SCO
Stockton City
Animal Adoption
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CITY OF STOCKTON
Audit Report
ANIMAL ADOPTION PROGRAM
Chapter 752, Statutes of 1998,
and Chapter 313, Statutes of 2004
July 1, 1998, through June 30, 2007
Excluding July 1, 2003, through June 30, 2005
J C
OHN HIANG
California State Controller
March 2011
March 9, 2011
The Honorable Ann Johnston
Mayor of the City of Stockton
425 N. El Dorado Street
Stockton, CA 95202-1997
Dear Mayor Johnston:
The State Controller’s Office audited the costs claimed by the City of Stockton for the
legislatively mandated Animal Adoption Program (Chapter 752, Statutes of 1998, and Chapter
313, Statutes of 2004) for the period of July 1, 1998, through June 30, 2007, excluding July 1,
2003, through June 30, 2005.
The city claimed $2,897,544 for the mandated program. Our audit disclosed that $444,306 is
allowable and $2,453,238 is unallowable. The costs are unallowable primarily because the city
claimed unsupported costs. The State paid the city $2,059,592. The amount paid exceeds
allowable costs claimed by $1,615,286.
If you disagree with the audit findings, you may file an Incorrect Reduction Claim (IRC) with
the Commission on State Mandates (CSM). The IRC must be filed within three years following
the date that we notify you of a claim reduction. You may obtain IRC information at the CSM’s
Web site at www.csm.ca.gov/docs/IRCForm.pdf.
If you have any questions, please contact Jim L. Spano, Chief, Mandated Cost Audits Bureau, at
(916) 323-5849.
Sincerely,
Original signed by
JEFFREY V. BROWNFIELD
Chief, Division of Audits
JVB/vb
The Honorable Ann Johnston -2- March 9, 2011
cc: Mark Moses, Chief Financial Officer
City of Stockton
Lynne Farrar, Supervising Accountant
City of Stockton
Tina Zakhary, Police Lieutenant
City of Stockton
Tom Hennig, Program Manager III
City of Stockton
Jeff Carosone, Principal Program Budget Analyst
Cor-Gen Unit, Department of Finance
Jay Lal, Manager
Division of Accounting and Reporting
State Controller’s Office
City of Stockton Animal Adoption Program
Contents
Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 2
Views of Responsible Official ........................................................................................... 3
Restricted Use .................................................................................................................... 3
Schedule 1—Summary of Program Costs ........................................................................... 4
Findings and Recommendations ........................................................................................... 7
Attachment—City’s Response to Draft Audit Report
City of Stockton Animal Adoption Program
Audit Report
Summary The State Controller’s Office (SCO) audited the costs claimed by the
City of Stockton for the legislatively mandated Animal Adoption
Program (Chapter 752, Statutes of 1998, and Chapter 313, Statutes of
2004) for the period of July 1, 1998, through June 30, 2007, excluding
July 1, 2003, through June 30, 2005.
The city claimed $2,897,544 for the mandated program. Our audit
disclosed that $444,306 is allowable and $2,453,238 is unallowable. The
costs are unallowable primarily because the city claimed unsupported
costs. The State paid the city $2,059,592. The amount paid exceeds
allowable costs claimed by $1,615,286.
Background Food and Agriculture Code sections 31108, 31752-31753, 32001, and
32003 (added and amended by Chapter 752, Statutes of 1998) attempted
to end the euthanasia of adoptable and treatable animals. It expressly
identifies the state policy that ―no adoptable animal should be euthanized
if it can be adopted into a suitable home‖ and that ―no treatable animal
should be euthanized.‖ The legislation increases the holding period for
stray and abandoned dogs, cats, and other specified animals. It also
requires public or private shelters to:
Verify the temperament of feral cats;
Post lost-and-found lists;
Maintain records for impounded animals; and
Ensure that impounded animals receive necessary and prompt
veterinary care.
On January 25, 1981, the Commission on State Mandates (CSM)
determined that Chapter 752, Statutes of 1998, imposed a state mandate
reimbursable under Government Code section 17561.
The program’s parameters and guidelines establish the state mandate and
define reimbursement criteria. CSM adopted the parameters and
guidelines on February 28, 2002, corrected them on March 20, 2002, and
last amended them on January 26, 2006. In compliance with
Government Code section 17558, the SCO issues claiming instructions to
assist local agencies and school districts in claiming mandated program
reimbursable costs.
For fiscal year (FY) 2003-04, the Legislature suspended the Animal
Adoption Program.
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City of Stockton Animal Adoption Program
Objective, Scope, We conducted the audit to determine whether costs claimed represent
increased costs resulting from the Animal Adoption Program for the
and Methodology
period of July 1, 1998, through June 30, 2007, excluding July 1, 2003,
through June 30, 2005.
Our audit scope included, but was not limited to, determining whether
costs claimed were supported by appropriate source documents, were not
funded by another source, and were not unreasonable and/or excessive.
We conducted this performance audit under the authority of Government
Code sections 12410, 17558.5, and 17561. We did not audit the city’s
financial statements. We conducted the audit in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
We limited our review of the city’s internal controls to gaining an
understanding of the transaction flow and claim preparation process as
necessary to develop appropriate auditing procedures.
Conclusion Our audit disclosed instances of noncompliance with the requirements
outlined above. These instances are described in the accompanying
Summary of Program Costs (Schedule 1) and in the Findings and
Recommendations section of this report.
For the audit period, the City of Stockton claimed $2,897,544 for costs of
the Animal Adoption Program. Our audit disclosed that $444,306 is
allowable and $2,453,238 is unallowable.
For the fiscal year (FY) 1998-99 claim, the State paid the city $135,447.
Our audit disclosed that $11,603 is allowable. The State will offset
$123,844 from other mandated program payments due the city.
Alternatively, the city may remit this amount to the State.
For the FY 1999-2000 claim, the State paid the city $500,753. Our audit
disclosed that $19,888 is allowable. The State will offset $480,865 from
other mandated program payments due the city. Alternatively, the city
may remit this amount to the State.
For the FY 2000-01 claim, the State paid the city $514,676. Our audit
disclosed that $25,800 is allowable. The State will offset $488,876 from
other mandated program payments due the city. Alternatively, the city
may remit this amount to the State.
For the FY 2001-02 claim, the State made no payment to the city. Our
audit disclosed that $239,020 is allowable. The State will pay allowable
costs claimed contingent upon available appropriations.
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City of Stockton Animal Adoption Program
For the FY 2002-03 claim, the State made no payment to the city. Our
audit disclosed that $43,130 is allowable. The State will pay allowable
costs claimed contingent upon available appropriations.
For the FY 2005-06 claim, the State paid the city $394,977. Our audit
disclosed that $48,667 is allowable. The State will offset $346,310 from
other mandated program payments due the city. Alternatively, the city
may remit this amount to the State.
For the FY 2006-07 claim, the State paid the city $513,739. Our audit
disclosed that $56,198 is allowable. The State will offset $457,541 from
other mandated program payments due the city. Alternatively, the city
may remit this amount to the State.
Views of We issued a draft audit report on February 24, 2010. Mark Moses, Chief
Financial Officer, responded by letter dated May 10, 2010 (Attachment),
Responsible
agreeing with the audit results except for Findings 1, 2, and 5. For
Officials
Findings 1 and 5, the city agreed to conduct a time study using the State
Controller’s Office Time Study Guidelines. The city conducted its time
study during March 2010, to document time spent by city employees for
the cost components of Non-Medical Records, Lost and Found Lists, and
Necessary and Prompt Veterinary care. The city submitted its time study
results to us via e-mail on May 26, 2010. We reviewed the time study
and applied the results as appropriate. This final audit report includes the
city’s response.
Restricted Use This report is solely for the information and use of the City of Stockton,
the California Department of Finance, and the SCO; it is not intended to
be and should not be used by anyone other than these specified parties.
This restriction is not intended to limit distribution of this report, which
is a matter of public record.
Original signed by
JEFFREY V. BROWNFIELD
Chief, Division of Audits
March 9, 2011
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City of Stockton Animal Adoption Program
Schedule 1—
Summary of Program Costs
July 1, 1998, through June 30, 2007
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 1998, through June 30, 1999
Direct costs:
Salaries and benefits $ 80,611 $ 6,498 $ (74,113) Finding 1
Materials and supplies 26,743 2,841 (23,902) Finding 2, 4
Total direct costs 107,354 9,339 (98,015)
Indirect costs 28,093 2,264 (25,829) Finding 1
Total program costs $ 135,447 11,603 $ (123,844)
Less amount paid by the State (135,447)
Allowable costs claimed in excess of (less than) amount paid $ (123,844)
July 1, 1999, through June 30, 2000
Direct costs:
Salaries and benefits $ 93,546 $ 12,714 $ (80,832) Finding 1
Materials and supplies 358,395 539 (357,856) Finding 2, 4, 5
Total direct costs 451,941 13,253 (438,688)
Indirect costs 48,812 6,635 (42,177) Finding 1
Total program costs $ 500,753 19,888 $ (480,865)
Less amount paid by the State (500,753)
Allowable costs claimed in excess of (less than) amount paid $ (480,865)
July 1, 2000, through June 30, 2001
Direct costs:
Salaries and benefits $ 92,084 $ 16,163 $ (75,921) Finding 1
Materials and supplies 378,300 1,863 (376,437) Finding 2, 3, 4, 5
Total direct costs 470,384 18,026 (452,358)
Indirect costs 44,292 7,774 (36,518) Finding 1
Total program costs $ 514,676 25,800 $ (488,876)
Less amount paid by the State (514,676)
Allowable costs claimed in excess of (less than) amount paid $ (488,876)
July 1, 2001, through June 30, 2002
Direct costs:
Salaries and benefits $ 143,345 $ 18,925 $ (124,420) Finding 1
Materials and supplies 61,087 9,787 (51,300) Finding 2, 3, 4, 5
Contract services 576,764 205,282 (371,482) Finding 3
Total direct costs 781,196 233,994 (547,202)
Indirect costs 38,072 5,026 (33,046) Finding 1
Total program costs $ 819,268 239,020 $ (580,248)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 239,020
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City of Stockton Animal Adoption Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
July 1, 2002, through June 30, 2003
Direct costs:
Salaries and benefits $ 169,873 $ 22,208 $ (147,665) Finding 1
Materials and supplies 36,233 1,190 (35,043) Finding 2, 3, 4, 5
Contract services 65,757 12,566 (53,191) Finding 3
Total direct costs 271,863 35,964 (235,899)
Indirect costs 54,818 7,166 (47,652) Finding 1
Total program costs $ 326,681 43,130 $ (283,551)
Less amount paid by the State —
Allowable costs claimed in excess of (less than) amount paid $ 43,130
July 1, 2003, through June 30, 2004 2
July 1, 2004, through June 30, 2005 3
July 1, 2005, through June 30, 2006
Direct costs:
Salaries and benefits $ 270,844 $ 32,663 $ (238,181) Finding 1
Materials and supplies 33,436 — (33,436) Finding 2, 5
Contract services 5,760 5,760 —
Total direct costs 310,040 38,423 (271,617)
Indirect costs 84,937 10,244 (74,693) Finding 1
Total program costs $ 394,977 48,667 $ (346,310)
Less amount paid by the State (394,977)
Allowable costs claimed in excess of (less than) amount paid $ (346,310)
July 1, 2006, through June 30, 2007
Direct costs:
Salaries and benefits $ 151,686 $ 38,629 $ (113,057) Finding 1
Materials and supplies 1,926 — (1,926) Finding 2, 5
Contract services 5,760 5,760 —
Total direct costs 159,372 44,389 (114,983)
Indirect costs 46,370 11,809 (34,561) Finding 1
Total program costs $ 205,742 56,198 $ (149,544)
Less amount paid by the State (513,739)
Allowable costs claimed in excess of (less than) amount paid $ (457,541)
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City of Stockton Animal Adoption Program
Schedule 1 (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment Reference 1
Summary: July 1, 1998, through June 30, 2007
Direct costs:
Salaries and benefits $ 1,001,989 $ 147,800 $ (854,189)
Materials and supplies 896,120 16,220 (879,900)
Contract services 654,041 229,368 (424,673)
Total direct costs 2,552,150 393,388 (2,158,762)
Indirect costs 345,394 50,918 (294,476)
Total program costs $ 2,897,544 444,306 $ (2,453,238)
Less amount paid by the State (2,059,592)
Allowable costs claimed in excess of (less than) amount paid $ (1,615,286)
Recap: By Cost Component
Direct costs:
Policies and procedures $ 43,797 $ — $ (43,797) Finding 1
Training 20,366 — (20,366) Finding 1
Computer software 19,692 19,692 —
Acquiring space and facility 649,349 206,083 (443,266) Finding 3
Care of dogs and cats 1,057,364 — (1,057,364) Findings 1, 2
Care of other animals 53,159 — (53,159) Findings 1, 2
Holding period 203,042 26,937 (176,105) Finding 1
Feral cats 119,294 — (119,294) Finding 1
Lost and found list 18,500 46,215 27,715 Finding 1
Non-medical records 277,905 77,767 (200,138) Finding 1
Veterinary care 28,837 8,401 (20,436) Findings 1, 5
Procuring equipment 60,845 8,293 (52,552) Findings 1, 4
Total direct costs 2,552,150 393,388 (2,158,762)
Indirect costs 345,394 50,918 (294,476)
Total claimed costs $ 2,897,544 $ 444,306 $ (2,453,238)
_________________________
1 See the Findings and Recommendations section.
2 The Animal Adoption Program was suspended for FY 2003-04.
3 Government Code section 17558.5 identified the statutory period claims are subject to audit. At the time this audit
was initiated, the statutory period to audit the FY 2004-05 claim had expired.
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City of Stockton Animal Adoption Program
Findings and Recommendations
FINDING 1— The city claimed $1,001,989 in salaries and benefits for the audit period.
The related indirect costs totaled $345,394. We determined that $147,800
Unsupported salaries
is allowable and $854,189 is unallowable. The related unallowable
and benefits
indirect costs totaled $294,476.
The costs are unallowable because the city claimed eligible activities that
it estimated and/or did not support with documentation. The city
provided only unsigned and undated forms, prepared after the end of the
fiscal year, that estimated the time spent annually on reimbursable
activities. The city’s mandate consultant provided the city with forms
that were completed with estimated annual time.
In the draft audit report, all salary and benefit costs and the related
indirect costs claimed by the city during the audit period were
unallowable. During the audit, we discussed with the city the inadequate
documentation and its option of performing a time study to substantiate
unsupported salaries and benefits. We provided the city a copy of the
SCO time-study guidelines to assist staff in developing a time study. We
agreed to review the time study results and revise the audit report, as
appropriate.
Subsequent to the issuance of the draft report, the city conducted a time
study during March of 2010 in order to recover unallowable costs. The
city’s time study was conducted for the cost components of Lost and
Found Lists, Maintaining Non-Medical Records, and two activities
performed under the cost component of Necessary and Prompt
Veterinary Care. We also worked with the city’s animal shelter
representatives to document staffing and hours of operation for the cost
component of Agencies Using the Holding Period of Four Business Days
After the Day of Impoundment (Holding Period).
The city submitted its raw time study data to us via e-mail on May 26,
2010. The city also provided employee productive hourly rate and animal
census data information in order to determine allowable costs. In
consultation with city representatives, we reviewed the documentation
submitted and applied the results to the audit period as appropriate.
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City of Stockton Animal Adoption Program
The following table summarizes the audit adjustment amounts by fiscal
year:
Fiscal Year
Cost Categories 1998-99 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Salaries and benefits:
One-time costs:
Policies and procedures $ (27,643) $ (8,348) $ (7,806) $ — $ — $ — $ — $ (43,797)
Training (7,429) (6,508) (6,429) — — — — (20,366)
Ongoing costs:
Care of dogs and cats — — — (65,223) (90,294) (133,268) (4,091) (292,876)
Care of other animals — — — (9,407) (8,724) (9,863) — (27,994)
Holding period (32,689) (29,468) (28,252) (14,805) (15,799) (27,568) (27,524) (176,105)
Feral cats (1,122) (11,950) (11,298) (15,232) (15,869) (29,378) (34,445) (119,294)
Lost and found lists 377 2,407 3,437 3,198 3,904 6,444 7,948 27,715
Non-medical records (5,763) (27,111) (22,700) (23,255) (20,750) (44,574) (55,985) (200,138)
Veterinary care 380 739 958 304 (133) 26 1,040 3,314
Procuring equipment (224) (593) (3,831) — — — — (4,648)
Subtotal (74,113) (80,832) (75,921) (124,420) (147,665) (238,181) (113,057) (854,189)
Indirect costs (25,829) (42,177) (36,518) (33,046) (47,652) (74,693) (34,561) (294,476)
Audit adjustment $ (99,942) $ (123,009) $ (112,439) $ (157,466) $ (195,317) $ (312,874) $ (147,618) $ (1,148,665)
The program’s parameters and guidelines (section IV), state:
. . . to be eligible for mandated cost reimbursement for any fiscal year,
only actual costs may be claimed. Actual costs are those costs actually
incurred to implement the mandated activities. Actual costs must be
traceable and supported by source documents that show the validity of
such costs, when they were incurred, and their relationship to the
reimbursable activities. A source document is a document created at or
near the same time the actual cost was incurred for the event or activity
in question. Source documents may include, but are not limited to,
employee time records or time logs, sign-in sheets, invoices and
receipts. Evidence corroborating the source documents may include,
but is not limited to, worksheets, cost allocation reports (system
generated), purchase orders, contracts, agendas, training packets, and
declarations.
Recommendation
We recommend that the city maintain source documents that support the
actual time employees spend performing mandate-related activities.
City’s Response
The SCO agreed to revise the audit report as appropriate, and thereby
recalculate allowable costs if the City perform a time study based on
the State Controllers Office Guidelines. This time study was completed
in March 2010. The City is in contact with the Auditor to schedule
appropriate review and possible revisions to disallowed costs.
SCO’s Comment
The recommendation remains unchanged.
In our draft report, all salary and benefit costs and the related indirect
costs claimed by the city during the audit period were unallowable. As
noted in its response, the city performed a time study in March of 2010,
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City of Stockton Animal Adoption Program
in order to recover unallowable costs. The city’s time study was
conducted for the cost components of Lost and Found Lists, Maintaining
Non-Medical Records, and Necessary and Prompt Veterinary Care. The
city also provided employee staffing and hours of operation information
related to the cost component of Agencies Using the Holding Period of
Four Business Days After the Day of Impoundment (Holding Period).
The city submitted its raw time study data to us via e-mail on May 26,
2010. In addition, the city provided employee productive hourly rate and
animal census data information in order for us to calculate allowable
costs.
In consultation with city representatives, we reviewed the time study data
and applied the results to the audit period as appropriate. We determined
that the time study supported allowable salary and benefit costs totaling
$147,800. The related allowable indirect costs totaled $50,918.
Therefore, our comments below relate to these cost components.
Agencies Using the Holding Period of Four Business Days After the
Day of Impoundment
The city claimed $203,042 in salaries and benefits during the audit
period under the Holding Period cost component. The related indirect
costs totaled $75,708. Based on the time study that the city conducted
during March, 2010, we determined that salary and benefit costs totaling
$26,937 is allowable and $176,105 is unallowable. The related allowable
indirect costs totaled $9,259. Costs were overstated because the city
overstated the shelter’s reimbursable hours and the required staffing
necessary to make animals available for owner redemption.
The following table summarizes the claimed, allowable, and unallowable
costs for the audit period by fiscal year:
Fiscal Year
Cost Categories 1998-99 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Salaries:
Claimed $ 22, 528 $ 22, 528 $ 22, 528 $ 12, 497 $ 13 ,117 $ 17, 093 $ 17, 121 $ 127,412
Allowable 750 1,554 2,174 2,342 2,848 2,972 3,692 16,332
Audit adjustment (21,778) (20,974) (20,354) (10,155) (10,269) (14,121) (13,429) (111,080)
Benefits:
Claimed 11,286 9,123 8,741 5,781 6,891 16,161 17,647 75,630
Allowable 375 629 843 1,131 1,361 2,714 3,552 10,605
Audit adjustment (10,911) (8,494) (7,898) (4,650) (5,530) (13,447) (14,095) (65,025)
Related indirect costs:
Claimed 11,784 16,515 15,040 4,855 6,457 10,428 10,629 75,708
Allowable 392 1,139 1,451 922 1,358 1,783 2,214 9,259
Audit adjustment (11,392) (15,376) (13,590) (3,932) (5,098) (8,645) (8,414) (66,449)
Total Claimed 45,598 48,166 46,309 23,133 26,465 43,682 45,397 278,750
Total Allowable 1,517 3,322 4,468 4,395 5,567 7,469 9,458 36,196
Total audit adjustment $ (44,081) $ (44,844) $ (41,841) $ (18,738) $ (20,898) $ (36,213) $ (35,939) $ (242,554)
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City of Stockton Animal Adoption Program
Hours of Operation
During the audit period, the city’s animal shelter was open for four hours
on Saturday (open from 10:00 a.m. to 3:00 p.m., but closed for lunch
from 12:00 to 1:00 p.m.). The city’s animal shelter was also open an
additional two hours on Wednesdays to comply with the mandated
requirements.
The parameters and guidelines state that the shelter ―must make the
animal available for owner redemption on one weekday evening until at
least 7:00 p.m., or, one weekend day.‖ Reimbursement is limited to one
of the days – either the increased Wednesday hours or all of the Saturday
hours. As the Saturday hours are longer than the increased Wednesday
hours, reimbursement is allowable for the four hours that the shelter was
open on Saturdays.
Staffing Requirements
The city claimed costs for all employees who were on duty at the animal
shelter on Saturdays, based on eight hours for fiscal year (FY) 1998-99
through FY 2000-01 and four hours for FY 2001-02 through FY
2006-07. Costs were claimed for one Animal Control Officer and two
Animal Control Assistants during FY 1998-99 through FY 2000-01 and
one Animal Control Officer and at least three Animal Control Assistants
on a rotating basis during FY 2002-03 through FY 2006-07. However,
reimbursement is limited to the additional employee(s) that were on duty
on Saturdays to make animals available for owner redemption.
We determined that when the shelter is open on Saturdays, the shelter
staff on duty typically included three Animal Control Assistants and one
Animal Control Officer. This was based on information obtained from
the shelter’s staff and a review of employee assignment logs. However,
we also noted that the same staffing requirements maintained on
Saturdays were also maintained on Sundays when the shelter is closed
for business.
We concluded that the shelter incurred increased costs only on Saturdays
for one Animal Control Assistant to make the animals available for
owner redemption. This employee would interact with the public by
helping owners reclaim their animals, process any required paperwork,
and collect fees as applicable. We also determined that even though the
shelter may have had an Animal Control Officer on duty during one
weekend day, this employee classification is not required to be at the
facility in the evening or on weekends to make animals available for
owner redemption. Therefore, reimbursement is allowable during the
audit period for one Animal Control Assistant.
The parameters and guidelines allow reimbursement, beginning
January 1, 1999, for the impounded animals specified in Food and
Agriculture Code section 31753 (―other animals‖), and beginning July 1,
1999 for impounded dogs and cats for either:
1. Making the animal available for owner redemption on one
weekday evening until at least 7:00 p.m.; or one weekend day; or
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City of Stockton Animal Adoption Program
2. For those local agencies with fewer than three full time employees
or that are not open during all regular weekend business hours,
establishing a procedure to enable owner to reclaim their animals
by appointment at a mutually agreeable time when the agency
would otherwise be closed.
Lost and Found Lists
The city claimed $18,500 for salaries and benefits during the audit period
under the Lost and Found Lists cost component. The related indirect
costs totaled $6,296. Based on the time study that the city conducted
during March, 2010, we determined that allowable salary and benefit
costs totaled $46,215. The related allowable indirect costs totaled
$15,897. The city understated total costs claimed by $37,316 because it
underestimated the amount of time required to perform the reimbursable
activities.
The following table summarizes the claimed, allowable, and unallowable
costs for the audit period by fiscal year:
Fiscal Year
Cost Categories 1998-99 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Salaries:
Claimed $ 1,0 87 $ 1, 088 $ 1, 087 $ 1, 837 $ 1, 899 $ 2, 182 $ 2, 268 $ 11,448
Allowable 1,339 2,801 3,563 3,975 4,708 5,440 6,149 27,975
Audit adjustment 252 1,713 2,476 2,138 2,809 3,258 3,881 16,527
Benefits:
Claimed 545 441 422 861 1,155 1,780 1,848 7,052
Allowable 670 1,135 1,383 1,921 2,250 4,966 5,915 18,240
Audit adjustment 125 694 961 1,060 1,095 3,186 4,067 11,188
Related indirect costs:
Claimed 569 798 726 717 986 1,242 1,258 6,296
Allowable 700 2,054 2,379 1,566 2,246 3,264 3,688 15,897
Audit adjustment 131 1,256 1,653 849 1,260 2,022 2,430 9,601
Total claimed 2,201 2,327 2,235 3,415 4,040 5,204 5,374 24,796
Total allowable 2,709 5,990 7,325 7,462 9,204 13,670 15,752 62,112
Total audit adjustment $ 508 $ 3,663 $ 5,090 $ 4,047 $ 5,164 $ 8,466 $ 10,378 $ 37,316
Time Study
The city’s animal shelter conducted a time study to determine the amount
of time shelter staff spent performing lost and found activities. The time
study focused on the five requirements as stated in the parameters and
guidelines, which include:
1. Ability to list animals they have lost or found on ―lost and found‖
lists maintained by the local agency;
2. Referrals to animals listed that may be the animals the owner or
finders have lost or found;
3. The telephone numbers and addresses of other pounds and shelters
in the same vicinity;
4. Advice as to means of publishing and disseminating information
regarding lost animals; and
5. The telephone numbers and addresses of volunteer groups that may
be assistance in locating lost animals.
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City of Stockton Animal Adoption Program
The time study was conducted over a four-week period from March 1,
2010 through March 29, 2010. The animal shelter’s staff involved in the
time study included seven Animal Services Assistants, one Office
Assistant II, and three Animal Services Officers. The city summarized
the time spent performing the lost and found activities, but the results
were not applied back to the fiscal years of the audit period.
Based on our analysis of the time study data, the animal shelter’s staff
spent a total of 1,433 minutes during the four-week period performing
lost and found activities.
The following table presents a breakdown by employee classification of
the time spent performing the mandated activities:
Total Total
Employee Classification Minutes Hours
Animal Services Assistant I 866 188
Animal Services Officer 229 50
Office Assistant II 338 73
Totals 1,433 311
The minutes from the time study were converted into allowable hours per
employee classification for each year. The time study hours shown in the
table above were applied to one employee per classification per year for
FY 2001-02 through FY 2006-07 to determine allowable costs for those
years. For FY 1998-99 through FY 2000-01, the city did not have the
employee classification of Office Assistant II. City representatives stated
that the duties of this classification would have been performed by the
Animal Services Assistant Is during those years. Therefore, we used 261
allowable hours for Animal Services Assistant Is and 50 hours for
Animal Services Officers to determine allowable costs for those years.
The following table summarizes the differences between total claimed
hours and allowable hours for all employee classifications during the
audit period:
Total Hours
Fiscal Year
1998-991 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07
Allowable 156 311 311 311 311 311 311
Claimed 55 55 55 106 106 106 106
Audit adjustment 101 256 256 205 205 205 205
_______________________
1 For FY 1998-99, reimbursement begins on January 1, 1999.
Productive Hourly Rates
To calculate employee productive hourly rates, we used annual payroll
history reports provided by the city to obtain the salary and benefit rates
for each employee classification. These rates were then applied to the
allowable hours per employee classification to determine the
reimbursable costs for each fiscal year.
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City of Stockton Animal Adoption Program
The program’s parameters and guidelines allow reimbursement,
beginning January 1, 1999, or providing owners of lost animals and those
who find lost animals with all the following:
1. Ability to list animals they have lost or found on ―lost and found‖
lists maintained by the local agency;
2. Referrals to animals listed that may be the animals the owner or
finders have lost or found;
3. The telephone numbers and addresses of other pounds and shelters
in the same vicinity;
4. Advice as to means of publishing and disseminating information
regarding lost animals; and
5. The telephone numbers and addresses of volunteer groups that may
be assistance in locating lost animals.
Maintaining Non-Medical Records
The city claimed salaries and benefits totaling $266,385 during the audit
period under the Non-Medical Record cost component. The related
indirect costs claimed totaled $93,905. Based on the time study that the
city conducted during March 2010, we determined that salary and benefit
costs totaling $66,247 is allowable and $200,138 is unallowable. The
costs are unallowable because the city overestimated the amount of time
spent by shelter staff performing the mandated activities. The related
allowable indirect costs totaled $22,867.
The following table summarizes the claimed, allowable, and unallowable
costs for the audit period by fiscal year:
Fiscal Year
Cost Categories 1998-99* 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Salaries:
Claimed $ 5, 827 $ 23 ,464 $ 21, 572 $ 20 ,927 $ 20, 007 $ 30, 256 $ 36, 017 $ 158,070
Allowable 1,989 4,168 5,218 5,684 6,985 7,592 8,607 40,243
Audit adjustment (3,838) (19,296) (16,354) (15,243) (13,022) (22,664) (27,410) (117,827)
Benefits:
Claimed 2,920 9,503 8,370 10,758 11,067 28,842 36,855 108,315
Allowable 995 1,688 2,024 2,746 3,339 6,932 8,280 26,004
Audit adjustment (1,925) (7,815) (6,346) (8,012) (7,728) (21,910) (28,575) (82,311)
Related indirect costs:
Claimed 3,047 17,202 14,402 8,416 10,028 18,533 22,277 93,905
Allowable 1,040 3,056 3,483 2,239 3,331 4,555 5,163 22,867
Audit adjustment (2,007) (14,146) (10,919) (6,177) (6,697) (13,978) (17,114) (71,038)
Total claimed 11,794 50,169 44,344 40,101 41,102 77,631 95,149 360,290
Total allowable 4,024 8,912 10,725 10,669 13,655 19,079 22,050 89,114
Total audit adjustment $ (7,770) $ (41,257) $ (33,619) $ (29,432) $ (27,447) $ (58,552) $ (73,099) $ (271,176)
____________________________ ____
* For FY 1998-99, reimbursement begins on January 1, 1999.
Time Study
All costs claimed for this cost component were initially unallowable
because the city claimed estimated costs and did not provide any
supporting documentation. The city’s claims for FY 2001-02 through FY
2006-07 made reference to a time study that was conducted supporting
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City of Stockton Animal Adoption Program
that shelter staff spent nine minutes per animal processing non-medical
records. However, the city was unable to provide any documentation
supporting that a time study was ever conducted for this cost component.
The city conducted a valid time study during March of 2010 to support
the amount of time spent by shelter staff processing non-medical records.
The city studied the time required to process records for incoming
animals and records for the final disposition of animals. These activities
were performed by various employee classifications. The city’s time
study results showed that 2.23 minutes were spent processing incoming
animal records and final disposition of animals.
The following table summarizes the results of the time study and the
calculation determining that 2.23 minutes was spent processing non-
medical animal records:
Percentage
Average of Time
Number Minutes Spent
of per Performing
Employee Classification Records Minutes Record Activity
Animal Services Assistant I 2,205 4,793 1.33 61%
Animal Services Assistant II 321 546 0.15 9%
Animal Services Officer 767 1,702 0.47 21%
Office Assistant II 332 1,044 0.28 9%
Total 3,625 8,085 2.23 100%
Number of Animal Records Processed
During the course of the audit, we obtained the city’s raw animal data
from its Chameleon database, analyzed the intake reports containing the
animal data, and performed a count for the number of animal records that
appeared in each year’s database. The city was unable to provide animal
record statistics for FY 1998-99 through FY 2001-02. Therefore, we used
the average of animal intake records processed for the last five years as
the number of records processed for the first four years of the audit
period.
The following table summarizes the audit adjustments to allowable hours
spent processing non-medical records based on the audited number of
records processed during the audit period:
Fiscal Year
1998-99 1 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07
Total intake count of animals:
Allowable 2 5,917 11,834 11,834 11,834 12,491 12,037 11,894
Claimed Unknown Unknown Unknown 8,701 8,287 10,286 11,737
Audit adjustment 3,133 4,204 1,751 157
Total hours
Allowable 2 220 440 440 440 464 447 442
Claimed 315 1,274 1,175 1,305 1,243 1,543 1,761
Audit adjustment (95) (834) (735) (865) (779) (1,096) (1,319)
_ ___________________
1 Reimbursement for FY 1998-99 began on January 1, 1999.
2 An average of animal census data from FY 2002-03 through FY 2006-07 was used for FY 1998-99
through FY 2001-02.
3 Allowable hours are based on 2.23 minutes per record times the number of records processed.
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City of Stockton Animal Adoption Program
Productive Hourly Rates
To calculate the productive hourly rates, the auditor used annual payroll
history reports provided by the city to obtain the salary and benefit rates
for each employee classification. The rates were then applied to the
allowable hours per employee classification to determine allowable
reimbursable costs for each fiscal year.
The program’s parameters and guidelines allow reimbursement,
beginning January 1, 1999, for:
Maintaining non-medical records on animals that are either taken up,
euthanized after the holding period, or impounded. Such records shall
include the following:
1. The date the animal was taken up, euthanized, or impounded;
2. The circumstances under which the animal is taken up, euthanized,
or impounded;
3. The names of the personnel who took up, euthanized, or impounded
the animal; and
4. The final disposition of the animal, including the name of the person
who euthanized the animal or the name and address of the adopting
party.
The cost of Software license renewal contracts, to the extent these cost
are not claimed as an indirect cost under these parameters and
guidelines, is eligible for reimbursement under Section V (A) (2) of the
parameters and guidelines. If the computer software is utilized in some
way that is not directly related to the maintenance of records specified
in this section, only the pro rata portion of the software license renewal
contract that is used for compliance with this section is reimbursable.
Necessary and Prompt Veterinary Care
The city claimed $5,087 in salaries and benefits during the audit period
under the cost component of Necessary and Prompt Veterinary Care. The
related indirect costs claimed totaled $1,552. The entire amount claimed
was originally unallowable because the city estimated that it took nine
minutes to administer wellness vaccines to incoming animals. However,
no documentation was provided supporting the amount of time spent
performing this activity.
Based on the time study that the city conducted during March 2010, we
determined that salary and benefit costs totaling $8,401 are allowable.
The related allowable indirect costs totaled $2,895. The city understated
total costs claimed by $4,657 primarily because it understated the
number of animals treated during the audit period.
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City of Stockton Animal Adoption Program
The following table summarizes the claimed, allowable, and unallowable
costs for the audit period by fiscal year:
Fiscal Year
Cost Categories 1998-99 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Salaries
Claimed $ — $ — $ — $ 5 35 $ 5 40 $ 1,0 32 $ 6 85 $ 2,792
Allowable 253 526 690 759 485 1,070 1,241 5,024
Audit adjustment 253 526 690 224 (55) 38 556 2,232
Benefits:
Claimed — — — 287 310 989 709 2,295
Allowable 127 213 268 367 232 977 1,193 3,377
Audit adjustment 127 213 268 80 (78) (12) 484 1,082
Related indirect costs:
Claimed — — — 218 274 634 426 1,552
Allowable 132 386 461 299 231 642 744 2,895
Audit adjustment 132 386 461 81 (43) 8 318 1,343
Total claimed — — — 1,040 1,124 2,655 1,820 6,639
Total allowable 512 1,125 1,419 1,425 948 2,689 3,178 11,296
Total audit adjustment $ 512 $ 1,125 $ 1,419 $ 385 $ (176) $ 34 $ 1,358 $ 4,657
Time Study
The city’s shelter staff conducted a time study over a four week period in
March of 2010 to determine the amount of time spent performing initial
physical examinations of animals and administering wellness vaccines to
animals. We tallied the individual employees’ time and determined that
during the four-week time study period, the shelter staff collectively
spent 598 minutes treating 304 animals.
The following table summarizes the results of the time study:
Number
Total Total of Hours per
Employee Classification Minutes Hours Animals Percentage animal
Animal Services Assistant I 554 9.23 289 95.07% 0.0319
Animal Services Officer 44 0.73 15 4.93% 0.0489
Total 598 9.97 304 100.00% 0.0808
Animal Census Data
The parameters and guidelines allow reimbursement only for animals
that died during the holding period or were ultimately euthanized
(euthanized after the holding period). We used the animal census data
provided by the city to determine the number of dogs, cats, and other
animals that fit these criteria (i.e. eligible animals). The city did not have
animal census data available for FY 1998-99 through FY 2001-02. For
these four fiscal years, we used a five-year average of eligible animals
based on actual animal census data that the city provided for FY 2002-03
through FY 2006-07.
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City of Stockton Animal Adoption Program
The table below summarizes our calculations of eligible animals for the
audit period.
Eligible Fiscal Year
Animals 1998-991 1999-20002 2000-012 2001-022 2002-03 2005-06 2006-07
Dogs and cats 976 1,952 1,952 1,952 1,048 2,157 2,075
Other animals 6 12 12 12 4 20 5
Total 982 1,964 1,964 1,964 1,052 2,177 2,080
____________________
1 The five-year average was divided in half because reimbursement began on January 1,
1999.
2 A five-year average based on data from FY 2002-03 through FY 2006-07 was used for
this year.
Calculation of Allowable Costs
The best application of the time study results to each fiscal year would be
to calculate a reimbursable rate per employee classification and apply
this rate by the percentage of animals that were time-studied by the total
number of animals impounded at the shelter. For example, as noted
previously, Animal Services Assistant Is spent 0.0319 hours per
treatment and they treated 95.07% of the animals impounded during the
time study. As 1,964 animals were eligible during FY 2001-02, we
concluded that Animal Services Assistant Is spent 59.56 hours that year
performing treatment activities ([1,964 × 95.07%] × 0.0319). Alterna-
tively, for FY 2002-03, there were 1,052 eligible animals and Animal
Services Assistant Is spent 31.90 hours performing treatment activities
([1,052 × 95.07%] × 0.0319). We then applied the calculated time
increments to the employees’ productive hourly rates to determine
allowable costs.
The table below summarizes our calculations of allowable costs by the
employee classifications of Animal Services Assistant I (ASA I) and
Animal Services Officer (ASO):
Employee Fiscal Year
Classification 1998-991 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Totals
Salaries and benefits:
ASA I $ 323 $ 625 $ 837 $ 995 $ 646 $ 1,804 $ 2,197 $ 7,427
ASO 57 114 121 131 71 243 237 974
Total direct costs 380 739 958 1,126 717 2,047 2,434 8,401
Indirect costs 132 386 461 299 231 642 744 2,895
Totals $ 512 $ 1,125 $ 1,419 $ 1,425 $ 948 $ 2,689 $ 3,178 $ 11,296
_________________________
1 Reimbursement for FY 1998-99 began on January 1, 1999.
The parameters and guidelines allow reimbursement, beginning
January 1, 1999, for:
Providing ―necessary and prompt veterinary care‖ for stray and
abandoned animals other than injured cats and dogs given emergency
treatment that die during the holding period or are ultimately
euthanized during the holding periods specified in Statutes of 1998,
Chapter 752.
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City of Stockton Animal Adoption Program
―Necessary and prompt veterinary care‖ means all reasonably necessary
medical procedures performed by a veterinarian or someone under the
supervision of a veterinarian to make stay or abandoned animals
―adoptable.‖ The following veterinary procedures, if conducted, are
eligible for reimbursement:
An initial physical examination of the animal to determine the
animal’s baseline health status and classification as ―adoptable,‖
―treatable,‖ or ―non-rehabilitatable.‖
A wellness vaccine administered to ―treatable‖ or ―adoptable‖
animals.
Veterinary care to stabilize and or relive the suffering of a ―treatable‖
animal.
Veterinary care intended to remedy any applicable disease, injury, or
congenital or hereditary condition that adversely affects the health of
a ―treatable‖ animal or that is likely to adversely affect the animal’s
health in the future, until the animal becomes ―adoptable.‖
Population Exclusions
Eligible claimants are not entitled to reimbursement for providing
―necessary and prompt veterinary care‖ to the following population of
animals:
Animals that are irremediably suffering from a serious illness or
severe injury. . . ;
Newborn animals that need maternal care and have been impounded
without their mothers. . . ;
Animals too severely injured to move or where a veterinarian is not
available and it would be more humane to dispose of the animal. . .;
Owner relinquished animals. . . ; and
Stray or abandoned animals that are ultimately redeemed, adopted, or
released to a nonprofit animal rescue or adoption organization.
Veterinary Care Exclusions
Eligible claimants are not entitled to reimbursement for providing the
following veterinary procedures:
Emergency treatment given to injured cats and dogs. . . ;
Administration of rabies vaccination to dogs. . . ;
Implantation of microchip identification. . . ;
Spay or neuter surgery and treatment. . . ; and
Euthanasia.
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City of Stockton Animal Adoption Program
FINDING 2— The city claimed $789,654 in materials and supplies related to the Care
and Maintenance of Dogs and Cats cost component and the Care and
Unsupported costs
Maintenance of Other Animals cost component for fiscal year (FY)
related to care and
1998-99 through FY 2006-07. The entire cost, totaling $789,654, is
maintenance of dogs,
unallowable.
cats, and other animals
The formula for care and maintenance of dogs, cats, and other animals
divides total costs by the daily animal census to produce a cost per
animal per day. The product is multiplied by the number of eligible dogs,
cats, and other animals that were euthanized and the number of
reimbursable holding days.
For FY 1998-99 through FY 2000-01, the city did not provide any
supporting documentation for the total costs of care and maintenance for
dogs, cats, and other animals. The total cost is necessary to determine
the reimbursable costs.
For FY 2001-02, FY 2002-03, FY 2005-06, and FY 2006-07, the city
claimed $77,402 for the care and maintenance of dogs, cats, and other
animals. The city provided detailed budget reports that showed total
salaries and benefits, materials, services and supplies incurred for each
year by accounts. However, the detailed budget reports included costs for
the entire animal shelter. The city provided no documentation supporting
the reimbursable portion relating to the care and maintenance of dogs,
cats, and other animals. In addition, some of the costs (such as salaries,
benefits, and other costs) were claimed in other cost components within
the claims. The city did provide animal census data for FY 2002-03
through FY 2006-07 to help validate the number of eligible animals.
However, the city provided no animal census data for FY 1998-99
through FY 2001-02. If the city is unable to locate animal census data for
FY 1998-99 through FY 2001-02, it should consider using the average
census data in subsequent years if the city can support that there were no
significant changes in the data.
During the audit, we discussed with the city the inadequate
documentation and its option of performing a time study consistent with
the program’s parameters and guidelines in order to substantiate the
unsupported costs. We agreed to review the results of the time study and
revise the audit report, as appropriate.
The following table summarizes the unallowable costs related to care and
maintenance of dogs, cats and other animals:
Fiscal Year
1998-99 1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Materials and supplies:
Care and maintenance
of dogs and cats $ (9,250) $(339,838) $(344,976) $(19,263) $(20,906) $(29,452) $ (804) $(764,489)
Care and maintenance
of other animals — (9,071) (9,117) (2,778) (2,019) (2,180) — (25,165)
Audit adjustment $ (9,250) $(348,909) $(354,093) $(22,041) $(22,925) $(31,632) $ (804) $(789,654)
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City of Stockton Animal Adoption Program
The parameters and guidelines require that all costs claimed be traceable
to source documents that show evidence of the validity of such costs and
their relationship to the mandate.
The parameters and guidelines (section IV.B.3.) state that the increased
holding period for dogs and cats is the difference between four or six
business days from the day after impoundment and three days from the
day of capture. The parameters and guidelines (section IV.B.3.) also
states that the increased holding period for other animals is four or six
business days. Four rather than six business days are applicable since the
shelter was opened on one weekend day. (See Food and Agricultural
Code sections 31108, 31752, and 31753.)
The parameters and guidelines state that the following populations of
animals are not reimbursable for care and maintenance:
Stray or abandoned animals that are irremediably suffering from a
serious illness or severe injury. . . ;
Newborn stray or abandoned animals that need maternal care and
have been impounded without their mothers. . . ;
Stray or abandoned animals too severely injured to move or where a
veterinarian is not available and it would be more humane to dispose
of the animal. . .;
Owner relinquished animals. . . ; and
Stray or abandoned animals that are ultimately redeemed, adopted, or
released to a nonprofit animal rescue or adoption organization.
The parameters and guidelines allow eligible claimants the option of
claiming costs using either the actual cost method or the time study
method.
Recommendation
We recommend that the city establish and implement procedures to
ensure that claimed costs are properly supported as required by the
mandate.
City’s Response
The City did not provide supporting documentation for reimbursements
requested for FYs 1998/99 through 2000/01, but was able to submit
adequate documentation for FYs 2002/03 through 2006/7. No
significant changes occurred between the particular years in question.
Therefore, the City requests the average census data from the years of
sufficient documentation be applied to 1998/99 through 2000/01 and
the disallowed portion be recalculated.
SCO’s Comment
The finding and recommendation remain unchanged.
In its response, the city refers to ―adequate documentation‖ that was
provided for FY 2002-03 through FY 2006-07. We believe that the city
is referring to its animal census data and we concur that the city provided
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City of Stockton Animal Adoption Program
adequate animal census data for those years. We are able to apply
average animal census data from those years in order to determine
allowable costs for FY 1998-99 through FY 2000-01.
However, the city has not yet provided information relating to the
employee classifications that performed care and maintenance activities
at the animal shelter nor calculated the percentage of time that these
employees spent performing care and maintenance activities. For
example, we believe that the employee classification of Animal Services
Assistant performs most of the care and maintenance activities at the
city’s shelter and that a significant portion of their time is spent
performing these activities. We requested such items as job duty
statements and analyses of daily activities to support time spent on care
and maintenance. However, the city has not provided any of this
information.
In addition, the city has not yet provided any documentation supporting
actual costs incurred for materials and supplies costs relating to the care
and maintenance of animals, such as food, bedding, cleaning supplies,
janitorial services, flea and tick control supplies, or any other items
relating to the daily care and maintenance of animals.
If the city subsequently provides any or all of this information, we will
revise the audit results as appropriate and reissue the audit report. If the
city provides adequate information relating to the employees that
performed care and maintenance activities, we will revise Finding 1—
Unsupported salaries and benefits. If the city provides adequate
information relating to materials and supplies costs incurred, we will
revise this finding.
FINDING 3— The city claimed costs totaling $649,349 ($622,829 in contract services,
and $26,520 in materials and supplies) for FY 2000-01 through FY 2002-
Overstated acquiring
03 related to the Acquiring Space/Facilities cost component. We
space/facilities
determined that $206,083 is allowable ($198,156 in contract services and
$7,927 in materials and supplies) and the city overstated costs by
$443,266 ($424,673 for FY 2001-02 through FY 2002-03 in contract
services, and $18,593 for FY 2000-01 through FY 2002-03 in materials
and supplies).
The total cost for FY 2000-01 through FY 2002-03 was initially
unallowable because the city used the incorrect number of euthanized
animals in the calculation of acquiring space/facilities. The city used
Summary Reports to determine the total number of euthanized animals
instead of detailed animal census reports to obtain the eligible number of
euthanized animals. The summary report did not identify the number of
eligible euthanized animals required by the calculation. As a result, the
city overstated the reimbursable percentage.
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City of Stockton Animal Adoption Program
The following table summarizes the unallowable contract services and
materials and supplies:
Fiscal Year
2000-01 2001-02 2002-03 Total
Contract services:
Acquiring space and/or
construction of new facilities $ — $ (371,482) $ (53,191) $ (424,673)
Total — (371,482) (53,191) (424,673)
Materials and supplies:
Acquiring space and/or
construction of new facilities (2,960) (14,162) (1,471) (18,593)
Total (2,960) (14,162) (1,471) (18,593)
Audit adjustment $ (2,960) $ (385,644) $ (54,662) $ (443,266)
For FY 2001-02, the city claimed $578,321 in costs ($557,073 in
contract services and $21,248 in materials and supplies). In a letter dated
June 18, 2005, the SCO’s Division of Accounting and Reporting
determined that the entire amount claimed was unsupported. During the
current audit, the city provided support for $192,677 ($185,591 in
contract services and $7,086 in materials and supplies). The revised
unsupported costs identified above for FY 2001-02 total $385,644.
The parameters and guidelines require that all costs claimed be traceable
to source documents that show evidence of the validity of such costs and
their relationship to the mandate.
The parameters and guidelines (section IV.B.1.) state that eligible
claimants are entitled to reimbursement only for the proportionate share
of actual costs required to plan, design, acquire, and/or build facilities in
a given fiscal year. The parameters and guidelines further state that the
reimbursable percentage is based on the pro rata representation of
impounded stray or abandoned dogs, cats, and other animals to the total
population of animals housed in the facility, as specified in the Statutes
of 1998, Chapter 752. This relates to animals that die during the
increased holding period or are ultimately euthanized. This also includes
animals that are excluded from reimbursement, as specified in Section
IV.B.3 and IV.B.4 of the parameters and guidelines during the entire
holding period required by Food and Agriculture Code sections 31108,
31752 and 31753.
Recommendation
We recommend that the city ensure that all claimed costs are supported
by appropriate documentation and at the level required by the parameters
and guidelines.
City’s Response
The City concurs with the revised calculation based on the documented
population available.
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City of Stockton Animal Adoption Program
SCO’s Comment
The city concurred with the revised calculation based on the documented
animal census data information that provided during the audit. However,
during preparation of the final report, we noted some errors that were
made in the calculations of allowable costs.
We recalculated the audit finding amounts and determined that
unallowable costs increased by $197,535 ($190,345 for contract services
and $7,190 for materials and supplies), from $245,731 to $443,266.
The table below summarizes the changes to the audit adjustment amounts
by cost category and fiscal year:
Fiscal Year
Cost Category 2000-01 2001-02 2002-03 Total
Draft report:
Contract services $ — $ (231,620) $ (2,708) $ (234,328)
Material and supplies (2,505) (8,823) (75) (11,403)
Original audit adjustment (2,505) (240,443) (2,783) (245,731)
Final report:
Contract services — (371,482) (53,191) (424,673)
Materials and supplies (2,960) (14,162) (1,471) (18,593)
Revised audit adjustment (2,960) (385,644) (54,662) (443,266)
Difference $ (455) $ (145,201) $ (51,879) $ (197,535)
Contract Services Costs
As noted in the table above, unallowable contract services costs for this
cost component increased by $190,345 ($139,862 for FY 2001-02 and
$50,483 for FY 2002-03).
The table below summarizes the details of the revised finding amount for
contract services:
Total
Eligible Total Contract Reimburs-
Number Number Services able
of Animals of Animals Ratio Costs Amount
Claimed:
FY 2001-02 6,381 13,106 48.7% $ 1,143,885 $ 557,072
FY 2002-03 6,367 14,907 42.7% 153,998 65,757
Total claimed costs 622,829
Allowable:
FY 2001-02 1,922 11,834 16.2 4% 1,142,797 185,590
FY 2002-03 1,019 12,491 8.16% 153,998 12,566
Total allowable costs 198,156
Audit adjustment $(424,673)
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City of Stockton Animal Adoption Program
Fiscal Year 2001-02
The original audit finding amount of $231,620 for FY 2001-02 was
based on the difference between claimed costs of $557,072 and
allowable costs of $325,452. The $325,425 amount was calculated by
multiplying total contract services costs of $1,142,797 times a ratio of
28.4785%. This ratio was based on 3,732 eligible animals and a total
animal population of 13,106 (3,732 ÷ 13,106 = 28.4785%).
However, this ratio was used in error. The denominator was incorrect
because it was already determined within another cost component that
the animal census data provided by the city for FY 2001-02 was
inaccurate. Therefore, we used a total population of 11,834, which is a
five-year average of total animals housed during the period of FY
2002-03 through FY 2006-07. The numerator was also incorrect because
it included dogs and cats that were euthanized during the increased
holding period (days 4-6 of the holding period). Using a five-year
average of eligible animals (those that died of natural causes during the
increased holding period plus that were ultimately euthanized after the
holding period), we determined that the correct number of eligible
animals was 1,922.
We determined that the correct ratio should be 16.24% (1,922 ÷ 11,834),
as shown in the table above. Accordingly, allowable costs decreased by
$139,862, to $185,590, and unallowable costs increased to $371,482.
Fiscal Year 2002-03
The original audit finding of $2,708 for FY 2002-03 was based the
difference between claimed costs of $65,757 and allowable costs of
$63,049. The $63,049 amount was calculated by multiplying total
contract services costs of $153,998 times a ratio of 40.94%. This ratio
was based on 5,114 eligible animals and a total animal population of
12,491 (5,114 ÷ 2,491 = 40.94%).
However, this ratio was used in error. The denominator of 12,491 was
correct. However, the numerator was incorrect because it included dogs
and cats that were euthanized during the increased holding period (days
4-6 of the holding period). After correcting for this error, we determined
that the correct number of eligible animals was 1,019.
We determined that the correct ratio should be 8.16% (1,019 ÷ 12,491),
as shown in the table above. Accordingly, allowable costs decreased by
$50,483 to $12,566 and unallowable costs increased to $53,191.
Construction Costs Claimed Twice
We determined that the gross contract services costs incurred by the city
for FY 2001-02 were overstated by $1,088. The city’s claim for that year
reported total contract services costs incurred totaling $1,143,885 under
the cost component of Acquiring Space and Facilities. However, we
noted that invoices for Hazard Management Services ($840) and
Stockton Blue ($248) were claimed twice. Accordingly, actual gross
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City of Stockton Animal Adoption Program
construction costs incurred by the city that year for construction of the
city’s animal shelter totaled $1,142,797 and were used in the calculation
of allowable costs, as shown in the table above.
Materials and Supplies Costs
The table below summarizes the details of the revised finding amount for
materials and supplies:
Total
Eligible Total Materials Reimburs-
Number Number and Supplies able
of Animals of Animals Ratio Costs Amount
Claimed:
FY 2000-01 — — 100.00% $ 3,454 $ 3,454
FY 2001-02 6,381 13,106 48.70% 43,631 21,248
FY 2002-03 6,367 14,907 42.70% 4,257 1,818
Total claimed costs 26,520
Allowable:
FY 2000-01 1,922 11,834 16. 24% 3,041 494
FY 2001-02 1,922 11,834 16.24% 43,631 7,086
FY 2002-03 1,019 12,491 8.16% 4,257 347
Total allowable costs 7,927
Audit adjustment $ (18,593)
Allowable materials and supplies costs for this cost component decreased
by $7,190 ($455 for FY 2000-01, $5,339 for FY 2001-02, and $1,396 for
FY 2002-03).
Fiscal Year 2000-01
The original audit finding amount of $2,505 for FY 2000-01 was based
on the difference between claimed costs of $3,454 and allowable costs of
$949. However, we noted that the $949 amount was based on a
reimbursement ratio of 31.2% in error. This ratio was based on 3,732
eligible animals and a total animal population of 11,957 (3,732 ÷ 11,957
= 31.2%).
However, this ratio was used in error. The denominator was incorrect.
Therefore, we used a total population of 11,834, which is a five-year
average of total animals housed during the period of FY 2002-03 through
FY 2006-07. The numerator was also incorrect because it included dogs
and cats that were euthanized during the increased holding period (days
4-6 of the holding period). Using a five-year average of eligible animals
(those that died of natural causes during the increased holding period
plus that were ultimately euthanized after the holding period), we
determined that the correct number of eligible animals was 1,922. After
applying the correct reimbursement ratio of 16.24%, allowable costs
decreased by $455, to $494, and unallowable costs increased to $2,960.
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City of Stockton Animal Adoption Program
Fiscal Year 2001-02
The original audit finding amount of $8,823 for FY 2001-02 was based
on the difference between claimed costs of $21,248 and allowable costs
of $12,425. The $12,425 amount was calculated by multiplying total
materials and supplies costs of $43,631 times a ratio of 28.4785%. This
ratio was used in error because it was already determined within another
cost component that the animal census data provided by the city for
FY 2001-02 was inaccurate. Accordingly, we used five-year averages of
eligible animals and total animals housed during the period of
FY 2002-03 through FY 2006-07 to determine the ratio of 16.24% shown
in the table above. Accordingly, allowable costs decreased by $5,339 to
$7,086 and unallowable costs increased to $14,162.
Fiscal Year 2002-03
The original audit finding of $75 for FY 2002-03 was based on the
difference between claimed costs of $1,818 and allowable costs of
$1,743. The $1,743 amount was calculated by multiplying total materials
and supplies costs of $4,257 times a ratio of 40.94%. This ratio was
based on 5,114 eligible animals and a total animal population of 12,491
(5,114 ÷ 12,491 = 40.94%).
However, this ratio was used in error. The denominator of 12,491 was
correct. However, the numerator was incorrect because it included dogs
and cats that were euthanized during the increased holding period (days
4-6 of the holding period). After correcting for this error, we determined
that the correct number of eligible animals was 1,019.
We determined that the correct ratio should be 8.16% (1,019 ÷ 12,491),
as shown in the table above. Accordingly, allowable costs decreased by
$1,396 to $347 and unallowable costs increased to $1,471.
FINDING 4— The city claimed $56,197 in materials and supplies related to the
Procuring Equipment cost component for FY 1998-99 through FY 2002-
Unallowed procuring
03. We determined that $47,904 is unallowable.
equipment
The city provided supporting documentation, but the same costs were
included in its indirect cost rate proposal (ICRP) calculation for FY
1998-99 through FY 2000-01. Although some costs were included in the
ICRP calculations, we have recalculated the pro-rata portion of the
reimbursable costs as the ICRP calculations for those years were
unsupported. If the city subsequently provides documentation supporting
the ICRP calculations, it should ensure that the procuring equipment
costs are excluded. For FY 2001-02 and FY 2002-03, the city claimed
100% of the costs instead of applying a pro rata percentage to the portion
related to the mandated activities. We recalculated and allowed the
mandate portion.
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City of Stockton Animal Adoption Program
The table below summarizes the claimed and allowable amounts by
fiscal year.
Total
Eligible Total Procuring Reimburs-
Number Number Equipment able
of Animals of Animals Ratio Costs Amount
Claimed:
FY 1998-99 — — 100.00% $ 17,494 $ 17,494
FY 1999-2000 — — 100.00% 3,317 3,317
FY 2000-01 — — 100.00% 8,428 8,428
FY 2001-02 — — 100.00% 16,633 16,633
FY 2002-03 — — 100.00% 10,325 10,325
Total claimed costs 56,197
Allowable:
FY 1998-99 1,922 11,834 16. 24% 17,494 2,841
FY 1999-2000 1,922 11,834 16.24% 3,317 539
FY 2000-01 1,922 11,834 16.24% 8,428 1,369
FY 2001-02 1,922 11,834 16.24% 16,633 2,701
FY 2002-03 1,019 12,491 8.16% 10,325 843
Total allowable costs 8,293
Audit adjustment $ (47,904)
The parameters and guidelines (section IV.B.10.) state that:
. . . procuring medical kennel, and computer equipment necessary to
comply with the reimbursable activities listed in section IV.B. to the
extent the costs are not claimed as indirect costs under section V.B. of
the parameters and guidelines. If the medical, kennel, and computer
equipment is utilized in some way not directly related to the mandated
program or the population of animals listed in section V.B., only the
pro rata portion of the activity that is used for the purposes of the
mandated program is reimbursable.
The parameters and guidelines require that all costs claimed be traceable
to source documents that show evidence of the validity of such costs and
their relationship to the mandate.
Recommendation
We recommend that the city ensure that all claimed costs are supported
by appropriate documentation and at the level required by the parameters
and guidelines.
City’s Response
The City concurs that only costs traceable to source documents and at
the level required by the parameters and guidelines of the mandate are
appropriate.
SCO’s Comment
The city concurred with the revised calculation based on the documented
animal census data information that it provided during the audit.
However, during preparation of the final report, we noted errors that
were made in the calculations of allowable costs.
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City of Stockton Animal Adoption Program
We recalculated the audit finding amounts and determined that
unallowable costs increased by $10,402; from $37,502 to $47,904.
The table below summarizes the changes to the audit adjustment amounts
by cost category and fiscal year:
Fiscal Year
1998-99 1999-2000 2000-01 2001-02 2002-03 Total
Draft report:
Costs incurred $ 17,494 $ 3,317 $ 8,428 $ 16,633 $ 10,325 $ 56,197
Reimbursement percentage × 31.54% × 31.54% × 31.54% × 31.54% × 40.94%
Original amount allowable 5,518 1,046 2,658 5,246 4,227 18,695
Final report:
Costs incurred 17,494 3,317 8,428 16,633 10,325 56,197
Reimbursement percentage × 16.24% × 16.24% × 16.24% × 16.24% × 8.16%
Revised amount allowable 2,841 539 1,369 2,701 843 8,293
Difference $ (2,677) $ (507) $ (1,289) $ (2,545) $ (3,384) $ (10,402)
Adjustment to Audit Findings
Fiscal Year 1998-99 through Fiscal Year 2001-02
The original audit finding amounts for FY 1998-99 through FY 2001-02
were based on a reimbursement ratio of 31.54%. This ratio was based on
3,732 eligible animals and a total animal population of 11,834
(3,732 ÷ 11,834 = 31.54%).
However, this ratio was used in error. The denominator of 11,834 was
correct; it is a five-year average of total animals housed during the period
of FY 2002-03 through FY 2006-07. We used a five-year average
because the city was unable to provide any animal census data for these
four fiscal years. However, the numerator was incorrect because it
included dogs and cats that were euthanized during the increased holding
period (days 4-6 of the holding period). Using a five-year average of
eligible animals (those that died of natural causes during the increased
holding period plus that were ultimately euthanized after the holding
period), we determined that the correct number of eligible animals was
1,922. Therefore, the correct reimbursement percentage is 16.24%
(1,922 ÷ 11,834 = 16.24%).
Fiscal Year 2002-03
The original audit finding amount for FY 2002-03 was based on a
reimbursement ratio of 40.94%. This ratio was based on 5,114 eligible
animals and a total animal population of 12,491 (5,114 ÷ 12,491 =
40.94%).
However, this ratio was used in error. The denominator of 12,491 was
correct. However, the numerator was incorrect because it included dogs
and cats that were euthanized during the increased holding period (days
4-6 of the holding period). After correcting for this error, we determined
that the correct number of eligible animals was 1,019. We determined
that the correct ratio should be 8.16% (1,019 ÷ 12,491), as shown in the
table on the previous page.
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City of Stockton Animal Adoption Program
FINDING 5— The city claimed $23,750 in unsupported material and supplies related to
the Necessary and Prompt Veterinary Care cost component for the audit
Unsupported
period. The entire amount claimed is unallowable because the city did
necessary and prompt
not provide any supporting documentation.
veterinary care
The city claimed costs for necessary and prompt veterinary care for stray
and abandoned animals during the holding period. The holding period for
dogs, cats, and other animals is four business days from the day after
impoundment (see Finding 2). The parameters and guidelines identify
veterinary procedures that are and are not reimbursable and the
population of animals that is not reimbursable.
During the audit, we discussed the inadequate documentation with the
city and its option to perform a time study. The city has the option to
time-study the initial physical examination and the wellness vaccination.
We agreed to review the time study results and revise the audit report, as
appropriate.
The following table summarizes the unsupported materials and supplies
related to veterinary care:
Fiscal Year
1999-2000 2000-01 2001-02 2002-03 2005-06 2006-07 Total
Materials and supplies:
Necessary and prompt
veterinary care $ (6,169) $(12,325) $ (1,165) $ (1,165) $ (1,804) $ (1,122) $(23,750)
Audit adjustment $ (6,169) $(12,325) $ (1,165) $ (1,165) $ (1,804) $ (1,122) $(23,750)
The parameters and guidelines require that all costs claimed be traceable
to source documents that show evidence of the validity of such costs and
their relationship to the mandate.
The parameters and guidelines state that reimbursable costs exclude
injured dogs, cats, and other animals given emergency treatment that die
during the holding period or are ultimately euthanized.
The parameters and guidelines specify that the following veterinary
procedures are reimbursable:
An initial physical examination of the animal to determine the
animal’s baseline health status and classification as ―adoptable,‖
treatable,‖ or ―non-rehabilitatable.‖
A wellness vaccine administered to ―treatable‖ or ―adoptable‖
animals.
Veterinary care to stabilize and/or relieve the suffering of a
―treatable‖ animal.
Veterinary care intended to remedy any applicable disease, injury, or
congenital or hereditary condition that adversely affects the health of
a ―treatable‖ animal or that is likely to adversely affect the animal’s
health in the future, until the animal becomes ―adoptable.‖
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City of Stockton Animal Adoption Program
The parameters and guidelines state that the following veterinary
procedures are not reimbursable:
Emergency treatment given to injured cats and dogs. . . ;
Administration of rabies vaccination to dogs. . . ;
Implantation of microchip identification. . . ;
Spay and neuter surgery and treatment. . .; and
Euthanasia.
The parameters and guidelines state that the following population of
animals is not reimbursable:
Animals that are irremediably suffering from a serious illness or
severe injury. . . ;
Newborn animals that need maternal care and have been impounded
without their mothers. . . ;
Animals too severely injured to move or where a veterinarian is not
available and it would be more humane to dispose of the animal. . . ;
Owner relinquished animals. . . ; and
Stray or abandoned animals that are ultimately redeemed, adopted, or
released to a nonprofit animal rescue or adoption organization.
Recommendation
We recommend that the city ensure that all claimed costs are supported
by appropriate documentation at the level required by the parameters and
guidelines.
City’s Response
The SCO agreed to revise the audit report as appropriate, and thereby
recalculate allowable costs if the City performs a time study based on
the State Controllers Office Guidelines. This time study was completed
in March 2010. The City is in contact with the Auditor to schedule
appropriate review and possible revisions to disallowed costs.
SCO’s Comment
The finding and recommendation remain unchanged.
The city conducted its time study and we determined that $8,401 in
salary and benefit costs are allowable for the activities of performing an
initial physical examination and administering wellness vaccines (see
Finding 1—Unsupported salaries and benefits). However, the city has
not yet provided any supporting documentation for materials and
supplies costs incurred under this cost component, such as the cost of the
wellness vaccines that were administered. If the city subsequently
provides documentation supporting actual costs incurred, we will revise
the audit results as appropriate and reissue the audit report.
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City of Stockton Animal Adoption Program
Attachment—
City’s Response to
Draft Audit Report
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250-5874
http://www.sco.ca.gov
S09-MCC-046