Appendix

Scope and Methodology

We conducted this audit pursuant to the audit requirements contained in the judicial contract law. Our audit focused on the superior courts in Alameda, Contra Costa, Lake, Orange, and San Bernardino counties. The Table below lists the audit objectives and the methods we used to address them.

Audit Objectives and the Methods Used to Address Them
AUDIT OBJECTIVE		METHOD
1	Review and evaluate the laws, rules, and regulations significant to the audit objectives.	Reviewed relevant state law and the judicial contracting manual, as well as each court’s policies and procedures.
2	Based on risk factors speciﬁed in the judicial contract law, identify ﬁve judicial branch entities, excluding the Judicial Council, for audit to assess their implementation of the judicial contract law.	Evaluated all 58 California superior courts and ranked them based on the following: significant changes that have occurred since 2018 that may impact compliance with the judicial contract law; the amount of time since they were last audited by our office or the Judicial Council and previous audit results or known deficiencies; significant changes in management or employee turnover; the complexity and size of the courts and their existing contracting practices and procedures; the volume and type of procurements made by the courts relative to total judicial branch procurements and to county populations; and substantial changes to the number and amount of total procurements from fiscal years 2018–19 to 2019–20.
3	For the five superior courts selected for this audit, perform the following: Determine whether each court has developed its own local contracting manual and assess its conformance to the judicial contracting manual. Assess each court’s compliance with key safeguards related to procurement and contracting in the judicial contracting manual and its local contracting manual, including those related to competitive bidding, sole‑source contracting, and payment and deliverable review and oversight. Evaluate each court’s contracts to determine whether it may have inappropriately split contracts to avoid obtaining necessary approvals or compliance with competitive bidding requirements. Review the appropriateness of each court’s CAL-Card or other court-issued purchase card transactions when the value of those transactions meets a certain threshold.	Obtained versions of each court’s local contracting manual that were applicable during fiscal year 2019–20 and assessed whether the local contracting manuals conformed to the judicial contracting manual’s requirements and recommendations. Based on factors including contract value and type of goods or services procured, judgmentally selected 12 contracts for each court that were active in fiscal year 2019–20 using the Judicial Council’s Semiannual Report on Contracts for the Judicial Branch (semiannual report) for fiscal year 2019–20 or, for the Lake court, the court’s ad hoc report of contracts active during that period. Based on factors including payment value, judgmentally selected 18 payments for each court (12 payments associated with the contracts we selected and six not associated with those contracts) using a fiscal year 2019–20 payment report provided by each court. To gain assurance that data used to select contracts and payments were complete, traced source documents to the reports we used for selection. Determined the payment reports were generally complete, although we could not trace source documents to the Orange court’s payment report because the Orange court does not maintain paper payment records. Determined the semiannual reports were generally complete for the Alameda, Contra Costa, Orange, and San Bernardino courts but incomplete for the Lake court. Obtained an alternative data source, the Lake court’s ad hoc report of contracts, to mitigate the risk of selecting contracts from incomplete data. For each court, reviewed 10 contracts and 10 payments (six associated with contracts we selected and four not associated with those contracts) against key requirements and safeguards identified in our review of the judicial contracting manual, local contracting manual, and other relevant policies and procedures. Followed up with court staff to determine the cause of any exceptions. If exceptions in the first 10 items warranted further review of a court’s contract or payment processes, reviewed additional items. Reviewed 10 contracts for each of the five courts; 10 payments for the Contra Costa, Lake, Orange, and San Bernardino courts; and 18 payments for the Alameda court. For each court, used the semiannual reports and the court’s list of active contracts to identify contracts newly valued over $1 million in fiscal year 2019–20. For any such contracts, reviewed the contracts and courts’ documentation of notifications sent to our office. In cases where the courts did not notify us of the contracts as required, interviewed court staff to obtain information about why we were not notified. Used the semiannual reports and the Lake court’s ad hoc contract report to identify instances when courts may have split contracts. For the identified instances, we evaluated additional information, such as payment reports and contract documents, to identify whether a court entered into contracts with the same vendor for similar goods or services during the same time frame for the purposes of avoiding competitive bidding. Determined there was no evidence indicating that any of the five courts split contracts. Determined whether each court used purchase cards and reviewed monthly purchase card statements for transactions that appeared questionable based on the amount or vendor. Based on factors including transaction value, reviewed a judgmental selection of six transactions at each of the three courts whose total value of fiscal year 2019–20 purchase card transactions met our threshold for review. For the selected transactions, reviewed purchase requisitions and receipts, and interviewed court staff to further assess any transactions that appeared questionable.

Source: Analysis of state law and information and documentation identified in the column titled Method.