The department's executive management should monitor the budget process closely to prevent any future variances from established policies and procedures designed to ensure accurate reporting.
Statewide procedures and policies for ensuring accurate reporting have been established by the Department of Finance, and are outlined in the "Fund Reconciliation Guide" (see link below). This process has been occurring since the FY 2014-15 Governor's Budget development process. Departments are required to submit Detailed Fund Balance (DFB) reports (Form DF-303) for all funds that have fund condition statements in the Governor's Budget. The DFB report is used by state departments to reconcile accounting data to budgetary data. Departments use the DFB report to prepare the past year portion of Fund Condition Statements for the Governor's Budget. Submission of the DFB report to the Department of Finance requires Departmental certification that the information provided reconciles to year-end financial reports submitted to the State Controller's Office. The Department's Executive Staff provides this certification, and therefore is involved in ensuring that procedures and policies are followed.
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Fund Reconciliation Guide: http://www.dof.ca.gov/accounting/Fund%20Reconciliation/documents/DFB_Guide_August_2015.pdf
The Department stated that the meetings would occur after the first quarter of the FY and every month thereafter. Since the first quarter just ended, and fiscal information will not be available until the 15th of the month, none such meeting have occurred this FY. We anticipate the discussions to commence around the beginning of November. Per BL 14-16 we follow the Fund Reconciliation process to prevent future variances.
At the close of the first quarter of each FY beginning in FY 2014-15, and monthly thereafter, the budget analysts will contact the District Superintendents in each of the Departments districts to discuss budget-to-actual expenditures and target-to-actual revenue. The analysts will also work with the District Superintendents to prepare both expenditure and revenue projections for the upcoming quarter. This same discussion will occur with the Deputy Director of each division within the Department.
After the close of the first quarter of each FY, and monthly thereafter, the Budget Officer will prepare a budget-to-actual expenditure and target-to-actual revenue report for review by the Executive Staff at the regularly scheduled Executive Staff Meeting. The Budget Officer will compile expenditure and revenue projections from information provided from the budget analysts.
Additionally, the Budget Officer now provides monthly budget briefings to Executive Staff, including the Director, and will provide regular status updates on the budget development to Executive and Senior Management for approval.
Although the department asserts that it's budget officer provides monthly budget briefings to the executive staff, the department has not provided us with documentation to demonstrate such briefings to executive staff. Additionally, the department does not address in its response our concerns that executive management monitor the budget process to prevent any future variances and ensure accurate reporting.
The Executive Staff receives monthly budget updates at Executive Staff Meetings. The Director receives briefings on any budgetary issues that may arise outside of the regulary scheduled briefings. BSA felt that the budget documents presented at Executive Staff Meeting were not detailed enough. The budget office has prepared more detailed budget briefing documents that will be used throughout fiscal year 13/14 for discussions.
Although the department provided us with examples of spreadsheets it provides to executive management as a budget update, it has not explained or demonstrated how executive management can use these spreadsheets to monitor the budget process to ensure accurate reporting and prevent any future variances from established policies and procedures. The department asserts that the executive staff receives monthly budget updates at executive staff meetings, but the documents provided only indicate that executive staff is updated with projected expenditures and revenues. Without better oversight by its executive staff, the department risks future variances in the fund balance information it reports to the Finance and State Controller.
The department's assertion that we felt the budget documents presented at executive staff meetings were not detailed enough is incorrect. As we state in the department's 60-day response and its 6 month response, the department has not provided examples for us to make such a determination.
The Executive Management team reviews the budget on a monthly basis at its weekly Executive Staff meeting. The budget review is scheduled for the third Tuesday of each month.
The department has not substantiated the budget review performed at its monthly executive staff meetings. Without documentation to support the department's assertion, we are unable to confirm that executive management is monitoring the budget process to prevent any future variances from established policies and procedures designed to ensure accurate reporting.
Agency responses received after June 2013 are posted verbatim.