Sacramento County 2016

SACRAMENTO COUNTY OFFICE OF EDUCATION Report of Review AUDIT RESOLUTION PROCESS Fiscal Year (FY) 2012-13 and FY 2013-14 BETTY T. YEE California State Controller March 2016 BETTY T. YEE California State Controller March 11, 2016 David W. Gordon County Superintendent of Schools Sacramento County Office of Education 10474 Mather Boulevard Mather, CA 95655 Dear Mr. Gordon: The State Controller’s Office reviewed the Sacramento County Office of Education’s (COE) audit resolution process for local education agency exceptions noted in the annual audit reports. The review covered fiscal year (FY) 2012-13 and FY 2013-14. Our review found that the Sacramento COE followed its audit resolution process for FY 2012-13 and FY 2013-14, with one exception for FY 2012-13. The Sacramento COE was in compliance with California Education Code section 41020 for FY 2012-13 and FY 2013-14, with the one exception noted in the Finding. The COE’s response to the Finding is enclosed. If you have any questions, please contact Jim L. Spano, Interim Chief, Financial Audits Bureau, at (916) 323-5849. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/ls David W. Gordon -2- March 11, 2016 cc: Sue Stickel, Deputy Superintendent Sacramento County Office of Education Tamara J. Sanchez, Assistant Superintendent Business Services Sacramento County Office of Education Debbie Wilkins, Coordinator, District Fiscal Services Sacramento County Office of Education Peter Foggiato, Director School Fiscal Services Division California Department of Education Arlene Matsuura, Education Fiscal Services Administrator School Fiscal Services Division California Department of Education Thomas Todd, Assistant Program Budget Manager Education Systems, California Department of Finance Sacramento County Office of Education Audit Resolution Process Contents Review Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Objective, Scope, and Methodology ................................................................................. 2 Conclusion .......................................................................................................................... 3 Views of Responsible Officials .......................................................................................... 3 Restricted Use .................................................................................................................... 3 Finding and Recommendation .............................................................................................. 4 Attachment—Sacramento County Office of Education’s Response to Draft Report Sacramento County Office of Education Audit Resolution Process Review Report Summary The State Controller’s Office (SCO) reviewed the Sacramento County Office of Education’s (COE) audit resolution process for local education agency (LEA) exceptions noted in the annual audit reports for fiscal year (FY) 2012-13 and FY 2013-14. Our review found that the Sacramento COE followed its audit resolution process for FY 2012-13 and FY 2013-14 with one exception for FY 2012-13. The Sacramento COE did not provide support that it filed the FY 2012-13 Certificate of Corrective Action form with the SCO by the May 15, 2014 filing due date. Background California Education Code section 41020(n) requires the State Controller to annually select a sampling of county superintendents of schools for which the SCO will perform a follow-up review of the audit resolution process. Results of these reviews will be reported to the Superintendent of Public Instruction (SPI) and the county superintendents of the schools that were reviewed. Furthermore, California Education Code section 41020(n) states that the State Controller shall require auditors to categorize audit exceptions in the audit report in such a manner that both the county superintendent of schools and the SPI can discern the exceptions for which it is their responsibility to ensure that the LEAs take action to correct. The Sacramento COE provides coordination of educational programs and professional and financial supervision for 13 LEAs and one joint powers entity under its jurisdiction. In addition, the county superintendent of schools maintains special schools and programs countywide, independent of the local education agencies. County superintendents of schools are required to do the following:  Review, for each of their school districts, audit exceptions relating to attendance, inventory of equipment, internal control, and any miscellaneous items, and determine whether the findings have been corrected or an acceptable plan of correction has been developed (California Education Code section 41020(i)(1));  Review audit exceptions related to the use of instructional materials program funds, teacher misassignments, and school accountability report cards. The county superintendents also must determine whether the exceptions have been corrected or an acceptable plan of correction has been developed (California Education Code section 41020(i)(2));  Review audit exceptions related to attendance, inventory of equipment, internal control, and other miscellaneous exceptions. Attendance exceptions or issues must include those related to local control funding formula allocations pursuant to Education Code section 42238.02, as implemented by section 42238.03, and independent study (Education Code section 41020(j)(1)); -1- Sacramento County Office of Education Audit Resolution Process  Notify the LEA, and request that the governing board of the LEA provide to the county superintendent of schools, a description of the correction or plan of correction by March 15 of the subsequent year (California Education Code section 41020(j)(2));  Review the description of the correction or plan of correction and determine its adequacy and, if its response was not adequate, require the LEA to resubmit that portion of its response that is inadequate (California Education Code section 41020(j)(3)); and  By May 15 of the subsequent year, certify to the Superintendent of Public Instruction (SPI) and the SCO that the county has reviewed all applicable exceptions, and state that all exceptions have been corrected, or that an acceptable plan for correction has been submitted by the LEA to the county superintendent, except as noted in the certification. In addition, identify by LEA any attendance-related exceptions or exceptions involving State funds, and require the LEA to submit the appropriate reporting forms to the SPI for processing (California Education Code section 41020(k));  Review LEAs’ unresolved prior year audit exceptions when the California Department of Education defers to the county (California Education Code section 41020(l)); and  Adjust subsequent local property tax requirements to correct audit exceptions relating to LEA tax rates and tax revenues (California Education Code section 41020(o)). Objective, Scope, Our review was conducted under the authority of California Education Code section 41020(n). Our review scope was limited to determining and Methodology whether or not the Sacramento COE followed its audit resolution process in resolving LEA audit exceptions. Our review did not include an evaluation of the sufficiency of the action taken by the LEA and the Sacramento COE to address each exception, nor did it assess the degree to which each exception was addressed. Specifically, our review was limited to the following procedures:  Verifying that the Sacramento COE addressed all attendance, inventory of equipment, internal control, and miscellaneous exceptions. In addition, we verified whether the Sacramento COE addressed any findings on instructional-materials program funds, teacher misassignments, and school accountability report cards. However, with respect to exceptions based on sample items, our review did not include a determination of whether or not the exception results were properly quantified and addressed at a districtwide or countywide level;  Verifying whether the Sacramento COE notified LEAs that they must submit completed corrective action forms to the Sacramento COE by March 15, 2014, and March 15, 2015, for FY 2012-13 and FY 2013-14, respectively. Our review did not include an assessment of the LEAs’ progress with respect to taking corrective action; -2- Sacramento County Office of Education Audit Resolution Process  Verifying whether the Sacramento COE required the LEAs to submit the appropriate reporting forms to the SPI for any attendance-related exceptions that affect State funding;  Reviewing the letters of certification due on May 15, 2014, and May 15, 2015, that the Sacramento COE sent to the SPI and the SCO with respect to any resolved and unresolved audit exceptions;  Verifying whether the Sacramento COE followed up with unresolved prior year audit exceptions the SPI required the Sacramento COE to conduct; and  Verifying whether the Sacramento COE adjusted subsequent local property tax requirements to correct audit exceptions related to LEA tax rates and tax revenues. Conclusion Our review found that the Sacramento COE followed its audit resolution process for FY 2012-13 and FY 2013-14, with one exception for FY 2012-13 discussed in the Finding. Except for the one item, the Sacramento COE was in compliance with the California Education Code section 41020 for FY 2012-13 and FY 2013-14. We made no additional determination regarding the Sacramento COE’s audit resolution process beyond the scope of the review outlined above. Views of We issued a draft review report on February 8, 2016. David W. Gordon, County Superintendent of Schools, responded by letter dated February 16, Responsible 2016, agreeing with the review results. Officials Restricted Use This report is intended solely for the information and use of the Sacramento COE, the California Department of Education, 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 meant to limit distribution of this report, which is a matter of public record. Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits March 11, 2016 -3- Sacramento County Office of Education Audit Resolution Process Finding and Recommendation FINDING 1— The Sacramento County Office of Education (COE) did not support that it Support for filing provided the State Controller’s Office (SCO) with a Certification of the Certificate of Correction Action form for fiscal year (FY) 2012-13 by the May 15, 2014 filing due date. In addition, the SCO did not have any record of receiving Corrective Action the certification. Subsequently, the SCO obtained a copy of the with the State certification during the engagement fieldwork on December 11, 2015. The Controller’s Office certification was dated March 24, 2014. The COE submitted its FY 2013- not maintained 14 certification form to the SCO by the May 15, 2015 filing due date. Education Code section 41020, subdivision (k), states: Each county superintendent of schools shall certify to the Superintendent and the Controller, not later than May 15, that his or her staff has reviewed all audits of local educational agencies under his or her jurisdiction for the prior fiscal year, that all exceptions that the county superintendent was required to review were reviewed, and that all of those exceptions, except as otherwise noted in the certification, have been corrected by the local educational agency or that an acceptable plan of correction has been submitted to the county superintendent of schools. In addition, the county superintendent shall identify, by local educational agency, any attendance-related audit exception or exceptions involving state funds, and require the local educational agency to which the audit exceptions were directed to submit appropriate reporting forms for processing by the Superintendent. In addition to the Education Code requirement, the Sacramento COE’s audit resolution process procedures require that the form be timely filed with the SCO. Recommendation We recommend that Sacramento COE maintain support for its compliance with the annual May 15 filing due date required by California Education Code section 41020, subdivision (k). -4- Sacramento County Office of Education Audit Resolution Process Attachment— Sacramento County Office of Education’s Response to Draft Report State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250-5874 http://www.sco.ca.gov S16-COE-9009