County of Riverside Office of the*

Inadequate Audits Audits are conducted on the IWF with the purpose of increasing transparency. IWF Bylaw Section B-Audits states: The Corrections Division Administrative Manager (FINANCE) will monitor and perform a monthly audit of all IWF expenditures and prepare pertinent management reports for the IWF. A non-County entity or outside accounting firm shall conduct an annual audit of the IWF [sic] The Corrections Administrative Manager (FINANCE) will initiate and coordinate with the Sheriff's Contracts Unit a request for quote for audit services in accordance with Riverside County Purchasing guidelines. These entities with the approval and concurrence of the Corrections Chief Deputy for Support Services will select the outside accounting firm to prepare said audit. To avoid exclusivity, the accounting firm will rotate every three years. Part C - Annual Report States: The Corrections Administrative Manager (FINANCE) will be responsible for the preparation of an annual report of all revenue, expenditures, current balance, and transactions of the IWF. An itemized report of expenditures will be included in the public information plan for each facility. Pursuant to 4025(e) of the Penal Code, the itemized expenditure report and a copy of the annual IWF audit will be submitted annually to the County Board of Supervisors. All audits are only distributed within the IWFC and thereby lack independent scrutiny or oversight during the year. The monthly audits are neither reviewed nor monitored by the Assistant Sheriff of Corrections of the Undersheriff or any other neutral party. The independent audits conducted annually focus strictly on accounting of numbers and as such, do not address internal controls. Internal Controls provide guidance for establishing and maintaining an effective system of operations and accounting principles in accordance with the County's policies. Internal controls refers to the methods and procedures used to provide reasonable assurance regarding the achievement of objectives in the following categories: Safeguarding assets 2. Ensuring accuracy, reliability and timeliness of financial records Promoting adherence to policies, procedures, regulations and laws 3. 4. Promoting effectiveness and efficiency of operations The Grand Jury has found no independent and comprehensive audit that focused on internal control, or reviews of the daily business operation of the fund. Considering the breadth and magnitude of the IWF, these internal controls are vital to effective management of the fund. As currently contracted and performed, the audits are inadequate to properly ascertain that the fund is being used appropriately. Annual Reports send to the BOS do not include information regarding the total revenues, the profit margin, what the reserve accounts are used for, and whether the expenditures for each area are appropriate. The only categories listed are expenditures. There is no comprehensive narrative explaining any of the expenditures or any other aspects of the fund, so the report is of limited value in its scope, and does a disservice to the BOS who should have a comprehensive explanation of what is happening with the IWF.