SCO
City of Rancho Palos Verdes
Identity Theft
Read the report at City of Rancho Palos Verdes ↗
CITY OF RANCHO PALOS VERDES
Audit Report
IDENTITY THEFT PROGRAM
Chapter 956, Statutes of 2000
July 1, 2002, through June 30, 2013
BETTY T. YEE
California State Controller
April 2020
BETTY T. YEE
California State Controller
April 8, 2020
CERTIFIED MAIL—RETURN RECEIPT REQUESTED
Angelina Garcia, Interim Director of Finance
City of Rancho Palos Verdes
30940 Hawthorne Boulevard
Rancho Palos Verdes, CA 90275
Dear Ms. Garcia:
The State Controller’s Office audited the costs claimed by the City of Rancho Palos Verdes for
the legislatively mandated Identity Theft Program for the period of July 1, 2002, through
June 30, 2013.
The city claimed $447,763 for costs of the mandated program. Our audit found that $142,637 is
allowable and $305,126 is unallowable because the city misclassified contract services costs as
salary costs, overstated the time increments required to perform the reimbursable activities, and
overstated indirect costs. The State made no payments to the city. The State will pay $142,637,
contingent upon available appropriations.
Following issuance of this audit report, the State Controller’s Office Local Government
Programs and Services Division will notify the city of the adjustment to its claims via a system-
generated letter for each fiscal year in the audit period.
This final audit report contains an adjustment to costs claimed by the city. If you disagree with
the audit finding, you may file an Incorrect Reduction Claim (IRC) with the Commission on
State Mandates (Commission). Pursuant to the Commission’s regulations, outlined in Title 2,
California Code of Regulations, section 1185.1, subdivision (c), an IRC challenging this
adjustment must be filed with the Commission no later than three years following the date of this
report, regardless of whether this report is subsequently supplemented, superseded, or otherwise
amended. IRC information is available on the Commission’s website at
www.csm.ca.gov/forms/IRCForm.pdf.
P.O. Box 942850, Sacramento, CA 94250 (916) 445-2636
3301 C Street, Suite 700, Sacramento, CA 95816 (916) 324-8907
901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 (323) 981-6802
Angelina Garcia, Interim Director of Finance -2- April 8, 2020
If you have any questions, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by
telephone at (916) 327-3138.
Sincerely,
Original signed by
JIM L. SPANO, CPA
Chief, Division of Audits
JLS/as
cc: The Honorable John Cruikshank, Mayor
City of Rancho Palos Verdes
Captain James C. Powers, Lomita Station
Los Angeles County Sheriff’s Department
Chris Hill, Principal Program Budget Analyst
Local Government Unit
California Department of Finance
Steven Pavlov, Finance Budget Analyst
Local Government Unit
California Department of Finance
Debra Morton, Manager
Local Government Programs and Services Division
State Controller’s Office
City of Rancho Palos Verdes Identity Theft Program
Contents
Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 3
Follow-up on Prior Audit Findings .................................................................................. 4
Views of Responsible Officials .......................................................................................... 4
Restricted Use .................................................................................................................... 4
Schedule—Summary of Program Costs .............................................................................. 5
Finding and Recommendation .............................................................................................. 10
Attachment—City’s Response to the Draft Audit Report
City of Rancho Palos Verdes Identity Theft Program
Audit Report
Summary The State Controller’s Office (SCO) audited the costs claimed by the City
of Rancho Palos Verdes for the legislatively mandated Identity Theft
Program for the period of July 1, 2002, through June 30, 2013.
The city claimed $447,763 for costs of the mandated program. Our audit
found that $142,637 is allowable and $305,126 is unallowable because the
city misclassified contract services costs as salary costs, overstated the
time increments required to perform the reimbursable activities, and
overstated indirect costs. The State made no payments to the city. The
State will pay $142,637, contingent upon available appropriations.
Background Penal Code (PC) section 530.6, subdivision (a), as added by the Statutes
of 2000, Chapter 956, requires local law enforcement agencies to take a
police report and begin an investigation when a complainant residing
within their jurisdiction reports suspected identity theft.
On March 27, 2009, the Commission of State Mandates (Commission)
found that this legislation mandates a new program or higher level of
service for local law enforcement agencies within the meaning of Article
XIII B, section 6 of the California Constitution, and imposes costs
mandated by the State pursuant to Government Code (GC) section 17514.
The Commission determined that each claimant is allowed to claim and be
reimbursed for the following ongoing activities identified in parameters
and guidelines (Section IV., Reimbursable Activities):
1. Either a) or b) below:
a) Take a police report supporting a violation of Penal Code
section 530.5 which includes information regarding the
personal identifying information involved and any uses of that
personal identifying information that were non-consensual and
for an unlawful purpose, including, if available, information
surrounding the suspected identity theft, places where the
crime(s) occurred, and how and where the suspect obtained and
used the personal identifying information. This activity
includes drafting, reviewing, and editing the identity theft
police report; or
b) Reviewing the identity theft report completed online by the
identity theft victim.
2. Begin an investigation of the facts, including the gathering of facts
sufficient to determine where the crime(s) occurred and what pieces
of personal identifying information were used for an unlawful
purpose. The purpose of the investigation is to assist the victims in
clearing their names. Reimbursement is not required to complete the
investigation for purposes of criminal prosecution.
The Commission also determined that providing a copy of the report to the
complainant and referring the matter to the law enforcement agency where
the suspected crime was committed for further investigation of the facts
are not reimbursable activities.
-1-
City of Rancho Palos Verdes Identity Theft Program
The program’s parameters and guidelines establish the state mandate and
define the reimbursement criteria. In compliance with GC section 17558,
the SCO issues claiming instructions to assist local agencies in claiming
mandated program reimbursable costs.
Objective, Scope, The objective of our audit was to determine whether costs claimed
represent increased costs resulting from the legislatively mandated
and Methodology
Identity Theft Program. Specifically, we conducted this audit 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 audit period was July 1, 2002, through June 30, 2013.
To achieve our objective, we:
Analyzed the annual mandated cost claims filed by the city for the
audit period and identified the significant cost components of each
claim as salaries and indirect costs. Determined whether there were
any errors or unusual or unexpected variances from year to year.
Determined whether the activities claimed adhered to the SCO’s
claiming instructions and the program’s parameters and guidelines;
Completed an internal control questionnaire by interviewing key city
staff. Discussed the claim preparation process with city staff to
determine what information was obtained, who obtained it, and how it
was used;
Obtained system-generated lists of identity theft cases from the Los
Angeles County Sheriff’s Department (LASD) Crime Analysis
Program, Criminal Intelligence Bureau that originated within the city
during the audit period based on information obtained from LASD’s
Los Angeles Regional Crime Information System (LARCIS) to verify
the existence, completeness, and accuracy of unduplicated case counts
for each fiscal year in the audit period;
Designed a statistical sampling plan to test approximately 15-25% of
claimed salary costs, based on a moderate level of detection (audit)
risk. Judgmentally selected two of the city’s filed claims during the
audit period (fiscal year [FY] 2011-12 and FY 2012-13), which
comprised salary costs totaling $75,106 of the $447,762 claimed
(19%). The sampling plan is described in the Finding and
Recommendation section;
Used a random number table to select 149 identity theft cases out of
296 from the two years sampled. Tested the identity theft cases as
follows:
o Determined whether a contemporaneously prepared and approved
police report supported that a violation of PC section 530.5
occurred;
o Obtained from sampled police reports the LASD employee
numbers, names, and employee classifications of staff members
who performed the reimbursable activities pursuant to a contract
-2-
City of Rancho Palos Verdes Identity Theft Program
between the city and Los Angeles County for the city’s law
enforcement services; and
o Compared the employee classifications obtained from the police
reports to those claimed by the city.
Obtained the contract rates from LASD’s Contract Law Enforcement
Bureau for the specific LASD staffing levels in effect during the audit
period for the law enforcement services that LASD provided to the
city;
Used audited time increments required to perform the reimbursable
activities from a time study previously conducted by LASD, as LASD
staff performed all of the city’s mandated identity theft activities.
LASD’s audited identity theft time increments were directly related to
the Identity Theft Program’s reimbursable activities and were properly
supported;
Projected the audit results of the two years tested by multiplying the
actual case counts by the audited average time increments to perform
the activities and then by the contract rates of LASD employees who
performed them. We applied a weighted two-year average of the
sampling results to the remaining eight years of the audit period due
to the homogeneity of the population; and
Reviewed the city’s Single Audit Reports to identify any offsetting
savings or reimbursements from federal or pass-through programs
applicable to the Identity Theft Program. The city also certified in its
claims that it did not receive any offsetting revenues applicable to this
mandated program.
GC sections 12410, 17558.5, and 17561 provide the legal authority to
conduct this audit. 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 objective. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our
audit objective.
We limited our review of the city’s internal controls to gaining an
understanding of the transaction flow and claim preparation process as
necessary to develop appropriate auditing procedures. Our audit scope did
not assess the efficiency or effectiveness of program operations. We did
not audit the city’s financial statements.
Conclusion As a result of performing the audit procedures, we found an instance of
noncompliance with the requirements described in our audit objective. We
did not find that the city claimed costs that were funded by other sources;
however, we did find that it claimed unsupported costs, as quantified in
the Schedule and described in the Finding and Recommendation section
of this audit report. To the extent that the city claimed unsupported costs,
such costs are also excessive and unreasonable.
For the audit period, the City of Rancho Palos Verdes claimed $447,763
for costs of the legislatively mandated Identity Theft Program. Our audit
-3-
City of Rancho Palos Verdes Identity Theft Program
found that $142,637 is allowable and $305,126 is unallowable. The State
made no payments to the city. The State will pay $142,637, contingent
upon available appropriations.
Following issuance of this audit report, the SCO’s Local Government
Programs and Services Division will notify the city of the adjustment to
its claims via a system-generated letter for each fiscal year in the audit
period.
Follow-up on We have not previously conducted an audit of the city’s legislatively
mandated Identity Theft Program.
Prior Audit
Findings
Views of We issued a draft audit report on February 19, 2020. Angelina Garcia,
Responsible Interim Finance Director, responded by letter dated February 27, 2020
(Attachment), disagreeing with the audit results. This final audit report
Officials
includes the city’s response.
Restricted Use This audit report is solely for the information and use of the City of Rancho
Palos Verdes, 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 audit
report, which is a matter of public record and is available on the SCO
website at www.sco.ca.gov.
Original signed by
JIM L. SPANO, CPA
Chief, Division of Audits
April 8, 2020
-4-
City of Rancho Palos Verdes Identity Theft Program
Schedule—
Summary of Program Costs
July 1, 2002, through June 30, 2013
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustments1
July 1, 2002, through June 30, 2003
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 2 6,671 $ - $ ( 26,671)
Begin an investigation of facts 3 ,901 - ( 3,901)
Total salaries 3 0,572 - ( 30,572)
Contract services
Taking police report on violation of PC section 530.5 - 5,264 5,264
Begin an investigation of facts - 4,701 4,701
Total contract services - 9,965 9,965
Total direct costs 3 0,572 9,965 ( 20,607)
Indirect costs 3 ,057 - ( 3,057)
Total program costs $ 3 3,629 9,965 $ ( 23,664)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 9,965
July 1, 2003, through June 30, 2004
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 1 6,366 $ - $ ( 16,366)
Begin an investigation of facts 2 ,390 - ( 2,390)
Total salaries 1 8,756 - ( 18,756)
Contract services
Taking police report on violation of PC section 530.5 - 3,223 3,223
Begin an investigation of facts - 2,879 2,879
Total contract services - 6,102 6,102
Total direct costs 1 8,756 6,102 ( 12,654)
Indirect costs 1 ,876 - ( 1,876)
Total program costs $ 2 0,632 6,102 $ ( 14,530)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 6,102
-5-
City of Rancho Palos Verdes Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustments1
July 1, 2004, through June 30, 2005
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 2 6,967 $ - $ ( 26,967)
Begin an investigation of facts 3 ,942 - ( 3,942)
Total salaries 3 0,909 - ( 30,909)
Contract services
Taking police report on violation of PC section 530.5 - 5,316 5,316
Begin an investigation of facts - 4,748 4,748
Total contract services - 10,064 10,064
Total direct costs 3 0,909 10,064 ( 20,845)
Indirect costs 3 ,090 - ( 3,090)
Total program costs $ 3 3,999 10,064 $ ( 23,935)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 10,064
July 1, 2005, through June 30, 2006
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 3 2,617 $ - $ ( 32,617)
Begin an investigation of facts 4 ,744 - ( 4,744)
Total salaries 3 7,361 - ( 37,361)
Contract services
Taking police report on violation of PC section 530.5 - 6,396 6,396
Begin an investigation of facts - 5,712 5,712
Total contract services - 12,108 12,108
Total direct costs 3 7,361 12,108 ( 25,253)
Indirect costs 3 ,736 - ( 3,736)
Total program costs $ 4 1,097 12,108 $ ( 28,989)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 12,108
July 1, 2006, through June 30, 2007
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 3 8,760 $ - $ ( 38,760)
Begin an investigation of facts 5 ,622 - ( 5,622)
Total salaries 4 4,382 - ( 44,382)
Contract services
Taking police report on violation of PC section 530.5 - 7,579 7,579
Begin an investigation of facts - 6,768 6,768
Total contract services - 14,347 14,347
Total direct costs 4 4,382 14,347 ( 30,035)
Indirect costs 4 ,438 - ( 4,438)
Total program costs $ 4 8,820 14,347 $ ( 34,473)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 14,347
-6-
City of Rancho Palos Verdes Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustments1
July 1, 2007, through June 30, 2008
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 4 0,671 $ - $ ( 40,671)
Begin an investigation of facts 5 ,898 - ( 5,898)
Total salaries 4 6,569 - ( 46,569)
Contract services
Taking police report on violation of PC section 530.5 - 7,944 7,944
Begin an investigation of facts - 7,095 7,095
Total contract services - 15,039 15,039
Total direct costs 4 6,569 15,039 ( 31,530)
Indirect costs 4 ,657 - ( 4,657)
Total program costs $ 5 1,226 15,039 $ ( 36,187)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 15,039
July 1, 2008, through June 30, 2009
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 3 7,553 $ - $ ( 37,553)
Begin an investigation of facts 5 ,405 - ( 5,405)
Total salaries 4 2,958 - ( 42,958)
Contract services
Taking police report on violation of PC section 530.5 - 7,717 7,717
Begin an investigation of facts - 6,892 6,892
Total contract services - 14,609 14,609
Total direct costs 4 2,958 14,609 ( 28,349)
Indirect costs 4 ,296 - ( 4,296)
Total program costs $ 4 7,254 14,609 $ ( 32,645)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 14,609
July 1, 2009, through June 30, 2010
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 3 4,801 $ - $ ( 34,801)
Begin an investigation of facts 5 ,014 - ( 5,014)
Total salaries 3 9,815 - ( 39,815)
Contract services
Taking police report on violation of PC section 530.5 - 7,157 7,157
Begin an investigation of facts - 6,392 6,392
Total contract services - 13,549 13,549
Total direct costs 3 9,815 13,549 ( 26,266)
Indirect costs 3 ,982 - ( 3,982)
Total program costs $ 4 3,797 13,549 $ ( 30,248)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 13,549
-7-
City of Rancho Palos Verdes Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustments1
July 1, 2010, through June 30, 2011
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 3 5,480 $ - $ ( 35,480)
Begin an investigation of facts 5 ,150 - ( 5,150)
Total salaries 4 0,630 - ( 40,630)
Contract services
Taking police report on violation of PC section 530.5 - 6,935 6,935
Begin an investigation of facts - 6,194 6,194
Total contract services - 13,129 13,129
Total direct costs 4 0,630 13,129 ( 27,501)
Indirect costs 4 ,063 - ( 4,063)
Total program costs $ 4 4,693 13,129 $ ( 31,564)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 13,129
July 1, 2011, through June 30, 2012
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 4 0,935 $ - $ ( 40,935)
Begin an investigation of facts 5 ,931 - ( 5,931)
Total salaries 4 6,866 - ( 46,866)
Contract services
Taking police report on violation of PC section 530.5 - 8,020 8,020
Begin an investigation of facts - 7,162 7,162
Total contract services - 15,182 15,182
Total direct costs 4 6,866 15,182 ( 31,684)
Indirect costs 4 ,686 - ( 4,686)
Total program costs $ 5 1,552 15,182 $ ( 36,370)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 15,182
July 1, 2012, through June 30, 2013
Direct costs:
Salaries
Taking police report on violation of PC section 530.5 $ 2 0,997 $ - $ ( 20,997)
Begin an investigation of facts 7 ,243 - ( 7,243)
Total salaries 2 8,240 - ( 28,240)
Contract services
Taking police report on violation of PC section 530.5 - 9,795 9,795
Begin an investigation of facts - 8,748 8,748
Total contract services - 18,543 18,543
Total direct costs 2 8,240 18,543 ( 9,697)
Indirect costs 2 ,824 - ( 2,824)
Total program costs $ 3 1,064 18,543 $ ( 12,521)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 18,543
-8-
City of Rancho Palos Verdes Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustments1
Summary: July 1, 2002, through June 30, 2013
Direct costs:
Salaries $ 4 07,058 $ - $ ( 407,058)
Contract services - 142,637 142,637
Total direct costs 4 07,058 142,637 ( 264,421)
Indirect costs 4 0,705 - ( 40,705)
Total program costs $ 4 47,763 142,637 $ ( 305,126)
Less amount paid by the State2 -
Allowable costs claimed in excess of amount paid $ 142,637
_________________________
1 See the Finding and Recommendation section.
2 Payment amount current as of March 10, 2020.
-9-
City of Rancho Palos Verdes Identity Theft Program
Finding and Recommendation
FINDING— The city claimed $447,763 ($407,058 in salary costs with no related
benefits and $40,705 in related indirect costs) for the Identity Theft
Overstated Identity
Program. We found that $142,637 of contract services is allowable and all
Theft Program costs
of the salary and related indirect costs claimed are unallowable. The
unallowable costs occurred because the city overstated salary costs by
$407,058, overstated indirect costs by $40,705, and understated contract
services costs by $142,637.
Salary costs are determined by multiplying the number of identity theft
police reports by the time required to perform the reimbursable activities,
and then by the weighted average productive hourly rates (PHRs) of the
employee classifications that performed the reimbursable activities.
Contract services costs are calculated in the same manner, except that
weighted average contract rates are used for the employees that performed
the reimbursable activities.
The costs are unallowable because the city misinterpreted the program’s
parameters and guidelines. As a result, the city misclassified contract
services costs as salary costs, overstated the time increments required to
perform the reimbursable activities, and overstated indirect costs.
The following table summarizes the claimed, allowable, and audit
adjustment amounts by fiscal year:
Salaries Related Contract Total
Fiscal Amount Amount Audit Indirect Cost Services Audit
Year Claimed Allowable Adjustment Adjustment Adjustment Adjustment
2002-03 $ 30,572 $ - $ (30,572) $ (3,057) $ 9,965 $ (23,664)
2003-04 18,756 - (18,756) (1,876) 6,102 (14,530)
2004-05 30,909 - (30,909) (3,090) 10,064 (23,935)
2005-06 37,361 - (37,361) (3,736) 12,108 (28,989)
2006-07 44,382 - (44,382) (4,438) 14,347 (34,473)
2007-08 46,569 - (46,569) (4,657) 15,039 (36,187)
2008-09 42,958 - (42,958) (4,296) 14,609 (32,645)
2009-10 39,815 - (39,815) (3,982) 13,549 (30,248)
2010-11 40,630 - (40,630) (4,063) 13,129 (31,564)
2011-12 46,866 - (46,866) (4,686) 15,182 (36,370)
2012-13 28,240 - (28,240) (2,824) 18,543 (12,521)
Total $ 407,058 $ - $ (407,058) $ (40,705) $ 142,637 $ (305,126)
Counts of identity theft police reports
Under a contract between the city and Los Angeles County, LASD
provided law enforcement services to Rancho Palos Verdes during the
audit period. LASD’s Lomita Station provided law enforcement services
to residents of the city under a Municipal Law Enforcement Service
Agreement, which included identity theft cases. The city claimed costs
incurred for taking police reports related to 1,575 identity theft cases
during the audit period. LASD had supporting documentation for the
identity theft case counts related to the city.
-10-
City of Rancho Palos Verdes Identity Theft Program
The LASD’s LARCIS is a database system that provides unduplicated
counts of initial police reports filed for violations of PC section 530.5 and
identifies the specific origin of each report.
We determined the accuracy of LASD’s LARCIS unduplicated counts of
initial police reports by:
Determining whether each identity theft case was supported by a
contemporaneously prepared and approved police report; and
Determining whether the police report supported a violation of PC
section 530.5.
We developed a statistical sampling plan and generated statistical samples
of identity theft cases for these two procedures so that we could project
our sample results to the population of identity theft cases for the entire
audit period. We selected our statistical samples of identity theft cases
originating in the city based on a 95% confidence level, a sampling error
of +/-8%, and an expected (true) error rate of 50%. We judgmentally
selected FY 2011-12 and FY 2012-13 for testing. Our sampling plan
required that we test 74 reports from FY 2011-12 and 75 reports from
FY 2012-13.
Our testing disclosed the following:
For FY 2011-12, we selected 74 cases from the population of 147
cases for testing by using a random number table. Our testing
disclosed that 1.35% of the cases was unallowable because the cases
were not supported by a contemporaneously prepared and approved
police report (one instance).
For FY 2012-13, we selected 75 cases from the population of 149
cases for testing by using a random number table. Our testing
disclosed that 1.33% of the cases was unallowable because the cases
were not a violation of PC section 530.5 (one instance).
We calculated a 1.34% average percentage of unallowable incident reports
for both years tested. As this error rate is immaterial, we determined that
the case counts claimed by the city were reasonable and not excessive and,
therefore, were allowable as claimed.
Overstated time increments
Claimed Time Increments
The city claimed time increments spent by LASD Deputy Sheriffs to
perform the following reimbursable activities:
Taking and drafting the police report on violation of PC section 530.5
(Activity 1a); and
Began an investigation of the facts of the Idenity Theft cases
(Activity 2).
The city also claimed time for LASD Sergeants to perform the
reimbursable activity of reviewing and approving police reports
(Activity 1a).
-11-
City of Rancho Palos Verdes Identity Theft Program
The city provided an unsigned and undated declaration to support the time
increments claimed. The city’s declaration identified the following
activities, employee classifications, and time increments:
Reimbursable Employee Minutes
Activity Classification Description Required
1a – Take a police report Deputy Sheriff Gather information and draft identity
theft report 120
1a – Take a police report Secretary Type, transcribe, or provide clerical
support * 6 0
1a – Take a police report Sergeant
Review, edit, and approve the report 20
Total – Activity 1a 200
2 – Begin an investigation Detective ** Gather facts sufficient to determine
where the crime(s) occurred and what
pieces of personal identifying
information were used for an unlawful
purpose 20
Total – Activity 2 20
Notes
* – The city did not claim time for Secretaries
** – The city claimed time for an LASD Deputy Sheriff, not a Detective
The parameters and guidelines for the mandated program require that costs
“be traceable to and supported by source documents that show the validity
of such costs, when they were incurred, and their relationship to the
mandated activities.” As the city did not support its declaration with any
contemporaneously prepared documentation that complies with this
requirement, we determined that the time increments claimed are
estimated and unsupported.
Allowable Time Increments
During audit fieldwork, LASD’s Lomita Station provided system-
generated summary reports of handling time in minutes for time spent by
LASD sworn officers performing the reimbursable activities during the
audit period. The city prepared these reports using LASD’s Regional
Allocation of Police Services (RAPS) system based on three identity theft
statistical codes. LASD stated that the RAPS report is intended to track all
law enforcement personnel that worked on a case. The totals for each of
the three identity theft statistical codes identified an average handling time
of 58 minutes spent by LASD officers preparing police reports for all
identity theft cases per fiscal year. However, as these were summary
reports, we could not trace the reported handling time to any individual
approved police report supporting violations of PC section 530.5.
Sworn officers within LASD’s Field Operations Support Services (FOSS)
Unit advised that the statistical codes on each case number within the
RAPS system could change after approval of the initial report or upon
further investigation. FOSS Unit officers also stated that an incident report
with an identity theft statistical code could disclose a violation of Penal
Code sections other than 530.5 (identity theft). Therefore, we concluded
-12-
City of Rancho Palos Verdes Identity Theft Program
that these summary reports alone did not provide sufficient evidence
supporting time increments spent by LASD officers performing the
reimbursable activities.
As an alternative, we used previously audited LASD identity theft time
increments for the following reasons:
The city contracted with LASD for its law enforcement services.
Therefore, LASD officers performed the reimbursable activities and
LASD also retained supporting documentation related to performing
these activities;
We previously audited the time increments used by LASD staff to
perform the reimbursable activities from FY 2004-05 through
FY 2012-13. SCO issued its audit report for the Los Angeles County’s
Identity Theft Program claims on June 12, 2017; and
LASD’s audited time increments directly relate to the Identity Theft
Program’s reimbursable activities and are properly supported.
In our June 12, 2017 audit report, we noted that LASD conducted a one-
month time study during June 2012 to determine how long it took to
perform reimbursable activities directly related to the Identity Theft
Program. LASD officers at sheriff’s stations in Lakewood, Palmdale, and
Santa Clarita participated in the time study. LASD chose these stations in
order to provide time study results from contract cities representing both
urban and rural unincorporated areas of Los Angeles County.
In that time study, LASD broke down reimbursable activity 1.a (Taking a
police report) into two sub-activities. Those sub-activities included writing
and editing the initial police report (activity 1a.1), and reviewing the police
report (activity 1a.2). LASD separated these activities because various
LASD staff performed activity 1a.1, while only Watch Sergeants
performed activity 1a.2. The county’s time study supported 58.31 minutes
to perform the reimbursable activities (26.94 minutes to take a police
report, 7.31 minutes to review the report, and 24.06 minutes to begin an
investigation). We noted that these results matched the average time of
58 minutes identified in the RAPS reports previously provided by LASD’s
Lomita Station, as noted above.
Therefore, we applied the following time increments (in minutes) for each
allowable police report that originated in the City of Rancho Palos Verdes:
Activity 1a – Take a police report supporting a violation of PC
section 530.5: 26.94 minutes for Deputy Sheriffs; and
Activity 2 – Beginning an investigation of the facts (sufficient to
determine where the crime occurred and the pieces of personal
identifying information used for an unlawful purpose): 24.06 minutes
for Deputy Sheriffs.
We did not include the 7.31 minutes spent by LASD Watch Sergeants to
review the reports because the city’s contract with LASD during the audit
period included only costs for time spent by LASD Deputy Sheriffs and
did not include costs for time spent by LASD Sergeants. Therefore, the
city did not incur any costs for time spent by LASD Watch Sergeants on
the reimbursable activities.
-13-
City of Rancho Palos Verdes Identity Theft Program
The following table summarizes the time claimed and allowable for the
reimbursable activities by fiscal year:
Claimed Minutes Allowable Minutes
Activity 1a.1 Activity 1a.2 Activity 2 Activity 1a.1 Activity 1a.2 Activity 2
Taking a Reviewing a Beginning Taking a Reviewing a Beginning
Fiscal police police an police police an
Year report report investigation report report investigation
2002-03 120.00 2 0.00 20.00 26.94 - 24.06
2003-04 120.00 2 0.00 20.00 26.94 - 24.06
2004-05 120.00 2 0.00 20.00 26.94 - 24.06
2005-06 120.00 2 0.00 20.00 26.94 - 24.06
2006-07 120.00 2 0.00 20.00 26.94 - 24.06
2007-08 120.00 2 0.00 20.00 26.94 - 24.06
2008-09 120.00 2 0.00 20.00 26.94 - 24.06
2009-10 120.00 2 0.00 20.00 26.94 - 24.06
2010-11 120.00 2 0.00 20.00 26.94 - 24.06
2011-12 120.00 2 0.00 20.00 26.94 - 24.06
2012-13 4 2.75 1 7.10 20.00 26.94 - 24.06
Misclassified costs
The city misclassified its claimed costs as employee salaries and related
indirect costs although the costs were actually contract services. The city
claimed salary costs for all years of the audit period based on PHRs for
Deputy Sheriffs and Sergeants. However, these employees were LASD
staff members who provided law enforcement services to the city pursuant
to the city’s contract with LASD. Therefore, claimed salary costs totaling
$407,058 and related indirect costs totaling $40,704 for the audit are
unallowable as claimed. We performed an analysis to determine allowable
contract services costs. We are presenting that analysis below, under the
heading of Allowable Contract Services Costs.
Allowable Contract Services Costs
Understated contract services costs
As noted above, the city did not claim any costs for contract services
during the audit period, although it contracted with Los Angeles County
for its law enforcement services, including all activities related to identity
theft.
During the audit, the city provided a copy of the signed Municipal Law
Enforcement Services Agreement that it negotiated with Los Angeles
County. The contract specifies that the services performed and requested
by the city shall be “indicated on a Los Angeles County Sheriff’s
Department SH-AD 575 Deployment of Personnel Form.” The county
uses this form to indicate the authorized LASD staffing level for each year
that the contract is in effect, and the rates billed to the city for various
LASD staff. We considered these forms as sufficient and appropriate
evidence to support the city’s contract services costs related to its Identity
Theft Program claims.
-14-
City of Rancho Palos Verdes Identity Theft Program
The city provided copies of its SH-AD 575 forms for all years of the audit
period. The contract law enforcement staffing level in effect for the entire
audit period included the sworn officer classifications of Sheriff Deputy
Generalist and Sheriff Deputy Bonus I. As noted previously, the city’s
contract with the county did not include costs for Sergeants.
Staff Allowable
In order to clarify which LASD staff performed the reimbursable
activities, we:
Obtained the LASD employee numbers from the sampled police
reports and LASD employee names from LASD’s Lomita Station; and
Calculated the extent that various contract LASD employees
performed the reimbursable activities (percentage of involvement) for
the city’s identity theft cases.
We found that Deputy Sheriffs performed reimbursable activity 1.a.1
(Taking a police report) and reimbursable activity 2 (Beginning an
investigation). Specifically, employees in the Deputy Sheriff Generalist
and the Deputy Sheriff Bonus I classifications performed these activities
at a level of 91% and 9%, respectively. We also noted, from viewing
copies of the filed police reports, that Sergeants reviewed and approved all
of the reports (reimbursable activity 1.a.2.) However, as already noted, the
approved staffing levels for the city did not include Sergeants during the
audit period. Therefore, the city did not incur any costs for time spent by
LASD Sergeants.
Contract Law Enforcement Rates
LASD’s Contract Law Enforcement Bureau provided contract rates for the
specific LASD staffing levels in effect during the audit period for the law
enforcement services that LASD provided to the city.
We noted that the salary rates included in the city’s claims are based on
LASD contract rates for the classifications of LASD Deputies and
Sergeants. The following table compares and summarizes the contract
rates claimed as employee salary rates and the allowable contract rates for
the audit period:
Employee Rates Claimed Contract Rates Allowable
Deputy Deputy Deputy
Fiscal Sheriff/ Sheriff Sheriff
Year Officer Sergeant Generalist Bonus I
2002-03 $ 87.34 $ 73.07 $ 87.01 $ 92.28
2003-04 89.62 76.01 89.28 94.40
2004-05 90.26 76.01 89.92 95.08
2005-06 95.51 83.66 95.14 100.26
2006-07 100.39 89.81 100.01 105.16
2007-08 107.89 96.64 107.48 111.92
2008-09 106.68 101.10 112.66 117.20
2009-10 109.80 103.27 115.95 120.38
2010-11 116.17 103.27 115.72 120.36
2011-12 119.41 107.73 119.28 125.90
2012-13 122.07 108.72 121.94 128.86
-15-
City of Rancho Palos Verdes Identity Theft Program
We calculated allowable costs for contract services during the audit period
based on the audited counts of PC section 530.5 identity theft reports,
audited time increments, and hourly contract rates.
For example, the following table shows the calculation of allowable
contract services costs for FY 2012-13:
[A] [B] [C] [D] [E] [F]
Allowable
Time Allowable Allowable
Reimbursable LASD Case Increment Hours Contract Percentage Costs
Activity Classification Count (Minutes) (col ([A] × [B]) / 60) Rates Involvement (col [C] × [D] × [E])
1a Deputy Sheriff Generalist 178 26.94 79.92 $ 121.94 91% $ 8,868
1a Deputy Sheriff Bonus 1 178 26.94 79.92 $ 128.86 9% 927
2 Deputy Sheriff Generalist 178 24.06 71.38 $ 121.94 91% 7 ,920
2 Deputy Sheriff Bonus 1 178 24.06 71.38 $ 128.86 9% 828
$ 18,543
The following table summarizes the allowable contract services costs by
fiscal year:
Allowable
Contract
Fiscal Services
Year Costs
2002-03 $ 9,965
2003-04 6,102
2004-05 10,064
2005-06 12,108
2006-07 14,347
2007-08 15,039
2008-09 14,609
2009-10 13,549
2010-11 13,129
2011-12 15,182
2012-13 18,543
$ 142,637
Criteria
Section III. (Period of Reimbursement) of the parameters and guidelines
states, in part, “Actual costs for one fiscal year shall be included in each
claim.”
Section IV. (Reimbursable Activities) of the parameters and guidelines
states, in part:
To be eligible for mandated cost reimbursement for any given fiscal year,
only actual costs may be claimed. Actual costs are those costs actually
incurred to implement the mandated activities. Actual costs must be
traceable to and supported by source documents that show the validity
of such costs, when they were incurred, and their relationship to the
reimbursable activities. A source document is a document created at or
near the same time the actual cost was incurred for the event or activity
-16-
City of Rancho Palos Verdes Identity Theft Program
in question. Source documents may include, but are not limited to,
employee time records or time logs, sign-in sheet, invoices, and receipts.
Section IV. (Reimbursable Activities) of the parameters and guidelines
also states, in part:
For each eligible claimant, the following ongoing activities are eligible
for reimbursement:
1. Either a) or b) below:
a) Take a police report supporting a violation of Penal Code
section 530.5 which includes information regarding the
personal identifying information involved and any uses of that
personal information that were non-consensual and for an
unlawful purpose, including, if available, information
surrounding the suspected identity theft, places where the
crime(s) occurred, and how and where the suspect obtained and
used the personal identifying information. This activity
includes drafting, reviewing, and editing the identity theft
police report; or
b) Reviewing the identity theft report completed on-line by the
identity theft victim.
2. Begin an investigation of the facts, including the gathering of facts
sufficient to determine where the crime(s) occurred and what pieces
of personal identifying information were used for an unlawful
purpose. The purpose of the investigation is to assist the victims in
clearing their names. Reimbursement is not required to complete the
investigation for purposes of criminal prosecution.
Section V. (Claim Preparation and Submission) of the parameters and
guidelines states, in part:
1. Salaries and benefits
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 specific
reimbursable activities performed and the hours devoted to these
activities.
Recommendation
The State Legislature suspended the Identity Theft Program in the
FY 2013-14 through FY 2019-20 Budget Acts. If the program becomes
active again, we recommend that the city:
Adhere to the program’s parameters and guidelines and claiming
instructions when claiming reimbursement for mandated costs; and
Ensure that claimed costs include only eligible costs, are based on
actual costs, and are properly supported.
-17-
City of Rancho Palos Verdes Identity Theft Program
City’s Response
The areas of disagreement we wish to re-state further relate to allowable
time increments to:
1) Begin Investigation: gather Information in order to take an ID
Theft report
Allowed = 24.06 minutes per case. Requested = 58 minutes per
case.
We believe there is may be some confusion on what time and
activities the RAPS system tracks. On page 4, paragraph 1, of the
preliminary report, it states, “LASD stated that it intends the RAPS
report to track all law enforcement personnel that worked on a case.”
RPV Sergeant DiGerlando has explained that this statement is not
accurate. RAPS only tracked the Deputy’s initial on-scene time:
time when the deputy arrived on scene and when the Deputy notifies
dispatch that they have left the scene/call for service.
As the RAPS system only records initial on-scene time, it would
only track the Deputies initial time meeting with the victim to gather
information in order to take the report. It does not include deputy
report writing (which occurs after the deputy has notified dispatch
that they have left the scene) and it would definitely not include
Sergeant report review time which occurs much later.
Perhaps the RAPS systems were being mistaken during the review
for the CLETS systems -which is used by Detectives to track their
follow-up investigative time and activities. We did not claim
Detective time or activities nor did we use times from the CLETS
system.
The Preliminary Finding on the same pages stated you “could not
trace the reported handling time to any approved police reports
showing violations of PD Codes 530.5.” We are confident that our
RAPS case records can be traced to approved 530.5 police reports.
The narrative seems to refer to records and analysis related to
another entity (LA County audit). We believe that our Lomita
Sheriff’s office can provide you with the evidence needed to show
the RAPS time can be traced to actual 530.5 reports and that the 58
minutes per case for this activity is accurate.
2) Allowable Time Increments: Draft and Edit an ID Theft Report.
Since our RAPS time (58 minutes per case) did not include time to
draft and edit the ID Theft reports and in order to expedite the audit,
we would be willing to accept the LA County average time of 26.94
minutes per case for the Deputy to write a police report.
SCO’s Comments
Our finding and recommendation remain unchanged.
The city did not support the time increments identified in any of its Identity
Theft Program claims with contemporaneously prepared documentation,
as required by Section IV of the program’s parameters and guidelines.
Therefore, we could have concluded that the city’s claims were
unsupported and entirely unallowable as claimed. However, we
recognized that the city incurred costs reimbursable under the mandated
program and worked with the city to determine allowable costs. We also
-18-
City of Rancho Palos Verdes Identity Theft Program
recognized that all of the reimbursable costs incurred by the city resulted
from work performed by LASD staff pursuant to the city’s contract with
Los Angeles County for law enforcement services.
The city’s response requests allowable time increments of 26.94 minutes
for LASD Deputy Sheriffs to write a police report for the city’s identity
theft cases and 58 minutes to begin an investigation of those cases. The
city’s response indicates that the support for these time increments comes
from LASD’s 2012 time study (for writing a police report) and LASD’s
RAPS system summary reports (for beginning an investigation).
We concur with the city that it took 26.94 minutes for LASD Deputy
Sheriffs to write a police report for the city’s identity theft cases and we
identified the allowable costs for this activity in our audit report based on
that time increment.
We do not agree with the city that it took LASD staff 58 minutes per case
for the reimbursable activity of beginning an investigation. We noted that
the total time increment of 58 minutes supported by LASD RAPS system
reports generated by the Lomita Station represents the total handling time
spent by all sworn officers for each of the three LASD statistical codes for
theft of:
117 – goods/services/credits (felony);
118 – utilities/cellular phones (felony); and
119 – attempt/possession of profile information (misdemeanor).
However, representatives of LASD’s FOSS Risk Management Bureau
explained that the county’s RAPS system reports do not provide sufficient
evidence to determine time spent on identity theft cases, which is why
LASD conducted its own time study in 2012 to determine the actual time
that LASD Deputies and Sergeants spent on the reimbursable activities.
Los Angeles County subsequently used the results of its time study to
support its own Identity Theft Program claims during the same period.
FOSS representatives explained that statistical codes for police reports
could be changed from the code reported for the original call for service
through subsequent supplemental reports or when a case is transferred,
either to a detective within the same patrol station or to the commercial
crimes or major crimes bureaus at LASD Headquarters. Because of these
facts, and the fact that RAPS system reports were only in summary form,
we did not rely on RAPS system information at all during our audit.
We used data taken from LASD’s LARCIS to determine the actual number
of identity theft cases filed during the audit period related to the city. As
noted in our report, we accepted the case counts claimed by the city during
the entire audit period. LARCIS also provides detail information for each
specific identity theft report that is not available in the summary reports
provided by the RAPS system.
LASD’s Time Study
To determine the amount of time spent by LASD staff on the reimbursable
activities for the city, we used data taken directly from the time study
conducted by LASD personnel in June of 2012 at its Lakewood, Palmdale,
-19-
City of Rancho Palos Verdes Identity Theft Program
and Santa Clarita stations. The county chose these three stations because
they represented both urban and rural areas of the county. Sworn officers
within FOSS planned and executed the time study, which included 12
specific activities.
For the purposes of filing mandated cost claims, the time study supported
an average of 58.31 minutes per identity theft case, as follows:
26.94 minutes – Handling Deputy takes a police report;
7.31 minutes – Watch Sergeant reviews and edits the report; and
24.06 minutes – Handling Deputy begins an investigation.
Taking a Police Report
The LASD time study identified three activities (activities 3, 8, and 10)
that relate to taking a police report related to violations of PC
section 530.5, as follows:
Activity 3 – Handling Deputy reviewed and acknowledged the call;
Activity 8 – Handling Deputy writes the incident report; and
Activity 10 – Handling Deputy revises/edits the incident report.
The time study supported an average of 26.94 minutes for LASD Deputy
Sheriffs to complete these three activities.
Reviewing a Police Report
LASD’s time study identified two activities (activities 9 and 11) that relate
to reviewing incident reports, as follows:
Activity 9 – Watch Sergeant reviews the incident report; and
Activity 11 – Watch Sergeant reviews the revised/edited incident
report.
The time study supported an average of 7.31 minutes for LASD Sergeants
to complete these two activities and we would have included this as an
allowable cost. However, as noted in our audit report, the city’s contract
with the County did not include time spent by LASD Sergeants.
Beginning an Investigation
The time study identified two activities (activities 4 and 5) that relate to
beginning an investigation, as follows:
Activity 4 – Handling Deputy investigates/interviews victim; and
Activity 5 – Handling Deputy collects/reviews evidence and
documents.
The time study supported an average of 24.06 minutes for LASD Deputy
Sheriffs to complete these two activities.
-20-
City of Rancho Palos Verdes Identity Theft Program
We determined (and LASD agreed) that time study activity 1, 2, 6, 7, and
12 were not activities recognized as reimbursable by the mandated
program.
Conclusion
In its response to the draft report, the city attempts to make a distinction
between one LASD report and another, under the assumptions that the data
is somehow different and that LASD staff spent more time on the city’s
identity theft cases than it did on its own cases. We do not believe that this
is a logical conclusion. From our perspective, LASD staff performed the
reimbursable activities for the city and LASD conducted a time study
covering the same period as the city’s mandated cost claims to determine
how much time it took to perform the reimbursable activities. Therefore,
by using the county’s time study and statements made by LASD’s FOSS
staff as audit evidence, distinguishing between one LASD report and
another is irrelevant when determining the amount of time that LASD staff
spent on the city’s reimburseable activities.
-21-
City of Rancho Palos Verdes Identity Theft Program
Attachment—
City’s Response to Draft Audit Report
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250
http://www.sco.ca.gov
S19-MCC-0023