Corrective Action Matrix

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PCCD BOARD RETREAT
November 10, 2011
Agenda
1.
2.
Corrective Action Matrix
FCMAT Report
Material Weakness vs. Significant
Deficiency


Material Weakness: a deficiency, or combination of
deficiencies, in internal control, such that there is a
reasonable possibility that a material misstatement of
the entity's financial statements will not be prevented,
or detected and corrected on a timely basis.
Significant Deficiency: a deficiency, or a combination
of deficiencies, in internal control that is less severe than
a material weakness, yet important enough to merit
attention by those charged with governance.
Audit Findings
2009-10
2008-09
Single Audit Findings
9
13
Material Weaknesses
13
15
Significant Deficiencies
19
25
Total
41
53
Corrective Action Matrix
Independent Audit Findings
2010-1
DISTRICT BUDGET MONITORING
Corrective Action
Responsibility/Point
Due Date
• Annual Budget Prepared and Presented to Stakeholders within
Statutory Time-Line – On-Going Monitoring of Budget
• Responsible: PCCD Board/Chancellor
• Point: Vice Chancellor For Finance & Administration
• September 28, 2010
Status
• The 2010-11 Budget will be presented for review and acceptance by
September 28, 2010.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Completed. Presented and adopted at the 9/28/10 Board meeting.
2010-2
QUARTERLY FINANCIAL REPORTING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Financial Activity Calendar Provided to Board of Trustees
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• September 28, 2010
• A Financial Activity Calendar will be provided to the Board of Trustees at the
September Board Meeting for information
• (Refer to VTD Audit Response)
• Completed. An annual financial activity calendar has been developed and was
taken to the Audit and Finance Committee meeting on 10/14. It will then be
taken to the 10/26 Board meeting and updated on an annual basis.
2010-3
OVERSIGHT AND MONITORING
Corrective Action
• Formal Comprehensive Review of the PeopleSoft Accounting
System
Responsibility/Point
• Responsible: Vice Chancellor For Finance & Administration
• Point: Associate Vice Chancellor of Finance
Due Date
Status
Systematic/Source
Integration
• June 30, 2011
• Staff will be providing a recommendation on the time-line and
approach to this corrective action. Add status of position
management
• (Refer to VTD Audit Response)
• Ongoing - Business process review has been conducted and items
noted as critical have been identified and prioritized. More recently
we redesigned PeopleSoft’s payroll process to align with desired
business process. Currently working on financial aid, automated
budget process, and external reporting.
2010-4
CORRECTIVE ACTION PLAN
Corrective Action
Responsibility/Point
• A corrective action plan that will address the progress of
implementation of all comments and instances of noncompliance
must be prepared and provided to the Chancellor and Board of
Trustees on a regular basis.
• Responsible: PCCD Board/Chancellor
• Point: Vice Chancellor For Finance & Administration
Due Date
• Upon Receipt of Audit – 30, 60, 90, 120 day Status Report to Audit
Finance Committee and Board of Trustees
Status
• This Corrective Action Matrix List Each 2009-10 Audit Findings and
Its Status. The matrix is being used as a tool to address each of the
current and prior year findings
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Ongoing - Corrective action plans for prior audit findings are
being implemented and continuously assessed. Status reports
have been provided previously to the Audit and Finance
Committees with quarterly reports currently to the Board.
2010-5
OTHER POST EMPLOYMENT BENEFITS
(OPEB)BOND INVESTMENT ACTIVITIES
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Receive, Review and Reconcile the Monthly Investment Activity
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
• During the Month of July, the Board of Trustees and Audit and
Finance Committee were provided an update on the Investment
Activity
• (Refer to VTD Audit Response)
• Completed - Beginning in the month of October 2010, all
investment accounts are being reconciled and reviewed on a
monthly basis. Training will be provided to staff during fall
2011 for formal reconciliation procedures.
2010-6
SWAP INVESTMENT ACTIVITY
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Prepare, Review and Adopt Policy on Use of Interest Rate Swap
Agreements
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
• The VICE CHANCELLOR FOR FINANCE & ADMINISTRATION is working with
new bond financial adviser in the development of appropriate policy,
procedures and practices on interest rate SWAP agreements
• (Refer to VTD Audit Response)
•Completed
•Development of new policy, procedure, and SOP completed in January presented in
February
•Draft investment policy and administrative procedure to the March 15, 2011 Board
meeting. 5/14/2011 – BOT approved Investment Policy and Administrative Procedure
•SWAP policy to be developed by independent Retirement Board. In Process – At June
Retirement Board, Retirement Board will revisit investment policy.
•To be completed as part of a comprehensive OPEB restructure
2010-7 CASH IN COUNTY RECONCIIATIONS
2010-8 BANK ACCOUNT RECONCIIATIONS
Corrective Action
Responsibility/Point
Due Date
• Cash and Bank Accounts Reconciled Monthly
• Responsible: Vice Chancellor For Finance & Administration
• Point: Associate Vice Chancellor for Finance
• June 30, 2011
Status
• The PCCD is reviewing its policy regarding cash and bank account
reconciliation and is revising and implementing necessary changes
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Completed
• SOP has been development and now being implemented. Cash
accounts currently being reconciled timely and reviewed by the
Associate Vice Chancellor for Finance/ Vice Chancellor for Finance
and Administration.
2010-9
INTERNAL AUDIT FUNCTION
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Develop a Risk Assessment Program and Perform Regular Reviews of
Programs, Services and Activities
• Responsible: Vice Chancellor For Finance & Administration
• Point: Internal Auditor
• June 30, 2011
• The PCCD is in the hiring process of an Internal Auditor to perform risk
assessment
• (Refer to VTD Audit Response)
• Completed
• Individual started April 4, 2011
2010-10
CAPITAL ASSET ACCOUNTING
Corrective Action
• Identify and Train Personnel in Accounting of Capital Assets
Responsibility/Point
• Responsible: Vice Chancellor For Finance & Administration
• Point: Associate Vice Chancellor for Finance
Due Date
Status
Systematic/Source
Integration
• June 30, 2011
• The Vice Chancellor For Finance & Administration is identifying and
having trained personnel in the accounting and recording of capital
assets
• (Refer to VTD Audit Response)
• Completed
• Training has occurred.
• Implementing asset management module within PeopleSoft.
2010-11
FINANCIAL ACCOUNTING SYSTEM PROCEDURES
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• A Review of the Capabilities of PeopleSoft Financial Accounting
Software System
• Responsible: Vice Chancellor For Finance & Administration
• Point: Associate Vice Chancellor for Finance
• June 30, 2011
• Staff will be providing a recommendation on the time-line and
approach to this corrective action.
• (Refer to VTD Audit Response)
• Completed - Publishing of Monthly Variance Reports,
development of additional queries and reports.
2010-12
STUDENT ENROLLMENT FEE REPORTING
Corrective Action
Responsibility/Point
Due Date
• Consistent Procedure for Accounting and Remittance of All Student
Fees
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
Status
• The PCCD authorized a position to work between student and finance.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Completed - Student Analyst position has been created and an
individual has been hired. Further, an Administrative Procedure has
been created covering the collection and remittance of fees collected.
2010-13
WRITTEN PROCEDURE MANUALS
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Written Procedure Manuals Developed for District and Business
Offices
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2012
• Procedures manuals are in process.
• (Refer to VTD Audit Response)
• Procedures manual in process. Areas where drafts exist are
Purchasing and Accounts Payable. Budget and Budget development
in process.
• Accounting procedures 5/17/2011 - 50% completed.
2010-15
ACCURAL ACCOUNTS
Corrective Action
Responsibility/Point
Due Date
• Adequate Controls Over Year-End Closing Process. Training of District
Staff on Accounting Principles
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
Status
• The PCCD will institute adequate controls and provide training to
staff.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Completed.
• Training has been conducted. On-going training is being planned
during the course of the fiscal year. Closing checklists have been
implemented for the fiscal year ending 6/30/2010.
2010-16
LOAD BANKING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Revise Policies to Conform with Current Internal Revenue Service (IRS)
Section Regulations Regarding “Load Banking”.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration and VC of HR
• June 30, 2011
• The PCCD is receiving annual load banking records to accrue the
liability for year-end financial reporting. The PCCD policy will be
modified to eliminate the employee’s option of cashing out their
balance in whole or in part to comply with the IRS regulations. PCCD
will engage a meet and confer process.
• (Refer to VTD Audit Response)
• In process - Analysis being conducted to determine collective
bargaining implications.
2010-17
DISASTER RECOVERY AND STRATEGIC PLANNING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Continue to Review and Implement the Draft Disaster Recovery Plan (DRP)
for the Information Systems Department. DRP Should Cover all Operating
Systems and be Tested Annually. DRP Should Include Procedures that
Ensure Recovery and Restoration of all Systems.
• Responsible: Vice Chancellor of Educational Services
• Point: Associate Vice Chancellor of Information Technology
• June 30, 2011
• The PCCD is reviewing and implementing the draft DRP. The System will be
tested by June 30, 2011. The DRP will include procedures that will ensure
recovery and restoration of the systems in the event of a disaster.
• (Refer to VTD Audit Response)
• Calendar developed for routine testing of disaster recovery system
• Off Campus Hosting back up files
• New infrastructure implementation is underway and will be completed by
October 2011, designed to facilitate more robust, scalable, and effective
disaster recovery.
• An external assessment is currently being conducted
2010-18
SCHEDULE EXPENDITURES OF FEDERAL AWARDS
(SEFA)/SCHEDULE OF EXPENDITURES OF STATE AWARDS (SESA)
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Review Procedures and Format Over Collection of Data in the SEFA/SESA
to Ensure it Includes All Required Elements
• Responsible: Vice Chancellor of Finance
• Point: Associate Vice Chancellor of Finance
• June 30, 2011
• The PCCD will review its procedures and format over the collection of data
to be included in the SEFA/SESA.
• (Refer to VTD Audit Response)
• Completed but additional time may be needed pending audit review.
During the fiscal year end closing process many grants/projects required
substantial “clean up” that will impact the preparation of this report.
2010-19
COLLEGE BUSINESS OFFICE ACTIVITY
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Review Guidelines for Receipt and Use of General Fund Monies
Deposited within the Accounts. All Activity Reconciled and Provided
in a Timely Manner. Amounts within the Trust Fund Belonging to the
District Forwarded to District with a Full Reconciliation and
Accounting
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• December 31, 2010
• The PCCD will review the current guidelines and all activity will be
reconciled in a timely manner. Trust funds will be forwarded with a
reconciliation and accounting.
• (Refer to VTD Audit Response)
• In Progress - Guidelines have been developed and distributed to the
campus business managers outlining timelines for forwarding funds to
the District.
2010-20
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• The Allowance for Doubtful Accounts – Need Review and Analysis
Throughout the Year – Properly Adjusted for Current Year Activities
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• On-Going
• The PCCD will develop a process to analyze accounts. The PCCD is
implementing a new module in the student finance system that will set up
payment plans for students.
• (Refer to VTD Audit Response)
• Completed - Payment plan program has been implemented. Additionally,
the District is now participating in the State’s Co Tops program in effort to
collect receivables. AR policies need to be developed.
2010-21
ACCOUNTING FOR EXPENSES
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Review and Understand Disbursement Policies and Procedures – AP
Staff Ensure Expenditures are Classified and all Documents are
Present Prior to Disbursement of Funds for Payment.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• December 31, 2010
• The PCCD will review and understand the disbursement policies and
procedures. AP staff will ensure that expenditures are classified and
all pertinent documents are present prior to disbursement of funds for
payment.
• (Refer to VTD Audit Response)
• Completed - Training materials developed with a training workshop
held February 24th.
2010-22
EMPLOYEE CONTRACTS
Corrective Action
• Employment Contracts and Salary Increases are Approved and
Accepted by the Chancellor within a Week of the Employee’s
Acceptance
Responsibility/Point
• Responsible: Chancellor
• Point: VC of HR/Vice Chancellor For Finance & Administration
Due Date
• On-Going
Status
• The PCCD will ensure that employment contracts and salary
increases are approved and accepted by the Chancellor within
30 days of Employee’s acceptance.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Completed – Vice Chancellor of HR has implemented
procedures to assure new employee contracts are accepted and
signed as a condition of employment.
2010-23
JOURNAL ENTRIES
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Process of recording Transfers and Journal Entries Evaluated for Proper
Internal Controls. Segregation of Duties with Responsibility for Review and
Reconciliation Maintained at the Supervisory Level. Written Procedures
Prepared on Proper Controls and Procedures.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
• Written procedures will be prepared on the proper controls and
procedures. Only managers and supervisors can post journal entries.
• (Refer to VTD Audit Response)
• Completed - Budget and accounting procedures are being reviewed and
revised. Procedures regarding the creation, review and posting of budget
transfers and journal entries have been completed and implemented.
2010-24
PAYROLL FINDING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Implementation of new procedures to strengthen internal controls over
tracking, reporting, and payout of compensated absences.
• Responsible: Chancellor
• Point: Vice Chancellor for Finance and Administration and Vice
Chancellor of Human Resources
• June 30, 2012
• Written procedures have been prepared and are being implemented
to assure future vacation payouts are paid to appropriate accounting
codes. The District will be implementing Time and Labor as well as
Leave Absences features within PeopleSoft to automate the process.
• In process - Implementation of T&L and LA of PeopleSoft to be
completed by June 30, 2012.
2010-25
STUDENT FINANCIAL AID DISBURSEMENTS
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Adopt, implement, and monitor procedures that will allow for the
disbursement of payments to be completed in a way that
mitigates the risk of unauthorized disbursements and ensures
that payments are properly recorded (not through the use of
trust accounts).
• Responsible: Chancellor
• Point: Vice Chancellor for Finance and Administration and Vice
Chancellor of Student Services
• June 30, 2012
• The District will develop and implement procedures and policies
regarding all financial aid disbursements to ensure proper
coding and discontinue the use of trust accounts within the
financial aid disbursement process.
• In process - The development of procedures underway.
2010-26
CCFS-320 ATTENDANCE REPORTING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Careful Calculation and Preparation of the CCFS-320 Attendance
Reports. Documentation Reviewed and a Procedure to Cross Check
and Verify the Amounts to be Reported to the Chancellor and
Submission to the State.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration and VC of
Educational Services
• December 31, 2010
• CCFS-320 Attendance Reports will be calculated and prepared
carefully. Supporting documents will be carefully reviewed and a
procedure to cross check and verify the amounts reported will be
completed prior to submittal.
• (Refer to VTD Audit Response)
• Cross checking through testing and confirmation with Business
Intelligence Tool (BI)
• Completed
2010-27
CALWORKS – REPORTING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Timelines of Required Categorical Reporting must be Documented
and Sent to all Program Directors – Supervisory Personnel to Ensure
Reporting is Complete and Accurate. General Ledger is Posted
Timely and Accurately for all Categorical Programs to Ensure
Accuracy of Reporting
• Responsible: Chancellor
• Point: Vice Chancellor of Educational Services
• December 31. 2010
• Documentation of categorical reporting will occur and will be
forwarded to all program directors. Supervisory personnel will
ensure the reporting is complete and accurate.
• (Refer to VTD Audit Response)
• In process - Training of staff and Vice Presidents of Student Services
on accurate collection of student data
• Completed – General ledger activity is posted timely and accurately.
2010-28
STUDENTS ACTIVELY ENROLLED
Corrective Action
Responsibility/Point
Due Date
• Program Written to Allow Admissions and Records Office to
Identify the Rosters that has not Properly Turned in by Instructors.
Admissions and Records Office Follow-Up with Instructors on
Requirements to Identify Students who are not Enrolled.
• Responsible: Chancellor
• Point: Vice Chancellor of Educational Services, Vice Chancellor
of Student Services and Vice Chancellor of Finance
• December 31, 2010
Status
• Program will be written to allow Admission and Records Office
to identify the rosters that have been turned in by the instructors
to determine completeness and accuracy.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Training by Staff Development Coordinator of Faculty on correct use of
rosters and grade reports.
• Regular follow up with instructional staff and administration on the campus.
• Regular reports distributed to Presidents
• In process.
2010-29
USE OF MATRICULATION FUND
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Identify an Individual Responsible to Monitor State Compliance
Issues Related to all Compliance Areas and Ensure that
Deadlines are met and Reports are Accurate.
• Responsible: Chancellor
• Point: Vice Chancellor of Educational Services and Vice
Chancellor of Finance
• December 31, 2010
• The PCCD has identified individuals that will monitor State compliance
issues related to all compliance areas and ensure that deadlines are met
and reports are accurate and filed in a timely manner. In terms of internal
controls, PCCD has established a reporting calendar and hired an Internal
Auditor on March 15, 2011, whom will monitor and follow-up on
compliance related matters.
• (Refer to VTD Audit Response)
• Training of staff
• Oversight by management to ensure knowledge of grants
received, proper set up of grants and follow through
• Completed
2010-30
ENROLLMENT FEES REPORTING
Corrective Action
Responsibility/Point
Due Date
• Careful Preparation of the Reporting Forms for the State
System’s Office. Reconciliation of Amounts to be Reported to
General Ledger Signed off by Supervisory Personnel Prior to
Submitting the Documents.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• December 31, 2010
Status
• Care will be taken in completing the required reporting forms
for the State’s System’s Office. Reconciliation of amounts to be
reported to the general ledger will be signed off by
supervisory personnel prior to submitting the documents.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• A financial reporting procedure being developed that calls for
appropriate checks and balances.
• Completed - External reporting is now reconciled with general
ledger prior to signature by Vice Chancellor for Finance
(i.e.323).
2010-31
GANN LIMIT CALCULATION
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Reconciliation of amounts to be reported should be signed off by
supervisory personnel prior to submitting the documents.
• Responsible: Chancellor
• Point: Vice Chancellor for Finance and Administration
• June 30, 2011
• The District has implemented procedures to internal controls are
present to identify and correct transposition errors while
preparing financial reports.
• Completed
• Procedures implemented
2010-32
50% LAW CALCULATION
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Job descriptions should be reviewed and clearly documented to
ensure only employees with instructional duties and under the
supervision of an instructor are charged to the 22XX object code
which is included in the 50% Law calculation.
• Responsible: Chancellor
• Point: Vice Chancellor for Finance & Administration
• June 30, 2012
• The District is reviewing its procedures over the coding and reporting
of salary expenditures. These procedures will be revised to ensure
expenditures for salary and benefits for employees are accurate.
• In process - Review of existing procedures are underway.
Corrective Action Matrix
Single Audit
2010-1
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA)
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Review procedures and format over the collection of data to be included in
the SEFA to ensure that it includes all required elements.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
• The district is reviewing all procedures and format over the collection of
data to be included in the SEFA and also review its existing format of SEFA
to ensure that it includes all required elements.
• Completed but additional time may be needed pending audit review.
During the fiscal year end closing process many grants/projects required
substantial “clean up” that will impact the preparation of this report.
2010-2
TIME AND EFFORT REPORTING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Better Assess Compliance Risks to Better Develop Appropriate
Compliance Objects and Necessary Controls
• Responsible: Chancellor
• Point: Vice Chancellor of Educational Services
• December 31, 2010
• The PCCD will assess the compliance risks to better develop
appropriate compliance objectives and necessary controls.
• (Refer to VTD Audit Response)
• Time and effort to be accurately recorded
• In process.
2010-3
FINANCIAL REPORTING
Corrective Action
Responsibility/Point
Due Date
Status
Systematic/Source
Integration
• Develop and Monitor Reporting Calendar to Document
Timelines. Verify Actual Costs Recorded in the Financial System.
• Responsible: Chancellor
• Point: Vice Chancellor of Educational Services
• December 31, 2010
• Reporting Calendar will be used to document timelines and
monitor reporting timelines. Reports will be reviewed to verify
actual costs are recorded in the financial system.
• (Refer to VTD Audit Response)
•
•
•
•
•
Accurate reporting of salary and benefits
Distribution of Monthly Expense Reports (MERs)
Correct accounting of labor and benefits
Correct accounting and coding of Pro-Rata pay
Completed
2010-4
SEPARATE ACCOUNTABILITY FOR THE AMERICAN
RECOVERY AND REINVESTMENT ACT (ARRA) FUNDING
Corrective Action
Responsibility/Point
Due Date
• Develop separate program codes for all ARRA awards in order
to ensure expenditure of funds are accounted separately from
non-ARRA funds.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
Status
• The District will establish separate accounts for the accounting of
all Federal ARRA funds.
Systematic/Source
Integration
• Completed – Unique accounting code created to identify, account
and tract ARRA revenues and expenditures.
2010-5
EQUIPMENT MANAGEMENT
Corrective Action
Responsibility/Point
Due Date
• Physical Inventory of the Federally Purchased Equipment taken BiAnnually – Reconciled – Written Procedures Prepared on Inventory
Controls – Safeguarded and Accounted For
• Responsible: Vice Chancellor of Finance
• Point: Purchasing Compliance Manager
• June 30, 2011
Status
• Physical Inventory will be taken on a bi-annual basis and reconciled
with records of purchases of the equipment.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• In process - A draft Board Policy and Administrative Policy has been developed that,
among other things, specifically requires inventory observations on a bi-annual basis.
These draft policies are currently going through the shared governance process.
•Completed - 2011 physical inventory scheduled with American Appraisal in June 2011.
2010-6
PROCUREMENT, SUSPENSION, AND DEBARMENT
Corrective Action
• Verify Entities Contracted with for Services are not Suspended
or Debarred
Responsibility/Point
• Responsible: Chancellor
• Point: Vice Chancellor of Educational Services and Purchasing
Compliance Manager
Due Date
Status
Systematic/Source
Integration
• December 31, 2010
• The PCCD has monitored the grant sub recipients for compliance with
program performance since December 2009. Signed MOUs have been
received from the five campuses that participated in the Tech-Prep grant.
Time and effort verification has been completed for all district-wide
awards.
• (Refer to VTD Audit Response)
• MOU’s are kept up to date, Vice Chancellor of Educational
Services will oversee grants and ensure reporting compliance
• Completed
2010-7
DIRECT LOANS
Corrective Action
Responsibility/Point
Due Date
• Implement procedures to ensure that the School Account Statement
data file and the Loan Detail records per the COD are reconciled to
Merritt College’s financial records.
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration
• June 30, 2011
Status
• With the migration to Federal Direct Loans (DL) the Financial Aid
SAFE system is now the method for DL reconciliation; no outside
mechanism is currently used; DL originations are submitted through
SAFE, origination records are accepted, funds are disbursed through
SAFE and reconciled directly to COD via FTP of SAFE DL files.
Systematic/Source
Integration
• Completed – as of fiscal year end student financial aid cluster have
been reconciled to general ledger.
2010-8
RETURN TO TITLE IV
Corrective Action
Responsibility/Point
Due Date
• Annual Budget Prepared and Presented to Stakeholders within
Statutory Time-Line – On-Going Monitoring of Budget
• Responsible: Chancellor
• Point: Vice Chancellor For Finance & Administration and Vice
Chancellor of Student Services
• June 30, 2011
Status
• Accounting policies will be developed to provide uniform
calculation procedures for each of the colleges. Records will
include support that the reports are run in a timely manner.
• (Refer to VTD Audit Response)
Systematic/Source
Integration
• Completed – Annual budget prepared and adopted within
statutory deadline. Monthly budget reports prepared and
disseminated to colleges and managers with budget
responsibility.
2010-9
FEDERAL DRAW DOWNS
Corrective Action
• Adopt a Policy that Determines Procedures for drawing Down
Federal Funds. Implement a Control to Ensure Proper
Segregation of Duties over Drawing Down Funds and Verify
Amount is Reviewed and Approved
Responsibility/Point
• Responsible: Chancellor
• Point: Vice Chancellor of Student Services and Associate Vice
Chancellor of Finance
Due Date
Status
Systematic/Source
Integration
• December 31, 2011
• The PCCD will adopt a policy/administrative regulation that
determine the procedures for drawing down Federal funds. A
control will be implemented to ensure segregation of duties.
Amounts will be reviewed and approved.
• (Refer to VTD Audit Response)
• In process - Policy in development calling for drawdowns no less
than quarterly.
FCMAT Report
Facilities Bonds - COC Meetings
Recommendations
1.
2.
3.
4.
5.
Develop and produce agendas and minutes in
compliance with the Brown Act, including
explanation of each item, motion, second and vote
results, and time for public comment on agenda
and non-agenda items.
Post all agendas and minutes for every COC
meeting, regardless of where there was a quorum.
Hold COC meetings a least quarterly in
compliance with Proposition 39 requirements.
Correct the COC bylaws to state that COC
meetings must occur at least quarterly, in
compliance with Proposition 39 requirements.
Appoint at least seven members to the COC in the
required categories.
Facilities Bonds - COC Meetings (cont’d)
Recommendations
6.
7.
8.
9.
Cease holding the COC members’ binders at the district
office. Find ways for COC members to take this
information home to allow for adequate review of
documents. Technology can be used to make this process
less cumbersome.
Provide committee members with all documents to be
discussed at COC meetings at least 72 hours, and
preferably one week, prior to the meetings. Do no wait
until the meeting to provide the documents.
Commit to providing COC members with the reports
required by Proposition 39 and with those requested by
the COC.
Cease requesting that COC members not share public
documents with members of the public prior to meetings.
Facilities Bonds - COC Reporting
Recommendations
1.
2.
3.
Require that the COC meet at least quarterly regardless
of whether there is a quorum. Meeting agendas should
provide complete descriptions of each agenda item,
and meetings should be structured in accordance with
the Ralph M. Brown open meetings act. Minutes should
be taken and approved at the following meeting.
Provide clear and understandable explanations and
tracking for all past and current projects and
expenditures in all areas.
Substantially reorganize and reformat its bond program
reports that are presented to the COC and to the board
and made available to the district’s website. The reports
should include several levels of detail, starting with
summarized data and including more detailed projectlevel information.
Facilities Bonds - COC Reporting (cont’d)
Recommendations
4.
5.
6.
Provide summary master program budget and
individual project budgets consistently at each
COC meeting. The full reports for each project
may comprise 20-30 pages, but a five-or-six-page
summary of each project budget would be
sufficient for the COC, the board and the public,
with the complete detailed project budget
available to any member of the public upon
request.
Review program and budget report formats with
the COC and seek feedback regarding possible
changes.
Prepare and present other reports about
particular issues or projects as needed.
Facilities Bonds - Contracts
Recommendations
1.
2.
3.
Review its contract language for independent contractors and
ensure that it includes provisions for deliverables or expected
outcomes.
Include contract language for consultants and contractors that
defines penalties or liquidated damages if the contractor or
consultant does not meet the deliverables or expected
outcomes.
Require that work be supervised and approved by district
management. Hourly invoice rates should be compared to
contract hourly rates, and management should sign vendor
invoices to indicate that the district’s expectations for
deliverables have been met. Hand writing or creating a
special stamp for administering managers that reads “Contract
deliverables have been met” along with a place for the
administrator’s signature would draw attention to the
importance of confirming that the district is acknowledging the
rates and deliverables.
Facilities Bonds - Contracts (cont’d)
Recommendations
4.
5.
Require that contracts and purchase orders
be completed and approved in advance
before a vendor begins providing services.
Ensure that a policy and procedure are in
place in the event that a contractor’s service
is required under certain emergency
situations. The policy and procedure should
specify which emergency situations are
acceptable, state who must authorize the
expenditure, and ensure that a full
description of the scenario accompanies all
documentation.
Facilities Bonds - Issuance
Recommendations
1.
2.
3.
Review bond issuance practices to achieve
lower issuance costs and thus increase
resources available for the facilities
program.
Review Series C bond issuance assumptions,
which appear to include assessed valuation
increases when valuation was declining, and
adjust practices accordingly.
Evaluate its ability to issue remaining bond
authorization without exceeding the
maximum allowable tax levy for Proposition
39 bonds, and adjust bond program
planning accordingly.
Facilities Bonds - Issuance (cont’d)
Recommendations
4.
5.
Conduct research regarding tax
delinquencies to determine if they will
have a negative effect on the district’s
ability to meet existing debt service
requirements or issue additional bonds.
Review representations made when
Series B and C bonds were issued to
validate assumptions regarding cash
needs, and adjust future debt issuance
practices accordingly.
Facilities Bonds - Arbitrage
Recommendations
1.
2.
Monitor the investment of bond
proceeds for potential arbitrage
rebate liability.
Prepare periodic calculations of
rebate liability and make any
necessary payments to the federal
government as required by the
Internal Revenue Code and related
regulations.
Bonds To Fund Other Post-Employment Benefits
Recommendations
1.
2.
3.
4.
Provide direction to district staff and the
team of experts regarding the restructuring
of the OPEB bonds, including the disposition
of all six OPEB swaps.
Implement a solution that avoids allocating
additional resources from its general fund.
Negotiate a new retiree benefit program
that reduces the long-term unfunded liability
of its OPEB.
Refrain from issuing any new pension or
retiree obligation bond programs in the
future.
Travel, Entertainment and Other Expenditures
Recommendations
1.
2.
3.
Review its policy and procedures to ensure that it denies
any requests from district employees or district
representatives for reimbursement of paid traffic fines.
Ensure that it keeps detailed documentation and
authorization to substantiate the business purpose of
expenditures for travel, meals, entertainment, staff
development or other functions. The district should
update its policies and procedures manual to include
stronger guidelines for travel, meals, entertainment and
staff development expenditures.
Cease allowing gift cards or strengthen its policies and
procedures regarding gift cards to ensure internal
controls such as signed logs for each card, confirmation
of use for program needs and oversight of unused gift
cards. Recognize that gift card use is susceptible to
fraud and can easily become a gift of public funds.
Travel, Entertainment and Other Expenditures
(cont’d)
Recommendations
4.
5.
6.
Prohibit vendors from providing services before a
contract and a purchase order have been
completed and approved. Ensure that purchase
orders and purchase requisitions are not
developed, approved or dated after a vendor has
started services.
Require that all meal and entertainment
expenditures be documented. Documentation
should identify the business purpose, date, time,
place and participants.
Perform a detailed study of the financial
profitability of the IA office’s foreign student
recruitment. Use the April 19, 2007 report
produced by the office of the inspector general as
a guideline for the study.
Credit Card Expenditures
Recommendations
1.
2.
3.
Review its policy and procedures to ensure that credit
card late fees and charges that are incurred because
the cardholder did not provide receipts or
documentation on time are billed to the card holder.
Update its policies and procedures to disallow
reimbursement for any charges on a district-issued credit
card for which the receipt is not submitted. Include
language that states that charges for which there is no
receipt submitted will be the responsibility of the
individual credit card holder and must be reimbursed to
the district if the receipt is not submitted at least five
days before the credit card bill’s due date.
Revise district travel and hotel policies and procedures
to expressly exclude the use of hotel mini bars.
Credit Card Expenditures (cont’d)
Recommendations
4.
5.
Update its travel and lodging policies and
procedures to include limits on hotel and other taxi
and limousine transportation costs and to require
that an explanation of the need for such a service
be written directly on the transaction invoice or
receipt. If the cost of the transportation will exceed
any previously established limits, require that prior
approval be obtained and indicate that without
such approval the district may deny reimbursement.
If PeopleSoft accounting software is used for
transactions and if it indicates that there is a
reconciliation status available for a transaction or
transactions require that the transactions be
reconciled and the transaction status updated.
Employee Leave and Absence Tracking
Recommendations
1.
2.
Replace its manual leave reporting
system with a fully integrated
electronic system.
Review vacation accrual limits in
collective bargaining agreements and
all other employment agreements, and
notify and implement a vacation
balance reduction plan for any
employee who has exceeded their
vacation accrual limit.
Fixed Assets
Recommendations
1.
2.
3.
Complete the fixed asset policies and
procedures manual as soon as possible and
include procedures for disposal, retirement,
and sales of assets.
Ensure that the fixed asset spreadsheet
allows users to identify which assets are
disposed of, the date of disposal, and any
other information specific to the asset’s
removal, rather than keeping the information
in a separate log.
Consider integrating the fixed asset
spreadsheet log into a PeopleSoft module
for fixed assets.
Cash Reconciliation
Recommendations
1.
2.
Ensure that Fund 89, Student Financial Aid, is posted in a
timely manner from the district’s stand-alone financial
system, and that transactions identify the monthly site
summary report information. The district’s administration
should develop a clear understanding of this offline
system and ensure that off-site personnel are trained
and have district support. System reconciliation should
be completed monthly to validate that offline student
information is correct, reports are accurate, and district
records agree with data in the county office’s financial
system.
Review the payroll positing process to provide more
timely financial reporting information and establish a
process to ensure that all payroll interfund activity is
recorded on time after each payroll has been
processed.
Cash Reconciliation (cont’d)
Recommendations
3.
4.
5.
6.
Ensure that journal entries are approved by a
business office manager and that they include
documentation that explains the reason for the
journal entry.
Ensure that correcting journal entries include the
reversal of the original incorrect entry to provide a
proper audit trail.
Ensure that all journal entries and financial source
documents are filed in a central location in the
business office and are accessible to all business
office personnel.
Develop systems that allow only the lead
accountant and/or supervisory accounting staff to
post entries to the district’s cash accounts.
Project Grants
Recommendations
1.
2.
3.
Consider maintaining the original assigned project code
throughout the life of a funded project to facilitate
accounting issues, budget monitoring and ease of
tracking expected revenues.
Consider using components of the existing account code
structure to separate expenditures and revenues by
fiscal year.
Consider establishing the budget for indirect cost in the
same fund as the expenditure budgets using a unique
7000 object code (other sources) to provide a resource
for tracking approved indirect cost, to help avoid
budget overruns and to highlight the indirect cost as a
valid expenditure entry during year-end closing and
when closing the project. The resulting credit to offset
the approved indirect cost should be shown in the
unrestricted general fund to reduce the overall costs to
administer the projects.
Project Grants (cont’d)
Recommendations
4.
5.
6.
7.
Meet with staff involved in employee salary and benefit
postings to resolve issues regarding the processing delay; set
a timeline; and help staff to provide more timely financial
data.
Review and update accounts payable procedures to include an
analysis and clearing of encumbrances and pre-encumbrances
as part of the year-end closing process. Valid purchase orders
should be closed if inactive, or disencumbered and reencumbered in the new fiscal year if active.
Develop and have its technology department implement a
standard format for financial reports that lists expenditures
and revenues in a single format.
Consider using a unique project number for ARRA funding to
make it easier to track the financial activity and help staff
complete the required expenditure reports.
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