Placer County

PLACER COUNTY Audit Report ANIMAL ADOPTION PROGRAM Chapter 752, Statutes of 1998; and Chapter 313, Statutes of 2004 July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 J C OHN HIANG California State Controller November 2014 J C OHN HIANG California State Controller November 17, 2014 Jack Duran, Chair Board of Supervisors Placer County 175 Fulweiler Avenue Auburn, CA 95603 Dear Mr. Duran: The State Controller’s Office audited the costs claimed by Placer County for the legislatively mandated Animal Adoption Program (Chapter 752, Statutes of 1998; and Chapter 313, Statutes of 2004) for the period of July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009. We did not include July 1, 2003, through June 30, 2004, in the audit period because the Animal Adoption Program was suspended. In addition, we did not include the costs claimed for July 1, 2004, through June 30, 2007, in the audit period because the statute of limitations to initiate the audit had expired. The county claimed $862,075 for the mandated program. Our audit found that $475,911 is allowable and $386,164 is unallowable. The costs are unallowable because the county overstated and understated allowable costs; claimed unallowable costs and unsupported costs; claimed misclassified costs, ineligible employees, and ineligible animals; misstated animal census data and indirect cost rates; and overstated offsetting revenues. The State made no payments to the county. The State will pay $475,911, contingent upon available appropriations. If you disagree with the audit findings, you may file an Incorrect Reduction Claim (IRC) with the Commission on State Mandates (Commission). 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 Commission’s website at www.csm.ca.gov/docs/IRCForm.pdf. If you have any questions, please contact Jim L. Spano, Chief, Mandated Cost Audits Bureau, by phone at (916) 323-5849. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/sk Jack Duran, Chair -2- November 17, 2014 cc: The Honorable Andrew Sisk, Auditor-Controller Placer County Stan Hapak, Administrative and Fiscal Operations Manager Placer County, Health and Human Services Wesley G. Nicks, Director of Environmental Health, Public Health, and Animal Services Placer County, Health and Human Services Rebecca Mellott, Director, Administrative Services Placer County, Health and Human Services Mike Winters, Animal Control Manager Placer County, Health and Human Services Michael Byrne, Principal Program Budget Analyst Mandates Unit, Department of Finance Jay Lal, Manager Division of Accounting and Reporting State Controller’s Office Placer County Animal Adoption Program Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Objectives, Scope, and Methodology ............................................................................... 2 Conclusion .......................................................................................................................... 2 Views of Responsible Officials .......................................................................................... 2 Restricted Use .................................................................................................................... 3 Schedule 1—Summary of Program Costs ........................................................................... 4 Schedule 2—Summary of Care and Maintenance Costs .................................................... 7 Findings and Recommendations ........................................................................................... 9 Attachment—County’s Response to Draft Audit Report Placer County Animal Adoption Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by Placer County for the legislatively mandated Animal Adoption Program (Chapter 752, Statutes of 1998; and Chapter 313, Statutes of 2004) for the period of July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009. We did not include July 1, 2003, through June 30, 2004, in the audit period because the Animal Adoption Program was suspended. In addition, we did not include the costs claimed for July 1, 2004, through June 30, 2007, in the audit period because the statute of limitations to initiate the audit had expired. The county claimed $862,075 for the mandated program. Our audit found that $475,911 is allowable and $386,164 is unallowable. The costs are unallowable because the county overstated and understated allowable costs; claimed unallowable costs and unsupported costs; claimed misclassified costs, ineligible employees, and ineligible animals; misstated animal census data and indirect cost rates; and overstated offsetting revenues. The State made no payments to the county. The State will $475,911, contingent upon available appropriations. 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. The statutes expressly identify 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 (Commission) 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. The Commision 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. -1- Placer County Animal Adoption Program Objectives, 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, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009. The objectives of our audit were to determine whether costs claimed were supported by appropriate source documents, were not funded by another source, and were not unreasonable and/or excessive. The legal authority to conduct this audit is provided by Government Code sections 12410, 17558.5, and 17561. We did not audit the county’s financial statements. We conducted this performance 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 county’s internal controls to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Our audit scope did not assess the efficiency or effectiveness of program operations. To achieve our audit objectives, we performed the following audit procedures:  Interviewed employees, completed the internal control questionnaire, and performed a walk-through of the cost components of each claim.  Traced costs claimed to supporting documentation that showed when the costs were incurred, the validity of such costs, and their relationship to mandated activities. Conclusion Our audit found instances of noncompliance with the requirements outlined above. These instances are described in the accompanying Summary of Program Costs (Schedule 1), Summary of Care and Maintenance Costs (Schedule 2), and in the Findings and Recommendations section of this report. For the audit period, Placer County claimed $862,075 for costs of the Animal Adoption Program. Our audit found that $475,911 is allowable and $386,164 is unallowable. The State made no payments to the county. The State will pay $475,911, contingent upon available appropriations. Views of We issued a draft audit report on October 24, 2014. Nicole C. Howard, CPA, Assistant Auditor-Controller, responded by letter dated November Responsible 5, 2014 (Attachment), agreeing with the audit results except for Findings Officials 1, 2, and 3. This final audit report includes the county’s response. -2- Placer County Animal Adoption Program Restricted Use This report is solely for the information and use of Placer County, 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, CPA Chief, Division of Audits November 17, 2014 -3- Placer County Animal Adoption Program Schedule 1— Summary of Program Costs July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 Actual Costs Allowable Audit Cost Elements Claimed Per Audit Adjustments Reference 1 July 1, 2001, through June 30, 2002 Direct costs: Policies and procedures $ 11,612 $ — $ (11,612) Findin g 1 Computer software 6,508 — (6,508) Finding 2 Remodeling/renovating facilities 52,057 — (52,057) Finding 3 Care and maintenance of dogs, cats, and other animals2 65,848 7,717 (58,131) Finding 4 Increased holding period 4,772 21,463 16,691 Finding 5 Feral cats 20,080 2,223 (17,857) Finding 6 Lost and found lists 14,162 5,383 (8,779) Finding 7 Maintaining non-medical records 31,847 6,492 (25,355) Finding 8 Necessary and prompt veterinary care 20,759 1,679 (19,080) Finding 9 Procuring equipment — 21,475 21,475 Finding 10 Total direct costs 227,645 66,432 (161,213) Indirect costs 33,551 23,330 (10,221) Finding 11 Total direct and indirect costs 261,196 89,762 (171,434) Less offsetting revenues (28,800) — 28,800 Finding 12 Total program costs $ 232,396 89,762 $ (142,634) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 89,762 July 1, 2002, through June 30, 2003 Direct costs: Computer software $ 6,908 $ — $ (6,908) Findin g 2 Remodeling/renovating facilities 147,080 — (147,080) Finding 3 Care and maintenance of dogs, cats, and other animals2 31,170 8,247 (22,923) Finding 4 Increased holding period 38,137 26,024 (12,113) Finding 5 Feral cats — 3,122 3,122 Finding 6 Lost and found lists 15,773 6,195 (9,578) Finding 7 Maintaining non-medical records 14,548 7,890 (6,658) Finding 8 Necessary and prompt veterinary care 35,101 2,029 (33,072) Finding 9 Procuring equipment — 791 791 Finding 10 Total direct costs 288,717 54,298 (234,419) Indirect costs 47,844 23,557 (24,287) Finding 11 Total direct and indirect costs 336,561 77,855 (258,706) Less offsetting revenues (34,273) — 34,273 Finding 12 Total program costs $ 302,288 77,855 $ (224,433) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 77,855 -4- Placer County Animal Adoption Program Schedule 1 (continued) Actual Costs Allowable Audit Cost Elements Claimed Per Audit Adjustments Reference 1 July 1, 2007, through June 30, 2008 Direct costs: Care and maintenance of dogs, cats, and other animals2 $ 18,124 $ 13,788 $ (4,336) Findin g 4 Increased holding period 47,581 32,821 (14,760) Finding 5 Feral cats — 7,495 7,495 Finding 6 Lost and found lists 25,463 9,485 (15,978) Finding 7 Maintaining non-medical records 46,415 24,780 (21,635) Finding 8 Necessary and prompt veterinary care 19,727 4,239 (15,488) Finding 9 Procuring equipment — 4,147 4,147 Finding 10 Total direct costs 157,310 96,755 (60,555) Indirect costs 58,257 57,454 (803) Finding 11 Total direct and indirect costs 215,567 154,209 (61,358) Less offsetting revenues (64,181) — 64,181 Finding 12 Subtotal 151,386 154,209 2,823 Less allowable costs that exceed costs claimed 3 (2,823) (2,823) Total program costs $ 151,386 151,386 $ — Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 151,386 July 1, 2008, through June 30, 2009 Direct costs: Care and maintenance of dogs, cats, and other animals2 $ 23,782 $ 11,267 $ (12,515) Findin g 4 Increased holding period 55,476 32,734 (22,742) Finding 5 Feral cats — 6,747 6,747 Finding 6 Lost and found lists 25,992 9,685 (16,307) Finding 7 Maintaining non-medical records 41,473 24,687 (16,786) Finding 8 Necessary and prompt veterinary care 29,434 4,276 (25,158) Finding 9 Procuring equipment — 3,368 3,368 Finding 10 Total direct costs 176,157 92,764 (83,393) Indirect costs 68,203 64,144 (4,059) Finding 11 Total direct and indirect costs 244,360 156,908 (87,452) Less offsetting revenues (68,355) — 68,355 Finding 12 Total program costs $ 176,005 156,908 $ (19,097) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 156,908 Summary: July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 Direct costs: Policies and procedures $ 11,612 $ — $ (11,612) Finding 1 Computer software 13,416 — (13,416) Finding 2 Remodeling/renovating facilities 199,137 — (199,137) Finding 3 Care and maintenance of dogs, cats, and other animals2 138,924 41,019 (97,905) Finding 4 Increased holding period 145,966 113,042 (32,924) Finding 5 Feral cats 20,080 19,587 (493) Finding 6 Lost and found lists 81,390 30,748 (50,642) Finding 7 Maintaining non-medical records 134,283 63,849 (70,434) Finding 8 -5- Placer County Animal Adoption Program Schedule 1 (continued) Actual Costs Allowable Audit Cost Elements Claimed Per Audit Adjustments Reference 1 Summary: July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 (continued) Necessary and prompt veterinary care 105,021 12,223 (92,798) Finding 9 Procuring equipment — 29,781 29,781 Finding 10 Total direct costs 849,829 310,249 (539,580) Indirect costs 207,855 168,485 (39,370) Finding 11 Total direct and indirect costs 1,057,684 478,734 (578,950) Less offsetting revenues (195,609) — 195,609 Finding 12 Subtotal 862,075 478,734 383,341 Less allowable costs that exceed costs claimed — (2,823) (2,823) Total program costs $ 862,075 475,911 $ (386,164) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 475,911 Summary by Object Account: July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 Direct costs: Salaries and benefits $ 401,617 $ 258,012 $ (143,605) Materials and supplies 348,319 19,899 (328,420) Contract services 27,756 11,172 (16,584) Fixed assets 72,137 21,166 (50,971) Total direct costs 849,829 310,249 (539,580) Indirect costs 207,855 168,485 (39,370) Total direct and indirect costs 1,057,684 478,734 (578,950) Less offsetting revenues (195,609) — 195,609 Subtotal 862,075 478,734 (383,341) Less allowable costs that exceed costs claimed — (2,823) (2,823) Total program costs $ 862,075 475,911 $ (386,164) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 475,911 _________________________ 1 See the Findings and Recommendations section. 2 See Schedule 2 – Summary of Care and Maintenance Costs. 3 Government Code section 17568 stipulates that the State will not reimburse any claim more than one year after the filing deadline specified in the SCO’s claiming instructions. That deadline has expired for FY 2007-08. -6- Placer County Animal Adoption Program Schedule 2— Summary of Care and Maintenance Costs July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 Amounts Claimed Allowable Per Audit Materials Materials Au dit Category & Supplies Salaries Benefits & Supplies Total Adjustment July 1, 2001, through June 30, 2002 Total care and maintenance costs $ 391,933 $ 196,994 $ 74,131 $ 52,159 Total animal census ÷ 24,820 ÷ 34,696 ÷ 34,696 ÷ 34,696 Cost per day $ 15.7910 $ 5.68 $ 2.14 $ 1.50 Care and Maintenance of Dogs and Cats: Cost per day $ 15. 7910 $ 5.68 $ 2.14 $ 1.50 Number of eligible dogs and cats × 2,085 × 270 × 270 × 270 Reimbursable days × 2 × 3 × 3 × 3 Total care and maintenance costs for dogs and cats $ 65,848 $ 4,601 $ 1,733 $ 1,215 $ 7,549 $ (58,299) Care and Maintenance of Other “Eligible” Animals: Cost per day $ — $ 5.68 $ 2.14 $ 1.50 Number of eligible other animals × — × 3 × 3 × 3 Reimbursable days × — × 6 × 6 × 6 Total care and maintenance costs for other animals $ — $ 102 $ 39 $ 27 $ 168 $ 168 Total care and maintenance costs $ 65,848 $ 4,703 $ 1,772 $ 1,242 $ 7,717 $ (58,131) July 1, 2002, through June 30, 2003 Total care and maintenance costs $ 318,287 $ 198,612 $ 98,926 $ 47,609 Total animal census ÷ 31,390 ÷ 36,935 ÷ 36,935 ÷ 36,935 Cost per day $ 10.14 $ 5.38 $ 2.68 $ 1.29 Care and Maintenance of Dogs and Cats: Cost per day $ 10.14 $ 5.38 $ 2.68 $ 1.29 Number of eligible dogs and cats × 1,537 × 288 × 288 × 288 Reimbursable days × 2 × 3 × 3 × 3 Total care and maintenance costs for dogs and cats $ 31,170 $ 4,648 $ 2,316 $ 1,115 $ 8,079 $ (23,091) Care and Maintenance of Other “Eligible” Animals: Cost per day $ 10.14 $ 5.38 $ 2.68 $ 1.29 Number of eligible other animals × — × 3 × 3 × 3 Reimbursable days × — × 6 × 6 × 6 Total care and maintenance costs for other animals $ — $ 97 $ 48 $ 23 $ 168 $ 168 Total care and maintenance costs $ 31,170 $ 4,745 $ 2,364 $ 1,138 $ 8,247 $ (22,923) -7- Placer County Animal Adoption Program Schedule 2 (continued) Amounts Claimed Allowable Per Audit Materials Materials Audit Category & Supplies Salaries Benefits & Supplies Total Adjustment July 1, 2007, through June 30, 2008 Total care and maintenance costs $ 557,462 $ 312,386 $ 176,812 $ 45,533 Total animal census ÷ 43,800 ÷ 54,472 ÷ 54,472 ÷ 54,472 Cost per day $ 12.7274 $ 5.73 $ 3.25 $ 0.84 Care and Maintenance of Dogs and Cats: Cost per day $ 12.7274 $ 5.73 $ 3.25 $ 0.84 Number of eligible dogs and cats × 712 × 458 × 458 × 458 Reimbursable days × 2 × 3 × 3 × 3 Total care and maintenance costs for dogs and cats $ 18,124 $ 7,873 $ 4,466 $ 1,154 $ 13,493 $ (4,631) Care and Maintenance of Other “Eligible” Animals: Cost per day $ 12.7274 $ 5.73 $ 3.25 $ 0.84 Number of eligible other animals × — × 5 × 5 × 5 Reimbursable days × — × 6 × 6 × 6 Total care and maintenance costs for other animals $ — $ 172 $ 98 $ 25 $ 295 $ 295 Total care and maintenance costs $ 18,124 $ 8,045 $ 4,564 $ 1,179 $ 13,788 $ (4,336) July 1, 2008, through June 30, 2009 Total care and maintenance costs $ 685,286 $ 288,534 $ 170,838 $ 52,249 Total animal census ÷ 39,420 ÷ 57,451 ÷ 57,451 ÷ 57,451 Cost per day $ 17.3842 $ 5.02 $ 2.97 $ 0.91 Care and Maintenance of Dogs and Cats: Cost per day $ 17.3842 $ 5.02 $ 2.97 $ 0.91 Number of eligible dogs and cats × 684 × 414 × 414 × 414 Reimbursable days × 2 × 3 × 3 × 3 Total care and maintenance costs for dogs and cats $ 23,782 $ 6,235 $ 3,689 $ 1,130 $ 11,054 $ (12,728) Care and Maintenance of Other “Eligible” Animals: Cost per day $ 17.3842 $ 5.02 $ 2.97 $ 0.91 Number of eligible other animals × — × 4 × 4 × 4 Reimbursable days × — × 6 × 6 × 6 Total care and maintenance costs for other animals $ — $ 120 $ 71 $ 22 $ 213 $ 213 Total care and maintenance costs $ 23,782 $ 6,355 $ 3,760 $ 1,152 $ 11,267 $ (12,515) Summary: July 1, 2001, through June 30, 2003; and July 1, 2007, through June 30, 2009 Care and maintenance Dogs and Cats $ 138,924 $ 23,357 $ 12,204 $ 4,614 $ 40,175 $ (98 ,749) Other “Eligible” Animals — 491 256 97 844 844 Total care and maintenance costs $ 138,924 $ 23,848 $ 12,460 $ 4,711 $ 41,019 $ (97,905) -8- Placer County Animal Adoption Program Findings and Recommendations FINDING 1— The county claimed materials and supplies totaling $11,612 during the audit period for developing policies and procedures. The county Unallowable one-time improperly classified costs under materials and supplies rather than cost of developing salaries and benefits. We found that the entire amount is unallowable. policies and The costs were unallowable because the hours claimed for staff procedures attendance at “Hayden Bill Planning Meetings” were not supported with source documents to validate the time spent or to explain how these meetings related to the policies and procedures needed to implement the reimbursable activities of this mandated program. The following table summarizes the claimed, allowable, and audit adjustment amounts per fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Materials and supplies: 2001-02 $ 11,612 $ — $ (11,612) Total, materials and supplies $ 11,612 $ — $ (11,612) The program’s parameters and guidelines (Section IV.A.1–One Time Activities) identify the following one-time reimbursable activity: Develop policies and procedures to implement the reimbursable activities listed in Section IV (B) of these parameters and guidelines. The parameters and guidelines (Section VI – Supporting Data) state that: For auditing purposes, all costs claimed shall be traceable to source documents (e.g., employee time records, cost allocation reports, invoices, receipts, purchase orders, contracts, worksheets, calendars, declarations, time studies, etc.) that show evidence of the validity of such costs and their relationship to this mandate. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response This finding was related to FY2001-02. While we agree that we were unable to provide source documents to validate time spent at “Hayden Bill Planning Meetings,” this does not necessarily mean that such documentation did not exist. Since the State Controller’s Office audit of these costs occurred nearly 10 years after the related expenses were incurred, it is not unreasonable to assume that any supporting records would have been destroyed during the normal course of business prior to the start of Placer County’s audit in November 2012. -9- Placer County Animal Adoption Program SCO’s Comments The finding and recommendation remain unchanged. In its response to the draft audit report, the county states that “it is not unreasonable to assume that any supporting records would have been destroyed during the normal course of business prior to the start of Placer County’s audit in November 2012.” While we understand that most accounting and other business records are subject to the county’s internal retention policies, the parameters and guidelines for the mandated program require that documentation supporting mandated costs be retained. Parameters and guidelines section VI (Supporting Data) states: All documentation in support of claimed costs shall be made available to the State Controller’s Office, as may be requested. Pursuant to Government Code section 17558.5, these documents must be kept on file by the agency submitting the claim for a period of no less than two years after the later of (1) the end of the calendar year in which the reimbursement claim is filed or last amended, or (2) if no funds are appropriated for the fiscal year for which the claim is made, the date of initial payment of the claim. The audit finding relates to costs claimed for FY 2001-02. No funds have been appropriated by the State Legislature for the payment of FY 2001- 02 claims filed under the Animal Adoption Program. Therefore, the claims were still subject to audit. FINDING 2— The county claimed materials and supplies totaling $13,416 during the audit period for developing or procuring computer software for the Unallowable one-time maintenance of animal records. The county improperly claimed salaries cost of developing or and benefits costs under materials and supplies. We found that the entire procuring computer amount is unallowable because the county did not provide source software for the documents to validate the time spent developing or procuring software. maintenance of In addition, the county’s claim stated that the costs were incurred to animal records perform an update of the county’s existing computer system, which is not a reimbursable activity under the mandated program. The following table summarizes the claimed, allowable, and audit adjustment amounts per fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Materials and supplies: 2001-02 $ 6,508 $ — $ (6,508) 2002-03 6,908 — (6,908) Total, materials and supplies $ 13,416 $ — $ (13,416) -10- Placer County Animal Adoption Program The parameters and guidelines (Section IV.A.3–One Time Activities) identify the following one-time reimbursable activity: Develop or procure computer software for the maintenance of records on animals specified in Section IV (B) (8) of these parameters and guidelines to the extent that these costs were not claimed as indirect costs under Section V (B) of these parameters and guidelines. The parameters and guidelines (Section VI – Supporting Data) state that: For auditing purposes, all costs claimed shall be traceable to source documents (e.g., employee time records, cost allocation reports, invoices, receipts, purchase orders, contracts, worksheets, calendars, declarations, time studies, etc.) that show evidence of the validity of such costs and their relationship to this mandate. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response This finding was related to FY2001-02 and FY2002-03. While we agree that we were unable to provide source documents to validate time spent developing or procuring software, this does not necessarily mean that such documentation did not exist. Since the State Controllers’ Office audit of these costs occurred nine to ten years after the related expenses were incurred, it is not unreasonable to assume that any supporting records would have been destroyed during the normal course of business prior to the state of Placer County’s audit in November 2012. SCO’s Comments The finding and recommendation remain unchanged. The county’s response to Finding 2 is identical to the response that it submitted for Finding 1. Therefore, our comments are the also the same as they relate to retaining source documentation, except that the costs claimed related to both FY 2001-02 and FY 2002-03. In addition to the costs being unsupported, the costs also were ineligible for reimbursement. In the audit report, we noted that “the county’s claim stated that the costs were incurred to perform an update of the county’s existing computer system, which is not a reimbursable activity under the mandated program.” Costs are reimbursable to “develop or procure computer software” rather than provide upgrades for existing software. -11- Placer County Animal Adoption Program FINDING 3— The county claimed salaries and benefits, materials and supplies, and fixed assets totaling $199,137 during the audit period under the Unallowable Remodeling/Renovating Existing Facilities cost component. The county remodeling/renovating improperly claimed salaries and benefits costs under materials and existing facilities costs supplies and fixed assets. We found that the entire amount is unallowable because the county was unable to properly support, through a Board Agenda or other similar supporting documentation, that improvements made to the Auburn animal shelter during FY 2001-02 and FY 2002-03 were the direct result of the increased holding period requirements of this mandated program. The following tables summarize the claimed costs, the pro rata percentages claimed and allowable, allowable costs, and the audit adjustment amounts by fiscal year: Percentage Amount Supported Percentage Amount Audit Fiscal Year Claimed Claimed Costs Allowable Allowable Adjustment 2001-02 Fixed Assets 100.0% $ 5 2,057 $ 52,057 0% $ - $ (52,057) Total, 2001-02 52,057 - (52,057) 2002-03 Salaries and Benefits 51.8% 5 16 996 0% - (516) Materials and Supplies 51.8% 1 46,564 282,942 0% - (146,564) Total, 2002-03 1 47,080 283,938 - (147,080) Grand Total $ 199,137 $ - $( 199,137) The parameters and guidelines (Section IV.B.2–Remodeling/Renovating Existing Facilities) identify the following reimbursable activities: Beginning January 1, 1999, for remodeling/renovating existing facilities to provide appropriate or adequate shelter necessary to comply with the mandated activities during the increase holding period for impounded stray or abandoned dogs, cats, and other animals specified in Statutes of 1998, Chapter 752 that die during the increase holding period or are ultimately euthanized. Eligible claimants are entitled to reimbursement for the proportionate share of actual costs required to plan, design, remodel, and/or renovate existing facilities in a given fiscal year based on the pro rata representation of impounded stray or abandoned dogs, cats, and other animals specified in Statutes of 1998, Chapter 752 that are held during the increased holding period specified in Sections IV (B) (3) and (4) of these parameters and guidelines and die during the increased holding period or are ultimately euthanized, to the total population of animals housed in the facility. The population of animals housed in the facilities includes those animals that are excluded from reimbursement, as specified in Sections IV (B)(3) and (4) of these parameters and guidelines during the entire holding period required by Food and Agriculture Code sections 31108, 31752, and 31753. -12- Placer County Animal Adoption Program Supporting Documentation Submitted with the Initial and Subsequent Reimbursement Claims Remodeling/renovating existing facilities is reimbursable only to the extent that an eligible claimant submits, with the initial and/or subsequent reimbursement claim, documentation reflecting the following: A determination by the governing board that remodeling/ renovating existing facilities is necessary because the existing facilities do not reasonably accommodate impounded stray or abandoned dogs, cats, and other specified animals that are ultimately euthanized for the increased holding period required by Statutes of 1998, Chapter 752. The determination by the governing board shall include all of the following findings:  The average daily census of impounded stray or abandoned dogs, cats, and other animals specified in Statutes of 1998, Chapter 752 that were impounded in 1998. For purposes of claiming reimbursement under section IV.B.2, average Daily Census is defined as the average number of impounded stay or abandoned dogs, cats, and other animals specified in Statutes of 1998, Chapter 752 housed on any given day, in a 365-day period;  The average daily census of impounded stray or abandoned dogs, cats, and other animals specified in Statutes of 1998, Chapter 752 that were impounded in a given year under the holding periods required by Food and Agriculture Code sections 31108, 31752, and 31753, as added or amended by Statutes of 1998, Chapter 752;  Existing facilities are not appropriately configured and/or equipped to comply with the increased holding period required by Statutes of 1998, chapter 752; and  Contracting with existing private or public shelters in the area to house the increase of impounded stray or abandoned dogs, cats or other animas specified in Statutes 1998, chapter 752 is not feasible or is more expensive than remodeling/renovating existing facilities to comply with the increased holding period required by Statutes 1998, chapter 752. Documentation requirements may be satisfied in whole or in part by staff agenda items, staff reports, minutes of governing board meetings, transcripts of governing board meeting, certification by the governing board describing the finding and determination and/or a resolution adopted by the governing board pursuant to Food and Agriculture Code section 31755, as added by Statutes of 1999, Chapter 81 (Assembly Bill 1482). The parameters and guidelines (Section VI – Supporting Data) state that: For auditing purposes, all costs claimed shall be traceable to source documents (e.g., employee time records, cost allocation reports, invoices, receipts, purchase orders, contracts, worksheets, calendars, declarations, time studies, etc.) that show evidence of the validity of such costs and their relationship to this mandate. -13- Placer County Animal Adoption Program Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response This finding was related to FY2001-02 and FY2002-03. This finding indicates that the entire amount is unallowable because the county was unable to properly support that improvements made to the Auburn animal shelter during FY2001-02 and FY 2002-03 were the direct result of the increased holding period requirements of this mandated program. A November 6, 2001 memo was located and provided to State Controller’s auditors that indicated that “modifications are needed at the current shelter facility in order to maintain adequate care for the animals being sheltered.” We feel that since these improvements were approved during the infancy of the mandated Animal Adoption Program, a correlation exists between these costs and mandated claim requirements and that related expenditures should be considered allowable. SCO’s Comments The finding and recommendation remain unchanged. In its response, the county states that a county memo stating “modifications are needed at the current shelter facility in order to maintain adequate care for the animals being sheltered” should be sufficient evidence that the county complied with the documentation requirements contained in the parameters and guidelines for this cost component. We disagree. The supporting documentation requirements contained in the parameters and guidelines for claiming remodeling and renovation costs are very specific. Not only is a determination required by the governing board stating that remodeling or renovation is required in order to comply with the increased holding period requirements of the Hayden Bill (Statutes of 1998, Chapter 752), but a numerical analysis is also required. Such analysis should support the average daily census of dogs and cats housed in the county’s animal shelter during 1998 and the number of “other animals” housed in the county’s shelter during any given year. A statement is also required noting that existing facilities are not configured or equipped to comply with the increased holding period requirements. None of this documentation was provided by the county. The county also notes that “since these improvements were approved during the infancy of the mandated Animal Adoption Program, a correlation exists between these costs and mandated claim requirements.” The associated costs were included in the county’s claims for FY 2001-02 and FY 2002-03. Actual cost claims for both years were due the SCO on January 15 following the end of both fiscal years. The parameters and guidelines for the Animal Adoption Program were originally adopted on February 28, 2002, based on a test claim filed by -14- Placer County Animal Adoption Program Los Angeles County on December 22, 1998. Therefore, there was adequate notice of the requirements for this mandated program before the county filed its FY 2001-02 claim on January 10, 2003, and filed its FY 2002-03 claim on January 15, 2004. FINDING 4— The county claimed direct costs totaling $ 138,924 during the audit period for the care and maintenance of dogs and cats. We found that Overstated care and $41,019 is allowable and $97,905 is unallowable. The costs are maintenance costs unallowable because the county overstated its materials and supplies costs, understated animal census data, overstated the cost per animal per day, overstated the number of eligible dogs and cats, understated the number of reimbursable days, claimed reimbursement for employee classifications that did not perform care and maintenance activities, and misstated the extent of involvement for the employee classifications that did perform the reimbursable activities. The following table summarizes the claimed, allowable, and audit adjustment amounts for care and maintenance costs for the audit period separately for dogs and cats and other animals by fiscal year. Refer to Schedule 2 (Summary of Care and Maintenance Costs) for further details. Amount Claimed Amount Allowable Fiscal Other Total Other Total Audit Year Dogs/Cats Animals Claimed Dogs/Cats Animals Allowable Adjustment 2001-02 $ 65,848 $ - $ 65,848 $ 7 ,549 $ 168 $ 7,717 $ (58,131) 2002-03 31,170 - 3 1,170 8,079 1 68 8,247 ( 22,923) 2007-08 18,124 - 1 8,124 1 3,493 2 95 13,788 (4,336) 2008-09 23,782 - 2 3,782 1 1,054 2 13 11,267 ( 12,515) Total $ 138,924 - $ 138,924 $ 40,175 $ 844 $ 4 1,019 $ (97,905) The parameters and guidelines (Section IV.B.3 – Care and Maintenance for Impounded Stray or Abandoned Dogs and Cats that Die During the Increased Holding Period or Are Ultimately Euthanized) identify the following reimbursable activities: Beginning July 1, 1999 – Providing care and maintenance during the increased holding period for impounded stray or abandoned dogs and cats that die during the increased holding period or are ultimately euthanized. The increased holding period shall be measured by calculating the difference between three days from the day of capture and four or six business days from the day after impoundment. The parameters and guidelines (Section IV.B.4 – Care and Maintenance for Impounded Stray or Abandoned Animals Specified in Food and Agriculture Code Section 31753 that Die During the Increased Holding Period or Are Ultimately Euthanized) also state: Beginning January 1, 1999 – For providing care and maintenance for. . . stray or abandoned rabbits, guinea pigs, hamsters, pot-bellied pigs, birds, lizards, snakes, turtles, and tortoises legally allowed as personal property that die during the increased holding period or are ultimately euthanized. -15- Placer County Animal Adoption Program Eligible claimants are not entitled to reimbursement for the care and maintenance of the following population of dogs and cats and other animals:  Stray or abandoned dogs, cats, and other animals that are irremediably suffering from a serious illness or severe injury,  Newborn stray or abandoned dogs, cats, and other animals that need maternal care and have been impounded without their mothers,  Stray or abandoned dogs, cats and other animals too severely injured to move or when a veterinarian is not available and it would be more humane to dispose of the animal,  Owner-relinquished dogs, cats, and other animals, and  Stray or abandoned dogs, cats, and other animals that are ultimately redeemed, adopted, or released to a nonprofit animal rescue or adoption organization. The parameters and guidelines state that claimants may elect to use either the Actual Cost Method or the Time Study Method to claim costs for the care and maintenance of impounded stray or abandoned dogs, cats, and other animals that die during the increased holding period or are ultimately euthanized. The county elected to use the actual cost method to claim these costs. The parameters and guidelines specify the following steps for claiming costs using the Actual Cost Method: Actual Cost Method – Under the actual cost method, actual reimbursable care and maintenance costs per animal per day are computed for an annual claim period, as follows: a) Determine the total annual cost of care and maintenance for all dogs, cats and other animals impounded at a facility. Total cost of care and maintenance includes labor, materials, supplies, indirect costs, and contract services. b) Determine the average daily census of all dogs, cats and other animals. For purposes of claiming reimbursement under IV.B.3, average daily census is defined as the average number of all dogs and cats at a facility housed on any given day, in 365-day period and the average number of all other animals at a facility housed on any given day, in a 365-day period. c) Multiply the average daily census of dogs, cats and other animals by 365 = the yearly census of dogs and cats and the yearly census of other animals. d) Divide the total annual cost of care by the yearly census of dogs and cats to calculate the cost per dog and cat per day and by the yearly census of other animals to calculate the cost per other animal per day. e) Multiply the cost per animal per day by the number of impounded stay or abandoned dogs, cats and other animals that die during the increased holding period or are ultimately euthanized by each reimbursable day. -16- Placer County Animal Adoption Program Reimbursable days for cats and dogs is the difference between three days from the day of capture, and four or six business days from the day after impoundment. The reimbursable days for other animals are four or six days from the day after impoundment. Care and Maintenance Formula The county elected to use the Actual Cost method to claim costs. The parameters and guidelines provide for a formula-driven methodology to determine allowable mandated costs for the care and maintenance of dogs and cats and other animals. The use of this method requires claimants to calculate the total amount of eligible costs incurred to provide care and maintenance for the animals housed in its shelter(s). This total is divided by the annual census of animals housed in the shelter(s) to determine a cost per animal per day. The next element of the formula is adding the number of stray and abandoned animals that died of natural causes during the holding period to the number of animals that were euthanized after the required holding period. This total number of animals is then multiplied by the cost per animal per day. The resulting amount represents allowable costs for providing care and maintenance. Our calculation took into consideration that the required holding period does not include Saturday as a business day. This is consistent with an Appellate Court decision in Purifoy v. Howell dated March 26, 2010. The mandate reimburses claimants for costs associated with animals that were not relinquished, redeemed, adopted, or released to nonprofit agency—and animals for which the local agency was unable to assess fees to recover such costs. Costs incurred by the county for care and maintenance consisted of salaries and benefits, materials and supplies, and related indirect costs (related indirect costs are addressed separately in Finding 11). The county used an inconsistent methodology to claim costs for care and maintenance during the audit period. To calculate the annual cost of care and maintenance, the county first totaled salaries and benefits for various employee classifications. However, the composition of shelter staff selected varied during the audit period. The following table details the employee classifications that the county included in the care and maintenance cost component by fiscal year. Fiscal Year Employee Classification 2001-02 2002-03 2007-08 2008-09 Animal Control Officer 1 3 7 7 Animal Control Officer II 3 - - - Animal Control Officer Supervisor - - 2 2 Animal Care Supervisor - - 1 1 Kennel Attendant 7 2 6 6 Administrative Clerk - 2 - - Senior Administrative Clerk - 1 - - Totals 11 8 16 16 -17- Placer County Animal Adoption Program This methodology assumes that all employee classifications perform the reimbursable activities to the same extent, which is not a reasonable assumption. For example, the Animal Control Officer Supervisor did not perform the reimbursable activities at the same level as Kennel Attendants. In addition, the county subtracted 60% of salaries and benefits costs from the calculation for field services as well as salaries and benefits claimed within other cost components. The calculation to deduct 60% of salaries and benefits costs for field services was not supported. The county added in costs for various line item expenditures from its Animal Shelter’s expenditures ledger, although it did not provide support for the amounts selected. The county then divided total costs by its calculated “yearly census of dogs and cats” to arrive at a cost per animal, per day. The county multiplied the cost per animal per day by a number that was intended to represent the number of impounded dogs and cats that died during the holding period or were ultimately euthanized. The county multiplied this amount by two reimbursable days. For each fiscal year of the audit period, the county claimed its calculated annual cost of care and maintenance under materials and supplies. This is an incorrect application of the Actual Cost formula. Schedule 2 (Summary of Care and Maintenance Costs) summarizes the adjustments that we made to claimed costs for animal care and maintenance. These adjustments consisted of changes to total annual costs incurred by the county for animal care and maintenance (salaries, benefits, and services and supplies) and animal census data used to determine the cost per animal per day. The table also shows the changes to the number of eligible animals and the number of reimbursable days that we used to determine reimbursable costs for each year of the audit period. Salaries and Benefits During the course of the audit, we requested that the county provide the actual salary amounts paid to those employee classifications directly involved with the care and maintenance function. We also requested the duty statements for such classifications to assist in determining the percentage of the daily workload that was devoted to caring for and maintaining animals. Animal shelter management provided a list of personnel who participate in the care and maintenance functions. Management also provided information relating to the level of involvement of each classification according to the employee’s job duty description and staffing requirements during the audit period. -18- Placer County Animal Adoption Program The following table details the percentage of animal care and maintenance per employee classification for both shelters as determined by the county’s shelter management. Auburn Shelter Tahoe Vista Shelter FY 2001-02 Employee Classification Administrative Clerk 0% 50% Kennel Attendant 97% n/a Animal Control Officer 3% 50% 100% 100% FY 2002-03 Employee Classification Administrative Clerk 0% 50% Kennel Attendant 97% n/a Animal Control Officer 3% 25% Animal Control Officer Supervisor 0% 25% 100% 100% FY 2007-08 & FY 2008-09 Employee Classification Kennel Attendant 98% 50% Animal Care Supervisor 1% 0.0% Animal Control Officer 1% 50% Animal Control Officer Supervisor 0% 0% 100% 100% Administrative Clerk Based on discussions with shelter management, the Administrative Clerk classification is generally not involved in the care and maintenance of animals in either of the county’s animal shelters. Management explained that it is not in the Administrative Clerk’s job duty description to perform care and maintenance activities. However, the only exception would be in FY 2001-02 and FY 2002-03, when an Administrative Clerk spent approximately 50% of her time performing care and maintenance duties due to staffing shortages at the Tahoe Vista shelter. Kennel Attendant The Kennel Attendant’s main duty is to provide care and maintenance of the animals. However, the percentage of time spent by this classification to provide care and maintenance varied by shelter depending on shelter staffing requirements and involvement of other employee classifications in the care and maintenance of animals. Shelter management provided the following assessment of the percentage of time spent by this employee classification performing care and maintenance activities:  For FY 2001-02 and FY 2002-03, the Kennel Attendant classification performed 97% of the care and maintenance at the Auburn shelter and 0% of the care and maintenance at the Tahoe Vista shelter. The Tahoe shelter was understaffed during these two fiscal years and the Kennel Attendant position was vacant. -19- Placer County Animal Adoption Program  For FY 2007-08 and FY 2008-09, the Kennel Attendant classification performed 98% of the care and maintenance at the Auburn shelter and 50% of the care and maintenance at the Tahoe Vista shelter. Shelter management stated that Kennel Attendant participation in care and maintenance duties at the Tahoe Vista shelter is significantly less than at the Auburn shelter, as the Tahoe Vista facility is much smaller. Based on our observations and inquiries, we concurred with the county’s assessment. Animal Control Officer Animal Control Officers (ACOs), in general, are not reimbursable under this cost component because their main duty is to provide animal control services in the field, not care and maintenance of animals in the shelter. However, shelter management indicated that due to the Tahoe Vista shelter’s small size, ACOs performed a proportionate share of the care and maintenance activities. For the Auburn shelter, ACOs performed a small portion of the care and maintenance activities for the purpose of providing coverage for the small percentage of duties not covered by the Kennel Attendants. We determined that this assessment was reasonable based on our observation and analysis of shelter staffing schedules. In summary, the ACOs were involved to a certain extent in the care and maintenance of the animals during the audit period. Shelter management provided the following assessment of the percentage of time spent by this employee classification performing care and maintenance activities:  For FY 2001-02, the ACOs performed 3% of the care and maintenance at the Auburn shelter and 50% of the care and maintenance at the Tahoe Vista shelter.  For FY 2002-03, the ACOs performed 3% of the care and maintenance at the Auburn shelter and 25% of the care and maintenance at the Tahoe Vista shelter.  For FY 2007-08 and FY 2008-09, the ACOs performed 1% of the care and maintenance at the Auburn shelter and 50% of the care and maintenance at the Tahoe Vista shelter. Animal Control Officer Supervisor The Animal Control Officer Supervisor’s main duty is to perform supervisory duties, not care and maintenance of animals. However, as indicated in discussions with shelter management, the Animal Control Officer Supervisor classification performed 25% of the care and maintenance activities at the Tahoe Vista Shelter for FY 2002-03 only. During this fiscal year, this classification shared the care and maintenance duties with an Animal Control Officer. We determined that this percentage was reasonable based on our observation and analysis of shelter staffing schedules. -20- Placer County Animal Adoption Program Animal Care Supervisor The county claimed the Animal Care Supervisor classification at the Auburn Shelter for FY 2007-08 and FY 2008-09. As indicated in discussions with shelter management, the Animal Care Supervisor performed 1% of the care and maintenance activities. While the ACOs performed 3% of the reimbursable activities during the first two years of the audit period, this load was shared between the two classifications during the last two years of the audit period. We determined that this assessment was reasonable based on our observation and analysis of shelter staffing schedules. Once we determined the employee classifications involved in the care and maintenance of animals and the extent of their involvement, we calculated allowable costs for labor, which includes the applicable percentages of actual salaries and benefits paid. The following table summarizes the salaries and benefits amounts that we used in the care and maintenance formula by fiscal year: Amount Amount Fiscal Year Claimed Supported Difference Salaries and benefits: 2001-02 $ - $ 271,125 $ 271,125 2002-03 - 297,538 2 97,538 2007-08 - 489,198 4 89,198 2008-09 - 459,372 4 59,372 Total, salaries and benefits $ - $ 1 ,517,233 $ 1,517,233 Materials and Supplies The county claimed materials and supplies costs totaling $138,924 during the audit period. However, the costs claimed for materials and supplies actually consisted of estimated salaries and benefits and materials and supplies that were co-mingled. In order to determine allowable costs, we worked in conjunction with county management to identify materials and supplies costs eligible for reimbursement for the Care and Maintenance cost component. The county provided expenditure reports and line item descriptions of the costs. We identified materials and supplies costs related to the care and maintenance of all animals in the following accounts:  Account 2068 - Food  Account 2085 - Special Department Expense  Account 2840 - Household Expense  Account 2522 - Other Supplies, and  Account 2555 - Professional Purchased Services We excluded certain expenditures posted to these accounts that were not used for care and maintenance activities. -21- Placer County Animal Adoption Program The following table summarizes the gross amount of materials and supplies costs that we used in the care and maintenance formula by fiscal year: Expenditure Category Fiscal Household Special Dept Other Professional Year Food Expense Expense Supplies Services Total 2001-02 $ 24,920 $ 19,585 $ 7 ,437 $ 217 $ - $ 52,159 2002-03 21,275 2 0,071 5,686 34 5 43 47,609 2007-08 17,826 2 5,415 2,292 - - 45,533 2008-09 24,402 2 3,454 4,393 - - 52,249 Totals $ 88,423 $ 88,525 $ 19,808 $ 251 $ 543 $ 197,550 Animal Census Data The yearly census refers to the total number of days that all animals were housed in the county’s shelters. The actual cost formula requires the eligible cost of care to be divided by the yearly census to arrive at an average cost per animal per day. The cost per animal per day is then multiplied by the number of eligible animals and the number of increased days. For the early years of the audit period, we were unable to verify the yearly census numbers or the numbers of eligible animals that the county used in its claims. The county provided the actual census information from its animal database system for the last two years of the audit period. Using information from the last two years of the audit period, we determined the correct animal census to apply to the actual cost formula for all years of the audit period. We consistently applied the exclusions per the parameters and guidelines to the raw animal data provided by the county. In order to determine the correct animal census for each fiscal year of the audit period, we requested animal data from the county. For FY 2001-02 and FY 2002-03, the county was unable to provide animal data because it used the Petwhere software system during those years and the system’s database records are not retrievable. For FY 2007-08 and FY 2008-09, information was available from the county’s Chameleon software system. In the absence of animal data for FY 2001-02 and FY 2002-03, we derived the animal census by computing the proportionate percentage of allowable care and maintenance costs incurred during those years to an average of allowable care and maintenance costs incurred during FY 2007-08 and FY 2008-09. We then applied the applicable percentages to determine the animal census for FY 2001-02 and FY 2002-03. Management was able to verify the validity of the raw data for FY 2007-08 and 2008-09 and correct any data entry errors. The staff corrected animal data showing negative days impounded, zeroes shown for the number of animals impounded, and other obvious inconsistencies in the raw data. -22- Placer County Animal Adoption Program The following table summarizes the claimed and allowable animal census information by fiscal year: Animal Census Fiscal Census Census Year Claimed Allowable Difference 2001-02 24,820 3 4,696 9,876 2002-03 31,390 3 6,935 5,545 2007-08 43,800 5 4,472 1 0,672 2008-09 39,420 5 7,451 1 8,031 Total 139,430 183,554 4 4,124 Eligible Dogs, Cats, and “Other” Animals The county did not claim costs for “other animals.” The county overstated the number of eligible dogs and cats for each year during the audit period. We determined the correct number of eligible animals to apply to the actual cost formula for all years of the audit period. We consistently applied the exclusions per the parameters and guidelines to the raw animal data provided by the county. In order to determine the correct number of eligible animals for each fiscal year of the audit period, we requested animal data from the county. For FY 2001-02 and FY 2002-03, the county was unable to provide animal data because it used the Petwhere software system during those years and the system’s database records are not retrievable. For FY 2007-08 and FY 2008-09, information was available from the county’s Chameleon software system. In the absence of animal data for FY 2001- 02 and FY 2002-03, we derived the number of eligible animals by computing the proportionate percentage of allowable care and maintenance costs incurred during those years to an average of allowable care and maintenance costs incurred during FY 2007-08 and FY 2008- 09. We then applied the applicable percentages to determine number of eligible animals for FY 2001-02 and FY 2002-03. To verify the eligible animal population, we ran a query of all animals that fit the following reimbursement criteria: Dogs and Cats:  Died (of natural causes) during the increased holding period: died days 4, 5, and 6  Ultimately euthanized: euthanized on day 7 of the holding period and beyond Eligible “Other” Animals:  Died (of natural causes) during the increased holding period: died day 2, 3, 4, 5 and 6 (animals that died on day 1 were not included because they were most likely irremediably suffering from a serious illness or injury or were too severely injured to move and it may -23- Placer County Animal Adoption Program have been more humane to dispose of the animal).  Ultimately euthanized: euthanized on day 7 of the holding period and beyond. The following table summarizes the claimed and allowable eligible animals used in the care and maintenance formula for the audit period by fiscal year: Eligible Animals Claimed Eligible Animals Allowable Fiscal Other Total Other Total Year Dogs/Cats Animals Claimed Dogs/Cats Animals Allowable 2001-02 2 ,085 - 2,085 270 3 2 73 2002-03 1 ,537 - 1,537 288 3 2 91 2007-08 712 - 712 458 5 4 63 2008-09 684 - 684 414 4 4 18 Total 5 ,018 - 5,018 1,430 15 1,445 Reimbursable Days The county claimed two increased holding days for dogs and cats and did not claim costs for other animals. An Appellate Court decision in Purifoy v. Howell dated March 26, 2010, determined that Saturday is not considered a business day for the purposes of this mandated program. Therefore, for the audit period, we determined that the increased holding period for dogs and cats is three days and the increased holding period for other animals is six days. Assembly Bill 222 Assembly Bill 222 (Chapter 97, Statutes of 2011) was enacted on July 25, 2011, and took effect January 1, 2012. This bill states that a “business day” includes any day that a public or private animal shelter is open to the public for at least four hours, excluding state holidays. This bill would be applicable beginning January 1, 2012, and does not affect the audit period covered in this audit. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. -24- Placer County Animal Adoption Program FINDING 5— The county claimed salaries and benefits totaling $145,966 during the audit period under the Increased Holding Period cost component. We Misstated increased found that $113,042 is allowable and the net amount of $32,924 is holding period costs unallowable (understated by $16,691 and overstated by $49,615). The county understated salary and benefit costs for FY 2001-02. Costs were understated because the county understated the number of hours that its two animal shelters were open to the public to make animals available for owner redemption during that year. The county overstated salary and benefit costs for FY 2002-03, FY 2007-08, and FY 2008-09. Costs were overstated because the county overstated the total number of hours the two shelters were open to the public to make animals available for owner redemption, overstated the number of Kennel Attendants that performed the reimbursable activities for all fiscal years of the audit period, overstated the number of Animal Control Officers for FY 2007- 08 and FY 2008-09 for the Auburn Shelter, and claimed the wrong employee classification performing the reimbursable activities at the Tahoe Vista Shelter. Additionally, the county understated the number of weeks in a year for FY 2002-03, FY 2007-08, and FY 2008-09 in it’s calculation of allowable hours for each employee classification. The following table summarizes the claimed, allowable, and audit adjustment amounts for salaries and benefits costs for the audit period by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and Benefits: 2001-02 $ 4,772 $ 21,463 $ 16,691 2002-03 38,137 2 6,024 ( 12,113) 2007-08 47,581 3 2,821 ( 14,760) 2008-09 55,476 3 2,734 ( 22,742) Total, salaries and benefits $1 45,966 $ 113,042 $ (32,924) Hours of Operation Auburn Shelter For FY 2001-02 and FY 2002-03, we found that the county’s animal shelter was open to the public on Saturdays from 8:00 a.m. to 5:00 p.m., for a total of nine hours per allowable employee. For FY 2007-08 and FY 2008-09, we found that the shelter was open to the public on Saturdays from 9:00 a.m. to 5:00 p.m., and closed for lunch between 1:00 p.m. to 2:00 p.m. In addition, the kennel portion of the shelter was closed from 9:00 a.m. to 10:30 a.m. Therefore, the animal shelter was open, making the animals available for owner redemption or adoption during those years for a total of 5.5 hours per allowable employee. The shelter met the requirements of the mandate by making animals available for owner redemption or adoption on the weekend day. -25- Placer County Animal Adoption Program The shelter’s hours of operation are essential in determining the allowable hours to comply with the Increased Holding Period cost component. For FY 2001-02, the county incorrectly claimed just one hour per employee because the county claimed only one hour per week on a weeknight. For FY 2002-03, the county incorrectly claimed costs incurred for seven hours of shelter operation. For FY 2007-08 and FY 2008-09, the county correctly claimed costs incurred for 5.5 hours of shelter operation. Tahoe Vista Shelter For FY 2001-02 and FY 2002-03, we found that the county’s animal shelter was open to the public on Saturdays from 10:00 a.m. to 5:00 p.m., and closed for lunch from 12:00 p.m. to 3:00 p.m. for a total of four hours per allowable employee. For FY 2007-08 and FY 2008-09, we found that the shelter was open to the public on Saturdays from 9:00 a.m. to 5:00 p.m., and closed for lunch from 12:00 p.m. to 1:00 p.m., for a total of seven hours per allowable employee. The shelter met the requirements of the mandate by making animals available for owner redemption or adoption on the weekend day. Knowing the shelter’s hours of operation is essential in determining the allowable hours spent to comply with the Increased Holding Period cost component. The county did not claim any costs for this shelter to be open on Saturdays during FY 2001-02. For FY 2002-03, the county correctly claimed costs incurred for four hours of shelter operation. For FY 2007-08 and FY 2008-09, the county incorrectly claimed costs for four hours of shelter operation instead of the allowable seven hours. Staffing Requirements We discussed with county staff the staffing requirements to make animals available for owner redemption on Saturdays, when the shelters were open in comparison to Sundays, when the shelters were closed. We also obtained staffing schedules for the Auburn and Tahoe Vista shelters in order to determine the number of employees on duty to make animals available for owner redemption. The first schedule was for the kennel staff and the second schedule was for the administrative staff. Auburn Shelter For FY 2001-02 through FY 2002-03 and FY 2007-08 through FY 2008- 09, we found that the costs incurred for one Kennel Attendant and one Administrative Clerk are allowable. Based on the kennel schedules provided, the number of Kennel Attendant positions was increased by one when the shelter was open compared to when the shelter was closed. Therefore, one additional Kennel Attendant was needed to make the animals available for owner redemption during the audit period. Additionally, based on the administrative schedule provided, no Administrative Clerk positions were necessary when the shelter was closed. However, when the shelter was open, one Administrative Clerk position was staffed. Therefore, one Administrative Clerk was also needed during the audit period to make the animals available for owner redemption. -26- Placer County Animal Adoption Program The following table shows the claimed and the allowable employee classifications determined to be the increased positions necessary to comply with making the animals available for owner redemption. In addition, the table summarizes the total hours claimed and allowable: Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Auburn Shelter Claimed Kennel Attendants 2 3 2 2 Administrative Clerks 1 - 1 1 Senior Administrative Clerks 1 1 - - Animal Control Officers - - 1 1 Total employee positions 4 4 4 4 × Hours claimed per position 1 7 5.5 5.5 × Weeks per year 52 50 50 50 Total hours claimed 208 1,400 1,100 1,100 3,808 Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Auburn Shelter Allowable Kennel Attendants 1 1 1 1 Administrative Clerks 1 1 1 1 Senior Administrative Clerks - - - - Animal Control Officers - - - - Total employee positions 2 2 2 2 × Hours allowable per position 9 9 5.5 5.5 × Weeks per year 52 52 52 52 Total hours allowable 936 9 36 5 72 5 72 3,016 Tahoe Vista Shelter For FY 2001-02 through FY 2002-03 and FY 2007-08 through FY 2008- 09, we found that the costs incurred for one Kennel Attendant are allowable. Because of the shelter’s small size, there was just one staffing schedule, as opposed to two for the Auburn shelter. The schedules provided showed that there was just one Animal Control Officer on staff when the shelter was closed. When the shelter was open to the public on Saturdays, there was one Kennel Attendant and one Animal Control Officer on staff. Therefore, one Kennel Attendant was needed to make the animals available for owner redemption during the audit period. The following table shows the claimed and the allowable employee classifications determined to be the increased positions necessary to comply with making the animals available for owner redemption. In addition, the table summarizes the total hours claimed and allowable: -27- Placer County Animal Adoption Program Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Tahoe Vista Shelter Claimed Supv. Animal Control Officer - 1 - - Animal Control Officer II - - 1 1 Total Employee Positions - 1 1 1 × Hours Claimed per Position - 4 4 4 × Weeks per Year - 50 50 50 Total Hours Claimed - 2 00 2 00 2 00 600 Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Tahoe Vista Shelter Allowable Supv. Animal Control Officer - - - - Animal Control Officer II - - - - Kennel Attendants 1 1 1 1 Total Employee Positions 1 1 1 1 × Hours Allowable per Position 4 4 7 7 × Weeks per Year 52 52 52 52 Total Hours Allowable 208 2 08 3 64 3 64 1,144 The parameters and guidelines (Section IV.B.5–Using the Holding Period of Four Business Days After the Day of Impoundment) state that the following activities are reimbursable beginning January 1, 1999, for 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 2. For those local agencies with fewer than three full time employees or that are not open during all regular weekday 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. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. -28- Placer County Animal Adoption Program FINDING 6— The county claimed direct costs totaling $20,080 during the audit period for the Feral Cats cost component. We found that $19,587 is allowable Misclassified and and $493 is unallowable. The costs are unallowable because the county allowable feral cat misclassified fixed asset costs included in its claims and did not claim costs any salary and benefits costs incurred to perform feral cat testing during the audit period. In its claim for FY 2001-02, the county claimed $20,080 for the purchase of cat cages under this cost component. We found that these costs are unallowable as claimed because fixed assets are not a reimbursable item under this cost component. We reclassified these costs and analyzed them in the Procuring Equipment cost component (See Finding 10). The county did not originally claim any salaries and benefits costs under the Feral Cat cost component. However, the county conducted a time study during the course of the audit to determine the time required to verify whether a cat is feral or tame by using a standardized protocol. Based on the results of the county’s time study, we found that salary and benefit costs totaling $19,587 are allowable. The following tables summarize the claimed, allowable, and audit adjustment amounts for the Feral Cat cost component for the audit period by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and benefits: 2001-02 $ - $ 2 ,223 $ 2,223 2002-03 - 3,122 3 ,122 2007-08 - 7,495 7 ,495 2008-09 - 6,747 6 ,747 Total, salaries and benefits $ - $ 19,587 $ 19,587 Fixed assets: 2001-02 $ 20,080 $ - $ (20,080) 2002-03 - - - 2007-08 - - - 2008-09 - - - Total, fixed assests $ 20,080 $ - $ (20,080) Total direct costs: 2001-02 $ 20,080 $ 2 ,223 $ (17,857) 2002-03 - 3,122 3 ,122 2007-08 - 7,495 7 ,495 2008-09 - 6,747 6 ,747 Total $ 20,080 $ 19,587 $ (493) Time Study The county conducted a two-week time study during the course of the audit to determine the average amount of time staff spent performing feral cat testing. We confirmed that the county has a protocol for assessing feral cats and this assessment is documented in a “Cat Behavioral Evaluation” form. Only Animal Care Technicians (Kennel -29- Placer County Animal Adoption Program Attendants) conduct feral cat tests; therefore, this is the only classification that participated in the time study and the only classification to which the results were applied. The county conducted its time study from June 1, 2013, through June 14, 2013. The time study found that it took shelter employees an average of 9.67 minutes to test each cat. Number of Feral Cat Tests As the County did not originally claim time for conducting feral cat tests, we requested from the county the maximum number of cats that received a feral cat test for each year of the audit period. For FY 2001-02 and FY 2002-03, the county was unable to provide animal data because it used the Petwhere software system during those years and the system’s database records are not retrievable. For FY 2007-08 and FY 2008-09, information was available from the county’s Chameleon software system; however, there was not a field specifically marked in the database to indicate which cats were given a feral cat test. Animal shelter management provided calculations of what they determined were the maximum number of cats that received or may have received a feral cat test. However, these calculations included only cats with an outcome of “unadoptable euthanized.” They did not include all incoming cats that may have received a feral cat test, whether ultimately determined to be feral or not. Therefore, for FY 2007-08 and FY 2008- 09, Chameleon data was used to determine the maximum number of cats that may have received a feral cat test. Shelter management’s data was revised to include all cats impounded at the county’s animal shelter, excluding only those cats that were not likely to have received a test based on their intake condition or cats that were ultimately returned to their owners. In the absence of animal data for FY 2001-02 and FY 2002-03, we derived the maximum number of cats that may have received a feral cat test by computing the proportionate percentage of allowable care and maintenance costs incurred during those two years to an average of allowable care and maintenance costs incurred during FY 2007-08 and FY 2008-09. We then applied the applicable percentages to determine the average number of feral cat tests for FY 2001-02 and FY 2002-03. The following table summarizes the allowable maximum number of cats that would have received a feral cat test by fiscal year: Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Allowable Cats: Kennel Attendant 7 70 8 20 1 ,293 1 ,190 4 ,073 -30- Placer County Animal Adoption Program Allowable Hours We determined the allowable hours for the Kennel Attendant classification based on the county’s time study. The following table summarizes the allowable hours as a result of the time study conducted during the course of the audit: Fiscal Year 2001-02 2002-03 2006-07 2007-08 Totals Allowable Hours: Number of tests 7 70 8 20 1 ,293 1 ,190 Minutes per test 9 .67 9 .67 9 .67 9 .67 Total hours allowable 1 24.10 1 32.15 2 08.38 1 91.78 6 56.42 To determine allowable costs for salaries and benefits, we first multiplied the results of the county’s time study (9.67 minutes per cat) by the maximum number of cats that would have received a feral cat test each year to determine total hours allowable. We then applied the allowable hours to the average productive hourly rate for the Kennel Attendant classification for each fiscal year of the audit period. The parameters and guidelines (Section IV.B.6–Feral Cats) identify the following reimbursable activity: Beginning January 1, 1999, for verifying whether a cat is feral or tame by using a standardized protocol within the first three days of the required holding period, if an apparently feral cat has not been reclaimed by its owner or caretaker. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. -31- Placer County Animal Adoption Program FINDING 7— The county claimed salary and benefit costs totaling $81,390 during the audit period under the Lost and Found Lists cost component. We found Overstated lost and that $30,748 is allowable and $50,642 is unallowable. The costs are found lists costs unallowable because the county estimated the costs to comply with the five reimbursable activities outlined for this cost component. Allowable costs are based on a time study that the county conducted for the activities of providing lost and found information to the public. The following table summarizes the claimed, allowable, and audit adjustment amounts for salaries and benefits for the Lost and Found Lists cost component by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and benefits: 2001-02 $ 14,162 $ 5 ,383 $ ( 8,779) 2002-03 15,773 6,195 (9,578) 2007-08 25,463 9,485 ( 15,978) 2008-09 25,992 9,685 ( 16,307) Total, salaries and benefits $ 81,390 $ 30,748 $ (50,642) Time Study All costs claimed were initially unallowable because the county claimed estimated costs for this cost component. During the course of the audit, the county conducted a two-week time study from October 19, 2013, through November 2, 2013 to determine the time required to comply with the mandated activities. The county’s time study results are based on time captured during a typical two-week period and coincide with the beginning of a new pay period. Though the county’s time study plan indicated that both the Auburn Shelter and the smaller Tahoe Vista Shelter would participate in the time study, only Auburn employees participated. The employee classifications of Kennel Attendants, Administrative Clerks, and Senior Administrative Clerks participated in the time study. The time study determined that shelter employees spend a total of 279 hours a year to comply with all five requirements of the Lost and Found Lists cost component, as noted in the following table. These hours were applied to the employee classifications that performed the reimbursable activities based on the extent of their involvement identified in the time study. We used this method to determine allowable costs. -32- Placer County Animal Adoption Program The following table summarizes the claimed and allowable hours for the Lost and Found Lists component by employee classification: Fiscal Year 2001-02 2002-03 2007-08 2008-09 Total Hours Claimed: Kennel Attendants 3 90.00 2 60.00 5 52.50 5 52.60 1 ,755.10 Administrative Clerks 2 60.00 2 86.00 1 23.50 1 23.50 7 93.00 Senior Administrative Clerks - 6 5.00 - - 6 5.00 Animal Care Supervisor - - 2 6.00 2 6.00 5 2.00 Supervising Animal Control Officer - 2 6.00 - - 2 6.00 Animal Control Officer - 5 2.00 3 9.00 3 9.00 1 30.00 Total hours claimed 6 50.00 6 89.00 7 41.00 7 41.10 2 ,821.10 Hours Allowable: Kennel Attendants 9 3.00 9 3.00 9 3.00 9 3.00 3 72.00 Administrative Clerks 4 6.00 4 6.00 4 6.00 4 6.00 1 84.00 Senior Administrative Clerks 1 40.00 1 40.00 1 40.00 1 40.00 5 60.00 Animal Care Supervisor - - - - - Animal Control Officer - - - - - Total hours allowable 2 79.00 2 79.00 2 79.00 2 79.00 1 ,116 Hours adjustment (371.00) (410.00) (462.00) (462.10) (1,705) The parameters and guidelines allow reimbursement, beginning January 1, 1999, for providing owners of lost animals and those who find lost animals with all of the following: 1. Ability to list the 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 of assistance in locating lost animals. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. -33- Placer County Animal Adoption Program FINDING 8— The county claimed direct costs totaling $134,283 ($85,308 in salaries and benefits, $37,803 in materials and supplies, and $11,172 in contract Overstated and services) for the Maintaining Non-Medical Records cost component unallowable during the audit period. We found that $63,849 is allowable ($52,677 for maintaining non- salaries and benefits and $11,172 for contract services) and $70,434 is medical records costs unallowable. The costs are unallowable because the county estimated the time that it took animal shelter staff to process non-medical animal records. In addition, the county claimed materials and supplies costs that are not reimbursable under this component. The following table summarizes the combined claimed, allowable, and adjusted direct costs for the Maintaining Non-Medical Records cost component by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Total direct costs: 2001-02 $ 31,847 $ 6 ,492 $ (25,355) 2002-03 14,548 7,890 (6,658) 2007-08 46,415 2 4,780 ( 21,635) 2008-09 41,473 2 4,687 ( 16,786) Total $ 134,283 $ 63,849 $ (70,434) Salaries and Benefits The county claimed $85,308 for salaries and benefits during the audit period. We found that $52,677 is allowable and $32,631 is unallowable. The costs are unallowable because the county did not claim costs based on the number of animal records processed in its claims for FY 2001-02 and FY 2002-03, but rather on an estimate of the total time spent by various shelter employees maintaining the non-medical records. The county estimated the time (10 minutes per animal record) that it took its animal shelter staff to process non-medical animal records in its claims for FY 2007-08 and FY 2008-09. The county conducted a time study during the course of the audit to determine the actual average amount of time spent by various employee classifications processing non-medical animal records. The following table summarizes the claimed, allowable, and audit adjustment amounts for salaries and benefits for the Maintaining Non- Medical Records cost component by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and benefits: 2001-02 $ 31,847 $ 6 ,492 $ (25,355) 2002-03 14,548 7,890 (6,658) 2007-08 18,622 1 9,220 598 2008-09 20,291 1 9,075 (1,216) Total, salaries and benefits $ 85,308 $ 52,677 $ (32,631) -34- Placer County Animal Adoption Program Time Study During the course of the audit, the county conducted a two-week time- study for this cost component from October 19, 2013, through November 2, 2013. The county studied the time required to process records for incoming animals and the final disposition of animals. The employee classifications of Kennel Attendants, Administrative Clerks, and Animal Control Officers participated in the time study. The time study determined that it takes an average of 4.68 minutes to process incoming animal records and an average of 4.60 minutes to process records for the final disposition of animals. Number of Animal Records Processed During the course of the audit, we obtained the county’s raw animal data for FY 2007-08 and FY 2008-09 from its Chameleon software system database. We applied the time study results to the number of animal records processed based on this data. For purposes of the Maintaining Non-Medical Records cost component, the allowable number of animal records is the total number processed by the facility during the fiscal year, with no exclusions. For FY 2001-02 and FY 2002-03, the county was unable to provide animal data because it used the Petwhere software system during those years and the system’s database records are not retrievable. In the absence of animal data for FY 2001-02 and FY 2002- 03, we derived the number of animal records processed by computing the proportionate percentage of allowable care and maintenance costs incurred during those years to an average of allowable care and maintenance costs incurred during FY 2007-08 and FY 2008-09. We then applied the applicable percentages to determine the number of animal records for FY 2001-02 and FY 2002-03. The following table summarizes the number of non-medical records processed for the audit period by fiscal year: Fiscal Year 2001-02 2002-03 2007-08 2008-09 Total Intake 1 ,970 2 ,097 3 ,267 3 ,088 1 0,422 Final Disposition 1 ,970 2 ,097 3 ,267 3 ,088 1 0,422 The following table identifies the involvement level of employee classifications that process non-medical records based on the time study that the county conducted: Percentage Employee Classification Involvement Incoming Animal Records: Administrative Clerks 56% Kennel Attendants 2% Animal Control Officers 42% 100% Final Disposition Animal Records: Administrative Clerks 61% Kennel Attendants 34% Animal Control Officers 5% 100% -35- Placer County Animal Adoption Program To determine allowable salaries and benefits, we applied the results of the county’s time study to the employee classifications that performed the activities. We determined that costs totaling $52,677 were allowable for salaries and benefits. Materials and Supplies The county claimed $37,803 in materials and supplies costs for FY 2007–08 and FY 2008-09. We found that the entire amount is unallowable. The county claimed costs for time spent by a Systems Analyst working on Chameleon software “retrieving historic data, restoring test database, and checking relevancy.” The county pro-rated the costs for time spent at 60% and misclassified them under materials and supplies. However, the activity, as described, is not reimbursable under this component. The following table summarizes the claimed costs, allowable costs, and the audit adjustment amounts for materials and supplies by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Materials and supplies: 2007-08 $ 22,233 $ - $ (22,233) 2008-09 15,570 - ( 15,570) Total, materials and supplies $ 37,803 $ - $ (37,803) Contract Services The county correctly claimed contract services costs in the amount of $11,172. The costs the county incurred were for the annual license renewal for its Chameleon software system for FY 2007-08 and FY 2008-09. Costs are allowable because the county provided the proper support and applied a 60% pro-rata percentage to the supported costs and properly supported the allocation percentage. The following table summarizes the claimed, allowable, and audit adjustment amounts for contract services by fiscal year: Pro-Rata Pro-Rata Supported Percentage Amount Percentage Amount Audit Fiscal Year Costs Claimed Claimed Allowable Allowable Adjustment Contract services: 2007-08 $ 9,266 60% $ 5 ,560 60% $ 5,560 $ - 2008-09 9 ,353 60% 5,612 60% 5 ,612 - Total $ 18,619 $ 11,172 $ 11,172 $ - -36- Placer County Animal Adoption Program The parameters and guidelines (Section IV.B.8–Maintaining Non- Medical Records) identify the following reimbursable activities: Beginning January 1, 1999 – Maintaining non-medical records on animals that are either taken up, euthanized after the holding period, or impounded. Such records shall include the following:  The date the animal was taken up, euthanized, or impounded;  The circumstances under which the animal is taken up, euthanized, or impounded;  The names of the personnel who took up, euthanized, or impounded the animal; and  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 parameters and guidelines (Section IV.B.8–Maintaining Non- Medical Records) identify the following reimbursable activity: The cost of Software license renewal contracts, to the extent these costs 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. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. FINDING 9— The county claimed direct costs totaling $105,021 ($88,437 in salaries and benefits and $16,584 in contract services) for the Necessary and Misstated and Prompt Veterinary Care cost component during the audit period. We unallowable necessary found that $12,223 is allowable and the net amount of $92,798 is and prompt unallowable (understated by $6,573 and overstated by $99,371). The veterinary care costs costs were unallowable because the county claimed estimated costs that were not supported, claimed contract services costs that were not adequately supported, and understated allowable costs for materials and supplies. Allowable costs totaling $5,650 for salaries and benefits are based on a time study that the county conducted for the activities of providing an initial physical exam of animals and administering wellness vaccines. The county also provided actual costs incurred for the cost of wellness -37- Placer County Animal Adoption Program vaccines administered. Allowable materials and supplies costs totaled $6,573 for the audit period. The following table summarizes the claimed, allowable, and adjusted total direct costs for the cost component for the audit period by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment 2001-02 $ 2 0,759 $ 1,679 $ (19,080) 2002-03 35,101 2,029 ( 33,072) 2007-08 19,727 4,239 ( 15,488) 2008-09 29,434 4,276 ( 25,158) Total $ 105,021 $ 1 2,223 $ (92,798) Salaries and Benefits – Initial Physical Examination and Administration of a Wellness Vaccine The county claimed $88,437 for salaries and benefits for “wellness assessments” (physical examinations) during the audit period. The county did not claim any costs for time spent administering wellness vaccines. All salary and benefit costs claimed were initially unallowable because the county claimed estimated costs for this cost component. However, the county conducted two time studies during the course of the audit to support the time it takes staff to conduct an initial physical examination of animals and to administer wellness vaccines. Based on the results of the county’s time studies, we found that salary and benefit costs totaling $5,650 are allowable. The following table summarizes the claimed, allowable, and audit adjustment amount for salaries and benefit costs by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and benefits: 2001-02 $ 20,759 $ 640 $ (20,119) 2002-03 35,101 9 02 ( 34,199) 2007-08 14,175 2,183 ( 11,992) 2008-09 18,402 1,925 ( 16,477) Total, salaries and benefits $ 88,437 $ 5,650 $ (82,787) Time Study – Initial Physical Examination During the course of the audit, the county performed a time study for conducting an initial physical exam of animals to determine their baseline health. The time study was conducted for a two-week period from January 25, 2014 through February 7, 2014. Kennel Attendants were the only employee classification that participated in the time study, even though the county claimed time for both Kennel Attendants and Animal Control Officers. The county indicated that Animal Control -38- Placer County Animal Adoption Program Officers do not perform initial physical exams of the animals. Kennel Attendants are qualified to make a determination in regards to an animal being “adoptable,” “treatable,” or “non-rehabilitatable” and to perform limited medical services. However, due to various anomalies with the time study results, we concluded that this time study could not be used to accurately project actual costs to perform the reimbursable activity. The county performed a second time study for a two-week period from July 12, 2014, through July 24, 2014. This time study determined that it takes Kennel Attendants an average of 2.30 minutes to conduct an initial physical exam. To determine allowable costs for salaries and benefits, we first multiplied the results of the county’s time study (2.30 minutes) by the number of eligible animals each year to determine total hours allowable. We then applied the allowable hours to the average productive hourly rate for the Kennel Attendant classification for each fiscal year of the audit period. The following table summarizes the claimed, allowable, and audit adjustment amounts for salaries and benefits as a result of the Initial Physical Examination time study: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and benefits - Initial Physical Exam 2001-02 $ 20,759 $ 189 $ (20,570) 2002-03 35,101 2 67 ( 34,834) 2007-08 14,175 6 45 ( 13,530) 2008-09 18,402 5 67 ( 17,835) Total, salaries and benefits $ 88,437 $ 1,668 $ (86,769) Time Study – Administration of Wellness Vaccines During the course of the audit, the county also performed a time study for administering wellness vaccines to “adoptable” or “treatable” animals. The time study was conducted for a two-week period from February 8, 2014, through February 21, 2014. Kennel Attendants were the only employee classification that participated in the time study, even though the county claimed time for both Kennel Attendants and Animal Control Officers. The county indicated that Animal Control Officers do not administer wellness vaccines. The time study determined that it takes the shelter staff an average of 5.54 minutes to administer wellness vaccines. To determine allowable costs for salaries and benefits, we first multiplied the results of the county’s time study (5.54 minutes) by the number of eligible animals each year to determine total hours allowable. We then applied the allowable hours to the average productive hourly rate for the Kennel Attendant classification for each fiscal year of the audit period. -39- Placer County Animal Adoption Program The following table summarizes the claimed, allowable, and audit adjustment amounts for salaries and benefits as a result of the Administration of Wellness Vaccines time study: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Salaries and benefits - Administration of Wellness Vaccines 2001-02 $ - $ 451 $ 451 2002-03 - 6 35 635 2007-08 - 1,538 1 ,538 2008-09 - 1,358 1 ,358 Total, salaries and benefits $ - $ 3,982 $ 3,982 Number of Eligible Animals During the course of the audit, we obtained the county’s raw animal data for FY 2007-08 and FY 2008-09 from its Chameleon software system database. We determined the number of animals that were eligible to receive the initial physical examination and the wellness vaccines based on this data. For FY 2001-02 and FY 2002-03, the county was unable to provide animal data because it used the Petwhere software system during those years and the system’s database records are not retrievable. In the absence of animal data for FY 2001-02 and FY 2002-03, we derived the eligible number of animals by computing the proportionate percentage of allowable care and maintenance costs incurred during those years to an average of allowable care and maintenance costs incurred during FY 2007-08 and FY 2008-09. We then applied the applicable percentages to determine the number of eligible animals for FY 2001-02 and FY 2002- 03. The parameters and guidelines specifically state that reimbursement is limited to “stray and abandoned animals. . . that die during the holding period or are ultimately euthanized.” As noted in Finding 4, we determined the average holding period to be six days; therefore, reimbursement is limited to the following population of animals:  Stray animals that died during the holding period: Died on days 2, 3, 4, 5, or 6  Stray animals that were ultimately euthanized: Euthanized on day 7 and greater This calculation is consistent with the Appellate Court ruling in the case of Purifoy v. Howell, which determined that Saturday is not considered a business day for the purposes of this mandated program. We filtered the animal data provided by the county using this criterion and determined the number of animals that are eligible for reimbursement. -40- Placer County Animal Adoption Program The following table summarizes the eligible number of animals that received an initial physical examination during the audit period. Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Eligible cats 208 222 352 320 1,102 Eligible dogs 65 69 111 98 343 Total cats and dogs 273 291 463 418 1,445 Other animals 2 3 5 3 13 Total all animals 275 294 468 421 1,458 The following table summarizes the eligible number of animals that received wellness vaccines during the audit period. Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Eligible cats 208 222 352 320 1,102 Eligible dogs 65 69 111 98 343 Total cats and dogs 273 291 463 418 1,445 Other animals - - - - - Total all animals 273 291 463 418 1,445 Materials and Supplies The county did not claim materials and supplies costs during the audit period under this cost component. During the course of the audit, the county provided supporting documentation of costs incurred for the purchase of wellness vaccines. We found that allowable costs for the audit period totaled $6,573 ($4,889 for wellness vaccines for cats and $1,684 for wellness vaccines for dogs), based on the cost of wellness vaccines and the number of eligible animals treated for each fiscal year. The following table summarizes the claimed, allowable, and audit adjustment amounts for materials and supplies by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Materials and supplies: 2001-02 $ - $ 1 ,039 $ 1,039 2002-03 1,127 $ 1,127 2007-08 - 2,056 2 ,056 2008-09 - 2,351 2 ,351 Total, materials and supplies $ - $ 6,573 $ 6,573 -41- Placer County Animal Adoption Program The table below details the calculation of allowable costs for the wellness vaccines: Fiscal Year 2001-02 2002-03 2007-08 2008-09 Totals Cost of cat wellness vaccines: FVRCP and Rabies serums, needle, and syringe $ 3.71 $ 3.78 $ 4 .33 $ 5.48 Eligible cats x 208 x 222 x 3 52 x 320 Total costs for cat vaccines $ 772 $ 839 $ 1 ,524 $ 1,754 $ 4,889 Cost of dog wellness vaccines: DA2PPv and Bordatella serums, 2 needles, and 2 syringes $ 4.11 $ 4.18 $ 4 .79 $ 6.09 Eligible dogs x 65 x 69 x 1 11 x 98 Total costs for dog vaccines $ 267 $ 288 $ 5 32 $ 597 $ 1,684 Total allowable costs $ 1,039 $ 1,127 $ 2 ,056 $ 2,351 $ 6,573 Contract Services The county claimed contract services costs totaling $16,584 during FY 2007-08 and FY 2008-09 for “wellness” veterinary care performed by a licensed veterinarian. The county pro-rated the costs, including only the proportionate share of costs based on its determination of the number of eligible animals that died during the holding period or were ultimately euthanized. The county applied 22.68% for FY 2007-08 and 23.34% for FY 2008-09. However, this is an incorrect methodology for determining eligible costs for this component. The following table summarizes the claimed, allowable, audit adjustment amounts for contract services costs incurred for necessary and prompt veterinary care by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Contract services: 2007-08 $ 5,552 $ - $ ( 5,552) 2008-09 11,032 - ( 11,032) Total, contract services $ 1 6,584 $ - $ (16,584) We advised the county that costs were unallowable as claimed, as reimbursement for these activities is limited to the population of stray and abandoned animals that were treated during the required holding period and then either died during the holding period or were ultimately euthanized. Therefore, to determine eligible costs, the county would need to provide itemized invoices from the veterinarian detailing the animal ID, intake date, outcome date, the date the service was performed, and a description of the service performed. -42- Placer County Animal Adoption Program 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. “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 stray 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 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.” 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 when 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 The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. -43- Placer County Animal Adoption Program FINDING 10— The county did not claim any costs during the audit period under the Procuring Equipment Cost component. We found that $29,781 is Unclaimed procuring allowable. equipment costs During the course of the audit, we found costs totaling $20,080 incurred during FY 2001-02 for the purchase of cat cages that were misclassified under the Feral Cat cost component (See Finding 6). Accordingly, these costs were reclassified to the Procuring Equipment cost component and analyzed as a fixed asset cost. In addition, materials and supplies costs incurred for equipment purchases were identified in the county’s “Special Department” and “Other Supplies” expenditure accounts during the course of the audit. The following table summarizes the claimed, allowable, and audit adjustment amounts for total direct costs for the audit period by fiscal year: Amount Amount Audit Fiscal Year Claimed Allowable Adjustment Direct costs: 2001-02 $ - $ 21,475 $ 21,475 2002-03 - 791 791 2007-08 - 4,147 4 ,147 2008-09 - 3,368 3 ,368 Total $ - $ 29,781 $ 29,781 Materials and Supplies The county did not include any materials and supplies costs under this cost component in its claims for the audit period. However, the county provided support for materials and supplies costs not originally claimed that are eligible for reimbursement under the mandated program. We found that $8,615 is allowable in materials and supplies costs for this component. The following table summarizes the costs claimed, the supported costs, the allowable pro-rata percentage, the allowable costs, and audit adjustment amounts for materials and supplies by fiscal year: Pro-Rata Amount Supported Percentage Amount Audit Fiscal Year Claimed Costs Allowable Allowable Adjustment Materials and supplies: 2001-02 $ - $ 309 100% $ 309 $ 309 2002-03 - 791 100% 791 7 91 2007-08 - 4 ,147 100% 4 ,147 4,147 2008-09 - 3 ,368 100% 3 ,368 3,368 Total, materials and supplies $ - $ 8,615 $ 8,615 $ 8,615 -44- Placer County Animal Adoption Program For FY 2001-02, the county incurred costs totaling $309 to purchase cages on wheels to facilitate cleaning around cages and to house stray cats. For FY 2002-03, the county incurred costs totaling $791 to purchase a refrigerator to store vaccines. For FY 2007-08, the county incurred costs totaling $4,147 to purchase the following items:  A refrigerator to store vaccines, medicines, and ice packs ($963);  Dog kennels for extra space outside, providing fresh air to the animals and allowing the staff better access when cleaning ($2,188);  Kennel door panels to separate dog runs and prevent nose-to-nose contact ($167); and  A washing machine to clean pet bedding and other pet items ($828). For FY 2008-09, the county incurred costs totaling $3,368 to purchase portable kennels ($1,747), kennel roofs ($1,049), and a washing machine ($572) to clean pet bedding. We interviewed shelter management and staff, who provided a reasonable explanation of how this equipment was necessary to comply with the reimbursable activities of the mandated program. In addition, shelter management stated, and we accepted, that each piece of equipment was used solely for mandated activities. Fixed Assets The county did not include any fixed asset costs under this cost component in its claims for the audit period. However, the county provided support for fixed assets costs not originally claimed that are eligible for reimbursement under the mandated program. In addition, we analyzed the fixed asset costs that were misclassified under the Feral Cat cost component. We found that $21,166 is allowable in fixed assets costs for this component. The following table summarizes the costs claimed, the supported costs, the allowable pro-rata percentage, the allowable costs, and audit adjustment amounts for fixed assets by fiscal year: Pro-Rata Amount Supported Percentage Amount Audit Fiscal Year Claimed Costs Allowable Allowable Adjustment Fixed assets: 2001-02 $ - $ 21,166 100% $ 21,166 $ 2 1,166 2008-09 - 10,906 0% - - Total, fixed assets $ - $ 32,072 $ 21,166 $ 2 1,166 For FY 2001-02, allowable fixed asset costs totaled $21,166. This total consisted of $20,080 in reclassified costs from the Feral Cats cost component used to purchase cat cages. We also found an additional $1,086 to purchase quarantine kennels to quarantine biting dogs. For FY 2008-09, supported costs totaled $10,906 for cat cages; however, -45- Placer County Animal Adoption Program upon research, we found that the county actually reimbursed a non-profit organization for the cages. The non-profit organization occasionally partners with the county to house an overflow of cats and kittens. As the organization also works with other agencies, and the animals were housed at the organization site and not the shelter, we determined that we cannot consider the costs for reimbursement. We interviewed shelter management and staff, who provided a reasonable explanation of how this equipment was necessary to comply with the reimbursable activities of the mandated program. In addition, shelter management stated, and we accepted, that each piece of equipment was used solely for mandated activities. The parameters and guidelines (section IV.B.10) identify the following reimbursable activity: Beginning January 1, 1999 for procuring medical, kennel, and computer equipment necessary to comply with the reimbursable activities listed in Section IV (B) for the parameters and guidelines, to the extent these costs are not claimed as an indirect cost 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 IV (B), only the pro rata portion of the activity that is used for the purposes of the mandated program is reimbursable. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that claimed costs include only eligible costs, are based on actual costs, and are properly supported. County’s Response The county agrees with this finding. -46- Placer County Animal Adoption Program FINDING 11— The county claimed $207,855 for indirect costs during the audit period. We found that $168,485 is allowable and $39,370 is unallowable. The Misstated indirect costs are unallowable primarily because of the audit adjustments to costs rates and salaries and benefits identified in Findings 3 through 9. In addition, the overstated indirect county overstated its indirect cost rate for FY 2001-02 and understated costs its indirect cost rates for FY 2007-08 and FY 2008-09. The following table summarizes the claimed, allowable, and audit adjustment amounts for indirect costs by fiscal year. Claimed Allowable Claimed Allowable Fiscal Indirect Indirect Indirect Indirect Audit Year Cost Rates Cost Rates Cost Cost Adjustment 2001-02 68.10% 54.67% $ 33,551 $ 23,330 $ (10,221) 2002-03 45.97% 45.97% 47,844 23,557 ( 24,287) 2007-08 55.04% 68.55% 58,257 57,454 (803) 2008-09 56.76% 79.90% 68,203 64,144 (4,059) Total $ 207,855 $ 168,485 $ (39,370) Misstated indirect cost rates Rates Claimed During the audit period, the county’s calculations of indirect costs were inconsistent. The county used the assistance of its mandated cost consultants to prepare its ICRPs for FY 2001-02, FY 2002-03, and FY 2007-08. The county prepared its own ICRP for FY 2008-09. The county’s calculations were as follows:  For FY 2001-02, the county used direct salaries as a base for the application of its indirect cost rates. The indirect cost pool included an unspecified portion of salaries and benefits costs for all of the animal shelter’s Administrative Clerks and a calculation adding $24,207 into the indirect cost pool for the county’s Health and Human Services Department that ultimately appeared in the county’s A-87 countywide cost plan. In addition, certain costs were included in the ICRP as direct costs that were actually indirect costs.  For FY 2002-03, the county used salaries and benefits as a base for the application of its indirect cost rate. The indirect cost pool correctly included salary and benefit costs incurred for the Animal Services Manager, although the total amount was understated by $787. The ICRP also included a calculation adding $21,888 into the indirect cost pool for the county’s Health and Human Services Department that ultimately appeared in the county’s A-87 countywide cost allocation plan. In addition, certain costs were included in the ICRP as direct costs that were actually indirect costs and certain costs were included as indirect costs that were actually direct costs. -47- Placer County Animal Adoption Program  For FY 2007-08 and FY 2008-09, the county used salaries and benefits as a base for the application of its indirect cost rates. The indirect cost pool excluded any costs for indirect salaries and benefits. In addition to using an inconsistent methodology to calculate indirect costs, the county provided no support for the indirect salaries and wages incurred for four Administrative Clerks and two Senior Administrative Clerks in its ICRP for FY 2001-02. Therefore, we recalculated the rates using a consistent methodology. Recalculated Rates We concluded that 100% of salary and benefit costs incurred for the Animal Services Manager were indirect costs for all years of the audit period. We also reclassified costs appearing in the services and supplies line item accounts of Communications as indirect and costs for maintenance as direct in the ICRP for FY 2001-02. For FY 2002-03, we reclassified costs for Communications and Other Supplies as indirect and costs for Maintenance-Equipment as direct. We excluded the additional indirect costs identified above in the amount of $24,207 for FY 2001-02 and $21,888 for FY 2002-03 in our calculations. We then applied the resulting indirect cost pool amount to total labor costs (excluding part- time wages and overtime) to determine the indirect cost rate for each year of the audit period. As a result of our calculations, we found that indirect costs were understated by $24,169 due to rate differences. The following table summarizes the claimed, allowable, and misstated indirect cost rates: Allowable Claimed Indirect Cost Indirect Cost Misstated Fiscal Year Rate Rate Rate 2001-02 54.67% 68.10% -13.43% 2002-03 45.97% 45.97% 0.00% 2007-08 68.55% 55.04% 13.51% 2008-09 79.90% 56.76% 23.14% The following table shows the audit adjustment for indirect costs that is related to misstated indirect cost rates: Total Indirect Salaries and Adjustment Fiscal Cost Rate Benefits for Rate Year Difference Allowable Difference 2001-02 -13.43% $ 4 2,676 $ (5,731) 2002-03 0.00% 51,242 - 2007-08 13.51% 83,813 1 1,323 2008-09 23.14% 80,281 1 8,577 Totals $ 258,012 $ 24,169 -48- Placer County Animal Adoption Program Overstated Indirect Costs Related to Overstated Salaries and Benefits Indirect costs were overstated by $39,370 for the audit period as a result of the unallowable salaries and benefits identified in Findings 3 through 9. The following table summarizes the audit adjustments to indirect costs for rate differences and unallowable costs by fiscal year: Adjustment Adjustment Total Fiscal for Rate for Unallowable Audit Year Difference Costs Adjustment 2001-02 $ (5,731) $ ( 4,490) $ ( 10,221) 2002-03 - ( 24,287) (24,287) 2007-08 1 1,323 ( 12,126) ( 803) 2008-09 1 8,577 ( 22,636) (4,059) Total $ 2 4,169 $ ( 63,539) $ ( 39,370) The parameters and guidelines (Section V.B.—Indirect Costs) state that: Indirect costs are those that have been incurred for common or joint purposes. These costs benefit more than one cost objective and cannot be readily identified with a particular final cost objective without effort disproportionate to the results achieved. After direct costs have been determined and assigned to other activities, as appropriate, indirect costs are those remaining to be allocated to benefited cost objectives. A cost may not be allocated as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been claimed as a direct cost. Claimants have the option of using 10% of direct labor, excluding fringe benefits, or preparing an Indirect Cost Rate Proposal (ICRP) pursuant to the Office of Management and Budget (OMB) Circular A- 87. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that its indirect cost rates are properly calculated and are applied to the same direct cost base that was used to calculate the rate. County’s Response The county agrees with this finding. -49- Placer County Animal Adoption Program FINDING 12— The county reported offsetting revenues totaling $195,609 on its mandated costs claims for FY 2001-02, FY 2002-03, FY 2007-08, and Overstated offsetting FY 2008-09. We found that the county should have made no offset for revenues the audit period. The difference occurred because four of the contracting cities did not file mandated cost claims with the State during the audit period, the City of Roseville did not contract with the county for animal services, and contract revenues paid by the City of Rocklin during the audit period funded the county’s general operating expenditures of its animal shelters rather than its mandated costs. We requested that Placer County determine the extent to which revenues received from its contracting cities for animal control services were used for mandated activities. The county determined that no offset should have been applied on its claims for the audit period. Accordingly, we will make the appropriate adjustments and issue a review report for claims filed under the Animal Adoption Program by the City of Rocklin. We will notify the contracting city of the review to be issued as a result of the county’s Animal Adoption audit and the county’s determination concerning contract revenues received. The following table summarizes audit adjustments for offsetting revenues by fiscal year: Amount That Fiscal Amount Should Have Audit Year Offset Been Offset Adjustment 2001-02 $ (28,800) $ - $ 28,800 2002-03 (34,273) - 34,273 2007-08 (64,181) - 64,181 2008-09 (68,355) - 68,355 Total $ (195,609) $ - $ 195,609 Amount Offset During the audit period, the county offset $195,609 on its Animal Adoption claims, which it determined to be the proportionate share of mandated costs incurred for the following six contracting cities:  City of Auburn  City of Colfax  City of Lincoln  City of Loomis  City of Rocklin  City of Roseville Though the county offset revenues received by the City of Roseville, the county did not contract with the city for animal services at any time during the audit period. Instead, the City of Roseville contracted with the Placer SPCA for its animal control services. -50- Placer County Animal Adoption Program The county determined the amounts to be offset on its claims each year based upon the population of animals housed in the county’s two animal shelters from each contracting city to the total population of animals. In addition, the county based its offset calculations on the total of the cost components the county determined the contracting entities were entitled to claim. County staff did not help prepare the contracting cities’ Animal Adoption claims, encourage the contracting cities to file claims, or advise the contracting cities on how to file a claim. The table below summarizes the amounts of offsetting revenues that appeared in the county’s claims, as well as the amounts claimed by these local agencies under the Animal Adoption Program. Based on this information, we initially determined that revenue offsets included in the county’s claims during the audit period were understated by $12,326. Total Fiscal City of City of City of City of City of City of Amount Year Auburn Colfax Lincoln Loomis Rocklin Roseville Offset Placer County Animal Adoption Offsets Related to Contracting Cities 2001-02 $ (3,343) $ (2,424) $ ( 9,006) $ ( 1,619) $ ( 12,408) $ - $ ( 28,800) 2002-03 (4,701) (1,213) ( 10,265) ( 2,713) ( 14,589) (791) ( 34,272) 2007-08 (10,221) (2,105) ( 18,115) ( 7,934) ( 25,398) (408) ( 64,181) 2008-09 (11,790) (3,028) ( 16,893) ( 7,530) ( 28,232) (883) ( 68,356) Total $ (30,055) $ (8,770) $ ( 54,279) $ ( 19,796) $ ( 80,627) $ (2,082) $ ( 195,609) Animal Adoption Costs Claimed By Contracting Cities 2001-02 $ - $ - $ - $ - $ - $ (10,194) $ ( 10,194) 2002-03 - - - - ( 3,421) (10,480) ( 13,901) 2007-08 - - - - ( 8,272) (63,106) ( 71,378) 2008-09 - - - - ( 11,414) (101,048) ( 112,462) Total $ - $ - $ - $ - $ ( 23,107) $ (184,828) $ ( 207,935) Difference $ 30,055 $ 8 ,770 $ 54,279 $ 19,796 $ 57,520 $ (182,746) $ ( 12,326) Table 3 Amounts to be Offset The table above reveals that the county offset $12,326 less on its claims than the contracting cities claimed for Animal Adoption program costs during the audit period. The differences occurred because the City of Auburn, the City of Colfax, the City of Lincoln, and the City of Loomis did not file mandated cost claims with the State during the audit period; the City of Rocklin did not file claim amounts with the State that were equal to the county’s offset; and the county did not contract with the City of Roseville for animal services. Calculation of Offsetting Revenue We requested that the county determine the extent to which contract revenues received by the county for animal control services funded a portion of its mandated costs or funded the general operating expenditures of its animal shelters. County representatives agreed to provide this determination in writing on county letterhead. -51- Placer County Animal Adoption Program Placer County ultimately determined that contract revenues received from the City of Rocklin during the audit period for animal control services funded the county’s general operating expenditures of its animal shelters rather than its mandated costs. As the county incurs all the costs for the animal services provided, it is in the position to determine how its contract revenues were used. The following tables summarize the amounts that were claimed by the cities that contracted with the county for animal control services and the amounts to be offset from the county’s Animal Adoption claims per contracting city for each fiscal year of the audit period, as determined by the county: Animal Adoption Costs Claimed By Contracting Cities Fiscal City of City of City of City of City of City of Total Year Auburn Colfax Lincoln Loomis Rocklin Roseville Claimed 2001-02 $ - $ - $ - $ - $ - n/a $ - 2002-03 - - - - ( 3,421) n/a (3,421) 2007-08 - - - - ( 8,272) n/a (8,272) 2008-09 - - - - ( 11,414) n/a (11,414) Total Claimed $ - $ - $ - $ - $ ( 23,107) $ - $ (23,107) Amounts to be Offset Fiscal City of City of City of City of City of City of Total Year Auburn Colfax Lincoln Loomis Rocklin Roseville Offsets 2001-02 $ - $ - $ - $ - $ - n/a $ - 2002-03 - - - - - n/a - 2007-08 - - - - - n/a - 2008-09 - - - - - n/a - Total Offsets $ - $ - $ - $ - $ - $ - $ - Based on this information, we determined that the claims filed by the City of Rocklin were overstated by $23,107. Accordingly, we will issue a review letter to adjust the City of Rocklin’s Animal Adoption claims as follows: City of Rocklin Fiscal Amount Amount Year Claimed Allowable Adjustment 2002-03 $ 3,421 $ - $ ( 3,421) 2007-08 8,272 - ( 8,272) 2008-09 11,414 - ( 11,414) Total $ 23,107 $ - $ ( 23,107) The parameters and guidelines (Section VII–Offsetting Savings and Other Reimbursements) state the following: Any offsetting savings that the claimant experiences as a direct result of this mandate must be deducted from the costs claimed. Additionally, reimbursement for this mandate received from any source shall be identified and deducted from this claim. These sources shall include, but are not limited to, rewards received under the authority of Civil Code section 1845; licensing fees and fines received and applied -52- Placer County Animal Adoption Program pursuant to Food and Agriculture Code section 30652, Government Code section 28502, and Penal Code section 597f; other state funds, and federal funds. The fees and fines received pursuant to Food and Agriculture Code section 30652 shall be deducted from the claim according to the priority specified in the statue and stated below:  First, to pay fees for the issuance of dog license tags pursuant to Food and Agriculture Code section 30652, subdivision(a);  Second, in accordance with Food and Agriculture Code section 30652, subdivision (b), any excess revenue held after the payment of dog license tags shall be applied to the fees, salaries, costs, expenses, or any or all of them for the enforcement of Division 14 of the Food and Agriculture code, including Food and Agriculture Code section 31108, and all ordinances that are made pursuant to division 14. Cost incurred under Food and Agriculture Code Section 31108 are specified in Section IV (B) (1), (2),(3), and (5), and Section IV (A) of these parameters and guidelines. Any or all excess revenue must be applied to the cost incurred under Food and Agriculture Code section 31108 before any revenue can be applied to subdivisions (c) and (d) of Food and Agriculture Code section 30652. Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through FY 2013-14 Budget Acts. If the program becomes active, we recommend that the county offset all revenue received from its contracting cities on its Animal Adoption claims to the extent that it funded mandated activities. County’s Response The county agrees with this finding. FINDING 13— Productive Hourly Rates Misstated productive The county claimed a productive hourly rate, excluding benefits, for each hourly rates and employee involved in reimbursable activities during the audit period. benefit rates Our analysis of productive hourly rates, excluding benefits, showed that the county mostly misstated productive hourly rates for FY 2001-02 and FY 2002-03, and overstated the rates for FY 2007-08 and FY 2008-09. Productive Hourly Rates Claimed The county submitted a Calculation of Productive Hourly Rates by Employee table for the Placer County Animal Services Department for each fiscal year of the audit period. The tables included the following information for all employees working in the department:  Hourly rate  Total regular hours  Vacation hours accrued  Sick leave hours taken  Authorized breaks -53- Placer County Animal Adoption Program  Total non-productive hours  Total productive hours  Annual wages  Calculated productive hourly rate For all fiscal years except FY 2002-03, the productive hourly rates the county claimed did not match the productive hourly rates provided in their productive hourly rate tables. Allowable Productive Hourly Rates For each fiscal year of the audit period, we recalculated the productive hourly rate of each employee using the information in the county’s productive hourly rate tables. We excluded hours for paid holidays, vacation earned (accrued), and sick leave taken. Informal time off, jury duty, and military leave taken did not apply in this case. When performing the recalculations we made note of the following:  For FY 2001-02, FY 2002-03, and FY 2008-09, there were several instances in which total regular work hours exceeded 2,080.  For all four fiscal years, there were instances in which the productive hourly rate calculation used more than 1,800 productive hours. The SCO’s claiming instructions identify the option of using 1,800 annual productive hours for all employees. This option excludes paid holidays, vacation earned, sick leave taken, informal time off, jury duty, and military leave taken from total regular working hours.  For FY 2008-09, the county’s productive hourly rate table listed vacation time taken rather than vacation time accrued. We contacted the county regarding this issue and the county provided a revised productive hourly rate table. In performing our recalculations, we noted differences between the productive hourly rates claimed and the recalculated rates. The differences were due to the following:  The county incorrectly included authorized break time in its calculation of non-productive hours, thus making its productive hours lower and their productive hourly rates higher. The SCO’s claiming instructions, which include guidelines for preparing mandated cost claims, do not identify time spent on authorized breaks as deductions (excludable components) from total hours when computing productive hours.  In instances where the calculation of productive hours exceeded 1,800 hours, the county did not default to 1,800 hours per the SCO’s claiming instructions. Once we recalculated the productive hourly rate of each employee, we calculated an average productive hourly rate for each employee classification. We then applied the average productive hourly rates per classification to the results of the various time studies conducted during the course of the audit to determine allowable salary and benefit costs. -54- Placer County Animal Adoption Program Benefit Rates The county claimed benefits specifically for employees involved in reimbursable activities during the audit period. We noted that for each fiscal year except FY 2007-08, the benefit rate the county listed on its ICRP for the Animal Control Department did not match the benefit rates listed on the county’s claims for payment. Therefore, we recalculated the benefit rates for each fiscal year of the audit period. Allowable Benefit Rates We recalculated the benefit rates by obtaining the year-to-date expenditure reports for the Animal Control Department. We calculated total salaries and total benefits separately for each fiscal year of the audit period. We then divided total benefits by total salaries to arrive at a benefit rate. For FY 2001-02 and FY 2008-09, we found that claimed benefit rates were overstated and for FY 2002-03 and FY 2007-08, we found that claimed benefit rates were understated. The following table summarizes the benefit rate shown on the county’s ICRP along with the claimed, allowable, and audit adjustment amounts for benefit rates by fiscal year: Benefit Rate Summary FY 2001-02 FY 2002-03 FY 2007-08 FY 2008-09 ICRP 39.00% 49.80% 55.70% 54.26% Claimed 45.21% 46.30% 55.70% 60.84% * Allowable 37.63% 49.81% 56.60% 59.21% Adjustment -7.58% 3.51% 0.90% -1.63% *Note: Various rates claimed. This is the overall rate. We applied the recalculated benefit rates to the audited productive hourly rates to arrive at salary and benefit costs for this audit. The exception is the Care and Maintenance component, wherein the recalculated benefit rates were applied to actual salaries. The parameters and guidelines (Section V–Claim Preparation and Submission–Direct Cost Reporting–Salaries and Benefits) state that, for salaries and benefits, claimants are required to: Report each employee implementing the reimbursable activities by name, job classification, and productive hourly rate (total wages and related benefits divided by productive hours). Describe the reimbursable activities performed and the hours devoted to each reimbursable activity performed. -55- Placer County Animal Adoption Program The SCO’s claiming instructions state that one of three options may be used to compute productive hourly rates:  Actual annual productive hours for each employee;  The weighted-average annual productive hours for each job title; or  1,800 annual productive hours for all employees. (The 1,800 annual productive hours excludes time for paid holidays, vacation earned, sick leave taken, informal time off, jury duty, and military leave taken.) Recommendation The Animal Adoption Program was suspended in the FY 2010-11 through 2013-14 Budget Acts. If the program becomes active, we recommend that the county ensure that productive hourly rates and benefit rates are calculated in accordance with the guidance provided in the SCO’s claiming instructions. County’s Response The county agrees with this finding. -56- Placer County Animal Adoption Program Attachment— County’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 S13-MCC-018