Report 2018-037 Recommendation 14 Responses

Report 2018-037: California Department of Housing and Community Development: Its Oversight of Housing Bond Funds Remains Inconsistent (Release Date: September 2018)

Recommendation #14 To: Housing and Community Development, Department of

To ensure that it maximizes the benefit of the funds it has invested in CAPES's development and to support its ongoing efforts to improve CAPES's usability, HCD should, by January 1, 2019, develop a documented process to ensure that all data in CAPES are accurate and complete. This process should include all phases of contract management, including monitoring. HCD should implement a routine periodic review of this process and update the process as necessary.

Annual Follow-Up Agency Response From September 2022

California Department of Housing and Community Development (HCD) hired Deloitte US to improve usability of CAPES financial data, including contracts. Deloitte US's scope included mapping back-end data in CAPES, reconciling historical contractual financial agreements in CAPES to CALSTARS and Financial Information System for California (FI$Cal), and creating Standard Operating Procedures going forward for reconciliation between CAPES and FI$Cal (the current state accounting system). Deloitte US transitioned monthly reconciliation to HCD staff in July 2021. Moving forward HCD staff will be maintaining reconciliations on a monthly basis.

Completion Date: July 2022

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

HCD provided documentation of its process for performing a monthly reconciliation of data in the CAPES system and an example of its reconciliation report for one month. To the extent that HCD performs these processes in the future, it will address our recommendation.

Annual Follow-Up Agency Response From September 2021

Estimated Completion Date: 6/30/2022

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From September 2020

HCD has entered into a financial consulting service contract to develop and improve upon processes to reconcile financial data in CAPES. This service contract will be used to implement best practices and develop financial tools and procedures to streamline complex budgetary controls, including bond management, loan management, and monitoring and controlling administrative expenditures to maintain compliance with statutorily authorized administrative caps. This service contract will assist in addressing the CSA findings.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

HCD has reviewed and revised the data integrity plan, based on the currently expected continued use of the CAPES system as the new Grants Management System (GMS) is piloted on a limited basis.

Completion Date: December 2018
Response Date: September 2019

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

Based on HCD's remediation plan, existing system data needs to be cleaned up while transitioning to the new system and may required the procurement of a contractor to assist. It also states that HCD program managers estimate the CAPES data cleanup effort could take approximately three to five years and cost approximately $2 million. We will review an update from HCD in its next response on these efforts.

6-Month Agency Response

Data integrity plan has been completed and is being implemented. A hard copy of the integrity plan will be provided.

Completion Date: January 2019
Response Date: March 2019

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

HCD provided a CAPES data integrity plan. However, the plan does not include a process for implementing a routine periodic review of ensuring that all data in CAPES is accurate and complete.

Auditee did not address all aspects of the recommendation

60-Day Agency Response

HCD is developing a documented approach to initial and ongoing data integrity/internal controls to be finalized by January 2019, and will include actionable steps to address immediate data integrity issues, inform development of necessary system upgrades, and conduct ongoing regular review of operation reports, and training.

Estimated Completion Date: 12/31/2018
Response Date: November 2018

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

All Recommendations in 2018-037

Agency responses received are posted verbatim.