For this fifth biennial audit of the procurement and contracting practices of California superior courts, we reviewed the superior courts in Alameda, Contra Costa, Lake, Orange, and San Bernardino counties. We determined that these five courts adhered to most of the required and recommended procurement and contracting practices that we reviewed; however, they could make certain improvements to better ensure the responsible stewardship of public funds. We reviewed the selected courts’ practices related to contracts, payments, and purchase card transactions for fiscal year 2019–20. This report concludes the following:
We found that three courts did not always follow established payment procedures, increasing the risk of misusing public funds. The Alameda court made questionable payments totaling $16,000 because it did not match invoices to appropriate supporting documentation for two of 18 payments we reviewed, and it routinely did not adhere to authorization limits for approving invoices. The Orange court also exceeded its authorization limit for one of 10 payments we reviewed, and the Lake court did not fully separate payment duties as recommended so that no one person is in a position to initiate or conceal errors or irregularities for six of 10 payments we reviewed. The courts whose purchase card transactions met our threshold for review (Contra Costa, Orange, and San Bernardino) generally used purchase cards appropriately. Many of the purchase card transactions we reviewed were emergency purchases related to the 2019 coronavirus disease pandemic and were exempt from competitive bidding requirements. The processes courts followed for these emergency transactions and the goods and services they purchased were reasonable.
Some courts have not fully complied with state law that generally requires them to notify the California State Auditor’s Office (State Auditor) within 10 business days of entering into contracts estimated to cost more than $1 million. The Alameda court had four such contracts in fiscal year 2019–20 but did not notify us of any because it did not have sufficient policies and procedures in place for doing so. The Contra Costa, Orange, and San Bernardino courts did notify us about some high-value contracts they had in fiscal year 2019–20 but failed to notify us about others for various reasons, including staff error, a gap in their notification procedures, or incorrect interpretation of the notification requirement. By not fully complying with the notification requirement, these courts have limited our ability to identify in a timely and accurate manner contracts that may warrant review.
Two courts do not have information in their local contracting manuals that would help ensure that their staff members follow appropriate contracting processes. The Alameda and Lake courts each omitted from their local contracting manuals certain provisions that the Judicial Branch Contracting Manual (judicial contracting manual) recommends courts include. Specifically, the Alameda court did not identify requirements for legal review of contracts, and both the Alameda and Lake courts lacked a plan for administering contracts. Neither court had a compelling reason for not including the recommended information.
In addition, we reviewed a selection of contracts from each of the five courts to determine whether the courts followed required procurement and contracting practices. We found no reportable issues in this area.
Summary of Recommendations
Alameda, Lake, and Orange County Superior Courts
To ensure appropriate expenditures of public funds, the courts should follow required and recommended practices for approving invoices and separating payment duties.
Alameda, Contra Costa, Orange, and San Bernardino County Superior Courts
To comply with the requirements of state law, the courts should implement procedures to notify the State Auditor within 10 business days of entering into all contracts estimated to cost more than $1 million and not exempt from the notification requirement.
Alameda and Lake County Superior Courts
To ensure staff members have sufficient guidance about appropriate contracting practices, the courts should include in their local contracting manuals information that the judicial contracting manual recommends.
The courts generally agreed with our recommendations. The Orange and San Bernardino courts disagreed with certain aspects of our finding that they did not fully comply with the requirement to notify our office about high-value contracts.