INTERNAL OPERATIONS COMMITTEE
Meeting Date: March 23, 2026
Subject: Report on the Auditor-Controller’s audit activities for 2025 and proposed schedule of financial audits for 2026
Submitted For: Joanne M. Bohren, CPA, Auditor-Controller
Department: Auditor-Controller
Referral No: 26/1
Referral Name: County Financial Audit Program
Presenter: Sandra Bewley
Contact: Sandra.Bewley@ac.cccounty.us
Referral History:
The Internal Operations Committee was asked by the Board in 2000 to review the process for establishing the annual schedule of audits, and to establish a mechanism for the Board to have input in the development of the annual audit schedule and request studies of departments, programs or procedures. The IOC recommended a process that was adopted by the Board on June 27, 2000, which called for the IOC to review the schedule of audits proposed by the Auditor-Controller and the County Administrator each December. However, due to the preeminent need during December for the Auditor to complete the Annual Comprehensive Financial Report, the IOC, rescheduled consideration of the Auditor’s report to February of each year.
In past years, the Auditor's Office sometimes found a lack of adherence to several of the County's administrative requirements for cash collection; discharge of delinquent accounts; inventories of materials, supplies and capital assets; and petty cash. Noncompliance with procurement card policies, contracting policies and procedures, and MAC fiscal procedures have also been among past findings.
Referral Update:
The attached “Schedule of Internal Audit Examinations” provides the proposed examination schedule for 2026, and the “Schedule of Internal Audit Examinations for 2025” summarizes the status of the 2025 examinations.
The Internal Audit Division completed twenty-five (25) of the twenty-seven (27) examinations on the Schedule of Internal Audit Examinations for 2025, attached. Of the remaining two (2) examinations scheduled, fieldwork is in progress and the examinations will be completed in calendar year 2026 due to hiring new staff and additional training time needed in the Office of the Auditor-Controller.
Examination Reports
Objectives:
The necessary tests and procedures were conducted to determine if, within the scope of the examinations, the following financial conditions existed:
• Assets were adequately safeguarded.
• Appropriate internal controls were in place and functional.
• Records were accurate and reliable.
• Statutory, contractual, and administrative requirements were followed.
General Findings:
There is an overall lack of adherence to several of the County's administrative requirements. Many of the departmental examinations included recommendations due to the following:
• Lack of compliance with the Administrative Bulletins established to ensure accurate and reliable records;
• Lack of compliance with the Administrative Bulletins established to safeguard assets;
• Lack of accurate and reliable records for inventory activities; and,
• Lack of adherence to the procurement card manual.
Conditions:
Approximately thirty-three percent (33%) of the findings in 2025 were repeated from previous examinations which is a decrease from the forty-six percent (46%) in 2024. Common examination conditions include:
• Lack of segregation of duties,
• Lack of safeguarding of inventories and assets;
• Lack of internal controls for contract monitoring;
• Lack of internal controls of unauthorized transactions for expense reports;
• Lack of adequate procurement card supporting documentation; and,
• Unauthorized charges on procurement cards.
In order to correct issues timely and mitigate repetitive findings, the Internal Audit Division follows up with auditees six month after the issuance of the examination report to determine if the recommendations were implemented. No data is available yet on the status of the 2025 findings.
Procurement Card
The quarterly procurement card reviews continue to reflect compliance issues in the use of the card for services, meal payments, printing services, and items of a personal nature. Per the Procurement Card Manual, Section V.G., the use of a procurement card for services, meal payments, printing services, and items of a personal nature is prohibited. Cardholders are also prohibited from using the procurement card for purchases not authorized in the County's Administrative Bulletins. Additionally, required supporting documentation such as itemized receipts, transaction logs, and exception memos often is missing or inadequate.
2026 Scheduled Examinations
The Auditor-Controller Division Manager of the Internal Audit division and the Auditor-Controller performed a thorough review of existing and recurring examinations that should be incorporated in the 2026 schedule. The emphasis and priority in scheduling examinations is based on the perceived risk to the County. The schedule is composed of legally required examinations, such as the Treasury cash counts, and reoccurring examinations. Twenty-eight (28) examinations have been scheduled for calendar year 2026.
Legally required examinations have their basis in government code. Reoccurring examinations have a preferred cycle attached to them based on the perceived amount of inherent risk. If a concern comes to the attention of the Internal Audit Division, a reoccurring examination may be scheduled prior to it being due based on the preferred cycle.
The County's financial operations are subject to audit by a firm of independent external auditors, Macias Gini & O'Connell, LLP, (MGO). The external auditors are responsible for performing an annual audit of the general-purpose financial statements of the County. The external auditors also perform an annual "Single Audit" of the County's federal financial-assistance programs. Other independent auditors perform annual audits of the Contra Costa County Housing Authority, state grant programs, and the First 5 Contra Costa Children and Families Commission.
Recommendation(s)/Next Step(s):
ACCEPT report on the Auditor-Controller’s audit activities for 2025 and APPROVE the proposed schedule of financial audits for 2025.
Fiscal Impact (if any):
No fiscal impact related to providing the annual audit schedule. The financial auditing process may result in positive and negative fiscal impacts, depending on the audit findings.