the grand jury. A copy of all responses to grand jury reports shall be placed on 10 file with the clerk of the public agency and the office of the county clerk, or the mayor when applicable, and shall remain on file in those offices. One copy shall be placed on file with the applicable grand jury final report by, and in the control of the currently impaneled grand jury, where it shall be maintained for a minimum of five years. '933.05 Response to Grand Jury Recommendations--Content Requirements A. Section 933.05 of the California Penal Code requires that a responding person or entity shall indicate one of the following: (1) The respondent agrees with the finding(s); or (2) The respondent disagrees wholly or in part with the finding(s). If this response is chosen, the respondent will specify that portion of the
F17
Library supply inventories are locked in a room, however, any Library employee is allowed access for convenience. The computer equipment is also under lock and key, and three (3) employees have keys to access the room.
Related Recommendations (1)
R13
The Library supplies inventory be locked at all times with one person made responsible to disburse items as needed.
F18
A 2002 internal audit discovered that seventy-three (73) receipts were missing out of 6 2,155 transactions. Of those departments with missing receipts, thirty-one (31) were from the office of the CEO. The majority of all receipts were found at a later date and given to the proper individual, but they were not available at the time of audit. CONCLUSIONS The Civil Grand Jury concluded that:
Related Recommendations (1)
R11
The County maintain internal audit staffing at the present level and add additional personnel as growth dictates.
Conclusions 16
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CL1 Page 7The Library purchase card limits need to be reduced. Past staff shortages which caused late approvals and late payments have been rectified, eliminating the need for high card limits. No Library credit cards have approximated their limit in the last year.
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CL2 Page 7County employees demonstrate a high degree of professionalism in performing their duties.
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CL3 Page 7The CEO is acting prudently in his analysis of the County=s fiscal position by recommending a reduction and reprioritization of expenditures to maintain a balanced budget.
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CL4 Page 7The County has done a good job informing employees of policies regarding the Purchase Card Program. The majority of the credit card discrepancies occurred due to under-staffing and staff perception that credit card monitoring was not a high priority.
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CL5 Page 7The approval of some purchase cards with limits of over $10,000 is being done by the Auditor-Controller=s office which contradicts a verbal directive by the CEO.
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CL6 Page 7Per SCBOS Agenda #B-12 dated September 27, 1994, the County=s original intent was to allow the departments to use credit cards for minor expenses.
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CL7 Page 7Department heads were originally given authority to issue credit cards to employees for purchases under $1,000. This limit was increased to $5,000 in 2001.
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CL8 Page 7The requirement that employees obtain competitive quotes and review purchases with either Emergency Dispatch (for communication equipment), MIS (for telephone and computer equipment) and Purchasing (for most other purchases) is not followed in many cases.
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CL9 Page 7The majority of purchases in the Library are for books. The Library has two (2) main sources for books (Ingram and Brodart) and would not normally contact the Purchasing Department to purchase books from these suppliers. They do 7 purchase books from Barnes and Noble and Amazon Books with their purchase cards. The person in charge of purchasing supplies does interact with the Purchasing Department when time permits.
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CL10 Page 8Two (2) Library employees have allowed others to use their purchase cards. Both employees knew what was being ordered and had given verbal approval for use of their card.
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CL11 Page 8The Library purchase cards are locked in a safe place and signed out by employees when needed. Most merchandise is ordered by phone, FAX or computer where only the card number is needed, not the card itself.
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CL12 Page 8There is no written policy regarding the transfer of funds into the County Treasury. The funds in the satellite library checking accounts are not transferred in a timely manner. Balances in these accounts have, at times, exceeded $40,000.
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CL13 Page 8Library supplies are available to all employees with no supervision and no inventory control. Computer equipment is locked in a separate room with limited authorized access.
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CL14 Page 8According to the Patrick E. Carroll & Associates report, employees are using credit cards for purchases when they should be utilizing the County=s Purchasing Department to maximize cost effectiveness.
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CL15 Page 8There is no evidence to conclude the purchase card program has saved $4,000,000.
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CL16 Page 8Internal audit found one employee had abused the purchase card policy by requesting payroll reimbursements for purchases made by credit card which resulted in duplication of payment. This was found in a random sampling of employees and their credit card receipts. It is unknown how many actual instances there are of this problem; however, under current policy, the potential for this type of abuse does exist.
No Responses Found 3
Government entities assigned to respond to this report. No response documents have been linked in our database.
Stanislaus County
County
Stanislaus County Auditor-Controller
Elected County Office