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    4.    
FINANCE COMMITTEE
Meeting Date: 11/07/2022  
Subject:    COUNTYWIDE SINGLE AUDIT FOR THE FISCAL YEAR ENDING JUNE 30, 2021
Submitted For: Monica Nino, County Administrator
Department: County Administrator  
Referral No.: N/A  
Referral Name: Single Audit Review
Presenter: Timothy Ewell, Chief Assistant County Administrator Contact: Timothy M. Ewell, (925) 655-2043

Information
Referral History:
On November 8, 1999, the Board established a policy and procedure for addressing the annual findings and recommendations of the County's external auditors. The procedure directs that the Board refer the annual Single Audit findings to the Finance Committee, and that the County Administrator make a report to the Finance Committee on the current- and prior-year audit findings and recommendations that identifies what corrective action has been taken or is planned to be taken on each recommendation. Inasmuch as the current year Single Audit report encompasses all unresolved or pending audit issues from prior-year audits, this report responds directly to the current-year Single Audit report (FY ending June 30, 2021).

Internal Control Over Financial Reporting. Government Auditing standards require the external auditor to obtain reasonable assurance that the general-purpose financial statements are free of material misstatement. The external auditor found no instances of material misstatement but did identify a significant deficiency in internal control (Finding 2021-001).

Internal Control Over Compliance. Government Auditing Standards and OMB Circular A-133 (which is applicable to federal programs) require the external auditor to report on both compliance with and internal controls over the major federal programs carried out by the County. The external auditor found no instances of noncompliance.
Referral Update:
FY 2020/21 Single Audit Findings
  • Finding 2021-001: Accuracy of the Schedule of Expenditures of Federal Award (SEFA)
Recommendation: The County should reevaluate its process and controls for the preparation of the SEFA to ensure completeness and accuracy. Consideration should be given to: providing training and/or reference materials to better educate the personnel responsible for submission of the information to the County Auditor-Controller’s Office; enhancing reviews by departments prior to the submission of expenditures and related information to the County Auditor-Controller; and strengthening the review and monitoring of the reporting documents by Departments and the County Auditor-Controller’s Office.

Background: During the audit of the County’s SEFA, various misstatements were identified as summarized below. All amounts were corrected prior to the issuance of the 2021 SEFA.
  • Health Services misclassified 100% of its expenditures for the WIC (Women, Infants, and Children) Special Supplemental Nutrition Program as COVID-19 funded.
  • Expenditures for the Health Services-Provider Relief Fund and American Rescue Plan Rural Distribution Program were overstated by a net of approximately $800k (3% of the corrected amount).
  • The Public Health Emergency Preparedness Program was overstated by $4.3 million (436% of the corrected amount) due to miscoding of the Assistance Listing number (AL#).
  • Expenditures were duplicated on the Countywide SEFA during compilation of the report causing an overstatement of $10,732,881 (20% of the corrected amount) for the Employment and Human Services Medical Assistance Program.
  • Conservation and Development-Community Development Block Grants/Entitlement Grants (CDBG) misreported expenditures of approximately $3 million under an incorrect grant award.
Corrective Action: Various corrected measures have been identified as follows:
  • Health Services finance managers will conduct a final review of the completed SEFA both prior to submission to the County Auditor-Controller’s Office and prior to the submission to the external auditors. As part of this review, Health Services will compare grants reported on the SEFA to the prior year submission to ensure accuracy of program identification.
  • Health Services finance managers will be required to ensure compliance with Federal guidelines on SEFA reporting for COVID-19 grants.
  • Health Services will require staff to confirm the correct AL# with each grantor prior to SEFA reporting and will be verified during management review.
  • The County Auditor-Controller will ensure a second review is performed on the Countywide SEFA to prevent any overstatements.
  • Conservation and Development will provide all the grant agreement award numbers that are associated to a program year that a project appears in the County’s CDBG Action Plan.

Prior Year Findings
  • Finding 2018-001: Wage Rate Requirements

Recommendation: The County should evaluate the effectiveness of its current internal control policies and procedures and establish new policies and procedures over withholding payment to construction contractors until certified payrolls are received (in accordance with the Title 29-Labor Part 5-Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction).

Background: During the audit of the County’s compliance with the Wage Rate Requirement for the Highway Planning and Construction Program, the Auditors noted that the Public Works Department did not receive the required certified payroll for 14 of a sample of 40 reports prior to disbursing funds to the contractors. Contractors are required to submit monthly certified payrolls and the Department did not review and verify required documents were received before approval for payment.

Corrective Action: Corrected. The Department had ensured compliance with the Wage Rate Requirement by revising a checklist to include certified payroll for both the primary contractor as well as all subcontractors and no longer approves invoices for payment unless the checklist is completed. As of November, 2021, staff procedures and contract language have been updated and training has been provided to project managers and resident engineers. Additional documentation is required for subcontractors and a 10% deduction has been instituted for omission of a certified payroll report to ensure compliance.
Recommendation(s)/Next Step(s):
Attachments
Fiscal Year 2020/21 Single Audit.

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