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  • Review agenda
  • Establish expanded audit guidelines Perform associated quality control functions
  • Definition taken from the FMG
  • Sarah Handout 1 Proposed policy- has not been voted on by the San Diego Commission
  • Provides a road map for beginning the planning process( priority setting, public engagement) and navigating it once you start (revenue forecasting, sustainability strategies) Sample documents from county commissions
  • One of a couple example documents from the First 5 Financial Management Guide
  • Orange County is using leading practice model
  • Sarah Handout 2 Good because documents both the policy and procedures Leading practice would incorporate a policy of periodically reporting revenues,expenses,budget to actual to commission throughout the year Orange County is using leading practice model
  • Need to have minutes of meeting where policy is adopted
  • Sarah 3 Handout Independent Commissions may have policies that describe , positions eligible for benefits, vacation policy, etc

Getting Ready to Report New Financial Requirements for First ... Getting Ready to Report New Financial Requirements for First ... Presentation Transcript

  • Getting Ready to Report New Financial Requirements for First 5 Commissions Pre-Conference Institute Manchester Grand Hyatt San Diego, CA May 24, 2006
  • Today’s Presenters Sheila Kruse First 5 Tuolumne County Rick Teichert Formerly of the Children & Families Commission of Orange County Sarah Sheehan Government Finance Officers Association – Research and Consulting Center Christina Altmayer Altmayer Consulting
  • Expanded Audit Guidelines
  • http://www.sco.ca.gov/aud/manuals/ccfp_audit_guide.pdf
  • Areas covered
    • Contracting and Procurement Policies
    • Administrative Costs
    • Conflict of Interest
    • County Ordinance creating County Commission
    • Long Range Financial Plan
    • Financial condition or commission
    • Amount spent on program evaluation and related results
    • Salaries and Benefits
  • Issues: Documentation that will be required to show compliance
    • Minutes of Meetings adopting policies
    • Legal Representation Letters
    • Management Representation Letter
    • Staff Reports
    • Resolutions adopting contracts
    • Other source documents to meet testing requirements
  • Contracting and Procurement
    • Compliance requirement:
    • County Commissions must adopt in a public hearing contracting and procurement policies that are consistent with state law. The policies must contain provisions to ensure that the grants and contracts are consistent with the county commission’s strategic plan.
  • Contracting and Procurement – Audit Procedure
    • Provide minutes documenting the policies were adopted in a public hearing
    • Provide copies of the adopted policies to the auditor
    • Provide a representation letter from legal counsel stating the policies are consistent with state law (See handout Rick 1)
  • Contracting and Procurement – Audit Procedure
    • Test a sample of transactions to source documents
      • Determine transaction is in compliance with the adopted policies
      • Determine that the expenditures are consistent with the contract
      • Verify that the Commission has determined contract/transaction is consistent with the adopted Strategic Plan (See handouts Rick 2 and 3)
  • Administrative Costs
    • Compliance Requirement:
    • Administrative Cost Definitions must comply
    • with the state commission’s guidelines and
    • the county commission must have a process
    • in place to monitor these costs
  • State Commission Guidelines Defining Administrative Costs Administrative costs are defined as costs incurred in support of the general management and administration for a county commission for a common or joint purpose that benefits more that one cost objective (other than evaluation) and/or those costs not assignable to a specifically assignable cost objective. - First 5 California memo to Commission EDs
  • Typical Administrative Costs
    • General Accounting/Financial Reporting
    • Financial Planning
    • Procurement
    • Commission Travel
    • Payroll/Benefits/HR
    • Legal/Consulting
    • Contract Compliance
    • Audit
    • Strategic Planning
    • Rent
    • Maintenance
    • Insurance
    • Utilities
    • Janitorial
  • Audit Procedure
    • Provide minutes to confirm the adoption of a policy in a public meeting.
    • 2) Determine whether the administrative cost definition is consistent with the state commission guidelines that define administrative functions.
    • 3) Verify that the Commission has implemented a system to monitor its administrative costs.
  • Example: San Diego County Administrative Cost Policy
    • 10% of the annual operating budget for the fiscal year (see handout Sarah 1)
    • The percentage of the Commission’s administrative costs to the total current fiscal year operating budget will be calculated as the total administrative expenses for the fiscal year, divided by the total annual operating budget.
    • “ Administrative costs” are the Commission’s labor and benefits costs, and all services and supplies costs not readily identifiable as costs of the Commission’s evaluation or programmatic activities.
    • The Commission and the Commission’s Finance Committee will receive financial reports (revenue & expenditure statements) that include year-to-date information on the Commission’s administrative expenditures. Additionally, the statements will include information on the percentage of administrative costs in relation to the Commission’s total annual operating budget. At the end of every fiscal year, the Commission’s total actual administrative expenses will be reported against the Commission’s total expenditures (including encumbrances) for the year.
    • The Commission and the Commission’s Finance Committee will receive financial reports (revenue & expenditure statements) that include year-to-date information on the Commission’s administrative expenditures.
    • Additionally, the statements will include information on the percentage of administrative costs in relation to the Commission’s total annual operating budget.
    • At the end of every fiscal year, the Commission’s total actual administrative expenses will be reported against the Commission’s total expenditures (including encumbrances) for the year.
    Example: San Diego County Administrative Cost Policy
  • Conflict of Interest
    • Compliance Requirement:
    • County commissions must adopt conflict-of-interest policies for commission members that are consistent with applicable state law. These policies must be designed to assure that the county commission complies with all applicable state and local conflict-of-interest statutes and regulations.
  • Conflict of Interest – Audit Procedure
    • Provide minutes documenting the policies were adopted in a public hearing
    • Provide copies of the adopted policies to the auditor
    • Provide a representation letter from legal counsel stating the policies are consistent with state law (See handout Rick 1)
  • Conflict of Interest – Audit Procedure
    • Determine that the commission is complying with the adopted policy
      • Review a sample of commission meeting minutes documenting appropriate abstentions for contract award actions
      • Review Form 700 filings for timeliness and completeness
      • Interview the Executive Director, Legal Counsel and a sample of Commissioners to determine the consistent understanding and application of the policy
  • County Ordinance creating the County Commission
    • Compliance Requirement:
    • The county commission must adopt policies and practices to assure that it is adhering to the county ordinance establishing the commission. The ordinance must be adopted by the county’s board of supervisors and contain the minimum provisions specified in Health and Safety Code Section 130140(a)(1), Section 130140(d)1 and Section 130151(b)(1).
    • Online Reference: http://www.leginfo.ca.gov/calaw.html
  • County Ordinance – Audit Procedure
    • Ensure that the new requirement of AB109 in Health and Safety Code Section 130140(a)(1)(C)(iv) is referenced in the ordinance
      • Requires the county commission to measure outcomes of county funded programs through the use of applicable, reliable indicators and review that information on a period basis as part of the public review of the county commission Strategic Plan. (See handout Rick 4)
  • County Ordinance – Audit Procedure
    • Develop a management representation letter outlining and detailing the commission’s practices and procedures for ensuring compliance with each relevant ordinance component. (See handouts Rick 5 and 6)
    • Review source documents to support and corroborate statements in the management representation letter
  • County Ordinance – Audit Procedure
    • Provide meeting minutes documenting the review or adoption of the Strategic Plan in a public meeting/hearing
      • Review of the plan in a public meeting
      • Revisions to the plan in a public hearing
    • Provide a copy of the adopted Strategic Plan
  • Long Range Financial Plan
    • Commission must adopt plan in a public meeting
    • Plan should conform to the First 5 Financial Management Guide, at a minimum
    • Provide minutes of the meeting adopting the Plan
  • Financial Planning Resources Found in the First 5 Financial Management Guide
  • Financial Planning Resources cont.
  • Communicating Financial Position Compliance Requirement: The commission must have policies and practices with respect to its financial condition.
  • Communicating Financial Condition
    • Annual audit will constitute minimum verification that policies and practices are in place with respect to financial condition
    • Leading practice would incorporate a policy of periodically reporting revenues,expenses and budget to actual to commission throughout the year
  • Example: Stanislaus County Stanislaus County Annual Audit of Financial Condition   Policy: Annually, the Commission shall have a financial audit of its accounts and transactions conducted. The results of the audit shall be communicated to the public and to the State of California First 5 Commission. (Handout Sarah 2) Procedure:   Following the close of the County’s fiscal year (July – June), the Commission shall have an independent audit conducted to assess the appropriateness and completeness of its revenue and expenditure transactions for the fiscal year just ended. As permitted by law, the audit can be conducted by the County Auditor’s Office or by an accounting firm with knowledge of governmental fund accounting.   Any annual audit conducted shall use audit guidelines issued by the State Controllers Office. (The most recent guidelines are entitled, “Standards and Procedures for Audits of California Counties Participating in the California Children and Families Program”.)   Within two months of receipt of the audit, the Commission shall hold a public hearing on the audit to discuss the report and any response to the findings. Within two weeks of the public hearing, the Commission shall submit a response to the audit findings to the California State Controller. By November 1st of each year, the Commission shall submit the audit report to the State of California First 5 Commission.
  • Program Evaluation
    • Compliance Requirement:
    • The county commission must have policies and practices with respect to the amount that it spends on program evaluation and the documented results of these expenditures.
  • Program Evaluation – Audit Procedure
    • Document the amount spent is consistent with policies and practices
      • Document a definition
      • Provide a budget/appropriation for evaluation
      • Demonstrate reporting of evaluation costs
      • Document that the roll-up and reporting of Administrative Costs is consistent with the definition
  • Program Evaluation – Audit Procedure
    • Confirm the existence of evaluation data and reports
      • Produce documentation of your Evaluation Data collection systems and processes
      • Provide a summary of reports presented to the Commission on program evaluation/outcomes (See handout Rick 4)
      • Meeting minutes reflecting presentation, copies of the reports, etc. (See handout Rick 7)
  • Program Evaluation
    • Guideline required language for Notes to the Financial Statements:
      • The commission spent $______ on program evaluation during the audit period.
      •  
      • Or
      •  
      • The commission did not maintain documentation to identify the amount spent on program evaluation during the audit period.
  • Salaries and Benefits Policy Compliance Requirement: The county commission must adopt, in a public hearing, policies and procedures for establishing salaries and benefits for its employees. The salaries and benefits must comply with those set forth in the commission policies or the county government policies.
  • Example: Solano County SALARY AND BENEFITS OF COMMISSION STAFF POLICY   Adopted March 7, 2006   The First 5 Solano Children and Families Commission, as part of Solano County, hereby affirms the use of the Solano County Human Resources Personnel and Salary Resolution Policies. Any updates to the Solano County Human Resources Personnel and Salary Resolution Policies document will be strictly adhered to by the First 5 Solano Commission. The Internal Systems Committee will notify the First 5 Solano Commission of updates at the next regularly scheduled meeting following an update. (Handout Sarah 3)  
  • Expanded Audit Pre-Audit Package
    • Consider preparing a comprehensive package of required policies and documents to initiate the audit work (See handout Rick 8)
      • Orient the auditors to the scope of work required by the SCO Guidelines quickly
      • Make the auditors field work efficient to minimize the added audit costs
      • Will demonstrate to the auditors that you are “on top of” the new requirements and well prepared
    • Begin the Expanded Audit early, in May or June, since there has been no relief in the timing of submitting both the financial and expanded audits
  • Small Group Discussion
    • Key Issues
    • Legal representation letter with regard to procurement
    • Agreements consistent with strategic plan
    • Administrative cost monitoring system
    • Long range financial plan
    • Others?