Performance Audit of the Sacramento Housing and Redevelopment Agency
In 2015, HMR conducted a performance audit of the Sacramento Housing and Redevelopment Agency (SHRA) to review the structure of the agency’s nonprofit affiliates, loan and grant practices, governance structure, and financial activities, controls, and compliance. In addition, we conducted a peer benchmarking and best practices survey. In general, we found opportunities to reduce risk, increase transparency and improve reporting. The audit resulted in four findings and 14 recommendations.
Management Audit of the County of Santa Clara Assessment Appeals Process
This management audit included a review and evaluation of all aspects of the County’s assessment appeals process to identify opportunities to improve the economy, efficiency, and effectiveness of the function. The audit resulted in six findings and 19 recommendations, which focused on mproving customer service, strengthening the quality and transparency of appeals, and ensuring compliance with State and local laws.
Performance Audit of Emergency Medical Services Resources at the San Francisco Fire Department
Completed in June 2014, this audit evaluated the allocation of resources to emergency medical services, which is a service function within the Fire Department. The audit contained three findings and 15 recommendations that identified opportunities for the Fire Department to improve emergency medical services asset management, financial condition, and organizational efficiency, in addition to identifying ways to assist the Fire Department in complying with EMS response time mandates.
Performance Audit of San Francisco’s Practices to Recruit, Retain, and Promote Uniformed Fire Staff and the Fire Department’s Use of Overtime
Acting in the firm’s capacity as the Budget and Legislative Analyst for the City and County of San Francisco, HMR completed a performance audit of San Francisco’s practices to recruit, retain and promote uniformed fire staff and the fire department’s use of overtime in January 2014. The audit examined how new uniformed fire employees enter and move up through the ranks of the San Francisco Fire Department. It also included an evaluation of the Department’s use of overtime to meet minimum staffing requirements. Key findings included the absence of recruitment activities at the Fire Department, lack of transparency regarding secondary selection criteria used in the hiring process, inadequate training requirements for advancement, lack of strategic and succession planning, and insufficient allocation of resources for emergency medical services. Recommendations focused on promoting transparency, incorporating planning into operations, and increasing the number of uniformed employees to reduce reliance on overtime.
Special Study: Santa Clara County Wrap-Around Services Contracts
In November 2013, acting in its capacity as the Management Audit Division of the Board of Supervisors for the County of Santa Clara, HMR completed a detailed review of four “Wrap-Around” services contracts that identified surplus funds due the County.
Management Audit of Santa Clara County’s Department of Children and Family Services
In October 2013, acting in its capacity as the Management Audit Division of the Board of Supervisors for the County of Santa Clara, HMR completed a Management Audit of the County of Santa Clara’s Department of Children and Family Services. If the County were to implement the proposed recommendations, nearly $1 million would be saved or generated annually for the County. The audit found that only about 60 percent of calls made to a child-abuse reporting hotline were actually answered, with thousands of calls abandoned. The audit recommended increasing call-center staffing. The audit also recommended changes to reduce the use of overtime and to improve efficiency of staffing, and to ensure compliance with 24-hour time limits for placing abused children in foster homes.
Management Audit of the County of Santa Clara’s Social Probation Department’s Administrative and Support Services
In July 2013, acting in its capacity as the Management Audit Division of the Board of Supervisors for the County of Santa Clara, HMR completed a Management Audit of the Probation Department’s Administrative and Support Services. Implementation of the audit recommendations would save the County at least $1.3 million on an ongoing basis, mostly by reducing staff in the kitchen and laundry functions that are no longer needed due to sharp declines in the inmate population. In addition, the audit made recommendations to bring Probation fees in line with costs, improve background checks of civilian staff, and improve fiscal oversight by creating a business manager position, among other improvements.
Performance Audit of the San Francisco Housing Authority
In June 2013, acting in its capacity as the Budget and Legislative Analyst for the City and County of San Francisco, HMR completed a performance audit of the San Francisco Housing Authority. The audit examined the overall effectiveness of the San Francisco Housing Authority – with a focus on governance financial oversight, and program and staff management. Recommendations included: improving financial controls; strengthening procurement processes and contract management; identifying opportunities to generate revenue for housing programs; enforcing performance standards for staff; and implementing immediate cost-saving measures.
Prop 39 Performance Audit of Beverly Hills Unified School District Measure E Bond Funds
In March 2013, HMR completed a Proposition 39 performance audit of the Beverly Hills Unified School District’s Measure E bond fund program. The audit scope focused on activities that took place in Fiscal Year 2011-2012 and contained findings in four major areas: (1) master planning; (2) budgeting and communication effectiveness; (3) contract awards; and, (4) contract administration and expenditure controls. The audit recommended enhancements to the facilities master plan to include elements considered essential by the State including District priorities and educational specifications. The audit’s review of budgeting found that the District spent significantly less overall during the year under review than budgeted, but spent more than originally budgeted on legal and related professional services for MTA-related and other litigation matters. In addition, the audit found that unlike contracts administered by the Facilities and Planning Department, competitive selection processes were not always used for Measure E contractors selected by the District Office. Further, the audit found that two separate processes are followed for administering contracts and reviewing invoices by the Facilities and Planning Department and the District Office, both of whom administer contracts paid for with Measure E bond funds. The process administered by the Facilities and Planning Department was found to use stronger controls than the process administered by the District Office.
Performance Audit of Public Safety Realignment in San Francisco
Acting in the firm’s capacity as the Budget and Legislative Analyst for the City and County of San Francisco, HMR completed a performance audit of San Francisco’s Public Safety Realignment in February 2013. The audit examined how San Francisco criminal justice departments have managed the transfer of certain offenders from the State to the County – known as public safety realignment – with a focus on changes in caseload and jail population; implementation of new programs; program costs; and staffing levels. Key findings included weaknesses in the management of certain components of implementation, the use of alternatives to incarceration, information systems management, and planning and citywide coordination. Recommendations focused on improving management practices, expediting data management coordination, and evaluating the impacts of realignment on specific departments to ensure proper resource allocation.
Management Review of Sonoma County Public Defender’s Office
The objective of HMR’s review was to evaluate the current structure and operations of the Office and compare them with practices in other jurisdictions. The management review found that Office staff were very hard working and dedicated but that Office management practices needed improvement in key areas. Specifically, the Office was found to be lacking systems and methods for collecting accurate, verifiable caseload data and information. This deficiency affected management’s ability to assign staff, assess staffing needs, and measure key aspects of Office performance. Management spans of control were found unequal and the Office was lacking formal written policies and procedures in areas such as case continuation processes for approvals. Fiscally, the review found if the County improved its financial screening and collections process, it could increase client fee revenue by an estimated $214,000 per year and that replacing contractors in one courtroom with County staff would reduce County costs by approximately $222,100 per year. The results of the management review were presented to and accepted by the Sonoma County Board of Supervisors in November 2012.
Performance Audit of San Francisco Public Health and Human Services Contracting of Professional Services
In November 2012, acting in its contracted role as the Budget and Legislative Analyst for the San Francisco Board of Supervisors, HMR completed a performance audit of professional services contracting by the Department of Public Health and the Human Services Agency in the City and County of San Francisco. The audit focused on the departments’ contract management practices, including performance monitoring. The audit found that although both departments had made recent strides toward improving contractor performance monitoring, systemic weakness persisted and, in some instances, established policies were not implemented. In addition to wide-ranging performance monitoring improvements, recommendations were targeted toward improving sole source contracting practices and clarifying the use of contingency reserves.
Management Audit of the County of Santa Clara’s Social Services Agency’s Administrative and Support Services
In September 2012, acting in its capacity as the Management Audit Division of the Board of Supervisors for the County of Santa Clara, HMR completed a Management Audit of the Social Services Agency’s Administrative and Support Services. The audit identified excessive warehouse space, lax security at warehouses, and lack of warehouse policies; the lease of office space that should have been purchased at far less cost; and massive uncollected debt, resulting in part from poor collections practices; excessive IT help desk staffing; and, weak controls over invoice payments. Implementation of the report’s recommendations would save the County an estimated $3.8 million every year.
Performance Audit of the Fiscal Operations of the Housing Authority of the City of Los Angeles
In 2012, HMR was retained by the Los Angeles City Controller to conduct a performance audit of the fiscal operations of the Housing Authority of the City of Los Angeles (HACLA). A previous audit conducted by the City Controller in 2011 reported on “lax financial controls” over travel expenditures and the inappropriate expenditure of hundreds of thousands of dollars by HACLA officials. The audit conducted by HMR built on these previous audit findings and reported on weaknesses in the HACLA internal control environment, including the absence of an internal control capability; budgeting practices; investment management; fixed asset inventory maintenance; and, procurement. According to City Controller Wendy Greuel, upon the release of the audit, “the Department continues to be fraught with inadequate internal controls and is beleaguered by managers who do not prioritize the organization’s finances.” Recommendations were made for the HACLA Board and President-Chief Executive Officer (PCEO) to implement changes that would improve the Housing Authority’s financial management foundation and processes for ensuring appropriate fiscal oversight by the Board and executive management.
Performance Audit of San Francisco Charitable Trust Departments and the Academy of Sciences
In June 2012, HMR completed a performance audit of San Francisco’s Charitable Trust Departments (the Asian Art Museum, Fine Arts Museums, and War Memorial) and the Academy of Sciences. The audit was conducted in the firm’s contracted role as the Budget and Legislative Analyst for the City and County of San Francisco’s Board of Supervisors. The audit evaluated City oversight; governance structures and practices; and the efficiency and effectiveness of the management of General Fund-supported operations. Key findings included uneven fiscal oversight; an overreliance on informal governance practices in some institutions; appropriations practices that were not in keeping with the City’s Tax Code; insufficient debt financing reporting requirements; and, at one of the institutions, high absenteeism among security guards resulting from poor labor practices.
Service Review and Audit of the El Camino Hospital District
In May 2012, HMR completed a special review and audit of the El Camino Hospital District for the County of Santa Clara Local Agency Formation Commission. The primary objectives of this audit were to determine whether the El Camino Hospital District was providing services outside its boundaries and whether the District should continue to exist and receive public funds, rather than having another entity providing its services more efficiently. The audit found that the District, along with an associated corporation and four other affiliated organizations were effectively operating as a single entity, which complicated the purchasing and governance processes. Regarding services, the audit found that the majority of inpatient services were provided to non-District residents and that community benefits are not targeted toward District residents. Governance, transparency, and public accountability improvements were recommended, such as a competitive process for appropriating community benefit dollars, and clearer budget policies. In the event the recommendations were not implemented, the dissolution the District was recommended.
Limited Scope Performance Audit of the Finances of the City of Victorville
In May 2012, HMR completed a limited scope performance audit for the 2011-12 San Bernardino County Civil Grand Jury on the finances of the City of Victorville. Our team found that the City’s solvency, capacity to provide current services, and ability to repay large debt operations were growing concerns. The City’s General Fund balance was depleted by several fiscal years of expenditures exceeding revenues along with loans by the General Fund to other City funds as subsidies to support their operations. The audit also found weaknesses in the City’s inter-fund loan policy; initiation of capital projects without proper risk assessments or project controls; development of hangar facilities at Southern California Logistics Airport on a no-bid agreement without proper controls to prevent cost overruns, misuse of public funds, or fraud; and mishandling of tax increment bond expenditures for redevelopment of George Air Force Base. More than twenty recommendations for improvement in financial oversight and management and for loan repayment were proposed.
Management Audit of the County of Santa Clara Office of Pre-Trial Services
In February 2012, acting in its capacity as the Management Audit Division of the Board of Supervisors for the County of Santa Clara, HMR completed a Management Audit of the Office of Pretrial Services. The audit made recommendations to improve the efficiency of operations, which would result in savings of up to $1.3 million in the form of reduced Office of Pretrial Services expenditures and reduced jail costs.
Review of the LA Community College District Inspector General Selection Process
In late 2011, HMR was hired by the Los Angeles City Controller to conduct a review of the Los Angeles Community College District’s (LACCD) processes for selecting a contractor Inspector General. The goals of the review were to determine how the selection process considered experience and qualifications of candidates, whether the process followed the LACCD’s procurement rules for selection, and whether there was any evidence of malfeasance. The analysis found weaknesses in the selection process, including inconsistencies in desired qualifications between the original advertisement for the position and in the desired qualifications discussed by the selection committee. The review also identified gaps in documentation requirements, scoring methods and protocols, bidder evaluation guidance, and conflicts of interest.
Review of the City of Los Angeles Emergency Management Plan
HMR completed an update to its original review of the City of Los Angeles’ Emergency Planning Efforts and Citywide Disaster Preparedness in May 2012 for the Los Angeles City Controller. The purpose of the review was to evaluate the implementation of the Los Angeles’ City Controller’s 2008 audit report recommendations. The 2012 update found many of the key recommendations from the 2008 report continued to remain unimplemented. Specifically, the 2012 report noted that the five departments reviewed, along with the Emergency Management Department, had not sufficiently partnered with the local businesses and nonprofit sector to conduct emergency planning, had not adequately established policies and expectations, had not developed a comprehensive plan for sheltering persons in the event of a major disaster, and had not made progress on a system for identifying the most vulnerable populations during an emergency. The review further found that budget cuts sustained since 2008 threatened the City’s ability to effectively coordinate emergency preparedness activities and conduct trainings.
Review of the Draft America’s Cup Development Agreement with the City and County of San Francisco
In the firm’s capacity as the Budget and Legislative Analyst for the City and County of San Francisco’s Board of Supervisors, HMR produced numerous legislative reviews associated with the City’s hosting the 34th America’s Cup. The most recent review, in March 2012, was an analysis of the Lease Disposition Agreement between the City and the Event Authority. The resulting report laid out the details of the legislation proposed to the Board to provide venues for the Event Authority and make corresponding improvements to the venues. The March 2012 report also outlined the fiscal impact of the proposed America’s Cup event, which concluded there would be a projected funding shortfall of $11,081,814 to be borne by the City due to the America’s Cup Organizing Committee not meeting their fundraising goals.
Review of County-Wide Cell Phone Authorization, Use and Oversight
In October 2011 HMR completed an audit to examine the cell-phone usage by staff countywide for the Santa Clara County Board of Supervisors. The report found 1,632 phones were either underutilized, used primarily for e-mail access, or had calling plans that did not match their usage. The audit also identified a need for improved County policies regarding cell phone acquisition and management, and a need for greater managerial oversight for telephone services generally, including land-lines. A total of eight recommendations were made, which were estimated to result in savings of up to $460,000 annually, as well as improve oversight over land-line and cell phone use.
Implementation of the Santa Clara Valley Habitat Plan
HMR completed a special study in September 2011 for the Board of Supervisors of the County of Santa Clara to assess the scope and effects of the prospective implementation of the draft Santa Clara Valley Habitat Plan/Natural Community Conservation Plan. An extensive review, through documents and interviews, of the history of the proposed plan, and a review of the associated funds culminated in a total of 19 reported recommendations intended to safeguard the County’s interests. Ultimately, if the proposed plan moves forward, the development and implementation of the Valley Habitat Plan would include participation by the County, several cities, two special districts, and State as well as federal officials.
Performance Audit of San Bernardino International Airport Operations, Development and Construction Activities
In June 2011, HMR completed a performance audit for the 2010-11 County of San Bernardino Civil Grand Jury to follow-up on a complaint claiming “irregularities” at the San Bernardino International Airport. The audit found that San Bernardino International Airport Authority (SBIAA) management did not follow industry standards or establish sufficient controls for the development of terminal and fixed-based operation facilities. Management made decisions to expedite and substantially scale-up the terminal development project based on unchecked assertions from the prospective developer, hired via a sole-source contract and paid on a percentage of project costs, posing clear conflicts of interest. Similar problems were found with the development of a fixed based operations facility. The audit also found that SBIAA management did not conduct sufficient due diligence prior to purchasing used aviation equipment from the developer, who had a prior criminal record and was banned from the aviation industry. The audit recommended specific courses of action to the SBIAA Commission to improve transparency and establish checks for contracting and financial decision-making.
Budget Analysis of the City of Costa Mesa
HMR completed an analysis of the finances and budget outlook of the City of Costa Mesa in June 2011 to determine whether the City might have surplus resources to help fund City operations. The analysis also extended to testing the City’s internal projections used to develop the budget for FY 2011-2012 and make recommendations for modifications to the City’s fiscal assumptions. Based on the final analysis, the City of Costa Mesa was found to have approximately $26.4 million in fund balances at the end of FY 2010-2011 that could be used to finance a portion of the FY 2011-2012 General Fund budget. In addition, there are were recommended revenue and expenditure adjustments moving forward, including suggestions that the City establish plans for the repayment of certain debt obligations owed to the General Fund and that the City issue Pension Obligation Bonds to prepay a portion of the unfunded liability owed to the pension plan.
Management Audit of the Measure B Transportation Improvement Program
HMR completed a management audit in May 2011 for the Santa Clara County Board of Supervisors on the closeout activities and fund balance of the Measure B Transportation Improvement Program, a transportation sales tax measure. The audit found that nearly all projects originally proposed to be funded by the measure were complete, and a total of $6.2 million in funds were identified as not needed for the proposed projects and could be reallocated for general County purposes. The review also found that the County, without contractual or legal authority, had overpaid the Valley Transportation Authority by $1.54 million to $4.07 million to carry out the projects, and it was recommended that these funds be recovered.
Comprehensive Assessment of Pension Plans in Los Angeles County
HMR’s assessment of pension plans in Los Angeles County, completed in April 2011 for the 2010-11 Los Angeles County Civil Grand Jury, was an unprecedented review of all 277 public pension plans available in the County. The report described the financial profile of these plans and illustrated trends by preparing in-depth profiles of the pension benefits and funding. Analysis of the profiles resulted in over 35 findings and a total of 25 subsequent recommendations for savings and limitation of associated risks to help guarantee the future stability of the pension plans. The report’s recommendations included prefunding retiree health benefits, modifying the listing of assets and liabilities associated with the retirement plan to reflect a more accurate current state of the plan, and for more immediate budget savings, reducing or eliminating the employee retirement pick-up during contract negotiations with employee bargaining groups.
Management Audit of the San Jose Police Department’s Central Identification Unit
The Board of Supervisors of the County of Santa Clara requested that HMR conduct a management audit of the San Jose Police Department Central Identification Unit in April 2011. The audit, aimed to improve the efficiency and effectiveness of the Unit, resulted in a total of 11 recommendations, including a total cost savings of at least $88,310 and an additional $38,000 in suggested increased funding opportunities for the Unit. The proposed recommendations also incorporated an additional safeguard to ensure the accuracy of latent print identifications, several methods to reduce the existing backlog of latent fingerprint analysis requests, and improvements to the planning and documentation of Unit staff training.
Performance Audit of the Alemany Farmers’ Market
In October 2010, HMR, acting as the Budget and Legislative Analyst for the San Francisco Board of Supervisors, completed a performance audit of the Alemany Farmers’ Market and the Real Estate Division, in its capacity as operator of the Market. The audit reviewed the management of the Farmers’ Market, the Market’s finances, the Market’s governance, and the Market’s adherence to applicable laws, codes, and regulations. The performance audit found that the Market lacked a well-defined mission and consistent management; the facilities and maintenance have not been adequately planned for by the Real Estate Division; a more effective governance structure for the Market is needed; and that the Market had not consistently complied with laws and regulations.
Management Audit of the Santa Clara Valley Health & Hospital System
HMR completed a management audit of the Santa Clara Valley Health & Hospital System (SCVMC) in April 2010, which extensively examined the operations, management practices, and finances of various Administration and Support Services, including 64 of approximately 300 cost centers in the SCVMC Enterprise Fund. The report listed 11 major findings and 56 recommendations, that if implemented, would enhance Finance Division staffing, result in improved financial management, and reduce expenditures by about $14 million annually.