Corrective action plan making good progress

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Committee Chair Mayor John Zaragoza (Photo by Chris Frost)

Oxnard – The Finance & Governance Committee approved an update to the Corrective Action Plan for the 2021 Individual Audit Report on Tuesday, May 24.

JENNIFER Hiraoka, senior manager of internal controls, introduced the article and said they last received an update in late 2021 and the city continues to make progress on its internal controls.

“Today, the only definitions applicable to the current unresolved issues of the corrective action plan are in progress and complete,” she said. “We are pleased to report that the three items that were in “To Be Tested” status during our last update (Policies and Procedures Approved if applicable, Training Complete and Corrective Action Ready, which the auditors will review during the next individual audit can test) were moved to status after corrective actions taken by the City were completed and reviewed by the Eadie + Payne team.”

She said the 2021 audit revealed one additional finding, two previous findings remained unresolved and there were no material weaknesses.

“The new additional finding is the result of 15 findings and two concerns from the U.S. Department of Housing and Urban Development (HUD) identified during routine remote monitoring conducted on a selection of community development blocks, or CDBG grants, that were granted by the city during the program years 2018 and 2019,” she said. “Eadie + Payne have combined the HUD results into one result for easier tracking.”

She said that as of 2015, the city had 186 exam results and 159 were unique results.

“The city has made significant progress at the moment; The city only has three unresolved audit findings,” Hiraoka said.

She presented a slide that compared the status of the corrective action plan through October 2021, when the city had five unresolved clear audit findings.

“At the time, the three results were waiting to be tested by our auditors, Eadie + Payne,” she said. “They are complete now.”

She said the three remaining results are in progress.

“Regarding the CDBG HUD results, the housing department continues to track the HUD to sufficiently complete its corrective action plan,” she said. “City officials are in the process of updating the indirect cost allocation plan. The finance department works with a consulting firm to help create the indirect cost allocation plan. For the determination of overall information technology controls, the IT department is in the process of implementing policies and procedures to address this determination. The updates will be provided to the City Council via a separate confidential written report.”

It found that as of April 2022 there are no major weaknesses, three major deficiencies, no non-compliance and no best practice findings.

“Part of a good system of internal controls is having the right people in the right positions,” she said. “Our new controller, Cesar Perfecto, started on April 18th. The city adopted all nine integrated internal control policies in December 2021. We continue to seek opportunities to provide ongoing training to employees and the Finance & Governance Committee. The ERP implementation is ongoing and we expect there will be numerous financial and process controls that will be enhanced in conjunction with the Munis implementation which will go live in October 2022.”

Eden Casareno of Eadie + Payne gave a short presentation beginning with the internal control report required by government standards, compliance reports for each major program, internal control of compliance and a report on the federal awards spending plan.

“The first report relates to the final exam,” she said. “We consider the City’s internal control over financial reporting when planning and performing our annual audit. We do not express an opinion on internal control; However, if we identify significant weaknesses or significant deficiencies, we are required to report them to you.”

She said it was the third year in a row that the city had no material weaknesses.

She listed the Federal Award Expenditure (SEFA) schedule, and total expenditures were $6.56 million with 18 programs, two of which were large, the CDBG (Community Development Block Grant) and the Emergency Solutions Grant.

“Both programs contain Covid-19 funds,” she said. “The $6.56 million does not include federal bonuses issued by the Oxnard Housing Authority. The Oxnard Housing Authority is being audited by another auditor.”

She said that two non-compliance findings were considered significant internal control weaknesses and one finding was a repeat of the previous year’s finding.

“The total pending results are actually three now,” she said. “No major weaknesses were identified this year.”

She said the new finding relates to a report by HUD on monitoring CDBG compliance for grants received in 2018-2019.

“They reported 15 findings and two concerns,” Casareno said. “I believe the city has already acted on this and is proceeding with a corrective action plan.”

Presiding Mayor John Zaragoza congratulated the Treasury on the audit.

“Are the new findings with the HUD report,” he said.

Casareno said he was right.

“They conducted a surveillance procedure for CDBG,” she said. “They do this on a regular basis and decided to review programs related to the 2018 and 2019 programming and identified a few that were non-compliant. Some of them have been corrected, others are still ongoing.”

Councilor Gabe Teran noted that the city has had “many more audit findings” in the past.

“When we started testing in 2015, we found 111 findings,” Casareno said. “In 2016 we added a little bit more, so it was 120. As of 2017, you could correct a lot of those.”

The report goes to the City Council.

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