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Supervisor questions management response in audit report

More internal auditing important to avoid misconduct, committee chairman says
By: Bridget Jones, Journal Staff Writer
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Placer County supervisors shared some concerns Tuesday after the county’s Audit Committee presented its annual report and discussed the findings of the single audit reports for fiscal year ending June 30, 2010. Wayne Nader, chairman of the Placer County Audit Committee, gave a suggestion at Tuesday’s Placer County Board of Supervisors meeting of what the county could do to make sure its finances are being properly controlled. Nader, a retired banker, said in a memorandum to the city that over the past year the committee met four times with Macias, Gini & O’Connell LLP, the external auditors for the county. The company performed audits on the First 5 Commission, the Redevelopment Agency, Flood Control District, Mosquito and Vector Control District, Tahoe Area Regional Transit, Western Placer Waste Management Authority, Golden Sierra Job Training Agency and the Treasury Oversight Committee for the fiscal year that ended June 30, 2010. The auditing process went smoothly and the committee has faith that the county is operating itself effectively, Nader said in his memorandum. “Macias, Gini & O’Connell LLP also reported that there were no serious difficulties encountered in performing the audits, no disagreements with management and no significant adjustments or disclosures not reflected in the financial statements,” Nader said. The company had a total of eight findings after the audits, according to county documents. One of the findings in the audit report stated that 14 out 60 showed no evidence that Placer County Human Services requested applicants’ Income Eligibility Verification System report to make sure they were eligible for aid, according to the single audit reports. According to the reports, the auditors found 29 of 60 cases had IEVS reports that had not been electronically signed off by caseworkers, which is required. However, the report states that there were no problems with any of the applicants receiving benefits they shouldn’t have due to these issues. In the report, Department of Human Services management disputed the findings. “While the documentation may not have been in the file or the electronic sign-off performed, it cannot be assumed that staff did not review IEVS information on the system prior to making their eligibility determination,” the response states. “According to the audit, all 60 of the cases reviewed were eligible for benefits. This finding is more salient to the point that staff performed their due diligence in ensuring only eligible recipients were granted benefits.” District 1 Supervisor Jack Duran said he was “troubled” with management’s response to the finding. “Eligibility wasn’t the issue, it was the lack of the electronic sign off,” Duran said. Susan Kimbley, assistant director of Placer County Human Services, said the department did have a plan after the audit’s findings. “We have taken corrective action since the audit occurred, and we have made great progress,” Kimbley said. “And by the next audit we expect to be fully compliant.” Nader said although he wasn’t accusing any county staff of doing what they shouldn’t, he said the demands on a small number of staff could result in negative situations. “Personnel reductions are impeding the ability of staff to consistently follow protocol with regards to policy and procedures, which is compromising controls,” Nader said. “With systems potentially subverted, it opens the door for the opportunity of misconduct. More temporary workers are being used to fill in on an as-needed basis. The county needs to be sure, especially in cash handling situations, that controls are in place to insure that these workers do not take advantage of a stretched oversight environment.” Nader said the way to avoid this was to allow more funding for additional internal auditing staff. “This is a prudent use of the county’s diminishing dollars during these challenging times, because it is quite likely that this investment would save more than it would cost,” he said. District 5 Supervisor Jennifer Montgomery said she also had concerns about how to stretch staff and follow regulations at the same time, not because they staff have bad intentions but because they have so much on their plates. To review the single audit reports visit placer.ca.gov/Departments/Auditor.aspx, click on the Financial Reports tab, scroll down and click on Fiscal Year Ended June, 30, 2010 Report. In other business the board: • Received an update regarding the first Placer County Stand Down and presented a resolution to the Gold Country Chaplaincy in support of the event. • Denied a third-party appeal and approved a conditional use permit, variance and adopted a mitigated negative declaration for the Northstar Mountain Lodge. Reach Bridget Jones at bridgetj@goldcountrymedia.com