Report 2014-107 Recommendation 14 Responses

Report 2014-107: Judicial Branch of California: Because of Questionable Fiscal and Operational Decisions, the Judicial Council and the Administrative Office of the Courts Have Not Maximized the Funds Available for the Courts (Release Date: January 2015)

Recommendation #14 To: Administrative Office of the Courts

To ensure that it spends funds appropriately, the AOC should develop and implement controls to govern how its staff can spend judicial branch funds. These controls should include specific definitions of local assistance and support expenditures, written fiscal policies and procedures as the rules of court require, and a review process.

Annual Follow-Up Agency Response From December 2017

Every other year, the State Controller's Office performs financial compliance audits of all revenues, expenditures and fund balances under the operational control of the Judicial Council of California (Judicial Council) per Government Code, section 77206(i). The last audit was issued in October 2017 for fiscal year 2015-16 and included a review of 235 expenditure transactions from 17 different funds. The objective of the review, among other things, was to evaluate whether spending was properly documented and consistent with state law and regulations. The State Controller's audit concluded the Judicial Council had "complied with governing statutes, rules, regulations and policies relating to revenues, expenditures and fund balance." Going forward, the Judicial Council will re-evaluate the need to further develop additional policies based on the State Controller's audit findings, if any. In addition to the normal GASB/GAAP accounting standards JCC has in place with respect to branch wide expenditures (supreme court, appellate, trial courts), the JCC budget staff are currently implementing a process of monthly reviews of JCC staff expenditures and that report will go directly to the Chief of Administration on staff expenditure patterns.

  • Estimated Completion Date: mid-2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Our recommendation was that the Judicial Council develop and implement controls over the spending of judicial branch funds. An annual audit by the State Controller's Office (SCO) does not sufficiently implement our recommendation, but we agree that this annual audit will identify controls that the Judicial Council needs to strengthen.

  • Auditee did not substantiate its claim of full implementation
  • Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From November 2016

All judicial branch funds have been appropriately categorized as either state operations or local assistance and the details of the budget can be found on the California Court's website (www.courts.ca.gov/finance.htm). The Judicial Council of California continues to work on further developing policies and procedures to improve controls over spending from these two different types of appropriations.

  • Estimated Completion Date: December 2017

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


1-Year Agency Response

The Judicial Council has worked with the Department of Finance to align Operations and Local Assistance expenditures. These adjustments will be reflected in the 2016-2017 Governor's Budget. It is anticipated that a defined set of controls will be ready for submittal to the Judicial Council by the second quarter of 2016.

  • Estimated Completion Date: Second quarter of 2016
  • Response Date: January 2016

California State Auditor's Assessment of 1-Year Status: Pending


6-Month Agency Response

The Judicial Council staff, in consultation with Judicial Council advisory bodies, will develop internal controls on expenditures of all judicial branch funds. Council staff anticipates completing this recommendation in the fourth quarter of 2015.

  • Estimated Completion Date: Fourth quarter of 2015
  • Response Date: July 2015

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

In consultation with the Trial Court Budget Advisory Committee, council staff is updating staff guidelines regarding appropriate uses for Trial Court Trust Fund and Trial Court Improvement and Modernization Fund monies consistent with the audit recommendations. This will include an annual training requirement for staff on use of the guidelines. Council staff anticipates completing the initial guidelines in the third quarter of 2015.

  • Estimated Completion Date: Third quarter of 2015
  • Response Date: March 2015

California State Auditor's Assessment of 60-Day Status: Pending

The AOC's response only notes that it will implement guidelines. We expect a clear policy that established internal controls over the spending of judicial branch funds, not just guidelines.


All Recommendations in 2014-107

Agency responses received are posted verbatim.