SCO
City of West Hollywood
Identity Theft
Read the report at City of West Hollywood ↗
CITY OF WEST HOLLYWOOD
Audit Report
IDENTITY THEFT PROGRAM
Chapter 956, Statutes of 2000
July 1, 2002, through June 30, 2013
M M. C
ALIA OHEN
California State Controller
January 2023
M M. C
ALIA OHEN
California State Controller
January 26, 2023
CERTIFIED MAIL—RETURN RECEIPT REQUESTED
Lorena Quijano, CPA, MPA, Director
Finance and Technology Services
City of West Hollywood
8300 Santa Monica Boulevard
West Hollywood, CA 90069
Dear Ms. Quijano:
The State Controller’s Office (SCO) audited the costs claimed by the City of West Hollywood
for the legislatively mandated Identity Theft Program for the period of July 1, 2002, through
June 30, 2013.
The city claimed $729,511 for costs of the mandated program. Our audit found that $590,629 is
allowable; and $138,882 is unallowable because the city misclassified contract services costs as
salary costs, overstated the number of identity theft reports taken, overstated the time increments
needed to perform the reimbursable activities, and overstated indirect costs. The State made no
payments to the city. The State will pay $590,629, 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.
If you have any questions, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by
telephone at (916) 327-3138.
Sincerely,
Original signed by
KIMBERLY TARVIN, CPA
Chief, Division of Audits
KT/ac
Lorena Quijano, CPA, MPA, Director -2- January 26, 2023
cc: The Honorable Lauren Meister, Mayor
City of West Hollywood
Danny Rivas, Director
Community Safety Department
City of West Hollywood
Carlos Corrales, Accounting Manager
Finance and Technology Services Department
City of West Hollywood
Claudia Duncan, Senior Financial Management Analyst
Finance and Technology Services Department
City of West Hollywood
Annie Ruiz, Revenue Manager
Finance and Technology Services Department
City of West Hollywood
Chris Hill, Principal Program Budget Analyst
Local Government Unit
California Department of Finance
Ted Doan, Finance Budget Analyst
Local Government Unit
California Department of Finance
Darryl Mar, Manager
Local Reimbursement Section
State Controller’s Office
Everett Luc, Supervisor
Local Reimbursement Section
State Controller’s Office
City of West Hollywood Identity Theft Program
Contents
Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Audit Authority.................................................................................................................. 2
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 4
Follow-up on Prior Audit Findings .................................................................................. 4
Views of Responsible Officials .......................................................................................... 4
Restricted Use .................................................................................................................... 4
Schedule—Summary of Program Costs .............................................................................. 5
Finding and Recommendation .............................................................................................. 12
Attachment A—City’s Initial Response to Draft Audit Report
Attachment B—City’s Final Response to Draft Audit Report
City of West Hollywood Identity Theft Program
Audit Report
Summary The State Controller’s Office (SCO) audited the costs claimed by the City
of West Hollywood for the legislatively mandated Identity Theft Program
for the period of July 1, 2002, through June 30, 2013.
The city claimed $729,511 for costs of the mandated program. Our audit
found that $590,629 is allowable; and $138,882 is unallowable because
the city misclassified contract services costs as salary costs, overstated the
number of identity theft reports taken, overstated the time increments
needed to perform the reimbursable activities, and overstated indirect
costs. The State made no payments to the city. The State will pay
$590,629, contingent upon available appropriations.
Background Penal Code (PC) section 530.6(a), as added by the Statutes of 2000,
Chapter 956, requires a local law enforcement agency to take a police
report and begin an investigation when a complainant residing within its
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 for further investigation of the facts
to the law enforcement agency in the location where the suspected crime
was committed are not reimbursable activities.
-1-
City of West Hollywood 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 the Mandated Cost Manual for Local Agencies (Mandated
Cost Manual) to assist local agencies in claiming reimbursable costs.
We conducted this performance audit in accordance with GC
Audit Authority
sections 17558.5 and 17561, which authorize the SCO to audit the city’s
records to verify the actual amount of the mandated costs. In addition, GC
section 12410 provides the SCO with general authority to audit the
disbursement of state money for correctness, legality, and sufficient
provisions of law.
Objective, Scope, The objective of our audit was to determine whether claimed costs
represent increased costs resulting from the legislatively mandated
and Methodology
Identity Theft Program. Specifically, we conducted this audit to determine
whether claimed costs 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, 2002, through June 30, 2013.
To achieve our objective, we performed the following procedures:
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. We determined whether there were
any errors or unusual or unexpected variances from year to year. We
reviewed the claimed activities to determine whether they adhered to
the SCO’s Mandated Cost Manual and the program’s parameters and
guidelines.
We completed an internal control questionnaire by interviewing key
city staff. We discussed the claim preparation process with city staff
to determine what information was obtained, who obtained it, and how
it was used.
We reviewed the contract service agreements and related Deployment
of Personnel (SH-AD 575) forms executed between the Los Angeles
County Sheriff’s Department (LASD) and the city to determine the
contracted employee classifications involved in performing the
reimbursable activities. We found that the Deputy Sheriff, Community
Service Assistant (CSA), and Sergeant classifications performed the
reimbursable activities.
We obtained the total contract costs and contract hours from the
SH-AD 75 forms in order to calculate average contract hourly rates
for the Deputy Sheriff, CSA, and Sergeant classifications.
We obtained system-generated lists of identity theft cases based on
information from the 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.
1 Unreasonable and/or excessive costs include ineligible costs that are not identified in the programs parameters and
guidelines as reimbursable costs.
-2-
City of West Hollywood Identity Theft Program
We designed a statistical sampling plan to test approximately 25-50%
of claimed salary costs, based on a moderate level of detection (audit)
risk. We judgmentally selected the city’s filed claims for fiscal
year (FY) 2008-09 through FY 2012-13, which comprised salary costs
totaling $331,266 (or 50.56%) of the $655,222 claimed. The sampling
plan is described in the Finding and Recommendation section.
We used a random number table to select 508 out of 1,584 identity
theft reports from the five fiscal years sampled. We tested the identity
theft reports as follows:
o We determined whether a contemporaneously prepared and
approved police report supported that a violation of PC
section 530.5 had occurred.
o We determined whether the initial police reports were courtesy
reports from other law enforcement agencies that had been
forwarded to the West Hollywood Station for further
investigation.
o We determined whether the victim of identity theft contacted the
LASD to inititate the law enforcement investigation.
o We obtained the LASD employee numbers, names, and
classifications from sampled police reports documenting who
performed the reimbursable activities pursuant to a contract
between the city and Los Angeles County for the city’s law
enforcement services. We compared the employee classifications
obtained from the police reports to those claimed by the city.
We used the time study documentation created by LASD employees
at the West Hollywood Station during January 2011 through
June 2011. This time study was directly related to the Identity Theft
Program’s reimbursable activities and was properly supported. Based
on our interview with a sworn officer and our review of the time study
documentation, we found that the city overstated the time increments
that it used to calculate the costs of the reimbursable activities.
We projected the audit results of the five years tested by multiplying
the actual case counts by the allowable average time increments
needed to perform the activities, and mutiplying the product by the
contract rates of LASD employees who performed them. We applied
a weighted five-year average to the remaining six years of the audit
period due to the homogeneity of the population.
We reviewed the city’s Single Audit Reports to identify potential
sources of offsetting savings or reimbursements from federal or pass-
through programs applicable to the Identity Theft Program. The city
certified in its claims that it did not receive any offsetting revenues
applicable to this mandated program.
We did not audit the city’s financial statements.
We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our
audit objective. We believe that the evidence obtained provides a
-3-
City of West Hollywood Identity Theft Program
reasonable basis for our findings and conclusions based on our
audit objective.
Conclusion As a result of performing the audit procedures, we found instances of
noncompliance with the requirements described in our audit objective. We
did not find that the City of West Hollywood claimed costs that were
funded by other sources; however, we did find that it claimed unsupported
and ineligible costs, as quantified in the Schedule and described in the
Finding and Recommendation section of this audit report.
For the audit period, the city claimed $729,511 for costs of the legislatively
mandated Identity Theft Program. Our audit found that $590,629 is
allowable and $138,882 is unallowable. The State made no payments to
the city. The State will pay $590,629, 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 of West
Hollywood’s legislatively mandated Identity Theft Program.
Prior Audit
Findings
Views of We issued a draft audit report on October 20, 2022. Lorena Quijano, CPA,
Responsible MPA, Director, Finance and Technology Services, responded by letter
dated October 28, 2022, disagreeing with the audit results. We considered
Officials
the city’s arguments and partially agreed with the position stated in its
response. Accordingly, we revised the audit finding, increasing allowable
costs by $200,247 (from $390,382 to $590,629). We emailed the revised
finding to the city on November 28, 2022. Ms. Quijano responded by letter
dated December 7, 2022, disagreeing only with the audit result concerning
indirect costs. The city’s responses are included in this report as
Attachments A and B.
Restricted Use This audit report is solely for the information and use of the City of West
Hollywood, 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
KIMBERLY TARVIN, CPA
Chief, Division of Audits
January 26, 2023
-4-
City of West Hollywood Identity Theft Program
Schedule—
Summary of Program Costs
July 1, 2002, through June 30, 2013
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2002, through June 30, 2003
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 3 6,233 $ - $ (36,233)
Beginning an investigation of facts 19,389 - (19,389)
Total salaries 55,622 - (55,622)
Contract services
Taking a police report on a violation of PC §530.5 - 14,798 14,798
Beginning an investigation of facts - 8,680 8,680
Total contract services - 23,478 23,478
Total direct costs 55,622 23,478 (32,144)
Indirect costs 5,562 - ( 5,562)
Total program costs $ 6 1,184 23,478 $ (37,706)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 2 3,478
July 1, 2003, through June 30, 2004
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 3 7,365 $ - $ (37,365)
Beginning an investigation of facts 20,247 - (20,247)
Total salaries 57,612 - (57,612)
Contract services
Taking a police report on a violation of PC §530.5 - 21,999 21,999
Beginning an investigation of facts - 12,891 12,891
Total contract services - 34,890 34,890
Total direct costs 57,612 34,890 (22,722)
Indirect costs 5,761 - ( 5,761)
Total program costs $ 6 3,373 34,890 $ (28,483)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 3 4,890
-5-
City of West Hollywood Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2004, through June 30, 2005
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 2 4,259 $ - $ (24,259)
Begin an investigation of facts 13,058 - (13,058)
Total salaries 37,317 - (37,317)
Contract services
Taking a police report on a violation of PC §530.5 - 27,400 27,400
Begin an investigation of facts - 16,032 16,032
Total contract services - 43,432 43,432
Total direct costs 37,317 43,432 6,115
Indirect costs 3,732 ( 3,732)
Total direct and indirect costs 41,049 43,432 2,383
Less allowable costs that exceed costs claimed2 - (2,383) ( 2,383)
Total program costs $ 4 1,049 41,049 $ -
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 4 1,049
July 1, 2005, through June 30, 2006
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 3 5,525 $ - $ (35,525)
Begin an investigation of facts 19,865 - (19,865)
Total salaries 55,390 - (55,390)
Contract services
Taking a police report on a violation of PC §530.5 - 26,712 26,712
Begin an investigation of facts - 15,621 15,621
Total contract services - 42,333 42,333
Total direct costs 55,390 42,333 (13,057)
Indirect costs 5,539 - ( 5,539)
Total program costs $ 6 0,929 42,333 $ (18,596)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 4 2,333
-6-
City of West Hollywood Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2006, through June 30, 2007
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 7,679 $ - $ (47,679)
Begin an investigation of facts 11,276 - (11,276)
Total salaries 58,955 - (58,955)
Contract services
Taking a police report on a violation of PC §530.5 - 35,297 35,297
Begin an investigation of facts - 20,600 20,600
Total contract services - 55,897 55,897
Total direct costs 58,955 55,897 ( 3,058)
Indirect costs 5,895 - ( 5,895)
Total program costs $ 6 4,850 55,897 $ (8,953)
Less amount paid by the state3 -
Allowable costs claimed in excess of amount paid $ 5 5,897
July 1, 2007, through June 30, 2008
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 8,141 $ - $ (48,141)
Begin an investigation of facts 10,919 - (10,919)
Total salaries 59,060 - (59,060)
Contract services
Taking a police report on a violation of PC §530.5 - 37,332 37,332
Begin an investigation of facts - 21,776 21,776
Total contract services - 59,108 59,108
Total direct costs 59,060 59,108 48
Indirect costs 7,619 - ( 7,619)
Total program costs $ 6 6,679 59,108 $ (7,571)
Less amount paid by the state3 -
Allowable costs claimed in excess of amount paid $ 5 9,108
-7-
City of West Hollywood Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2006, through June 30, 2007
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 7,679 $ - $ (47,679)
Begin an investigation of facts 11,276 - (11,276)
Total salaries 58,955 - (58,955)
Contract services
Taking a police report on a violation of PC §530.5 - 35,297 35,297
Begin an investigation of facts - 20,600 20,600
Total contract services - 55,897 55,897
Total direct costs 58,955 55,897 ( 3,058)
Indirect costs 5,895 - ( 5,895)
Total program costs $ 6 4,850 55,897 $ (8,953)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 5 5,897
July 1, 2007, through June 30, 2008
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 8,141 $ - $ (48,141)
Begin an investigation of facts 10,919 - (10,919)
Total salaries 59,060 - (59,060)
Contract services
Taking a police report on a violation of PC §530.5 - 37,332 37,332
Begin an investigation of facts - 21,776 21,776
Total contract services - 59,108 59,108
Total direct costs 59,060 59,108 48
Indirect costs 7,619 - ( 7,619)
Total program costs $ 6 6,679 59,108 $ (7,571)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 5 9,108
_______________________
-8-
City of West Hollywood Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2008, through June 30, 2009
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 5 3,862 $ - $ (53,862)
Begin an investigation of facts 14,559 - (14,559)
Total salaries 68,421 - (68,421)
Contract services
Taking a police report on a violation of PC §530.5 - 44,123 44,123
Begin an investigation of facts - 25,777 25,777
Total contract services - 69,900 69,900
Total direct costs 68,421 69,900 1,479
Indirect costs 9,853 - ( 9,853)
Total program costs $ 7 8,274 69,900 $ (8,374)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 6 9,900
July 1, 2009, through June 30, 2010
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 9,222 $ - $ (49,222)
Begin an investigation of facts 12,479 - (12,479)
Total salaries 61,701 - (61,701)
Contract services
Taking a police report on a violation of PC §530.5 - 40,706 40,706
Begin an investigation of facts - 23,771 23,771
Total contract services - 64,477 64,477
Total direct costs 61,701 64,477 2,776
Indirect costs 8,823 - ( 8,823)
Total program costs $ 7 0,524 64,477 $ (6,047)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 6 4,477
-9-
City of West Hollywood Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2010, through June 30, 2011
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 8,622 $ - $ (48,622)
Begin an investigation of facts 11,808 - (11,808)
Total salaries 60,430 - (60,430)
Contract services
Taking a police report on a violation of PC §530.5 - 33,791 33,791
Begin an investigation of facts - 19,715 19,715
Total contract services - 53,506 53,506
Total direct costs 60,430 53,506 ( 6,924)
Indirect costs 7,433 - ( 7,433)
Total program costs $ 6 7,863 53,506 $ (14,357)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 5 3,506
July 1, 2011, through June 30, 2012
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 6 4,908 $ - $ (64,908)
Begin an investigation of facts 14,677 - (14,677)
Total salaries 79,585 - (79,585)
Contract services
Taking a police report on a violation of PC §530.5 - 51,446 51,446
Begin an investigation of facts - 30,023 30,023
Total contract services - 81,469 81,469
Total direct costs 79,585 81,469 1,884
Indirect costs 7,959 - ( 7,959)
Total program costs $ 8 7,544 81,469 $ (6,075)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 8 1,469
-10-
City of West Hollywood Identity Theft Program
Schedule (continued)
Actual Costs Allowable Audit
Cost Elements Claimed per Audit Adjustment1
July 1, 2012, through June 30, 2013
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 4 9,818 $ - $ (49,818)
Begin an investigation of facts 11,311 - (11,311)
Total salaries 61,129 - (61,129)
Contract services
Taking a police report on a violation of PC §530.5 - 40,729 40,729
Begin an investigation of facts - 23,793 23,793
Total contract services - 64,522 64,522
Total direct costs 61,129 64,522 3,393
Indirect costs 6,113 - ( 6,113)
Total program costs $ 6 7,242 64,522 $ (2,720)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 6 4,522
Summary: July 1, 2002, through June 30, 2013
Direct costs:
Salaries
Taking a police report on a violation of PC §530.5 $ 495,634 $ - $ (495,634)
Begin an investigation of facts 1 59,588 - (159,588)
Total salaries 6 55,222 - (655,222)
Contract services
Taking a police report on a violation of PC §530.5 - 3 74,333 374,333
Begin an investigation of facts - 2 18,679 218,679
Total contract services - 5 93,012 593,012
Total direct costs 6 55,222 5 93,012 (62,210)
Indirect costs 74,289 - (74,289)
Total direct and indirect costs 7 29,511 5 93,012 (136,499)
Less allowable costs that exceed costs claimed2 - (2,383) ( 2,383)
Total program costs $ 729,511 5 90,629 $ (138,882)
Less amount paid by the State3 -
Allowable costs claimed in excess of amount paid $ 590,629
_________________________
1 See the Finding and Recommendation section.
2 GC section 17568 stipulates that the State will not reimburse any claim more than one year after the filing deadline
specified in the SCO’s Mandated Cost Manual. That deadline has expired for FY 2004-05.
3 Payment amount current as of November 29, 2022.
-11-
City of West Hollywood Identity Theft Program
Finding and Recommendation
FINDING— The city claimed $729,511 ($655,222 in salary costs and $74,289 in
related indirect costs) for the Identity Theft Program. We found that
Overstated Identity
$593,012 is allowable; and $136,499 is unallowable.2 We found that the
Theft Program costs
city incorrectly classified the claimed costs as salary costs because it
contracted with the LASD for all of its law enforcement services during
the audit period. Therefore, the city did not incur any salary costs, but
rather incurred contract services costs. We reallocated the costs to the
appropriate cost category of Contract Services.
The city used the correct methodology to calculate its salary costs: it
multiplied the number of identity theft police reports by the time required
to perform the reimbursable activities, and it multiplied the product by the
hourly rates reported in the city’s contract with the county. The hourly
rates in the contract include salaries, benefits, and indirect costs. However,
because no city staff members performed the reimbursable activities, these
costs should have been classified as contract services costs, not as
salary costs.
The costs are unallowable primarily because the city claimed misclassified
costs, overstated the number of identity theft reports taken, overstated the
time increments needed to perform the reimbursable activities, and
claimed unallowable indirect costs.
The following table summarizes the claimed, allowable, and audit
adjustment amounts by fiscal year:
(A) (B) (C) (D)=(A)+(B)+(C)
Salaries Related Contract Total
Fiscal Amount Amount Audit Indirect Cost Services Audit
Year Claimed Allowable Adjustment Adjustment Adjustment Adjustment
2002-03 $ 55,622 $ - $ (55,622) $ (5,562) $ 23,478 $ ( 37,706)
2003-04 5 7,612 - (57,612) (5,761) 34,890 (28,483)
2004-05 3 7,317 - (37,317) (3,732) 43,432 2,383
2005-06 5 5,390 - (55,390) (5,539) 42,333 (18,596)
2006-07 5 8,955 - (58,955) (5,895) 55,897 (8,953)
2007-08 5 9,060 - (59,060) (7,619) 59,108 (7,571)
2008-09 6 8,421 - (68,421) (9,853) 69,900 (8,374)
2009-10 6 1,701 - (61,701) (8,823) 64,477 (6,047)
2010-11 6 0,430 - (60,430) (7,433) 53,506 (14,357)
2011-12 7 9,585 - (79,585) (7,959) 81,469 (6,075)
2012-13 6 1,129 - (61,129) (6,113) 64,522 (2,720)
Total $ 655,222 $ - $ (655,222) $ (74,289) $ 593,012 $ (136,499)
2
For FY 2004-05, we found that $43,432 is allowable, which is $2,383 in excess of claimed costs. GC
section 17568 stipulates that the State will not reimburse any claim more than one year after the filing deadline
specified in the SCO’s Mandated Cost Manual, and that deadline has expired for FY 2004-05. Therefore, total
allowable costs for the audit period are $590,629 ($593,012 less $2,383 in excess of claimed costs for
FY 2004-05).
-12-
City of West Hollywood Identity Theft Program
Contract Services Costs
The city contracted with the LASD to provide all of its law enforcement
services during the audit period. These services included the reimbursable
activities claimed for the mandated program. The city contracted for
various LASD staff positions each fiscal year; these included, but were not
limited to, the Deputy Sheriff, CSA, and Sergeant classifications, and it
paid the LASD annual contract rates for the positions. No city staff
member performed any of the reimbursable activities under this program;
therefore, the city did not incur salary and related indirect costs as claimed,
but rather incurred contract services costs. We reallocated the costs to the
appropriate cost category of Contract Services.
Identity Theft Incident Reports
The city claimed that it took 2,943 identity theft incident reports for the
audit period. We found that the city overstated the number of reports taken
by 348, and that 2,595 reports are allowable.
The following table summarizes the counts of claimed, supported, and
allowable identity theft cases, and the audit adjustment by fiscal year:
(A) (B) (C) (D)=(C)-(A)
Audited
Fiscal Claimed Population Allowable Audit
Year Reports (per LARCIS) Reports Adjustment
2002-03 261 1 48 125 (136)
2003-04 262 2 14 181 (81)
2004-05 169 2 63 223 54
2005-06 233 2 47 209 (24)
2006-07 297 3 08 261 (36)
2007-08 279 3 01 255 (24)
2008-09 314 3 36 291 (23)
2009-10 279 3 01 262 (17)
2010-11 261 2 82 224 (37)
2011-12 339 3 78 318 (21)
2012-13 249 2 87 246 (3)
Total 2,943 3,065 2,595 (348)
The city provided a summary report for each fiscal year to support the
claimed number of identity theft incident reports taken. These summary
reports were generated by the LASD’s LARCIS. LARCIS provided
unduplicated counts of initial police reports filed for violations of PC
section 530.5 and identified the specific origin of each report. The list
supports 3,065 identity theft police reports filed during the audit period.
We verified the accuracy of the unduplicated counts of initial police
reports recorded in the LASD’s LARCIS by determining whether:
The initial police report was a courtesy report prepared by another law
enforcement agency and forwarded to the LASD for further
investigation;
The police report was the result of a victim of identity theft contacting
the LASD to initiate the law enforcement investigation.
-13-
City of West Hollywood Identity Theft Program
Each identity theft case was supported by a contemporaneously
prepared and approved police report; and
The police report supported that a violation of PC section 530.5 had
occurred.
Due to the LASD’s record-retention policy, the county was unable to
provide any copies of the city’s incident reports for FY 2002-03 through
FY 2007-08. Therefore, for FY 2008-09 through FY 2012-13, we selected
a statistical sample from the documented number of identity theft incident
reports (the population) based on a 95% confidence level, a precision rate
of ±8%, and an expected error rate of 50%. We used statistical samples in
order to project the results to the population for each fiscal year. We
selected for review a total random sample of 508 out of 1,584 identity theft
incident reports from the last five fiscal years of the audit period.
Our review of sample incident reports disclosed the following:
For FY 2008-09, we found that 14 out of 104 identity theft incident
reports were unallowable. Six of the 14 reports were unallowable
because the victim of identity theft did not initiate the investigation by
contacting the local law enforcement agency that had jurisdiction over
his or her actual residence or place of business, as required by PC
section 530.6(a). Five of the 14 reports were unallowable because they
were not supported by a contemporaneously prepared and approved
police report. The remaining three reports were unallowable because
they were courtesy reports (police reports taken and prepared by other
law enforcement agencies). Therefore, we calculated an error rate of
13.46% for FY 2008-09.
For FY 2009-10, we found that 13 out of 100 identity theft incident
reports were unallowable. Five of the 13 reports were unallowable
because the victim of identity theft did not initiate the investigation by
contacting the local law enforcement agency, as required by PC
section 530.6(a). Five of the 13 reports were unallowable because they
were courtesy reports. Two of the 13 reports were unallowable
because they were not supported by a contemporaneously prepared
and approved police report. The remaining report was unallowable
because it was a duplicate (the police report given two identifying
report numbers). Therefore, we calculated an error rate of 13.00% for
FY 2009-10.
For FY 2010-11, we found that 20 out of 98 identity theft incident
reports were unallowable. Fourteen of the 20 reports were unallowable
because they were courtesy reports. Five of the 20 reports were
unallowable because the victim of identity theft did not initiate the
investigation by contacting the local law enforcement agency, as
required by PC section 530.6(a). The remaining report was
unallowable because it was not supported by a contemporaneously
prepared and approved police report. Therefore, we calculated an error
rate of 20.41% for FY 2010-11.
For FY 2011-12, we found that 17 out of 107 identity theft incident
reports were unallowable. Eleven of the 17 reports were unallowable
because they were courtesy reports. The remaining six reports were
unallowable because the victim of identity theft did not initiate the
-14-
City of West Hollywood Identity Theft Program
investigation by contacting the local law enforcement agency, as
required by PC section 530.6(a). Therefore, we calculated an error rate
of 15.89% for FY 2011-12.
For FY 2012-13, we found that 14 out of 99 identity theft incident
reports were unallowable. Ten of the 14 reports were unallowable
because the victim of identity theft did not initiate the investigation by
contacting the local law enforcement agency, as required by PC
section 530.6(a). The remaining four reports were unallowable
because they were courtesy reports. Therefore, we calculated an error
rate of 14.14% for FY 2012-13.
As we were unable to sample the incident reports and determine the actual
error rates for FY 2002-03 through FY 2007-08, we calculated an average
error rate of 15.38% for the five fiscal years sampled.
The following table shows the average error rates for FY 2008-09 through
FY 2012-13:
(A) (B) (C)=(A)÷(B)
Number of
Unallowable
Fiscal Cases Sample
Year Sampled Size Error Rate
2008-09 14 1 04 13.46%
2009-10 13 1 00 13.00%
2010-11 20 98 20.41%
2011-12 17 1 07 15.89%
2012-13 14 99 14.14%
Total 76.90%
Number of fiscal years sampled ÷ 5
Average error rate 15.38%
We extrapolated the average error rate to the audited population of reports
for FY 2002-03 through FY 2007-08. We applied the actual audited error
rate to each of the other fiscal years to determine the allowable and
unallowable number of incident reports taken.
The following table shows the number of allowable and unallowable
incident reports taken by fiscal year:
(A) (B) (C)=(A)×(B) (D)=(A)-(C)
Average Total Total
Fiscal Audited Error Error Unallowable Allowable
Year Population Rate Rate Reports Reports
2002-03 1 48 N/A 15.38% 23 125
2003-04 2 14 N/A 15.38% 33 181
2004-05 2 63 N/A 15.38% 40 223
2005-06 2 47 N/A 15.38% 38 209
2006-07 3 08 N/A 15.38% 47 261
2007-08 3 01 N/A 15.38% 46 255
2008-09 3 36 13.46% N/A 45 291
2009-10 3 01 13.00% N/A 39 262
2010-11 2 82 20.41% N/A 58 224
2011-12 3 78 15.89% N/A 60 318
2012-13 2 87 14.14% N/A 41 246
Total 3,065 470 2 ,595
-15-
City of West Hollywood Identity Theft Program
Time increments
The parameters and guidelines identify the following reimbursable
activities:
Activity 1a – Taking a police report on a violation of PC
section 530.5;
Activity 1b – Reviewing an online identity theft report completed by
a victim; and
Activity 2 – Beginning an investigation of the facts.
For our purposes, we separated Activity 1.a into two sub-activities:
Activity 1a.1 – Taking a police report; and
Activity 1a.2 – Reviewing and approving a police report.
The city claimed the following time increments during the audit period:
87 minutes for a Deputy Sheriff to take a police report
(sub-activity 1a.1); and
10 minutes for a Sergeant to review and approve the police report for
the audit period (sub-activity 1a.2).
In addition, the city claimed the following time increments for beginning
an investigation of the facts (Activity 2):
61 minutes for a Detective for FY 2002-03 through FY 2005-06;
61 minutes for a Law Enforcement Technician (LET) for FY 2006-07
through FY 2010-11; and
57 minutes for a Detective (23% of the cases), and 30 minutes for a
LET (77% of the cases) for FY 2011-12 through FY 2012-13.
The city worked with LASD employees at the West Hollywood Station to
perform a time study from January through June 2011 to determine how
long it took to perform the reimbursable activities that directly relate to the
Identity Theft Program.
During fieldwork, we held discussions with the city and a representative
of LASD in an attempt to understand why the claimed time increments for
LASD’s West Hollywood Station were significantly higher than other
LASD stations previously audited by SCO. The LASD representative
explained that since the city is an affluent area, identity theft crimes
typically involved more pieces of personal identifying information. As a
result, a “preliminary investigation” took longer to perform along with the
requisite police report.
The city worked with LASD employees at the West Hollywood Station to
perform a time study from January through June 2011 to determine how
long it took to perform the reimbursable activities that directly relate to the
Identity Theft Program. The city provided an unsigned and undated time
log summary (for 26 identify theft cases) to support the time increments
claimed for the following activities: 1) Take and prepare a report;
2) Review and approve a report; and 3) Conduct a preliminary
investigation.
-16-
City of West Hollywood Identity Theft Program
Although the city claimed time for LASD Detectives and LETs to begin
an investigation, we found that the city’s contracts for law enforcement
service with Los Angeles County did not include Detectives for any fiscal
year of the audit period and did not include LETs until FY 2007-08. In
addition, none of the initial police reports or supplemental reports that
LASD provided for the time study cases contained any indication that an
LET performed investigative work. We also requested that the city provide
case notes or written reports that LETs prepared to support the time
claimed. However, the city did not provide such documentation.
During the audit, LASD provided Incident History Reports for 19 of the
26 time study cases, while explaining that reports for the other seven cases
were unavailable. LASD’s Incident History Reports contain
contemporaneous time stamps indicating when an Officer arrived on scene
to interview the identity theft victim and when the Officer completed the
interview.
Using LASD’s Incident History Reports, we found that nine of the
19 reports were ineligible for the calculation of time increments for the
following reasons:
Five Incident History Reports were related to cases that did not meet
the requirements of PC section 530.6(a) because the victim(s) of
identity theft did not initiate the investigation by contacting the local
law enforcement agency,
Three Incident History Reports did not indicate when the Officer
arrived on scene, and
One Incident History Report was determined to be an outlier due to
the amount of time recorded (169 minutes) to conduct an interview at
the front counter of LASD’s West Hollywood Station.
We used the Incident History Reports for the remaining 10 time study
cases to calculate allowable time for beginning an investigation. The
reports supported that Deputy Sheriffs and CSAs performed this activity.
We used the city’s time study results for the 10 time study cases to
calculate the allowable time for preparing a police report and for reviewing
a police report.
We applied the following time increments for each allowable police report
that originated in the City of West Hollywood in our calculations of
allowable costs:
74 minutes (1.23 hours) for Deputy Sheriffs and 84 minutes (1.40
hours) for CSAs to perform sub-activity 1a.1 – taking a police report
on violations of PC section 530.5;
7.20 minutes (0.12 hours) for Sergeants to perform sub-activity 1a.2 –
reviewing incident reports on violations of PC section 530.5; and
47 minutes (0.78 hours) for Deputy Sheriffs and 65 minutes (1.08
hours) for CSAs to perform Activity 2 – beginning an investigation of
the facts.
-17-
City of West Hollywood Identity Theft Program
The following table summarizes the time increments 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 Reviwing a Beginning an Taking a Police Reviwing a Beginning an
Report Police Report Investigation Report Police Report Investigation
Deputy Deputy Deputy
Fiscal Year Sheriff Sergeant Detective LET Sheriff CSA Sergeant Sheriff CSA
2002-03 87 10 61 - 7 4 8 4 7.2 4 7 6 5
2003-04 87 10 61 - 7 4 8 4 7.2 4 7 6 5
2004-05 87 10 61 - 7 4 8 4 7.2 4 7 6 5
2005-06 87 10 61 - 7 4 8 4 7.2 4 7 6 5
2006-07 87 10 - 61 7 4 8 4 7.2 4 7 6 5
2007-08 87 10 - 61 7 4 8 4 7.2 4 7 6 5
2008-09 87 10 - 61 7 4 8 4 7.2 4 7 6 5
2009-10 87 10 - 61 7 4 8 4 7.2 4 7 6 5
2010-11 87 10 - 61 7 4 8 4 7.2 4 7 6 5
2011-12 87 10 57 30 a 7 4 8 4 7.2 4 7 6 5
2012-13 87 10 57 30 b 7 4 8 4 7.2 4 7 6 5
a, bFor Activity 2 during FY 2011-12 and FY 2012-13, the city claimed that 23% of the cases were investigated by
Detectives (57 minutes) and 77% of the cases were investigated by LETs (30 minutes).
Although we used the city’s audited time study results to determine the
time increments required to perform the reimbursable activities, we did
not use the time study to determine an average percentage of involvement
for each employee classification that performed the reimbursable
activities.
The city’s time study showed the following:
LASD Deputy Sheriffs took reports and began investigations for 13 of
19 cases (68.42%);
CSAs took reports and began investigations for five of 19 cases
(26.32%); and
An LASD Detective took a report and began an investigation for one
case (5.26%).
During our testing to determine the allowable number of police reports,
we requested and the city provided case listings of police reports filed for
violations of PC Section 530.5 for all years of the audit period. Each listing
of police reports identified the LASD employees involved. The LASD
specified which employees were CSAs and which employees were
Detectives. This testing showed the following involvement of CSAs
during the audit period:
FY 2002-03 through FY 2004-05 – no CSA involvement;
FY 2005-06 – five of 209 reports (2.4%);
FY 2006-07 – four of 261 reports (1.5%);
FY 2007-08 – no CSA involvement;
FY 2008-09 – three of 291 reports (1.0%);
FY 2009-10 – five of 262 reports (1.9%);
FY 2010-11 – 14 of 224 reports (6.3%);
-18-
City of West Hollywood Identity Theft Program
FY 2011-12 – one of 318 reports (0.31%); and
FY 2012-13 – no CSA involvement.
We also found that case listings did not show that any Detectives or
Sergeants took police reports or began investigations. Therefore, we used
the actual results of Deputy and CSA involvement from the LASD’s case
listings to calculate allowable costs for each year of the audit period.
Contract Hourly Rates
The city provided copies of the signed Municipal Law Enforcement
Services Agreements that it negotiated with Los Angeles County. The
contracts specify that the services performed and requested by the city
must be “indicated on a LASD SH-AD-575 Deployment of Personnel
Form.” The county uses this form to indicate the authorized LASD staffing
level for each year that a contract is in effect, and the rates billed to the
city for various LASD staff.
When we reviewed the city’s contracts for law enforcement services, the
contracts did not identify Detectives in the city’s SH-AD 575 forms. An
LASD representative indicated to us that the services of the LASD’s
Detective Bureau were already included in the city’s contracts for law
enforcement services. Therefore, the city did not incur any additional costs
for services performed by LASD Detectives.
Based on the sampled police reports, we found that Deputy Sheriffs and
CSAs performed reimbursable Sub-Activity 1a.1 (Take a police report)
and reimbursable Activity 2 (Begin an investigation of the facts). We also
found that Sergeants exclusively performed reimbursable Sub-
Activity 1a.2 (Review and approve a police report).
We recomputed the contract hourly rates for the Deputy Sheriff, CSA, and
Sergeant classifications using information from the SH-AD 575 forms and
the city’s contracts with the LASD. The city’s SH-AD 575 forms specify
the number of service units, which vary from year to year, for the Deputy
Sheriff, CSA, and Sergeant classifications. The LASD’s agreements with
contract cities define a “service unit” as one position of a certain
classification.
For the Deputy Sheriff and CSA classifications, the city’s contracts specify
a liability percentage of 6% for FY 2002-03 through FY 2009-10, and
4% for FY 2010-11 through FY 2012-13. The liability percentage is a
charge that the county adds to its calculated contract rates for staff based
on salaries, benefits, and overhead costs. We applied the appropriate
liability percentage to the contract costs for each fiscal year. To calculate
the average contract hourly rate for each fiscal year, we divided the total
annual unit cost (including the liability percentage) for all Deputy Sheriffs
by the total annual hours per service unit. We applied a similar calculation
to the CSAs.
-19-
City of West Hollywood Identity Theft Program
The following table summarizes the claimed and allowable contract hourly
rates for Deputy Sheriffs during the audit period, and the difference
between those rates:
Deputy Sheriff
Claimed Allowable
Fiscal Hourly Hourly Rate
Year Rate Rate Difference
2002-03 $ 87.34 $ 89.03 $ 1.69
2003-04 8 9.62 91.31 1 .69
2004-05 9 0.26 92.17 1 .91
2005-06 9 5.51 97.18 1 .67
2006-07 100.39 102.13 1 .74
2007-08 107.89 109.48 1 .59
2008-09 106.68 114.32 7 .64
2009-10 109.80 117.76 7 .96
2010-11 116.17 117.53 1 .36
2011-12 119.74 121.29 1 .55
2012-13 124.97 124.00 (0.97)
The following table summarizes the claimed and allowable contract
hourly rates for CSAs during the audit period, and the difference between
those rates:
CSA
Claimed Allowable
Fiscal Hourly Hourly Rate
Year Rate Rate Difference
2002-03 $ - $ 21.70 $ 21.70
2003-04 - 22.46 22.46
2004-05 - 23.06 23.06
2005-06 - 29.19 29.19
2006-07 - 29.51 29.51
2007-08 - 29.72 29.72
2008-09 - 29.70 29.70
2009-10 - 30.64 30.64
2010-11 - 30.71 30.71
2011-12 - 30.65 30.65
2012-13 - 32.55 32.55
To calculate the average contract hourly rate for Sergeants, we divided the
total annual unit cost for all Sergeants by the total annual hours per service
unit. The following table summarizes the claimed and allowable contract
hourly rates for Sergeants during the audit period, and the difference
between those rates:
Sergeant
Claimed Allowable
Fiscal Hourly Hourly Rate
Year Rate Rate Difference
2002-03 $ 73.07 $ 73.98 $ 0.91
2003-04 7 6.01 76.95 0 .94
2004-05 7 6.00 79.20 3 .20
2005-06 8 3.86 84.70 0 .84
2006-07 8 9.81 90.92 1 .11
2007-08 9 6.64 97.83 1 .19
2008-09 101.10 100.26 (0.84)
2009-10 103.27 103.90 0 .63
2010-11 107.07 105.31 (1.76)
2011-12 107.07 107.73 0 .66
2012-13 113.17 108.72 (4.45)
-20-
City of West Hollywood Identity Theft Program
For the audit period, we calculated allowable contract services costs based
on the audited counts of PC 530.5 identity theft reports, audited time
increments, and contract hourly rates.
For example, the following table shows the calculation of allowable
contract services costs for FY 2010-11:
(A) (B) (C) (D)=(A)×(B)×(C)
Allowable Allowable
Total Time Contract
Reimbursable LASD Allowable Increment Hourly Allowable
Activity Staff Reports (in hours) Rate Costs
1a.1, 2 Deputy Sheriff 210 1.23 $ 1 17.53 $ 3 0,358
1a.1, 2 CSA 14 1.4 $ 30.71 6 02
1a.2 Sergeant 224 0.12 $ 1 05.31 2,831
2 Deputy Sheriff 210 0.78 $ 1 17.53 19,251
2 CSA 14 1.08 $ 30.71 4 64
Total allowable contract services costs $ 5 3,506
Indirect Costs
The city claimed related indirect costs totaling $74,289 for the audit period
based on claimed salaries totaling $655,222. We found that the entire
amount is unallowable because no city staff member performed any of the
reimbursable activities under this program during the audit period. Instead,
the city contracted with the LASD for all of its law enforcement services
during the audit period. Therefore, the city did not incur any direct salary
costs, but rather incurred contract services costs.
For FY 2002-03 through FY 2006-07 and FY 2011-12 through
FY 2012-13, the city applied the default 10% indirect cost rate to the
salaries claimed. As the city did not incur any direct salary costs for those
fiscal years, there are no related indirect costs.
The city provided copies of its Indirect Cost Rate Proposals for
FY 2007-08 through FY 2010-11. However, the city used a distribution
base of direct salaries and wages for LASD staff to calculate its indirect
cost rates. As the city incurred only contract services costs, there are no
related indirect costs.
The following table summarizes the claimed, allowable, and audit
adjustment amounts by fiscal year:
(A) (B) (C)=(B)-(A)
Claimed Indirect
Fiscal Salaries Indirect Indirect Costs Audit
Year Claimed Cost Rate Costs Allowed Adjustment
2002-03 $ 55,622 10.00% $ 5,562 $ - $ (5,562)
2003-04 5 7,612 10.00% 5 ,761 - (5,761)
2004-05 3 7,317 10.00% 3 ,732 - (3,732)
2005-06 5 5,390 10.00% 5 ,539 - (5,539)
2006-07 5 8,955 10.00% 5 ,895 - (5,895)
2007-08 5 9,060 12.90% 7 ,619 - (7,619)
2008-09 6 8,421 14.40% 9 ,853 - (9,853)
2009-10 6 1,701 14.30% 8 ,823 - (8,823)
2010-11 6 0,430 12.30% 7 ,433 - (7,433)
2011-12 7 9,585 10.00% 7 ,959 - (7,959)
2012-13 6 1,129 10.00% 6 ,113 - (6,113)
Total $ 655,222 $ 74,289 $ - $ ( 74,289)
-21-
City of West Hollywood 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
begins:
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 of the parameters and guidelines continues:
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.
In addition, Section IV states, “Referring the matter to the law enforcement
agency where the suspected crime was committed for further investigation
of the facts is also not reimbursable under this program.”
Section V.A.1, “Salaries and benefits,” of the parameters and guidelines
states:
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.
-22-
City of West Hollywood Identity Theft Program
Section V.B, “Indirect Cost Rates,” of the parameters and guidelines
states, in part:
. . . Indirect costs may include: (1) the overhead costs of the unit
performing the mandate; and (2) the costs of the central government
services distributed to the other departments based on a systematic and
rational basis through a cost allocation plan. . . .
Recommendation
The State Legislature suspended the Identity Theft Program in the
FY 2013-14 through FY 2022-23 Budget Acts. If the program becomes
active again, we recommend that the city:
Adhere to the program’s parameters and guidelines and the Mandated
Cost Manual when claiming reimbursement for mandated costs; and
Ensure that claimed costs include only eligible costs, are based on
actual costs, and are properly supported.
City’s Final Response
While we disagree with your determination that indirect costs are not
eligible for reimbursement, since this was a minor component of our
submission, we will not pursue this issue as overall we feel the results of
the other parts of the audit, as proposed, are fair and reasonable.
SCO Comments
Based on the City’s final response, our finding remains unchanged.
-23-
City of West Hollywood Identity Theft Program
Attachment A—
City’s Initial Response to Draft Audit Report
Attachment B—
City’s Final Response to Draft Audit Report
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250
http://www.sco.ca.gov
S21-MCC-0022