Report 2013-302/2013-303 Recommendation 25 Responses

Report 2013-302/2013-303: Judicial Branch Procurement: Semiannual Reports to the Legislature Are of Limited Usefulness, Information Systems Have Weak Controls, and Certain Improvements in Procurement Practices Are Needed (Release Date: December 2013)

Recommendation #25 To: Administrative Office of the Courts

The AOC should implement procedures to ensure that its internal controls over payments are followed and that procurements are approved before ordering and receiving goods and services.

Annual Follow-Up Agency Response From November 2016

The Judicial Council of California (Judicial Council) believes that its current contracting manual is consistent with the Public Contract Code and the State Contracting Manual. Although the State Auditor's report from 2013 found 1 case out of 60 were there was a minor and isolated exception for roughly $500, the Judicial Council respectfully disagrees that changes to existing policies are needed and will re-evaluate the need for further training based on the results of subsequent audits by the State Auditor. The Judicial Council is pleased that that the State Auditor's more recent reviews have similarly yielded a minimal number of audit findings.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

As cited in the report, the State Auditor tested 60 payments for Judicial Council (formerly the AOC) procurements and found 1 isolated case for approximately $500. The one isolated compliance situation cited was done as an exception that was acknowledged as non-compliant but a expediting deemed necessary at the time and subsequently documented as such. Policy and procedure changes would not change the exception and a formal exception process in policy is not being considered.

The Judicial Council (formerly the AOC)believes that its policies and procedures as documented, including the Judicial Branch Contracting Manual (JBCM), are adequate in this area. Specifically, the JBCM establishes that [P]ayments should not be processed or released by a Judicial Branch Entity (JBE) to a Vendor for any goods or services unless the JBE possesses all of the following: 1. A properly authorized contract; 2. Documentation verifying the goods/services were satisfactorily received and/or performed; and 3. An accurate, properly submitted Vendor invoice.

California State Auditor's Assessment of 1-Year Status: No Action Taken

We continue to believe that the presence of this issue indicates that the AOC's internal controls could be strengthened to ensure procurements are approved before ordering and receiving goods and services.

6-Month Agency Response

As cited in the report, the State Auditor tested 60 payments for AOC procurements and found 1 isolated case for approximately $500. The AOC believes that its policies and procedures as documented, including the Judicial Branch Contracting Manual (JBCM), are adequate in this area and that this compliance issue should not reoccur.

Specifically, the JBCM establishes that [P]ayments should not be processed or released by a Judicial Branch Entity (JBE) to a Vendor for any goods or services unless the JBE possesses all of thee follwoing:

1. A properly authorized contract;

2. Documentation verifying the goods/services were satisfactorily received and/or performed; and

3. An accurate, properly submitted Vendor invlice."

While should not is not considered mandatory, reasonable discretion must prevail according to the JBCM with monitoring for compliance and exceptions. An example would encompass the actual receipt of a good while the documentation may not be as discriptive as possible. The individual has the good in hand and does not need the detailed documentation to validate he/she has it in hand. This is the basis of reasonable discretion and reasoning behind why it is not believed additional procedures are necessary.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

We continue to believe that the presence of this issue indicates that the AOC's internal controls could be strengthened to ensure procurements are approved before ordering and receiving goods and services.

60-Day Agency Response

As cited in the report, the Auditor tested 60 payments for AOC procurements and found 1 isolated case for approximately $500. The AOC believes that its policies and procedures are adequate in this area and that this compliance issue should not reoccur.

California State Auditor's Assessment of 60-Day Status: No Action Taken

The AOC believes that its policies and procedures in this area are adequate and that the issue we found should not reoccur. However, the presence of this issue indicates that the AOC's internal controls could be strengthened to ensure procurements are approved before ordering and receiving goods and services. The AOC has not implemented any procedures to better ensure that its internal controls over payments are followed and that procurements are approved before ordering and receiving goods and services.

All Recommendations in 2013-302/2013-303

Agency responses received are posted verbatim.