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Judicial Council of California

Letter Report: 2019-302

Judicial Council of California

November 25, 2019

Ms. Elaine M. Howle, CPA
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, California 95814

Dear Ms. Howle:

I appreciate the opportunity to respond to your office’s statutory audit of the Judicial Council’s procurement practices. The Judicial Council is committed to continual improvement and the State Auditor’s office provides a valuable service through its biennial reviews. I am pleased your report often concluded “no reportable findings” for many of your audit’s most important objectives. These key conclusions—even though they are briefly discussed in the Scope and Methodology section at the end of your report—confirm that our Judicial Branch Contracting Manual and related procurement policies are consistent with state law. Overall, the limited number of recommendations contained in your report—only two—is a positive reflection of the hard work and professionalism of the Judicial Council’s contracting and procurement staff. I am especially pleased your testing found no reportable issues with the following key procurement practices of the Judicial Council:

These procurement practices and related policies are core components of the Judicial Branch Contracting Manual. Despite the overall positive results of your audit, the Judicial Council recognizes the need for further improvement and will carefully consider your report’s two recommendations. In the sections below, my staff provide additional detail and context on these two issues.

Recommendation #1:

To ensure that it complies with state law, maintains appropriate transparency, and provides the Legislature with all legally required information regarding its contracting and procurements, the Judicial Council should take the following action by February 2020:


Reporting accurate and complete procurement data is a priority for the Judicial Council, and we will work with the Department of FI$Cal to explore opportunities to further refine our reporting practices. For context, the Judicial Council began using FI$Cal during fiscal year 2018–19 for its accounting and procurement transactions. This implementation was a significant effort for the Judicial Council’s staff as it resulted in numerous changes to our internal policies and practices. At the time we prepared our semiannual reports, staff were unaware of any delays between our entry of payment data into FI$Cal and when that data would subsequently become available to the public on FI$Cal’s website. Any under-reporting of our payments to vendors resulting from this minor delay—which the auditors estimated to be between 30 to 60 days—was unintentional.

Notwithstanding this issue, the Judicial Council’s reporting of its procurement and payment activities on FI$Cal’s public website has significant benefits. Specifically, the FI$Cal website is continually updated and the public no longer needs to wait an additional six months to view the council’s more recent transactions. For example, the Judicial Council’s most recent semiannual report was due in August 2019, covering the period of January through June 2019. Today, the public can see our payment transactions through August 2019 and thus no longer needs to wait until February 2020 to see our more recent data from the first two months of fiscal year 2019–20. Regardless, we understand the estimated delays cited in the auditor’s finding are inconsistent with state law.

The auditor’s draft report also discusses the misclassification of four contract amendments in our semiannual report, noting these four were reported as contracts instead of contract amendments. In a few cases, the auditors also noted the lack of additional information regarding the duration and nature of these amendments. We acknowledge these unintentional omissions. More importantly, we appreciate the auditor’s explanation that “FI$Cal lacks a dedicated field to identify whether an entry is an amendment, so Judicial Council staff typically use the item description field [within FI$Cal] to identify amendments.” With our transition to FI$Cal, staff have sought to identify ways in which they can use FI$Cal to meet our reporting obligations. In the few cases noted by the auditors, Judicial Council staff did not enter this data—as they have done for other contracts—and we will examine ways to improve our consistency in providing this information. Given the state’s significant investment in FI$Cal and the desire for greater transparency and timeliness, legislative changes may be necessary to better align the statutorily mandated reporting requirements with FI$Cal’s functional capabilities. Judicial Council staff will keep these issues in mind during its discussions with FI$Cal and as we determine the appropriate next steps when developing our corrective action plan.

Finally, the audit report concludes the Judicial Council did not disclose the goods or services pertaining to roughly 500 contract amendments each year. The auditor’s report accurately discloses that we provide this information when reporting the original contract or when a subsequent amendment changes the good or service provided. However, contract amendments that do not change the goods or services procured will not result in the information cited by the auditors in their finding. We will examine the programming costs necessary to compile the missing information and we will have further information at our 60-day, six-month, and one-year updates on the audit.

Recommendation #2:

To better limit the risk of inappropriate procurements or that it will not procure goods and services at the best value, the Judicial Council should immediately revise its procurement process to include a final verification step to confirm that managers with appropriate signature authority approve its procurements.

The audit report cites five instances when a supervisor approved a purchase order or contract that exceeded his or her signing authority. In one of these five instances, a result of the improper approval was the under-reporting of a single contract to the State Auditor’s office. We acknowledge the wrong individuals executed these five agreements and our management team has counseled all supervisors regarding their approval authorities. Our management team will also consider the merits of developing additional controls—as recommended by the auditor—to the extent they are likely to reduce similar approval issues in the future.

Notwithstanding the wrong individuals approved these five agreements, it is important to note the State Auditor’s report did not otherwise question the merits of these transactions or conclude they were improper. Among the procurements cited in the auditor’s finding were a contract for court-appointed juvenile dependency counsel; a purchase order for branchwide software licenses under an earlier agreement from 2005; and a purchase order to pay dues to the National Center for State Courts, a nationally recognized nonprofit organization focused on improving judicial administration. As noted in the auditor’s report, senior management within the Judicial Council’s procurement office reviewed each of these five transactions—when brought to our attention by the audit team—and concluded each would have been approved if properly routed. Nevertheless, we agree with the auditor’s finding.

With these comments and clarifications in mind, I would like to thank the audit team for their contributions toward helping the Judicial Council further improve its procurement practices. Should you have any questions regarding this response, please contact Grant Parks, Principal Manager, Audit Services, at (916) 263-1321.


Millicent Tidwell
Chief Deputy Director
Judicial Council


California State Auditor's Comment on the Response From the Judicial Council of California

To provide clarity and perspective, we are commenting on the Judicial Council’s response to our audit. The number below corresponds to the number we have placed in the margin of the Judicial Council’s response.


The Judicial Council’s comment that its staff were unaware at the time it prepared the semiannual report of any delays between its entry of payment data into FI$Cal and when that data would subsequently become available to the public appears to be incorrect. In each of its semiannual reports for fiscal year 2018–19, the Judicial Council informed the reports’ users that they can see all procurement transactions and historical payment data older than 60 days on FI$Cal’s website.

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