Concord City

CITY OF CONCORD Audit Report CRIME STATISTICS REPORTS FOR THE DEPARTMENT OF JUSTICE PROGRAM Chapter 1172, Statutes 1989; Chapter 1338, Statutes 1992; Chapter 1230, Statutes 1993; Chapter 933, Statutes 1998; Chapter 571, Statutes 1999; Chapter 626, Statutes 2000; and Chapter 700, Statutes 2004 July 1, 2001, through June 30, 2010; and July 1, 2011, through June 30, 2012 BETTY T. YEE California State Controller July 2022 BETTY T. YEE California State Controller July 13, 2022 CERTIFIED MAIL—RETURN RECEIPT REQUESTED Karan Reid, Finance Director City of Concord 1950 Parkside Drive, Building C Concord, CA 94519 Dear Ms. Reid: The State Controller’s Office (SCO) audited the costs claimed by the City of Concord for the legislatively mandated Crime Statistics Reports for the Department of Justice Program for the periods of July 1, 2001, through June 30, 2010; and July 1, 2011, through June 30, 2012. The city did not file a reimbursement claim for the period of July 1, 2010, through June 30, 2011. The city claimed $983,733 for the costs of the mandated program. Our audit found that $736,452 is allowable, and $247,281 is unallowable because the city overstated salary and benefit costs, related indirect costs, and indirect cost rates. The State made no payments to the city. The State will pay $736,452, 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/ls Karan Reid, Finance Director -2- July 13, 2022 cc: The Honorable Dominic Aliano, Mayor City of Concord Suzanne McDonald, Financial Operations Manager Concord Finance Department George Villa, SB-90 Coordinator Concord Finance Department Mark Bustillos, Chief Concord Police Department Nick Gartner, Lieutenant Concord Police Department Kay Carzoli, Program Manager Concord 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 Darryl Mar, Manager Local Reimbursement Section State Controller’s Office Everett Luc, Supervisor Local Reimbursement Section State Controller’s Office City of Concord Crime Statistics Reports for the Department of Justice Program Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Audit Authority.................................................................................................................. 2 Objective, Scope, and Methodology ................................................................................. 3 Conclusion .......................................................................................................................... 4 Follow-up on Prior Audit Findings .................................................................................. 4 Views of Responsible Officials .......................................................................................... 4 Restricted Use .................................................................................................................... 5 Schedule—Summary of Program Costs .............................................................................. 6 Findings and Recommendations ........................................................................................... 10 City of Concord Crime Statistics Reports for the Department of Justice Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by the City of Concord for the legislatively mandated Crime Statistics Reports for the Department of Justice Program for the periods of July 1, 2001, through June 30, 2010; and July 1, 2011, through June 30, 2012. The city did not file a reimbursement claim for the period of July 1, 2010, through June 30, 2011. The city claimed $983,733 for the costs of the mandated program. Our audit found that $736,452 is allowable, and $247,281 is unallowable because the city overstated salary and benefit costs, related indirect costs, and indirect cost rates. The State made no payments to the city. The State will pay $736,452, contingent upon available appropriations. Background Penal Code (PC) sections 12025 (h)(1) and (h)(3), 12031 (m)(1) and (m)(3), 13014, 13023, and 13730 (a) require local agencies to report information related to certain specified criminal acts to the California Department of Justice (DOJ). These sections were added and/or amended by Chapter 1172, Statutes of 1989; Chapter 1338, Statutes of 1992; Chapter 1230, Statutes of 1993; Chapter 933, Statutes of 1998; Chapter 571, Statutes of 1999; Chapter 626, Statutes of 2000; and Chapter 700, Statutes of 2004. On June 26, 2008, the Commission on State Mandates (Commission) adopted a statement of decision for the Crime Statistics Reports for the Department of Justice Program. The Commission found that the test claim legislation constitutes a new program or higher level of service and imposes a reimbursable state-mandated program on city and county claimants beginning on July 1, 2001, within the meaning of Article XII B, section 6 of the California Constitution and Government Code (GC) section 17514. On July 31, 2009, the Commission heard an amended test claim on PC section 13023 (added by Chapter 700, Statutes of 2004), which imposed additional crime reporting requirements. The Commission also found that this test claim legislation constitutes a new program or higher level of service, and imposes a reimbursable state-mandated program for city and county claimants beginning on January 1, 2004. On April 10, 2010, the Commission issued a corrected statement of decision to correctly identify the operative and effective date of the reimbursable state-mandated program as January 1, 2005. The Commission found that the following activities are reimbursable (Section I., “Summary of the Mandate”):  [For] a local government entity responsible for the investigation and prosecution of a homicide case to provide the [DOJ] with demographic information about the victim and the person or persons charged with the crime, including the victim’s and person’s age, gender, race, and ethnic background [PC section 13014]. -1- City of Concord Crime Statistics Reports for the Department of Justice Program  [For] local law enforcement agencies to report, in a manner to be prescribed by the Attorney General, any information that may be required relative to any criminal acts or attempted criminal acts to cause physical injury, emotional suffering, or property damage where there is a reasonable cause to believe that the crime was motivated, in whole or in part, by the victim’s race, ethnicity, religion, sexual orientation, . . . physical or mental disability, . . . gender, or national origin [PC section 13023].  For district attorneys to report annually on or before June 30, to the Attorney General, on profiles by race, age, gender, and ethnicity any person charged with a felony or misdemeanor under section 12025 (carrying a concealed firearm) or section 12031 (carrying a loaded firearm in a public place) of the Penal Code, and any other offense charged in the same complaint, indictment, or information. The Commission finds that this activity is a reimbursable mandate from July 1, 2001 . . . through January 1, 2005 [PC sections 12025 (h)(1) and (h)(3), and 12031 (m)(1) and (m)(3)].  For local law enforcement agencies to support all domestic violence related calls for assistance with a written incident report [PC section 13730 (a), Chapter 1230, Statutes of 1993]. . . .  [For] local law enforcement agency to report the following in a manner to be prescribed by the Attorney General: o Any information that may be required relative to hate crimes, as defined in [PC] section 422.55 as criminal acts committed, in whole or in part, because of one or more of the following perceived characteristics of the victim: (1) disability, (2) gender, (3) nationality, (4) race or ethnicity, (5) religion, (6) sexual orientation. o Any information that may be required relative to hate crimes, defined in [PC] section 422.55 as criminal acts committed, in whole or in part, because of association with a person or group with one or more of the following actual or perceived characteristics: (1) disability, (2) gender, (3) nationality, (4) race or ethnicity, (5) religion, (6) sexual orientation. The program’s parameters and guidelines establish the state mandate and define reimbursement criteria. The Commission adopted the parameters and guidelines on September 30, 2010, and amended them on January 24, 2014, to clarify reimbursable costs related to domestic violence related calls for assistance. In compliance with Government Code section 17558, the SCO issues the Mandated Cost Manual for Local Agencies (Mandated Cost Manual) to assist local agencies and school districts in claiming mandated program reimbursable costs. Audit Authority We conducted this performance audit in accordance with GC 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 audit authority to audit the disbursement of state money for correctness, legality, and sufficient provisions of law. -2- City of Concord Crime Statistics Reports for the Department of Justice Program Objective, Scope, The objective of our audit was to determine whether costs claimed represent increased costs resulting from the legislatively mandated Crime and Methodology Statistics Reports for the Department of Justice 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 periods were July 1, 2001, through June 30, 2010; and July 1, 2011, through June 30, 2012. To achieve our objective, we performed the following procedures:  We reviewed 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. 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 members. We discussed the claim preparation process with city staff members to determine what information was obtained, who obtained it, and how it was used.  We assessed the reliability of data generated by the city’s information management system (salary, expenditure, and revenue reports) and the city’s record management system by interviewing city staff members and examining supporting records. We determined that the data was sufficiently reliable to address the audit objectives.  We interviewed city staff members to determine what employee classifications were involved in performing the reimbursable activities during the audit period.  We traced productive hourly rate (PHR) and benefit rate calculations for all employee classifications performing the mandated activities to supporting information in the city’s payroll system (see Finding 1).  We assessed whether the average time increments (ATIs) claimed for each fiscal year in the audit period to perform the reimbursable activities were reasonable per the requirements of the program, and supported by source documentation (see Finding 1).  We reviewed and analyzed the claimed domestic violence incident report counts for consistency and possible exclusions, and verified that counts were supported by the reports that the city submitted to the DOJ (see Finding 1).  We traced a non-statistical sample of 200 (20 reports per year for fiscal year [FY] 2001-02 through FY 2009-10, and 20 reports for FY 2011-12) out of 8,271 domestic violence calls for assistance to written incident reports. Errors found were not projected to the intended (total) population. 1Unreasonable and/or excessive costs include ineligible costs that are not identified in the program’s parameters and guidelines as reimbursable costs. -3- City of Concord Crime Statistics Reports for the Department of Justice Program  We verified that indirect costs claimed for each fiscal year in the audit period were for common or joint purposes, and that indirect cost rates were properly supported and applied (see Finding 2).  We inquired with city staff members, reviewed single audit reports (with accompanying financial statements), and reviewed revenue reports to identify potential sources of offsetting revenues and reimbursements for the audit period. We determined that the claimed costs were not funded by another source. 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 audit 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. 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 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 Findings and Recommendations section of this audit report. For the audit period, the City of Concord claimed $983,733 for costs of the legislatively mandated Crime Statistics Reports for the Department of Justice Program. Our audit found that $736,452 is allowable and $247,281 is unallowable. The State made no payments to the city. The State will pay $736,452, 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 Crime Statistics Reports for the Department of Justice Program. Prior Audit Findings Views of We discussed our audit results with the City of Concord’s representatives Responsible during an exit conference conducted on March 29, 2022. The city’s representatives agreed with the audit results, and further agreed that we Officials could issue the audit report as final. -4- City of Concord Crime Statistics Reports for the Department of Justice Program Restricted Use This audit report is solely for the information and use of the City of Concord, 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 July 13, 2022 -5- City of Concord Crime Statistics Reports for the Department of Justice Program Schedule— Summary of Program Costs July 1, 2001, through June 30, 2010; and July 1, 2011, through June 30, 2012 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference1 July 1, 2001, through June 30, 2002 Direct costs: Domestic violence related calls for assistance $ 44,851 $ 38,440 $ (6,411) Finding 1 Total direct costs 44,851 38,440 (6,411) Indirect costs 3,312 2,838 (474) Finding 1 Total direct and indirect costs 48,163 41,278 (6,885) Less offsetting revenues and reimbursements2 - - - Total program costs $ 48,163 41,278 $ (6,885) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 41,278 July 1, 2002, through June 30, 2003 Direct costs: Domestic violence related calls for assistance $ 46,412 $ 38,431 $ (7,981) Finding 1 Total direct costs 46,412 38,431 (7,981) Indirect costs 22,278 11,797 (10,481) Findings 1 and 2 Total direct and indirect costs 68,690 50,228 (18,462) Less offsetting revenues and reimbursements2 - - - Total program costs $ 68,690 50,228 $ (18,462) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 50,228 July 1, 2003, through June 30, 2004 Direct costs: Domestic violence related calls for assistance $ 52,361 $ 26,260 $ (26,101) Finding 1 Total direct costs 52,361 26,260 (26,101) Indirect costs 19,687 5,619 (14,068) Findings 1 and 2 Total direct and indirect costs 72,048 31,879 (40,169) Less offsetting revenues and reimbursements2 - - - Total program costs $ 72,048 31,879 $ (40,169) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 31,879 -6- City of Concord Crime Statistics Reports for the Department of Justice Program Schedule (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference1 July 1, 2004, through June 30, 2005 Direct costs: Domestic violence related calls for assistance $ 62,674 $ 58,326 $ (4,348) Finding 1 Total direct costs 62,674 58,326 (4,348) Indirect costs 37,416 19,948 (17,468) Findings 1 and 2 Total direct and indirect costs 100,090 78,274 (21,816) Less offsetting revenues and reimbursements2 - - - Total program costs $ 1 00,090 78,274 $ (21,816) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 78,274 July 1, 2005, through June 30, 2006 Direct costs: Domestic violence related calls for assistance $ 76,240 $ 66,688 $ (9,552) Finding 1 Total direct costs 76,240 66,688 (9,552) Indirect costs 34,688 14,870 (19,818) Findings 1 and 2 Total direct and indirect costs 110,928 81,558 (29,370) Less offsetting revenues and reimbursements2 - - - Total program costs $ 1 10,928 81,558 $ (29,370) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 81,558 July 1, 2006, through June 30, 2007 Direct costs: Domestic violence related calls for assistance $ 79,046 $ 63,388 $ (15,658) Finding 1 Total direct costs 79,046 63,388 (15,658) Indirect costs 52,487 22,058 (30,429) Findings 1 and 2 Total direct and indirect costs 131,533 85,446 (46,087) Less offsetting revenues and reimbursements2 - - - Total program costs $ 1 31,533 85,446 $ (46,087) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 85,446 -7- City of Concord Crime Statistics Reports for the Department of Justice Program Schedule (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference1 July 1, 2007, through June 30, 2008 Direct costs: Domestic violence related calls for assistance $ 73,123 $ 58,393 $ (14,730) Finding 1 Total direct costs 73,123 58,393 (14,730) Indirect costs 48,553 20,321 (28,232) Findings 1 and 2 Total direct and indirect costs 121,676 78,714 (42,962) Less offsetting revenues and reimbursements2 - - - Total program costs $ 1 21,676 78,714 $ (42,962) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 78,714 July 1, 2008, through June 30, 2009 Direct costs: Domestic violence related calls for assistance $ 61,136 $ 60,305 $ ( 831) Finding 1 Total direct costs 61,136 60,305 (831) Indirect costs 32,525 22,133 (10,392) Findings 1 and 2 Total direct and indirect costs 93,661 82,438 (11,223) Less offsetting revenues and reimbursements2 - - - Total program costs $ 93,661 82,438 $ (11,223) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 82,438 July 1, 2009, through June 30, 2010 Direct costs: Domestic violence related calls for assistance $ 80,863 $ 80,029 $ ( 834) Finding 1 Total direct costs 80,863 80,029 (834) Indirect costs 36,057 19,823 (16,234) Findings 1 and 2 Total direct and indirect costs 116,920 99,852 (17,068) Less offsetting revenues and reimbursements2 - - - Total program costs $ 1 16,920 99,852 $ (17,068) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 99,852 -8- City of Concord Crime Statistics Reports for the Department of Justice Program Schedule (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference1 July 1, 2011, through June 30, 2012 Direct costs: Domestic violence related calls for assistance $ 82,804 $ 81,422 $ (1,382) Finding 1 Total direct costs 82,804 81,422 (1,382) Indirect costs 37,220 25,363 (11,857) Findings 1 and 2 Total direct and indirect costs 120,024 106,785 (13,239) Less offsetting revenues and reimbursements2 - - - Total program costs $ 1 20,024 106,785 $ (13,239) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 1 06,785 Summary: July 1, 2001, through June 30, 2010; and July 1, 2011, through June 30, 2012 Direct costs: Domestic violence related calls for assistance $ 6 59,510 $ 5 71,682 $ (87,828) Finding 1 Total direct costs 659,510 571,682 (87,828) Indirect costs 324,223 164,770 (159,453) Findings 1 and 2 Total direct and indirect costs 983,733 736,452 (247,281) Less offsetting revenues and reimbursements2 - - - Total program costs $ 9 83,733 736,452 $ ( 247,281) Less amount paid by the State3 - Allowable costs claimed in excess of amount paid $ 7 36,452 _________________________ 1 See the Findings and Recommendations section. 2 We determined that the claimed costs were not funded by any other sources. 3 Payment amount current as of June 9, 2022. -9- City of Concord Crime Statistics Reports for the Department of Justice Program Findings and Recommendations FINDING 1— The city claimed $659,510 in salaries and benefits for the Domestic Violence Related Calls for Assistance cost component. We found that Overstated salary $571,682 is allowable and $87,828 is unallowable. Unallowable related and benefit costs indirect costs total $42,674, for a total finding of $130,502. Reimbursable activities for this cost component consist of writing, reviewing, and editing incident reports. The parameters and guidelines require that a written incident report support each domestic violence related call for assistance. To calculate the claimed salaries and benefits, the city multiplied the number of written incident reports by the average time increments (ATIs) necessary to process a report, then multiplied the resulting hours by a PHR and a related benefit rate. During testing, we found that the city overstated the claimed hours; overstated the PHRs in some of the fiscal years; and overstated related indirect costs. The city overstated these costs because it did not claim costs in accordance with the program’s parameters and guidelines or the SCO’s Mandated Cost Manual. The following table summarizes the claimed, allowable, and overstated costs for the Domestic Violence Related Calls for Assistance cost component by fiscal year: Salaries and Benefits Fiscal Amount Amount Audit Unallowable Total Audit Year Claimed Allowable Adjustment Indirect Costs Adjustment 2001-02 $ 44,851 $ 38,440 $ (6,411) $ (474) $ (6,885) 2002-03 46,412 38,431 (7,981) (3,832) (11,813) 2003-04 52,361 26,260 (26,101) (9,814) (35,915) 2004-05 62,674 58,326 (4,348) (2,595) (6,943) 2005-06 76,240 66,688 (9,552) (4,346) (13,898) 2006-07 79,046 63,388 (15,658) (10,398) (26,056) 2007-08 73,123 58,393 (14,730) (9,780) (24,510) 2008-09 61,136 60,305 (831) (442) (1,273) 2009-10 80,863 80,029 (834) (372) (1,206) 2011-12 82,804 81,422 (1,382) (621) (2,003) Total $ 6 59,510 $ 5 71,682 $ (87,828) $ (42,674) $ (130,502) Overstated hours/unsupported incident reports The city overstated claimed hours for the Domestic Violence Related Calls for Assistance cost component. As a result, the city overstated salary and benefit costs totaling $59,837. Unallowable related indirect costs total $26,376, for a total adjustment of $86,213. The claimed hours are derived by multiplying the time it takes employees to complete the mandated activity (average time increment) by the number of domestic violence incident reports that were reported to the DOJ. We reviewed each component separately. -10- City of Concord Crime Statistics Reports for the Department of Justice Program Incident Reports For FY 2001-02 through FY 2009-10, the city’s claims did not identify the total number of domestic violence related calls for assistance incident reports claimed. However, the city’s claim identified 660 incident reports for FY 2011-12. For FY 2001-02 through FY 2009-10, we calculated the claimed number of domestic violence related calls for assistance incident reports by dividing the claimed hours by the claimed average time increments in order to compare the information with the city’s records. During testing, we requested that the city provide copies of monthly reports that had been submitted to the DOJ. The city provided the monthly reports for FY 2003-04 through FY 2009-10 and FY 2011-12. We analyzed the information and found that the claimed number of domestic violence related calls for assistance incident reports did not reconcile to the numbers in the monthly reports that were submitted to the DOJ. We found that the city claimed more incidents than were reported to DOJ in most fiscal years. The parameters and guidelines require that all domestic violence related calls for assistance be supported by a written report. Therefore, we requested a summary report of domestic violence incident reports for each fiscal year to verify the number of calls for assistance based on the city’s Records Management System. The city provided and we analyzed the summary reports for FY 2001-02 through FY 2009-10 and FY 2011-12. During our review of the Records Management System summary reports and the monthly reports that were submitted to DOJ, we compared the information in both documents for FY 2003-04 through FY 2009-10 and FY 2011-12 to determine the allowable number of incident reports. We selected and reviewed a sample of incident reports to verify the existence of the written report and to determine whether the incident report was the result of a domestic violence related call for assistance. Our review disclosed that the summary reports included incident reports that did not meet the mandate criteria. However, errors found were not projected to the population. For FY 2001-02 and FY 2002-03, the city was unable to provide the monthly reports to determine the number of domestic violence related calls for assistance incident reports that were reported to DOJ. City staff members stated that the records for these fiscal years were no longer available. As a result, we were unable to determine the number of domestic violence related calls for assistance that were reported to DOJ. Instead of disallowing all costs for these fiscal years, we calculated an average incident report count based on the allowable incident reports determined for FY 2003-04 through FY 2009-10 and FY 2011-12. We applied the average incident report count to FY 2001-02 and FY 2002-03. -11- City of Concord Crime Statistics Reports for the Department of Justice Program The following table summarizes the allowable number of written incident reports for domestic violence related calls for assistance: Written Incident Fiscal Reports Year Allowable 2001-02 689 2002-03 689 2003-04 419 2004-05 805 2005-06 773 2006-07 726 2007-08 631 2008-09 603 2009-10 759 2011-12 649 Total 6 ,743 Average Time Increments For the audit period, the city estimated that it took Police Officers 45 minutes to write an incident report and 10 minutes to edit incident reports. In addition, the city estimated that it took Sergeants 15 minutes to review incident reports. The city did not maintain a time study to support time increments claimed for Police Department staff members performing the mandated activities. We interviewed key personnel and performed a walk-through of the city’s report writing process. Based on our interviews, we concluded that the claimed ATIs are reasonable. The city claimed overstated costs as a result of overstated hours and unsupported incident reports. The following table summarizes the fiscal years that resulted in an audit adjustment: Fiscal Salaries Related Audit Year and Benefits Indirect Costs Adjustment 2001-02 $ (6,411) $ (474) $ (6,885) 2002-03 (7,981) (3,832) (11,813) 2003-04 (26,101) (9,814) (35,915) 2004-05 (4,348) (2,595) (6,943) 2006-07 (4,978) (3,306) (8,284) 2007-08 (8,636) (5,734) (14,370) 2011-12 (1,382) (621) (2,003) Total $ (59,837) $ (26,376) $ (86,213) Productive hourly rates The city overstated the average PHRs claimed for the Police Officer and Sergeant classifications, which resulted in overstated salary and benefit costs totaling $27,991. Unallowable related indirect costs total $16,298, for a total adjustment of $44,289. -12- City of Concord Crime Statistics Reports for the Department of Justice Program For the audit period, the city calculated average PHRs for the Police Officer and Sergeant classifications using information from the Police Department’s salary reports. For FY 2001-02 through 2004-05 and FY 2011-12, the city calculated the average PHRs using salaries only. However, for FY 2005-06 through FY 2009-10, the city calculated average PHRs using salary and benefit costs. The city provided salary reports for FY 2002-03 through FY 2009-10 and FY 2011-12. We recalculated the PHRs using the salary reports, and found that the claimed PHRs for FY 2005-06 through FY 2009-10 were overstated. The overstatement occurred because the claimed PHRs were not supported by the city’s records. We calculated an error rate and applied it to the allowable hours to determine the unallowable costs. The city claimed overstated costs as a result of overstated PHRs. The following table summarizes the fiscal years that resulted in an audit adjustment: Fiscal Salaries Related Audit Year and Benefits Indirect Costs Adjustment 2005-06 $ (9,552) $ (4,346) $ (13,898) 2006-07 (10,680) (7,092) (17,772) 2007-08 (6,094) (4,046) (10,140) 2008-09 (831) (442) (1,273) 2009-10 (834) (372) (1,206) Total $ (27,991) $ (16,298) $ (44,289) Criteria 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 and supported by source documents that show the validity of such costs, when they were incurred, and their relationship to the reimbursable activities. . . . The claimant is only allowed to claim and be reimbursed for increased costs for reimbursable activities. . . . Increased cost is limited to the cost of an activity that the claimant is required to incur as a result of the mandate. “Ongoing Activities,” paragraph D (Section IV, page 6) of the parameters and guidelines allows costs related to supporting domestic violence related calls for assistance with a written incident report, and reviewing and editing the report. Section V, “Claim Preparation and Submission,” of the parameters and guidelines states that cost elements must be identified for the reimbursable activities identified in Section IV of the parameters and guidelines. Section V also states that all reimbursable costs must be supported by -13- City of Concord Crime Statistics Reports for the Department of Justice Program source documentation; and that for salary and benefit costs, claimants must report each employee implementing the reimbursable activities by name, job classification, and PHR. Recommendation The Crime Statistics Reports for the Department of Justice Program was suspended in the FY 2012-13 through FY 2021-22 Budget Acts. If the program becomes active again, we recommend that the city:  Follow the program’s parameters and guidelines and the Mandated Cost Manual when claiming reimbursement for mandated costs;  Claim costs based on the actual time increment required to perform the mandated cost activity;  Claim costs based on the number of domestic violence related calls for assistance that are supported with a written report; and  Calculate PHRs and benefit rates based on the employee classification that perform the mandated activities using documentation for the corresponding fiscal year. FINDING 2— The city overstated indirect cost rates, which resulted in overstated indirect costs totaling $116,779. The overstatement occurred because the indirect Overstated indirect cost pool in the city’s indirect cost rate proposal (ICRP) calculations cost rates included overstated benefit costs, unsupported A-87 Cost Allocation plan costs, unallowable equipment and building costs, and direct service costs. The city provided expenditure reports to support the claimed indirect cost rates. During testing, we found several issues with the city’s ICRP calculations:  In FY 2003-04 through FY 2006-07, the city included salary and benefit costs on the salary line item of its ICRPs, then calculated additional benefit costs based on the calculated departmental benefit rate. As a result, the city overstated benefit costs in the indirect cost pool. Therefore, we removed the overstated benefit costs from the indirect cost pool.  For FY 2009-10 and FY 2011-12, the claimed indirect salary and benefit costs were not supported by city’s records. We traced the information to the salary reports and found that the claimed salary and benefit costs were overstated. Therefore, we removed the overstated costs from the indirect cost pool.  The city did not provide documentation to support the indirect salary and benefit costs for FY 2002-03 or FY 2007-08. Therefore, we applied the audit adjustments to these fiscal years based on our analysis.  The city included equipment and building replacement costs in the indirect cost pool. Title 2, Code of Federal Regulations (2 CFR) part 225 (Office of Management and Budget Circular A-87) identifies these types of costs as unallowable indirect costs. Therefore, we removed these costs from the indirect cost pool. -14- City of Concord Crime Statistics Reports for the Department of Justice Program  The city included unsupported cost allocation plan costs during the audit period. Therefore, we removed these costs from the indirect cost pool.  For FY 2008-09 and FY 2009-10, the city included contract services costs in the indirect cost pool. In all other fiscal years, the city identified contact services as direct costs. The city did not provide additional documentation to support that these costs should have been indirect costs for these fiscal years. Therefore, we removed contract services from the indirect cost pool. We recalculated the indirect cost rate and applied the error rate to allowable salaries and benefits to determine the audit adjustment. The following table summarizes the fiscal years that resulted in an audit adjustment: Fiscal Year 2002-03 2003-04 2004-05 Total Allowable indirect cost rate 30.70% 21.40% 34.20% Claimed indirect cost rate (48.00)% (37.60)% (59.70)% Error rate (17.30)% (16.20)% (25.50)% Allowable salaries and benefit costs 38,431 26,260 5 8,326 Audit adjustment $ (6,649) $ ( 4,254) $ ( 14,873) $ (25,776) 2005-06 2006-07 2007-08 Allowable indirect cost rate 22.30% 34.80% 34.80% Claimed indirect cost rate (45.50)% (66.40)% (66.40)% Error rate (23.20)% (31.60)% (31.60)% Allowable salaries and benefit costs 66,688 63,388 5 8,393 Audit adjustment $ (15,472) $ (20,031) $ ( 18,452) (53,955) 2008-09 2009-10 2011-12 Allowable indirect cost rate 36.70% 24.77% 31.15% Claimed indirect cost rate (53.20)% (44.59)% (44.95)% Error rate (16.50)% (19.82)% (13.80)% Allowable salaries and benefit costs 60,305 80,029 8 1,422 Audit adjustment $ (9,950) $ (15,862) $ ( 11,236) (37,048) Total Audit Adjustment $ (116,779) Criteria Paragraph 1 of Section IV, “Reimbursable Activities,” of the parameters and guidelines states, “Actual costs must be traceable and supported by source documents that show the validity of such costs. . . .” Paragraph 2 of Section V.B, “Indirect Cost Rates,” of the parameters and guidelines states that agencies may claim indirect costs using the procedures identified in 2 CFR part 225. -15- City of Concord Crime Statistics Reports for the Department of Justice Program 2 CFR part 225 provides the following guidance:  Appendix A, part C.3.a, states, “A cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received.”  Appendix A, part C.3.b, states, “All activities which benefit from the governmental unit’s indirect cost . . . will receive an appropriate allocation of indirect costs.”  Appendix A, part C.3.c, states, “Any cost allocable to a particular Federal award or cost objective under the principles provided for in 2 CFR part 225 may not be charged to other Federal awards to overcome fund deficiencies. . . .”  Appendix B, part 8.h, subsection (4) states that employees must maintain personnel activity reports or equivalent documentation when they work on both indirect and direct cost activities.  Appendix B, part 15.b.5, states “Equipment and other capital expenditures are unallowable as indirect costs. . . .”  Appendix E, part A.1, states, “. . . A cost may not be allocated to a Federal award as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been assigned to a Federal award as a direct cost.” Recommendation The Crime Statistics Reports for the Department of Justice Program was suspended in the FY 2012-13 through FY 2021-22 Budget Acts. If the program becomes active again, we recommend that the city:  Allocate expenditures between direct, indirect, and unallowable costs based on the guidance in 2 CFR part 225 when calculating ICRPs; and  Maintain source documentation that can be used to verify such costs. -16- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 http://www.sco.ca.gov S21-MCC-0008