San Mateo County

SAN MATEO COUNTY Audit Report ABSENTEE BALLOTS PROGRAM Chapter 77, Statutes of 1978, and Chapter 920, Statutes of 1994 July 1, 1999, through June 30, 2002 STEVE WESTLY California State Controller August 2004 STEVE WESTLY California State Controller August 10, 2004 Mr. Warren Slocum Chief Elections Officer and Assessor-County Clerk-Recorder San Mateo County County Government Center 555 County Center, 3rd Floor Redwood City, CA 94063-1665 Dear Mr. Slocum: The State Controller’s Office has completed an audit of the claims filed by San Mateo County for costs of the legislatively mandated Absentee Ballots Program (Chapter 77, Statutes of 1978, and Chapter 920, Statutes of 1994) for the period of July 1, 1999, through June 30, 2002. The county claimed $444,446 for the mandated program. Our audit disclosed that $439,314 is allowable and $5,132 is unallowable. The unallowable costs occurred because the county claimed unsupported fringe benefit costs. The county was paid $380,888. Allowable costs claimed in excess of the amount paid total $58,426. If you have any questions, please contact Jim L. Spano, Chief, Compliance Audits Bureau, at (916) 323-5849. Sincerely, Original Signed By: VINCENT P. BROWN Chief Operating Officer VPB:JVB/ams cc: The Honorable Tom Huening, Controller San Mateo County Willy Padilla Financial Services Manager Department of Elections San Mateo County James Tilton, Program Budget Manager Corrections and General Government Department of Finance San Mateo County Absentee Ballots Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 1 Conclusion.......................................................................................................................... 2 Views of Responsible Official........................................................................................... 2 Restricted Use.................................................................................................................... 3 Schedule 1—Summary of Program Costs........................................................................... 4 Finding and Recommendation.............................................................................................. 6 Steve Westly • California State Controller San Mateo County Absentee Ballots Program Audit Report Summary The State Controller’s Office (SCO) has completed an audit of the claims filed by San Mateo County for costs of the legislatively mandated Absentee Ballots Program (Chapter 77, Statutes of 1978, and Chapter 920, Statutes of 1994) for the period of July 1, 1999, through June 30, 2002. The last day of fieldwork was March 8, 2004. The county claimed $444,446 for the mandated program. The audit disclosed that $439,314 is allowable and $5,132 is unallowable. The unallowable costs occurred because the county claimed unsupported fringe benefit costs. The county was paid $380,888. Allowable costs claimed in excess of the amount paid total $58,426. Background Chapter 77, Statutes of 1978, and Chapter 920, Statutes of 1994, require that absentee ballots be available to any registered voter without the prerequisite of certain conditions as required under prior law. Under prior law, absentee ballots were provided only when one of the following conditions were met: illness, absence from the precinct on the day of election, physical handicap, conflicting religious commitments, or a voter’s residence more than ten miles from his/her polling place. On June 17, 1981, the State Board of Control (now the Commission on State Mandates) ruled that Chapter 77, Statutes of 1978, resulted in state- mandated costs that are reimbursable pursuant to Government Code Section 17561. Parameters and Guidelines, adopted by the Commission on State Mandates on August 12, 1987, and last amended on December 18, 1997, establishes state mandates and defines criteria for reimbursement. In compliance with Government Code Section 17558, the SCO issues claiming instructions for each mandate requiring state reimbursement to assist local agencies in claiming reimbursable costs. Objective, The audit objective was to determine whether costs claimed are increased costs incurred as a result of the Absentee Ballots Program (Chapter 77, Scope, and Statutes of 1978, and Chapter 920, Statutes of 1994) for the period of Methodology July 1, 1999, through June 30, 2002. The auditor performed the following procedures: • Reviewed the costs claimed to determine if they were increased costs resulting from the mandated program; • Traced the costs claimed to the supporting documentation to determine whether the costs were properly supported; Steve Westly • California State Controller 1 San Mateo County Absentee Ballots Program • Confirmed that the costs claimed were not funded by another source; and • Reviewed the costs claimed to determine that the costs were not unreasonable and/or excessive. The SCO conducted the audit in accordance with Government Auditing Standards, issued by the Comptroller General of the United States, and under the authority of Government Code Section 17558.5. The SCO did not audit the county’s financial statements. The scope was limited to planning and performing audit procedures necessary to obtain reasonable assurance concerning the allowability of expenditures claimed for reimbursement. Accordingly, transactions were examined, on a test basis, to determine whether the amounts claimed for reimbursement were supported. Review of the county’s internal controls was limited to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Conclusion The audit disclosed an instance of noncompliance with the requirements outlined above. This instance is described in the accompanying Summary of Program Costs (Schedule 1) and in the Finding and Recommendation section of this report. For the audit period, San Mateo County claimed $444,446 for costs of the Absentee Ballots Program. The audit disclosed that $439,314 is allowable and $5,132 is unallowable. For fiscal year (FY) 1999-2000, the county was paid $194,515 by the State. The audit disclosed that $191,167 is allowable. The amount paid in excess of allowable costs claimed, totaling $3,348, should be returned to the State. For FY 2000-01, the county was paid $80,271 by the State. The audit disclosed that $142,221 is allowable. Allowable costs claimed in excess of the amount paid, totaling $61,950, will be paid by the State based on available appropriations. For FY 2001-02, the county was paid $106,102 by the State. The audit disclosed that $105,926 is allowable. The amount paid in excess of allowable costs claimed, totaling $176, should be returned to the State. Views of The SCO issued a draft audit report on June 18, 2004. The auditor Responsible contacted Willy Padilla, Financial Services Manager in the county Elections Department, by telephone on June 28, 2004. Mr. Padilla Official expressed agreement with the audit results and declined to respond in writing to the draft report. Steve Westly • California State Controller 2 San Mateo County Absentee Ballots Program Restricted Use This report is solely for the information and use of San Mateo County, 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 report, which is a matter of public record. Original Signed By: JEFFREY V. BROWNFIELD Chief, Division of Audits Steve Westly • California State Controller 3 San Mateo County Absentee Ballots Program Schedule 1— Summary of Program Costs July 1, 1999, through June 30, 2002 Actual Costs Allowable Audit 1 Cost Elements Claimed per Audit Adjustments July 1, 1999, through June 30, 2000 Salaries $ 205,757 $ 205,757 $ — Benefits 11,091 6,848 (4,243) Services and supplies 89,110 89,110 — Total direct costs 305,958 301,715 (4,243) Indirect costs 68,929 68,929 — Total costs of absentee ballots cast 374,887 370,644 $ (4,243) Number of absentee ballots cast ÷ 91,143 ÷ 91,143 Cost per absentee ballot (rounded) 4.11 4.07 Number of reimbursable absentee ballots cast × 77,182 × 77,182 Gross reimbursable costs 317,218 313,870 Less offsetting savings/reimbursements (122,703) (122,703) Net reimbursable costs $ 194,515 191,167 $ (3,348) Less amount paid by the State (194,515) Allowable costs claimed in excess of (less than) amount paid $ (3,348) July 1, 2000, through June 30, 2001 Salaries $ 207,222 $ 207,222 $ — Benefits 11,139 9,242 (1,897) Services and supplies 85,946 85,946 — Total direct costs 304,307 302,410 (1,897) Indirect costs 72,735 72,735 — Total costs of absentee ballots cast 377,042 375,145 $ (1,897) Number of absentee ballots cast ÷ 99,733 ÷ 99,733 Cost per absentee ballot (rounded) 3.78 3.76 Number of reimbursable absentee ballots cast × 84,508 × 84,508 Gross reimbursable costs 319,484 317,876 Less offsetting savings/reimbursements (175,655) (175,655) Net reimbursable costs $ 143,829 142,221 $ (1,608) Less amount paid by the State (80,271) Allowable costs claimed in excess of (less than) amount paid $ 61,950 Steve Westly • California State Controller 4 San Mateo County Absentee Ballots Program Schedule 1 (continued) Actual Costs Allowable Audit 1 Cost Elements Claimed per Audit Adjustments July 1, 2001, through June 30, 2002 Salaries $ 143,228 $ 143,228 $ — Benefits 8,387 8,182 (205) Services and supplies 34,397 34,397 — Total direct costs 186,012 185,807 (205) Indirect costs 55,429 55,429 — Total costs of absentee ballots cast 241,441 241,236 $ (205) Number of absentee ballots cast ÷ 75,538 ÷ 75,538 Cost per absentee ballot (rounded) 3.20 3.19 Number of reimbursable absentee ballots cast × 64,480 × 64,480 Gross reimbursable costs 206,098 205,922 Less offsetting savings/reimbursements (99,996) (99,996) Net reimbursable costs $ 106,102 105,926 $ (176) Less amount paid by the State (106,102) Allowable costs claimed in excess of (less than) amount paid $ (176) Summary: July 1, 1999, through June 30, 2002 Net reimbursable costs $ 444,446 $ 439,314 $ (5,132) Less amount paid by the State (380,888) Allowable costs claimed in excess of (less than) amount paid $ 58,426 _________________________ 1 See the Finding and Recommendation section. Steve Westly • California State Controller 5 San Mateo County Absentee Ballots Program Finding and Recommendation FINDING— The county claimed fringe benefit costs that were not supported by its accounting records and differed from costs it actually incurred. The Fringe benefit costs differences appeared to be the result of mathematical and other errors unsupported made by the county and its consultant who prepared the claims. Parameters and Guidelines for the Absentee Ballots Program specifies that only actual increased costs incurred in the performance of the mandated activities and supported by appropriate documentation are reimbursable. Claimed costs have been adjusted by $6,345 as follows (total reimbursable costs have been reduced in Schedule 1 by only $5,132 due to the effects of the mandate reimbursement formula): Audit Adjustment Fiscal Year 1999-2000 2000-01 2001-02 Total Fringe benefits $ (4,243) $ (1,897) $ (205) $ (6,345) Recommendation The county should ensure that all costs claimed are eligible increased costs incurred as a result of the mandate, and are supported by accounting records. Steve Westly • California State Controller 6 State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, California 94250-5874 http://www.sco.ca.gov S04-MCC-025