Report I2019-4 All Recommendation Responses

Report I2019-4: Gross Mismanagement Led to the Misuse of State Resources and Multiple Violations of State Laws (Release Date: August 2019)

Case Number I2017-0840

Recommendation #1 To: Food and Agriculture, Department of

CDFA:

Ensure that its audit office conducts biannual compliance audits for all district agricultural associations and that the office prioritizes auditing district agricultural associations on the watch program.

Agency Response From November 2020

CDFA reported that its request for additional funding was denied and it does not have auditors available until May 2021. It stated that it is beginning the process to engage the services of a CPA firm to perform the audit of the association in January 2021.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From May 2020

CDFA reported that it plans to conduct the compliance audit for the association in September 2020 and that it submitted a request for additional funding to the Legislature in January 2020, requesting two full-time permanent auditor positions and one limited-term auditor position to assist with performing compliance audits with prioritization of those on the watch program.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA previously reported that it requested that its audit office schedule the association for a compliance audit between the spring and summer of 2020. As of February 2020, it has not provided confirmation of the date when the audit will be conducted, nor has it explained how it will ensure that it will conduct biannual compliance audits for all district agricultural associations, prioritizing those on the watch program.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that it requested that its audit office schedule the association for a compliance audit between the spring and summer of 2020. As of October 2019, it has not provided confirmation of when the audit is scheduled, nor has it explained how it will ensure that it will conduct biannual compliance audits for all district agricultural associations, prioritizing those on the watch program.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #2 To: Food and Agriculture, Department of

CDFA:

Consider exercising its authority to assume any or all rights, duties, and powers of the board of the association. If CDFA agrees to implement this recommendation, it should assume responsibility for implementing our recommendations to the association.

Agency Response From October 2019

As noted in our report, CDFA stated that it was premature to assume the rights, duties, and powers of the board of the association, with which we disagreed. Nevertheless, CDFA reported that its staff has been attending all monthly association board meetings, reviewing meeting agendas and monthly financial reports, as well as assisting the association with the development of appropriate policies and procedures. It further stated that it is scheduling monthly teleconferences with association staff and will confirm that the association has access to CDFA's online training materials. It stated that in July 2019, the CEO and four board members attended training tailored for their positions.

California State Auditor's Assessment of Status: Fully Implemented


Case Number I2017-0840

Recommendation #3 To: Food and Agriculture, Department of

CDFA:

Provide district agricultural associations with timely notifications from the Department of Motor Vehicles' Employer Pull Notice Program and follow up to ensure that the district agricultural associations take appropriate action.

Agency Response From November 2020

CDFA reported that 41 of the 52 associations are currently enrolled in the pull program and that it is following up with those that are outstanding. It noted that some association CEOs are being laid off due to the COVID-19 pandemic, which has delayed progress.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From May 2020

CDFA reported that in February and May 2020, it reminded the associations to enroll in the pull program. It informed us that 25 of the 52 associations have enrolled so far.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA stated that it sent a letter to all district agricultural associations regarding the program. It said that CEOs were enrolling, but it did not indicate whether all CEOs had enrolled. It stated that CEOs would be responsible for enrolling association employees and monitoring employee driving records.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA estimated that it would begin enrolling association CEOs in the program and start monitoring driving records in October or November 2019 and stated that it is still exploring options for the associations to monitor permanent staff through the program. CDFA said it will schedule a meeting with the DMV regarding this component. It estimated that it would fully implement this recommendation by November or December 2019.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #4 To: Food and Agriculture, Department of

CDFA:

To the extent that its authority allows, oversee implementation of our recommendations to the association.

Agency Response From November 2020

CDFA reported that it continues to work with the association and attend

monthly board meetings.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From May 2020

CDFA reported that its efforts toward this recommendation are ongoing.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA reported that its efforts to implement this recommendation are ongoing. It is providing regular updates regarding the association's efforts to implement the recommendations.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

In July 2019, CDFA reported that it had two telephone meetings with the association board chair and vice chair to discuss our recommendations and identify a path forward for each recommendation. It has also been providing monthly updates regarding the association's efforts to implement the recommendations.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #5 To: Food and Agriculture, Department of

Association:

Take appropriate disciplinary action against the CEO, the maintenance supervisor, and all other permanent and temporary employees who engaged in the improper governmental activities that we identified.

Agency Response From November 2020

CDFA reported that due to the COVID-19 pandemic, the disciplinary process was put on hold. It stated that all of the employees referenced in the report will be laid off by the end of 2020. It provided documentation to support that several positions within the association, not including the CEO, were listed as surplus in July 2020. However, we first provided our recommendation to the association in April 2019, months before we issued our report in August 2019 and nearly a year before the COVID-19 pandemic began. This provided the association with ample time to take appropriate disciplinary action. To date, the association has merely issued an informal reprimand to the CEO and has not provided any evidence that it has taken any disciplinary actions against the other employees despite our findings and CDFA's recommendation of dismissal for the CEO, the maintenance supervisor, and Employee A, and its recommendations for suspensions and pay reductions for other employees involved.

California State Auditor's Assessment of Status: No Action Taken


Agency Response From May 2020

CDFA reported that it provided a memo in February 2020 to the association board outlining recommendations for all employees identified in our report. CDFA recommended dismissal for the CEO, the maintenance supervisor, and Employee A, and various other suspensions, pay reductions, and reprimands for the other employees. It instructed the association board to work with CDFA to initiate adverse actions. CDFA informed us that the association board chose to provide the CEO an informal letter of reprimand and did not indicate whether the association board took any actions against the other employees.

California State Auditor's Assessment of Status: Pending


Agency Response From February 2020

CDFA reported that it planned to provide its recommendations regarding disciplinary action to the association board at the board's February 2020 meeting. It did not specify what those recommendations would be.

California State Auditor's Assessment of Status: Pending


Agency Response From October 2019

In August 2019, CDFA reported that it would consult with the CEO and the board on the matter. In September 2019, it clarified that it would work with the board specifically on potential disciplinary action against the CEO. In October 2019, it stated that its human resources department had reviewed our report and was waiting on additional information from the association before it makes a recommendation regarding disciplinary action. It did not provide an anticipated completion date for this recommendation.

California State Auditor's Assessment of Status: Pending


Case Number I2017-0840

Recommendation #6 To: Food and Agriculture, Department of

Association:

Recoup the money from the CEO, the deputy manager, and the maintenance supervisor for their inappropriate purchases.

Agency Response From November 2020

CDFA reported that the association provided justification for the purchases totaling $356.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From May 2020

CDFA reported that the CEO and board members reimbursed the association a total of $1,294 for alcohol purchases. It also reported that it recommended that the association collect $6,400 from the CEO and the deputy manager for excessive out-of-state meal expenses and $356 for inappropriate hardware expenses. It provided evidence that the vice chair of the association board reimbursed the $6,400 to the association, but the $356 appears to remain outstanding.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA reported that at the January 2020 association board meeting, it presented to the board information regarding inappropriate purchases and instructed the board to request reimbursement from staff. CDFA stated that it expected the board to complete this by February 2020.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

In August 2019, CDFA reported that it would consult with the CEO and the board regarding the recommendation, even though the recommendation involves potential collections from the CEO. It later reported that the board president and vice president would start reviewing receipts and other evidence to identify inappropriate purchases and that recouping any monies will be based on evidence. It said that the CEO's role would be to provide data. In September 2019, CDFA reported that the association agreed to repay $1,259 for alcohol purchases. In October 2019, CDFA reported that it had requested receipts for the inappropriate purchases and that all but one board member had reimbursed the association for the inappropriate alcohol purchases. It estimated that the association would fully implement the recommendation by November or December 2019.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #7 To: Food and Agriculture, Department of

Association:

Recoup the actual costs from the maintenance supervisor for his personal use of a state vehicle.

Agency Response From May 2020

CDFA reported that the maintenance supervisor identified the days in which he used the state vehicle and reimbursed the association $1,606 based on applicable mileage rates at the time of his vehicle misuse. Based on our findings that the maintenance manager used the state vehicle nearly every day as if it were his personal vehicle and that he was dishonest about the frequency of such usage, $1,606 likely represents only a fraction of the cost of his misuse.

California State Auditor's Assessment of Status: Resolved


Agency Response From February 2020

CDFA reported that it received from the association a record of the maintenance supervisor's personal miles driven in the state vehicle and that he had reimbursed the association for the related costs. It did not provide specifics regarding the amount or how the association calculated the misuse.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that it has requested a record of the maintenance supervisor's personal miles driven using a state vehicle by late October 2019. It was unclear who would provide the information to CDFA, but it estimated the association would fully implement the recommendation by November or December 2019.

California State Auditor's Assessment of Status: Pending


Case Number I2017-0840

Recommendation #8 To: Food and Agriculture, Department of

Association:

Recoup all travel expenses from employees and board members who exceeded the allowable travel reimbursement amounts for lodging and meals or who improperly traveled to banned states.

Agency Response From May 2020

CDFA reported that it recommended that the association collect $6,400 from the CEO and the deputy manager for excessive out-of-state meal expenses. It provided documentation that the vice chair for the association board reimbursed the $6,400 to the association. It stated that it did not recommend any amounts to collect from board members because it was not able to identify which board members were in attendance at each meal and because many of those who may have attended were no longer active board members and, in one case, a board member was deceased.

California State Auditor's Assessment of Status: Resolved


Agency Response From February 2020

CDFA reported that in January 2020, it presented to the association board its findings regarding excessive meal costs for out-of-state travel. It stated that it expected the board to accept its recommendations and request staff to reimburse the association for excessive meal costs by February 2020.

California State Auditor's Assessment of Status: Pending


Agency Response From October 2019

In September 2019, CDFA reported that it had requested travel claims from the association related to out-of-state travel. In October 2019, CDFA stated that it asked the association to prepare a worksheet to help identify the inappropriate travel. It estimated that the association would fully implement the recommendation by November or December 2019.

California State Auditor's Assessment of Status: Pending


Case Number I2017-0840

Recommendation #9 To: Food and Agriculture, Department of

Association:

Develop appropriate controls for the propane tank, including securing access to the propane tank key. The association should consider installing a meter and creating, maintaining, and auditing a propane usage log.

Agency Response From October 2019

CDFA reported that the association removed the propane tanks and provided CDFA with an invoice for their removal. CDFA stated that it toured the grounds in July 2019 and confirmed their removal.

California State Auditor's Assessment of Status: Resolved


Case Number I2017-0840

Recommendation #10 To: Food and Agriculture, Department of

Association:

Train all staff who have purchasing authority on relevant state laws and CDFA and association accounting policies. This training should specifically focus on requiring the submission of itemized receipts and preventing inappropriate or illegal purchases.

Agency Response From May 2020

CDFA provided an agenda of the training it provided in 2019 and a copy of the materials provided to association staff, including the applicable state laws and accounting and contracting manuals.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From February 2020

CDFA reported that it completed its review of the information the CEO provided in the association training sessions. CDFA stated that it also performed training on this topic with association staff in October 2019. It has not yet provided our office with a copy of the information the CEO provided in his training sessions or an agenda of the training CDFA provided.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that in July 2019, the CEO provided information substantiating training sessions he provided. It is reviewing the materials and will work with the association to ensure the proper guidance was provided. It stated that it will also provide additional training on this topic to association staff and estimated that the recommendation would be fully implemented by October or November 2019.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #11 To: Food and Agriculture, Department of

Association:

Establish an appropriate segregation of duties between credit card holders and those who reconcile the credit card statements.

Agency Response From May 2020

CDFA provided an agenda of the training it provided in 2019 and a copy of the materials provided to association staff, including the applicable state laws and accounting and contracting manuals, which covered segregation of duties.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From February 2020

CDFA reported that it completed its review of the information the CEO provided in the association training sessions. CDFA stated that it also performed training on this topic with association staff in October 2019. It has not yet provided our office with a copy of the information the CEO provided in his training sessions or an agenda of the training CDFA provided. It also has not provided documentation to support that the association has established an appropriate segregation of duties.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that in July 2019, the CEO provided information substantiating training sessions he provided. It is reviewing the materials and will work with the association to ensure the proper guidance was provided. It stated that it will also provide additional training on this topic to association staff and estimated that the recommendation would be fully implemented by October or November 2019.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #12 To: Food and Agriculture, Department of

Association:

Formally adopt, train staff on, and follow the Fairs and Expositions branch's accounting procedures manual, as well as CDFA's Controlled Substances and Alcohol and Incompatible Activities policies.

Agency Response From November 2020

CDFA provided documentation to support that the association has adopted policies on controlled substances and alcohol as well as incompatible activities, but it did not provide information to substantiate that the association trained its staff on these policies.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From May 2020

CDFA provided an agenda of the training it provided in 2019 and a copy of the materials provided to association staff, including the applicable state laws and accounting and contracting manuals. However, it has not provided any information to substantiate that the association has adopted or provided training on CDFA's Controlled Substances and Alcohol and Incompatible Activities policies.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA reported that it completed its review of the information the CEO provided in the association training sessions. CDFA stated that it also performed training on this topic with association staff in October 2019. It has not yet provided our office with a copy of the information the CEO provided in his training sessions or an agenda of the training CDFA provided.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that in July 2019, the CEO provided information substantiating training sessions he provided. It is reviewing the materials and will work with the association to ensure the proper guidance was provided. It stated that it will also provide additional training on this topic to association staff and estimated that the recommendation would be fully implemented by October or November 2019.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #13 To: Food and Agriculture, Department of

Association:

Implement the State Administrative Manual sections pertaining to inventory control and vehicle usage.

Agency Response From November 2020

CDFA provided documentation to support that the association has implemented the use of inventory and mileage logs.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From May 2020

CDFA provided an agenda of the training it provided in 2019 and a copy of the materials provided to association staff, including the applicable state laws and accounting and contracting manuals. However, it did not provide any documentation to substantiate that the association has implemented the State Administrative Manual sections pertaining to inventory control and vehicle usage.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA reported that it completed its review of the information the CEO provided in the association training sessions. CDFA stated that it also performed training on this topic with association staff in October 2019. It has not yet provided our office with a copy of the information the CEO provided in his training sessions or an agenda of the training CDFA provided.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that in July 2019, the CEO provided information regarding implementation of inventory and vehicle usage controls. It stated that it is reviewing the materials provided and will work with the association to ensure controls are in accordance with State Administrative Manual requirements. It stated that it will also provide additional training on this topic to association staff and estimated that the recommendation would be fully implemented by October or November 2019.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2017-0840

Recommendation #14 To: Food and Agriculture, Department of

Association:

Require employees and board members to submit travel expense claims for their travel expenses (except airfare and car rental) and ensure that future travel-related expenses and reimbursements adhere to all applicable state laws and the Governor's Executive Order B-06-11.

Agency Response From November 2020

CDFA provided documentation to support that the association has adopted CDFA's travel guide, which includes the requirements covered by Executive Order B-06-11.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From May 2020

CDFA provided an agenda of the training it provided in 2019 and a copy of the materials provided to association staff, including instructions on the proper use of travel expense claims. However, it did not provide any documentation to substantiate that the association is requiring its employees to abide by the Governor's Executive Order B-06-11.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From February 2020

CDFA reported that it completed its review of the information the CEO provided in the association training sessions. CDFA stated that it also performed training on this topic with association staff in October 2019. It has not yet provided our office with a copy of the information the CEO provided in his training sessions or an agenda of the training CDFA provided.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From October 2019

CDFA reported that in July 2019, the CEO provided information substantiating training sessions he had provided on the issue. CDFA stated that it is reviewing the materials and will work with the association to ensure proper guidance was provided to association staff. It also stated that it will provide additional training on this topic to association staff and estimated the recommendation would be fully implemented by October or November 2019.

California State Auditor's Assessment of Status: Partially Implemented


All Recommendations in I2019-4