Report 2019-302 All Recommendation Responses

Report 2019-302: Judicial Council of California (Release Date: December 2019)

Recommendation #1 To: Judicial Council of California

To ensure that it complies with state law, maintains appropriate transparency, and provides the Legislature with all legally required information regarding its contracting and procurements, the Judicial Council should by February 2020 develop and implement a method to include all of the non-Superior Court entities' information required by the judicial contract law when submitting semiannual reports. For instance, if the publicly available FI$Cal website does not provide all the required information, the Judicial Council should implement an alternate reporting mechanism, such as providing summary information from FI$Cal data not available to the public.

1-Year Agency Response

Our 60-day and six-month updates on this recommendation described our efforts to improve the Judicial Council's reporting practices, including our collaborative efforts with the Department of FI$Cal. Following our last update in June 2020, the Legislature passed AB 3364 (chapter 36, statutes of 2020) in August which altered the Judicial Council's reporting responsibilities under section 19209 of the Public Contract Code. This change in the law thus affected how the Judicial Council sought to implement this recommendation.

Effective January 2021, judicial branch entities using FI$Cal—such as the Judicial Council, Supreme Court, and others—no longer must submit semi-annual reports detailing their activities to the Legislature or the State Auditor's Office. Instead, the statute requires the Judicial Council (and others using FI$Cal) to record their transactions within the FI$Cal system. This statutory change recognizes the important role of the State's public transparency websites and their utilization of FI$Cal for making contract and payment details available to the public. The specificity of the Judicial Council's contract and payment reporting now mirrors the transparency requirements placed on other state entities using FI$Cal.

The Legislature's recent statutory change is a significant improvement over the previous semi-annual reporting approach. Currently, section 19209 allows for the continual reporting and updating of our contracting and payment activity on a rolling basis, while also curing the timing delays in the now-abolished semi-annual reports that was a central issue in the auditor's report. Should the Department of FI$Cal or the State's transparency websites require that we record our transactions differently for transparency purposes, the Judicial Council will of course follow those state directives.

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

Because of the change in state reporting requirements, we have assessed this recommendation as resolved.

6-Month Agency Response

After consulting with the Department of FI$Cal, the Judicial Council identified a report that now allows it to better comply with statutory reporting requirements. For the full six-month-period ending December 31, 2019, judicial branch entities made over $635 million in payments. This payment detail can be reviewed in a searchable format (via Microsoft Excel) on our public website at www.courts.ca.gov. However, we have more work remaining to improve our semi-annual reporting. Specifically, our "payment report" for non-trial court entities does not provide payment detail by judicial branch entity as required by the Public Contract Code. Instead, these payments in FI$Cal are generally coded under organization code "0250," which encompasses the entire judicial branch. We are exploring whether we can use FI$Cal's chartfields to better attribute payments from specific judicial branch entities (such as the Supreme Court, Courts of Appeal, and the Judicial Council) to their respective vendors in the payment report.

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

60-Day Agency Response

The Judicial Council expects to be in full compliance with this recommendation by the time the next semi-annual report is submitted in August 2020. In the meantime, the Judicial Council's staff have taken several steps to begin taking corrective action. Specifically, the following activities have occurred:

- Identified a report within FI$Cal that meets the statutory reporting requirements for procurement-related payment data. This new report was used as part of the semi-annual report that was submitted on February 1, 2020 (covering the six-month period between July and December 2019).

- Submitted two "change requests" to the Department of FI$Cal to create ways in which the necessary data can be extracted to comply with Legislative requirements for contract reporting. As an interim solution, the Judicial Council began efforts to manually capture required contract data in an existing workload spreadsheet. The interim solution was implemented on February 1, 2020 and will rely on this process for the next semi-annual report, which will be due on August 1st, 2020. The goal is to create an automated process using FI$Cal that will satisfy all reporting requirements.

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

Recommendation #2 To: Judicial Council of California

To ensure that it complies with state law, maintains appropriate transparency, and provides the Legislature with all legally required information regarding its contracting and procurements, the Judicial Council should by February 2020 establish a procedure that requires procurement staff to consistently include all necessary information in FI$Cal when processing contract amendments.

1-Year Agency Response

The Legislature passed AB 3364 in August 2020 and altered the Judicial Council's reporting responsibilities under section 19209 of the Public Contract Code. This change in the law thus affected how the Judicial Council sought to implement this recommendation.

Effective January 2021, judicial branch entities using FI$Cal—such as the Judicial Council, Supreme Court, and others—no longer must submit semi-annual reports detailing their activities to the Legislature or the State Auditor's Office. Instead, the statute requires the Judicial Council (and others using FI$Cal) to record their transactions within the FI$Cal system. The specificity of the Judicial Council's contract and payment reporting now mirrors the transparency requirements placed on other state entities using FI$Cal. In contrast, the superior courts do not use FI$Cal and thus the reporting requirements contained in section 19209 are much more detailed and prescriptive.

The Department of FI$Cal has issued policies and procedures that establish sound internal controls for processing contract and payment transactions within FI$Cal. Excerpts from FI$Cal's user procedures are attached, illustrating system workflows and controls that would prevent the same individual from approving purchase orders, requisitions, contracts, and payments (i.e. vouchers) that he or she created. Also attached are procedures for amending purchase orders and recording the reasons for such changes within FI$Cal. Separately, Judicial Council budget and accounting staff continually work with each office to ensure that encumbrances are established and their effects on available spending authority are monitored and actively managed. We look forward to working with the State Auditor's staff and obtaining further feedback when they again audit the Judicial Council in 2021.

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

Because of the change in state reporting requirements, we have assessed this recommendation as resolved.

6-Month Agency Response

As noted in our 60-day response from February 2020, the Judicial Council expects to demonstrate implementation of the State Auditor's recommendation by August 2020. The Judicial Council has been manually tracking certain data pertaining to contract amendments, which we believe will address the State Auditor's recommendation. This manually tracked data will be used in the next semi-annual report that is due in August. In the long term, the Judicial Council's goal is to create an automated process within FI$Cal that will address all reporting requirements.

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

60-Day Agency Response

The Judicial Council expects to be in full compliance with this recommendation by the time the next semi-annual report is submitted in August 2020. In the interim, the Judicial Council's staff have taken several steps to comply with the Auditor's recommendations. Specifically, the following activities have occurred:

- Submitted two "change requests" to the Department of FI$Cal to create ways in which to extract the data needed to comply with the statutory responsibilities for contract reporting.

- Developed a manual tracking process (beginning February 1, 2020) to track amendments and other contract data to comply with reporting requirements. This manually tracked data will be used in the next semi-annual report to the Legislature, which will be due on August 1, 2020. The goal is to create an automated process using FI$Cal that will satisfy all reporting requirements.

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

Recommendation #3 To: Judicial Council of California

To ensure that it complies with state law, maintains appropriate transparency, and provides the Legislature with all legally required information regarding its contracting and procurements, the Judicial Council should by February 2020 develop and implement a method to ensure that it includes in its reports all required contract amendment information related to the Superior Courts.

6-Month Agency Response

The Council's staff has completed the necessary adjustments to the Phoenix system to address this finding. The previous configuration did not always capture the descriptions of the specific goods or services a court had procured when the associated contract was not amended. For additional clarity, the new configuration also changed the name of the "Goods/Services (New)" column (column H) to "Goods/Services". The updated report will be published as part of the July 2020 report and is attached for your reference.

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

60-Day Agency Response

The Judicial Council's staff are analyzing the current configuration within the Phoenix Financial System to improve the reporting of contract amendments pertaining to the Superior Courts. The expectation is to implement the configuration changes prior to our next semi-annual report in August 2020 (covering the period between January 1 through June 30, 2020). Although the Judicial Council staff are confident that the configuration changes will fully address reporting requirements going forward, it is unknown, at this point, whether the configuration changes can be applied retroactively. As a result, the August 2020 report may contain only partially corrected data.

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

Recommendation #4 To: Judicial Council of California

To better limit the risk of inappropriate procurements and to ensure it procures goods and services at the best value, the Judicial Council should immediately revise its procurement process to include a final verification step to confirm that managers with appropriate signature authority approve its procurements.

60-Day Agency Response

The Judicial Council's staff expect to issue a revised contract routing sheet (example attached) by February 15, 2020. The revised routing sheet includes the dollar value of the procurement action and an initialed acknowledgement by the responsible Procurement Supervisor that they are aware of, and have not exceeded, their signature authority. This affirmation will act as a reminder, and a second source of documentation for discipline, should a signing authority exceed their authorized limit. In the event the proposed procurement action exceeds the supervisor's signature authority, the contract package will be forwarded to the procurement managers for their approval, both of whom have adequate signature authority.

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

All Recommendations in 2019-302

Agency responses received are posted verbatim.