Report 2010-101 Recommendation 19 Responses

Report 2010-101: Department of Resources Recycling and Recovery: Deficiencies in Forecasting and Ineffective Management Have Hindered the Beverage Container Recycling Program (Release Date: June 2010)

Recommendation #19 To: Resources Recycling and Recovery, Department of

To improve oversight of grants and ensure that the intended value is received from the grant funds it awards, the department should implement policies to ensure that cities and counties spend grant funds for recycling purposes by requiring periodic reporting of expenses or reporting of how funds were used after the grant ends.

Annual Follow-Up Agency Response From October 2016

1. Implemented an approximate two-year term to expend Program funds effective FY 2015-16. Recipients will have approximately two years from the date of award to expend their funding, and repay CalRecycle any unspent or unreported funds at the end of the term. Failure to meet these requirements may result in the denial of future funding.

2. Require authorized signatures with submittal of Funding Request and Expenditure Reporting Certifications. The Signature Authority or their designee must sign a Funding Request Certification at time of submittal of the Funding Request. Effective FY 2015-16, they must also sign an Expenditure Reporting Certification for reported expenditures after funds have been spent.

3. Capability to upload expenditure reports and supporting documentation now exist in CAPRS. Recipients will be able to upload expenditure reports and supporting documentation in CAPRS. Program staff will review and determine whether the expenditures were related to the cleanup activities. Program staff developed procedures to review and collate the data in the expenditure reports submitted from prior FYs 2010-11 through 2013-14.

4. Implemented a proportionate cost policy for all eligible activities. Components of a project or activity unrelated to the cleanup activities will not be funded by the Program. The funding level will be approved on a case-by-case basis.

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

Annual Follow-Up Agency Response From September 2015

Require all payment recipients submit expenditure reports in CAPRS by date certain. If they do not account for all funds for a specific year, CalRecycle will invoice the payment recipient to return funds.

All participants were notified in FY2014-15 cycle of the requirement to submit expenditure reports in CAPRS by date certain. The necessary conversions in CAPRS were completed to allow participants to upload expenditure reports.

Require all payment recipients to upload back up documentation to CAPRS. Program staff will review backup documentation of a random sample of 60 to ensure accountability of reported expenditures. This sample size may change or a tiered review approach may be considered based on accuracy and accountability of reporting.

All participants were notified in FY2014-15 cycle of the requirement to submit back-up documentation, including proof of purchases, in CAPRS. Program staff is developing procedures for reviewing and tracking backup documentation.

Payment recipients that do not complete the expenditure report by the end of the 2nd year will be invoiced for the amount not reconciled. If they do not pay CalRecycle back by date certain, they will not be eligible to apply for the next cycle.

All participants were notified of the new requirements for FY2014-15 and subsequent cycles. Failure to complete the expenditure report and/or expend the CCPP funds appropriately will result in ineligibility for future cycles.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From December 2014

Based on the audit recommendations, staff are changing how the program is currently monitoring active cycles (FY 2011-12, 2012-13, 2013-14) for the Beverage Container City County Payment Program. Currently, program staff request 60 random sample payment recipients to submit an expenditure report into the City/County Annual Payment and Reporting System (CAPRS). CalRecycle's will now require 60 random payment recipients to upload back-up documentation to CAPRS and program staff will review this information to ensure accountability of reported expenditures. Since these cycles have no end date which payment recipients have to expend funds by (i.e., there is no term for the program under the current agreements), program staff are unable to enforce cycle closure.

CalRecycle will implement the following changes for FY 2014-15 and future cycles:

Require all payment recipients submit expenditure reports in CAPRS by date certain. If they do not account for all funds for a specific year, CalRecycle will invoice the payment recipient to return funds.

Require all payment recipients to upload back up documentation to CAPRS. Program staff will review backup documentation of a random sample of 60 to ensure accountability of reported expenditures. This sample size may change or a tiered review approach may be considered based on accuracy and accountability of reporting.

Payment recipients that do not complete the expenditure report by the end of the 2nd year will be invoiced for the amount not reconciled. If they do not pay CalRecycle back by date certain, they will not be eligible to apply for the next cycle.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From December 2014

Re: Audit 2010-101—Recommendation #19 (also included in Audit 2014 Appendix B):

Based on the audit recommendations, staff are changing how the program is currently monitoring active cycles (FY 2011-12, 2012-13, 2013-14) for the Beverage Container City County Payment Program. Currently, program staff request 60 random sample payment recipients to submit an expenditure report into the City/County Annual Payment and Reporting System (CAPRS). CalRecycle's new proposed requirement will require the same 60 random sample payment recipients to upload back-up documentation to CAPRS and program staff will review this information to ensure accountability of reported expenditures. Since these cycles have no end date (i.e., there is no term for the program under the existing open agreements), program staff are unable to enforce cycle closure.

CalRecycle is proposing the following changes for FY 2014-15 and future cycles:

Request all payment recipients to submit expenditure report in CAPRS by date certain. If they do not account for all funds for a specific year, CalRecycle will invoice the payment recipient to return funds.

Require all payment recipients to upload back up documentation to CAPRS. Program staff will review backup documentation of a random sample of 60 to ensure accountability of reported expenditures. This sample size may change or a tiered review approach may be considered based on accuracy and accountability of reporting.

If payment recipients do not complete the expenditure report at the end of the 2nd year, they will be invoiced for the amount not reconciled. If any of the 60 random sample payment recipients do not upload supporting documentation at the end of the 2nd year, they will be subject to being invoiced for the amount not reconciled. If they do not pay CalRecycle back by date certain, they will not be eligible to apply for the next cycle.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The department developed a methodology to annually review a statistically valid sample of city and county payment programs recipients to ensure funds are appropriately utilized. Further, the department indicated it will complete this review by January 2013. (2012-406, p. 161).

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

All Recommendations in 2010-101

Agency responses received after June 2013 are posted verbatim.