City of Fontana

CITY OF FONTANA Audit Report IDENTITY THEFT PROGRAM Chapter 956, Statutes of 2000 July 1, 2005, through June 30, 2013 BETTY T. YEE California State Controller November 2020 BETTY T. YEE California State Controller November 25, 2020 CERTIFIED MAIL—RETURN RECEIPT REQUESTED Lisa Strong, Director of Management Services City of Fontana 8353 Sierra Avenue Fontana, CA 92335 Dear Ms. Strong: The State Controller’s Office audited the costs claimed by the City of Fontana for the legislatively mandated Identity Theft Program for the period of July 1, 2005, through June 30, 2013. The city claimed $819,073 for costs of the mandated program. Our audit found that $241,759 is allowable; and $577,314 is unallowable because the city overstated the number of identity theft reports and the time increments required to perform the reimbursable activities and misstated the job classifications and related productive hourly rates for the city employees who performed the reimbursable activities. The State made no payments to the city. The State will pay $241,759, contingent upon available appropriations. Following issuance of this audit report, the Local Government Programs and Services Division of the State Controller’s Office will notify the city of the adjustment to its claims via a system- generated letter for each fiscal year in the audit period. 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 Lisa Strong, Director of -2- November 25, 2020 Management Services cc: The Honorable Acquanetta Warren, Mayor City of Fontana Steve McGuffey, Administrative Technician Purchasing Department City of Fontana Lieutenant Brian Binks Fontana Police 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 Reimbursement Section State Controller’s Office City of Fontana 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 .............................................................................................. 9 City of Fontana Identity Theft Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by the City of Fontana for the legislatively mandated Identity Theft Program for the period of July 1, 2005, through June 30, 2013. The city claimed $819,073 for costs of the mandated program. Our audit found that $241,759 is allowable, and $577,314 is unallowable because the city overstated the number of identity theft reports and the time increments required to perform the reimbursable activities and misstated the job classifications and related productive hourly rates (PHRs) for the city employees who performed the reimbursable activities. The State made no payments to the city. The State will pay $241,759, 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 on 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 in the -1- City of Fontana Identity Theft Program jurisdiction where the suspected crime was committed for further investigation of the facts are not reimbursable activities. 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.1 The audit period was July 1, 2005, 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, benefits, and indirect costs. Determined whether there were any errors or unusual or unexpected variances from year to year. Reviewed the activities claimed to determine whether they adhered to the SCO’s claiming instructions and the program’s parameters and guidelines;  Completed an internal control questionnaire by interviewing key city staff members. Discussed the claim preparation process with city staff members to determine what information was obtained, who obtained it, and how it was used;  Obtained system-generated lists of identity theft cases from the city’s Computer Aided Dispatch (CAD) Records Management System 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] 2009-10, and FY 2012-13), which comprised salary costs totaling $137,763 of the $406,337 claimed (34%). The sampling plan is described in the Finding and Recommendation section;  Used a random number table to select 179 identity theft cases out of 454 officer-reported cases and 236 out of 1,111 citizen-reported cases 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; and 1 Unreasonable and/or excessive costs include ineligible costs that are not identified in the program’s parameters and guidelines as a reimbursable cost. -2- City of Fontana Identity Theft Program o Obtained the employee numbers, names, and employee classifications from the sampled officer-reported cases documenting who performed the reimbursable activities; o Compared the employee classifications obtained from the police reports to those claimed by the city; o Interviewed a sworn officer at the Fontana Police Department (FPD) to determine which employee classifications reviewed citizen/online-reported cases;  Interviewed a sworn officer at the FPD, which revealed that time spent drafting, editing, reviewing, and approving a police report (taking a police report supporting a violation of PC section 530.5) and time spent reviewing citizen/online reports is not included in the contemporaneous time increments recorded in the city’s CAD. We determined allowable time increments for these reimbursable activities based on the results of this interview;  Projected the audit results of the two years tested by multiplying the actual case counts by the actual average time increments to perform the activities, and multiplying the product by the weighted average PHRs of the employees who performed them. We applied the weighted two-year average of the sampling results to the remaining six years of the audit period due to the homogeneity of the population;  Traced the city’s claimed benefit and indirect cost rates to supporting documentation for each fiscal year in the audit period and verified that the rates claimed were not unreasonable or excessive; 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 instances of noncompliance with the requirements described in our audit objective. We found that the city did not claim costs that were funded by another source; however, the unallowable costs are unsupported, as quantified in the Schedule and described in the Finding and Recommendation section of -3- City of Fontana Identity Theft Program this audit report. To the extent that the city claimed costs not supported by appropriate source documents, such costs are also unreasonable and/or excessive. For the audit period, the City of Fontana claimed $819,073 for costs of the legislatively mandated Identity Theft Program. Our audit found that $241,759 is allowable and $577,314 is unallowable. The State made no payments to the city. The State will pay $241,759, 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 October 21, 2020. We contacted Steve Responsible McGuffey, Administrative Technician, Purchasing Department, by email on November 2, 2020. Mr. McGuffey declined to respond to the draft Officials report. Restricted Use This audit report is solely for the information and use of the City of Fontana, the California Department of Finance, and 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 November 25, 2020 -4- City of Fontana Identity Theft Program Schedule— Summary of Program Costs July 1, 2005, through June 30, 2013 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustments1 July 1, 2005, through June 30, 2006 Direct costs: Salaries Taking police report in violation of PC § 530.5 $ 7,664 $ 3 ,766 $ (3,898) Begin an investigation of facts 10,204 3 ,197 (7,007) Total salaries 17,868 6 ,963 (10,905) Benefits 9,327 3 ,471 (5,856) Total direct costs 27,195 1 0,434 (16,761) Indirect costs 9,300 2 ,922 (6,378) Total program costs $ 36,495 1 3,356 $ (23,139) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 1 3,356 July 1, 2006, through June 30, 2007 Direct costs: Salaries Taking police report in violation of PC § 530.5 $ 14,319 $ 7 ,084 $ (7,235) Begin an investigation of facts 19,546 5 ,968 (13,578) Total salaries 33,865 1 3,052 (20,813) Benefits 17,779 6 ,377 (11,402) Total direct costs 51,644 1 9,429 (32,215) Indirect costs 14,718 5 ,091 (9,627) Total program costs $ 66,362 2 4,520 $ (41,842) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 2 4,520 -5- City of Fontana 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 in violation of PC § 530.5 $ 19,148 $ 9 ,465 $ (9,683) Begin an investigation of facts 26,271 7 ,951 (18,320) Total salaries 45,419 1 7,416 (28,003) Benefits 25,072 9 ,237 (15,835) Total direct costs 70,491 2 6,653 (43,838) Indirect costs 19,738 6 ,929 (12,809) Total program costs $ 90,229 3 3,582 $ (56,647) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 3 3,582 July 1, 2008, through June 30, 2009 Direct costs: Salaries Taking police report in violation of PC § 530.5 $ 29,140 $ 7 ,787 $ (21,353) Reviewing online ID theft report - 4 ,718 4,718 Begin an investigation of facts 41,390 6 ,497 (34,893) Total salaries 70,530 1 9,002 (51,528) Benefits 39,355 1 0,295 (29,060) Total direct costs 109,885 2 9,297 (80,588) Indirect costs 30,328 7 ,852 (22,476) Total program costs $ 140,213 3 7,149 $ (103,064) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 3 7,149 July 1, 2009, through June 30, 2010 Direct costs: Salaries Taking police report in violation of PC § 530.5 $ 34,116 $ 6 ,314 $ (27,802) Reviewing online ID theft report - 7 ,706 7,706 Begin an investigation of facts 48,602 4 ,507 (44,095) Total salaries 82,718 1 8,527 (64,191) Benefits 46,901 9 ,666 (37,235) Total direct costs 129,619 2 8,193 (101,426) Indirect costs 24,627 6 ,259 (18,368) Total program costs $ 154,246 3 4,452 $ (119,794) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 3 4,452 -6- City of Fontana 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 in violation of PC § 530.5 $ 25,796 $ 8 ,164 $ (17,632) Reviewing online ID theft report - 3 ,238 3,238 Begin an investigation of facts 36,749 6 ,785 (29,964) Total salaries 62,545 1 8,187 (44,358) Benefits 33,274 1 0,367 (22,907) Total direct costs 95,819 2 8,554 (67,265) Indirect costs 31,525 6 ,482 (25,043) Total program costs $ 127,344 3 5,036 $ (92,308) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 3 5,036 July 1, 2011, through June 30, 2012 Direct costs: Salaries Taking police report in violation of PC § 530.5 $ 10,904 $ 6 ,145 $ (4,759) Reviewing online ID theft report - 4 ,857 4,857 Begin an investigation of facts 27,083 5 ,107 (21,976) Total salaries 37,987 1 6,109 (21,878) Benefits 21,686 8 ,865 (12,821) Total direct costs 59,673 2 4,974 (34,699) Indirect costs 22,914 5 ,894 (17,020) Total program costs $ 82,587 3 0,868 $ (51,719) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 3 0,868 July 1, 2012, through June 30, 2013 Direct costs: Salaries Taking police report in violation of PC § 530.5 $ 17,054 $ 3 ,623 $ (13,431) Reviewing online ID theft report - 9 ,727 9,727 Begin an investigation of facts 38,351 3 ,370 (34,981) Total salaries 55,405 1 6,720 (38,685) Benefits 32,075 9 ,538 (22,537) Total direct costs 87,480 2 6,258 (61,222) Indirect costs 34,117 6 ,538 (27,579) Total program costs $ 121,597 3 2,796 $ (88,801) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 3 2,796 -7- City of Fontana Identity Theft Program Schedule (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustments1 Summary: July 1, 2005, through June 30, 2013 Salaries $ 406,337 $ 1 25,976 $ (280,361) Benefits 225,469 6 7,816 (157,653) Indirect costs 187,267 4 7,967 (139,300) Total program costs $ 819,073 2 41,759 $ (577,314) Less amount paid by the State2 - Allowable costs claimed in excess of amount paid $ 2 41,759 _________________________ 1 See the Finding and Recommendation section. 2 Payment information is current as of November 3, 2020. -8- City of Fontana Identity Theft Program Finding and Recommendation FINDING— The city claimed $819,073 ($406,337 in salaries, $225,469 in related benefits, and $187,267 in related indirect costs) for the Identity Theft Overstated Identity Program. We found that $241,759 is allowable and $577,314 is Theft Program costs unallowable. To calculate the claimed salaries and benefits, the city multplied the number of written incident reports by the average time increments necessary to process a report, then multiplied the resulting hours by the PHR of the employee classifications that performed the reimbursable activities and related benefit rate. The costs are unallowable because the city misinterpreted the program’s parameters and guidelines, which resulted in an overstated number of identity theft reports, overstated time increments required to perform the reimbursable activities, and misstated job classifications and related PHRs for the city employees who performed the reimbursable activities. The following table summarizes the claimed and allowable amounts, and the audit adjustments by fiscal year: Salaries Related Related Total Fiscal Amount Amount Audit Benefit Indirect Cost Audit Year Claimed Allowable Adjustment Adjustment Adjustment Adjustment 2005-06 $ 1 7,868 $ 6 ,963 $ (10,905) $ (5,856) $ (6,378) $ (23,139) 2006-07 3 3,865 1 3,052 (20,813) (11,402) (9,627) (41,842) 2007-08 4 5,419 1 7,416 (28,003) (15,835) (12,809) (56,647) 2008-09 7 0,530 1 9,002 (51,528) (29,060) (22,476) (103,064) 2009-10 8 2,718 1 8,527 (64,191) (37,235) (18,368) (119,794) 2010-11 6 2,545 1 8,187 (44,358) (22,907) (25,043) (92,308) 2011-12 3 7,987 1 6,109 (21,878) (12,821) (17,020) (51,719) 2012-13 5 5,405 1 6,720 (38,685) (22,537) (27,579) (88,801) Total $ 4 06,337 $ 1 25,976 $ (280,361) $ (157,653) $ (139,300) $ (577,314) Overstated counts of identity theft police reports The city claimed costs incurred for taking police reports related to 4,790 identity theft cases during the audit period. The city provided us with system-generated unduplicated lists of identity theft case numbers of police reports filed for violations of PC section 530.5. The lists differentiated officer-reported cases from citizen-reported (online) cases each fiscal year. We determined the accuracy of the unduplicated counts of initial police reports by determining whether:  Each identity theft case was supported by a contemporaneously prepared and approved police report; and  The police report supported a violation of PC section 530.5. -9- City of Fontana Identity Theft Program 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. We selected our statistical samples of identity theft cases originating within 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 2009-10, and FY 2012-13 for testing. Our testing disclosed the following:  For FY 2009-10, we selected 98 cases from the population of 279 officer-reported cases for testing. We found that 20 cases were unallowable because they did not support violations of PC section 530.5 (20.41% exception rate).  For FY 2009-10, we selected 115 cases from the population of 496 citizen-reported (online) cases for testing. We found that all of the citizen-reported cases were allowable because they supported violations of PC section 530.5.  For FY 2012-13, we selected 81 cases from the population of 175 officer-reported cases for testing. We found that 24 cases were unallowable because they did not support violations of PC section 530.5 (29.63% exception rate).  For FY 2012-13, we also selected 121 cases from the population of 615 citizen-reported cases for testing. We found that all of the citizen- reported (online) cases were allowable because they supported violations of PC section 530.5. We extrapolated and projected the results of our substantive tests of statistical samples to determine the number of allowable and unallowable identity theft incident reports for the entire eight-year audit period. As shown in the table below, we found that 3,880 incident reports are allowable because 910 officer-reported incident reports did not support violations of PC section 530.5. We calculated a 25.02% average error rate for the two years that we tested (FY 2009-10 and FY 2012-13). We applied this average error rate to the other six years of the audit period (FY 2005-06 through FY 2008-09, FY 2010-11, and FY 2011-12). The following table summarizes the counts of claimed, supported, and allowable identity theft cases, and the difference by fiscal year: Per FPD CAD Allowable Fiscal Officer Citizen Officer Citizen Year Claimed Reported Reported Total Reported Reported Total Difference 2005-06 216 216 - 216 162 - 162 (54) 2006-07 382 382 - 382 286 - 286 (96) 2007-08 486 486 - 486 364 - 364 (122) 2008-09 690 374 316 690 280 316 596 (94) 2009-10 775 279 496 775 222 496 718 (57) 2010-11 586 378 208 586 283 208 491 (95) 2011-12 685 284 312 596 213 312 525 (160) 2012-13 970 175 615 790 123 615 738 (232) Total 4,790 2,574 1,947 4,521 1,933 1,947 3,880 (910) -10- City of Fontana Identity Theft Program Overstated time increments Claimed Time Increments The city claimed time increments spent by FPD sworn officers who performed the following reimbursable activities:  Drafting, reviewing, and editing the identity theft police report (Take a police report supporting a violation of PC section 530.5 ‒ Activity 1a.); and  Determining where the crime occurred and what pieces of personal identifying information were used for an unlawful purpose (Begin an investigation of the facts ‒ Activity 2). The city did not provide support for the time increments claimed. The parameters and guidelines for the mandated program state, “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 mandated activities.” As the city did not provide support that complies with this requirement, we determined that the time increments claimed are estimated and unsupported. Allowable Time Increments During audit fieldwork, FPD CAD provided system-generated contemporaneous records of time, in minutes, spent by officers from the time they arrived at a victim’s residence or business located in the city (Time On Scene) to the time they completed the initial call for service (Time Completed). The responding officer is responsible for determining where the crime occurred and what pieces of personal information were used for unlawful purposes (Activity 2). CAD did not record time spent drafting, reviewing, and editing officer- reported identity theft police reports (Activity 1a). Additionally, CAD did not record time spent reviewing citizen-reported (online) identity theft police reports (Activity 1b). The city did not claim costs for reviewing citizen-reported (online) identity theft police reports. FPD provided testimonial evidence of the approximate time spent for reimbursable activities not recorded by its CAD. The following table summarizes the time claimed and allowable for the reimbursable activities by fiscal year: Claimed Minutes Allowable Minutes 1a 2 1a 1a 1b 2 Taking a Beginning T a k i n g a Review and Review Beginning Police an Police Approve a Online an Fiscal Year Report Investigation Report Police Report Police Reports Investigation 2005-06 55.29 60 30 9 18 37 2006-07 55.29 60 30 9 18 37 2007-08 55.29 60 30 9 18 37 2008-09 55.29 60 30 9 18 37 2009-10 55.29 60 30 9 18 32 2010-11 55.29 60 30 9 18 37 2011-12 19.99 45 30 9 18 37 2012-13 20.01 45 30 9 18 41 -11- City of Fontana Identity Theft Program Misstated job classifications and productive hourly rates Claimed Job Classifications The city claimed the following job classifications by reimbursable activity:  Activity 1a – Taking a police report (Drafting, reviewing, and editing the identity theft police reports) o Officer Advanced – FY 2005-06 through FY 2011-12; and o Corporal Advanced – FY 2012-13.  Activity 2 – Beginning an investigation (Determining where the identity theft crime occurred and what pieces of personal identifying information were used for an unlawful purpose) o Sergeant Intermediate – FY 2005-06 through FY 2007-08; o Sergeant Advanced – FY 2008-09 through FY 2010-11; and o Corporal Advanced – FY 2011-12 and FY 2012-13. Staff Allowable In order to clarify which FPD staff members performed the mandated activities, we:  Prepared a schedule of employee numbers and names from copies of the sampled police reports;  Requested information from the city supporting the actual job classifications for the employees identified;  Calculated the extent (percentage of involvement) that various employees performed the mandated activities for the city’s identity theft cases; and  Verified with the city the results of the above steps to confirm the actual job classifications that performed the reimbursable activities. -12- City of Fontana Identity Theft Program The following table summarizes the actual job classifications of the employees who performed the reimbursable activities for FY 2009-10 and FY 2012-13, their percentages of involvement in the reimbursable activities, and the weighted average percentages for the two fiscal years: Fiscal Year Weighted Classification 2009-10 2012-13 Average Officer-reported cases CSO I 37% 11% 26% CSO II 0% 16% 7% Officer Basic 15% 26% 20% Officer Intermediate 13% 24% 17% Officer Advanced 35% 23% 30% Sergeant Advanced 0% 0% 0% 100% 100% 100% Citizen-reported (online) cases Corporal Intermediate 37% 29% 33% Corporal Advanced 63% 71% 67% 100% 100% 100% The approved officer-reported identity theft police reports that we reviewed showed that CSO and Officer job classifications write and edit reports (Activity 1a) after they determine where the identity theft crime occurred and what pieces of personal identifying information were used for an unlawful purpose (Activity 2). Sergeants review and approve all officer-reported identity theft police reports (Activity 1a). The approved citizen-reported (online) identity theft police reports (Activity 1b) showed that Corporals review and approved these reports. We requested and the city provided a schedule of the actual hourly billing rates by organization and title for the employee classifications that performed the reimbursable activities. The city also provided benefit and overhead rates. The following table summarizes the auditor-recalculated weighted- average PHRs for each fiscal year in the audit period based on the percentages of employee involvement in the reimbursable activities, as shown in the table above and the hourly rates provided by the city: Fiscal Weighted Avg 100% Weighted Avg Year CSOs/Officers Sergeants Corporals 5 2005-06 $32.00 $48.33 $41.72 2006-07 $33.84 $52.34 $44.07 2007-08 $35.42 $55.29 $46.33 2008-09 $37.63 $59.98 $49.77 2009-10 $38.07 $62.71 $51.79 2010-11 $38.88 $62.71 $51.89 2011-12 $38.88 $62.71 $51.89 2012-13 $40.10 $62.71 $52.72 -13- City of Fontana Identity Theft Program Allowable related employee benefits Benefit costs are determined by multiplying each year’s allowable salary costs by each year’s benefit rate. Employee benefits related to the allowable salaries identified above are also allowable. The city provided, and we accepted, the benefit rates for each job classification that performed the reimbursable activities for each fiscal year in the audit period. We calculated allowable benefit costs using the benefit rates that the city provided for each job classification for each fiscal year in the audit period. The following table summarizes the claimed and allowable amounts of related benefits, and audit adjustments by fiscal year: Fiscal Related Benefits Audit Year Claimed Allowable Adjustment 2005-06 $ 9,327 $ 3,471 $ (5,856) 2006-07 17,779 6,377 (11,402) 2007-08 25,072 9,237 (15,835) 2008-09 39,355 10,295 (29,060) 2009-10 46,901 9,666 (37,235) 2010-11 33,274 10,367 (22,907) 2011-12 21,686 8,865 (12,821) 2012-13 32,075 9,538 (22,537) $ 225,469 $ 67,816 $ (157,653) Allowable related indirect costs Indirect costs are determined by multiplying each year’s salary and benefit costs by each year’s indirect cost rates. The city provided, and we accepted, the indirect cost rates claimed during the audit period. Unallowable indirect costs are related to the unallowable salaries and benefits previously identified. The following table summarizes the claimed and allowable amounts of related indirect costs, and audit adjustments by fiscal year: Fiscal Related indirect costs Year Claimed Allowable Adjustment 2005-06 $ 9,300 $ 2,922 $ (6,378) 2006-07 14,718 5,091 (9,627) 2007-08 19,738 6,929 (12,809) 2008-09 30,328 7,852 (22,476) 2009-10 24,627 6,259 (18,368) 2010-11 31,525 6,482 (25,043) 2011-12 22,914 5,894 (17,020) 2012-13 34,117 6,538 (27,579) $ 187,267 $ 4 7,967 $ ( 139,300) -14- City of Fontana Identity Theft Program 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: 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 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: 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: 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. -15- City of Fontana Identity Theft Program Recommendation The State Legislature suspended the Identity Theft Program in the FY 2013-14 through FY 2020-21 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. -16- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 http://www.sco.ca.gov S19-MCC-0003