Report 2014-122 Recommendation 1 Responses

Report 2014-122: Ross Valley Sanitary District: The Board and Management Have Only Recently Begun to Address Significant Weaknesses in the District's Financial and Administrative Functions (Release Date: April 2015)

Recommendation #1 To: Ross Valley Sanitary District

The board should ensure that management continues to develop and strengthen its controls over the district's financial and administrative functions. For example, district management should fully implement all of the external auditor's remaining recommendations by June 30, 2015. Management should also ensure that its staff follow these policies and should create and implement a plan for monitoring its system of controls. The board should also consider periodically contracting with qualified professionals to conduct a review of the effectiveness of the district's system of internal controls.

Annual Follow-Up Agency Response From April 2017

Complete. A complete set of Finance Policies has been developed and endorsed by the Board. A set of Accounting and Payroll Procedures has been developed and is used by staff. These policies and procedures address all of the 13 findings from the external auditor.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We reviewed these policies and procedures and found them to fully address our recommendation.

1-Year Agency Response

Of the 13 findings from the external auditor, 11 are implemented and 2 are nearing completion.

For inventory controls; physical counts are now a set part of each fiscal year close out, and spot checks of listed assets in inventory are done by the independent financial auditor. The implementation of the inventory tracking tools is in progress, with standard inventory data (part #'s, descriptions, location) being set up for the two information systems which have to share inventory tracking data; QuickBooks Enterprise and Innovyze CMMS. The remaining inventory tracking tool implementation is expected to be complete in FY 2016-17.

A complete set of ten (10) Finance Policy topics was endorsed by the RVSD Board. Four of these have been adopted by the Board, and drafts of two more are pending Board action. The remaining four topic areas will be submitted for Board adoption during FY 16/17.

The scope of work for the independent annual financial audit includes review of the district's internal controls.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

Of the 13 findings from the external auditor, 11 are implemented and 2 are in progress.

One finding in progress is finalizing the new inventory controls, which have included 2 years of physical counts and standard processes rolled out for the annual inventory process. The remaining step is for implementing a standard electronic record keeping system for the annual inventory controls.

The one finding still pending is for the adoption of written accounting policies. These will be codified in a new Financial Practices and Controls Policy (Accounting Policy), which will be developed and approved within FY 2015-16. Future financial audit scopes will include steps to monitor compliance with the new FPC Policy.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

Of the 15 findings from the external auditor, 13 are implemented, 1 is in progress, and 1 is pending. The recommendation for timesheets being done by all employees is now fully implemented, with all staff using a new electronic time charging system (Time Control commercial software), and updating their time on a weekly basis. Payroll uses the Time Control software input, via QuickBooks, eliminating use of old paper time sheets and manual input to QuickBooks.

The one finding in progress is finalizing the new inventory controls, which have included 2 years of physical counts and standard processes rolled out for the annual inventory process. The remaining step is for implementing a standard electronic record keeping system for the annual inventory controls.

The one finding still pending is for the adoption of written accounting policies. These will be codified in a new Financial Practices and Controls Policy (Accounting Policy), which will be developed and approved within Q1 of the new FY 2015-16. Future financial audit scopes will include steps to monitor compliance with the new FPC Policy.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2014-122

Agency responses received are posted verbatim.