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Agenda Item
ASR
Control 25-000586 |
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MEETING
DATE: |
09/23/25 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
All
Districts |
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SUBMITTING Agency/Department: |
Auditor-Controller (Approved) |
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Department contact person(s): |
Andrew
N. Hamilton (714) 834-2457 |
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Salvador
Lopez (714) 834-2470 |
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Subject: Relief of Accountability &
Reimbursement of Cash Shortage for Child Support Svcs
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
No
Legal Objection |
Consent
Calendar |
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3
Votes Board Majority |
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Budgeted: Yes |
Current Year
Cost: $7,637 |
Annual Cost: N/A |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: N/A |
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RECOMMENDED
ACTION(S):
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1. |
Relieve the
Child Support Services Director of the cash shortage totaling $7,637 in
accordance with Government Code Section 29390. |
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2. |
Authorize the
Auditor-Controller to reimburse Child Support Services for the cash shortage
totaling $7,637. |
SUMMARY:
Request
to reimburse the Child Support Services Director for a cash shortage totaling
$7,637 in accordance with Government Code Section 29390.
BACKGROUND
INFORMATION:
Cash shortages are losses or
deficits of more than $10 in the County officers' account where there is no
proof of fraud or gross negligence in connection with the shortage, and the
loss is not covered by insurance. County officers may be relieved of accountability
for a cash shortage in any of their accounts pursuant to Government Code
Sections 29390 and 29390.1. A County officer’s accountability for cash
shortages is to the Board of Supervisors (Board). The Auditor-Controller is
authorized to perform the functions of the Board in providing relief of
accountability and replenishing shortages not exceeding $2,500 in County funds
(Board Resolution No. 05-033). For shortages exceeding $2,500 in County funds,
the Auditor-Controller submits applications for replenishment to the Board.
It is the Auditor-Controller’s
responsibility to review cash shortages to ensure departments have provided
sufficient required information regarding the shortage, have reported the
shortage to the appropriate authorities, have performed an internal investigation
to determine if the shortage is due to employee fraud or gross negligence, and
have taken appropriate corrective action. To obtain relief of accountability
for cash shortages, County Accounting Procedure C-3 requires departments to
provide a letter to the Auditor-Controller. The Internal Audit Department
reviews the Relief of Accountability letters and makes recommendations to the
Auditor-Controller on whether relief of accountability should be granted and
the shortages reimbursed when the shortages are over $1,000. The Internal Audit
Department also assesses the adequacy of related internal controls for
departments with individual cash shortages of $1,000 or more. Cash shortages
over $2,500 are also submitted to the District Attorney’s Office for review and
evaluation.
In 2021, Child Support Services initiated
an internal investigation surrounding the Revolving Fund. The $7,637 shortage
is the result of multiple instances of employee theft committed by one employee
that occurred between November 6, 2020, and April 30, 2021. On May 13, 2021, a
sheriff's report was filed documenting a brief description of the incident.
The Auditor-Controller's Internal Audit
Unit submitted the cash shortage documentation to the District Attorney for
review and evaluation on June 7, 2021. Concurrently, Internal Audit Department
was informed to ensure they were aware.
CEO Risk Management confirmed that the
cash shortage is not covered by insurance. Child Support Services has developed
increased reviews, training, and replenishment procedures to ensure accurate
and transparent cash transactions by all cash handling employees.
The District Attorney investigated the
case and found that there was sufficient evidence to determine the shortage was
the result of employee fraud, gross negligence, or other criminal behavior. The
District Attorney officially filed complaint documents with the Superior Court
of Orange County on March 13, 2025. The result of the District Attorney's
review was submitted to the Auditor-Controller's Internal Audit Unit on May 1,
2025.
On June 28, 2024, the Internal Audit
Department performed an Internal Control Audit of the cash receipts and issued
Audit Report No. 2306, where they determined that Child Support Services took
corrective action by establishing additional cash controls over the areas where
the shortages occurred and that these controls are adequate to minimize the
risk of future cash shortages from occurring. On June 18, 2025, the Internal
Audit Department recommended that the Auditor-Controller approve the relief of
accountability. The Auditor-Controller is therefore submitting this relief of
accountability and reimbursement request to the Board to relieve Child Support
Services and authorize the Auditor-Controller to reimburse the $7,637 cash
shortage.
FINANCIAL
IMPACT:
Appropriations
for this expense will be absorbed in Budget Control 027 FY 2025-26 Budget.
STAFFING
IMPACT:
N/A
REVIEWING
AGENCIES:
Child
Support Services
Internal Audit Department
ATTACHMENT(S):
Attachment
A - Internal Audit Department's Recommendation for Child Support Services' Cash
Shortage Request
Attachment B - Memorandum from Child Support Services Director Maria Arzola
Attachment C - California Government Codes 29390 and 29390.1
Attachment D - Board of Supervisors Resolution 05-033