Report 2019-302 Recommendation 2 Responses

Report 2019-302: Judicial Council of California (Release Date: December 2019)

Recommendation #2 To: Judicial Council of California

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 by February 2020 establish a procedure that requires procurement staff to consistently include all necessary information in FI$Cal when processing contract amendments.

1-Year Agency Response

The Legislature passed AB 3364 in August 2020 and altered the Judicial Council's reporting responsibilities under section 19209 of the Public Contract Code. This change in the law thus affected how the Judicial Council sought to implement this recommendation.

Effective January 2021, judicial branch entities using FI$Cal—such as the Judicial Council, Supreme Court, and others—no longer must submit semi-annual reports detailing their activities to the Legislature or the State Auditor's Office. Instead, the statute requires the Judicial Council (and others using FI$Cal) to record their transactions within the FI$Cal system. The specificity of the Judicial Council's contract and payment reporting now mirrors the transparency requirements placed on other state entities using FI$Cal. In contrast, the superior courts do not use FI$Cal and thus the reporting requirements contained in section 19209 are much more detailed and prescriptive.

The Department of FI$Cal has issued policies and procedures that establish sound internal controls for processing contract and payment transactions within FI$Cal. Excerpts from FI$Cal's user procedures are attached, illustrating system workflows and controls that would prevent the same individual from approving purchase orders, requisitions, contracts, and payments (i.e. vouchers) that he or she created. Also attached are procedures for amending purchase orders and recording the reasons for such changes within FI$Cal. Separately, Judicial Council budget and accounting staff continually work with each office to ensure that encumbrances are established and their effects on available spending authority are monitored and actively managed. We look forward to working with the State Auditor's staff and obtaining further feedback when they again audit the Judicial Council in 2021.

California State Auditor's Assessment of 1-Year Status: Resolved

Because of the change in state reporting requirements, we have assessed this recommendation as resolved.

6-Month Agency Response

As noted in our 60-day response from February 2020, the Judicial Council expects to demonstrate implementation of the State Auditor's recommendation by August 2020. The Judicial Council has been manually tracking certain data pertaining to contract amendments, which we believe will address the State Auditor's recommendation. This manually tracked data will be used in the next semi-annual report that is due in August. In the long term, the Judicial Council's goal is to create an automated process within FI$Cal that will address all reporting requirements.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The Judicial Council expects to be in full compliance with this recommendation by the time the next semi-annual report is submitted in August 2020. In the interim, the Judicial Council's staff have taken several steps to comply with the Auditor's recommendations. Specifically, the following activities have occurred:

- Submitted two "change requests" to the Department of FI$Cal to create ways in which to extract the data needed to comply with the statutory responsibilities for contract reporting.

- Developed a manual tracking process (beginning February 1, 2020) to track amendments and other contract data to comply with reporting requirements. This manually tracked data will be used in the next semi-annual report to the Legislature, which will be due on August 1, 2020. The goal is to create an automated process using FI$Cal that will satisfy all reporting requirements.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2019-302

Agency responses received are posted verbatim.