2009 Statewide Issues

The number of instances of control deficiencies and noncompliance excludes two issues that are not specific to any one program or department, but rather encompass all programs and are therefore statewide issues.

• The State has yet to comply with federal provisions requiring a schedule that shows total federal awards expended for each individual federal program because California's automated accounting system identifies revenues for each federal award, but is not expenditures. Because of this limitation of the accounting system, the State uses total federal cash receipts by program to prepare the schedule of total federal awards rather than funds expended by program. Further, our office must determine the major federal programs to audit using total cash receipts rather than expenditures as required. This has been an ongoing issue that we have reported each year since fiscal year 1995-96.
• The State cannot ensure that it can accurately identify all receipts from the American Recovery and Reinvestment Act of 2009 (Recovery Act), because Finance lacks adequate internal controls. The California Recovery Task Force requested all state departments report Recovery Act receipts to Finance so that it could prepare the required Schedule of Federal Assistance. State departments responded to Finance via e-mail, providing assertions of the amount of Recovery Act funds received. However, relying on e-mail assertions from state departments, instead of obtaining their accounting records showing Recovery Act receipts, is an inadequate internal control to ensure the accuracy of information used in the Schedule of Federal Assistance.
• In our prior year audit, we reported that the State cannot ensure local governments are taking prompt and appropriate corrective action to address audit findings after it receives the local governments' audit reports. However, the federal government requires the State to issue management decisions on audit findings within six months of receiving these reports. This condition is partly attributable to the amount of time the State Controller's Office (SCO) took to certify audit reports and forward the reports and corrective action plans to the appropriate state departments. Last year, we found that for 26 of the 58 counties, the SCO took between 1.2 months and 9.2 months to certify the reports and forward them to the appropriate state entities. Although the SCO modified its process for forwarding audit reports to the appropriate state agencies in July 2009, we found that it did not consistently follow these new procedures. The SCO also limited state agencies' ability to meet the six-month requirement for issuing management decisions.

Pages 29-36 of the 2009 Single Audit report describe the issues.