Report I2011-0837 Recommendations and Responses in 2014-041

Report I2011-0837: California Department of Veterans Affairs: Wastefulness, Failure to Comply With State Contracting Requirements, and Inexcusable Neglect of Duty

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of 2013-041 Response Not Implemented as of Most Recent Response
California Department of Veterans Affairs 1 7 6 n/a 5

Recommendation To: Veterans Affairs, Department of

For all contracts that involve recreation fund moneys or involve recreation fund enterprises, as a best practice, institute policies that require the contracts be awarded and administered in a manner consistent with the policies and procedures set forth in the State Administrative Manual and the State Contracting Manual.

Response

In December 2014, Veterans Affairs stated that the new policy it has drafted to address this recommendation would be in place by January 2015. Currently, the policy is being reviewed by auxiliary divisions within Veterans Affairs for final review. However, a draft version of the policy was provided for our review.

Veterans Affairs' new policy requires goods or services purchased at $5,000 or more to follow the procedures established in the State Contracting Manual, State Administrative Manual, and its department administrative manual for bidding, procurement, and contracting. Although purchases under $5,000 do not appear to be similarly obligated to follow the State Contracting Manual and State Administrative Manual as we recommended, Veterans Affairs listed a number of additional controls in the new policy, such as detailed quarterly financial statements and preapproval requirements for individual transactions by the undersecretary or his designee, to ensure that contracts involving the recreation fund are preapproved and reviewed by headquarters prior to execution.

One deficiency we identified in the draft policy was that it did not explicitly require the veterans homes to obtain preapproval for any contracts that involved the use, modification, or leasing of state property to an outside vendor, such as in the case of the zip line contract mentioned in this investigation. When we brought this deficiency to Veteran Affairs' attention, it stated that it intended to include such a statement and that it would ensure its inclusion in the final policy.

  • California State Auditor's Assessment of Status: Partially Implemented
  • Estimated Completion Date: January 2015
  • Response Date: December 2014

Recommendation To: Veterans Affairs, Department of

For all contracts that involve recreation fund moneys or involve recreation fund enterprises, institute policies that require the contracts to be approved by a Veterans Affairs attorney prior to being executed.

Response

In December 2014, Veterans Affairs reported that similar to the manner in which state agencies address General Fund contracts, recreation fund contracts will only be reviewed by a Veterans Affairs attorney on an as-needed basis. As Veterans Affairs action on this recommendation appears to be reasonable, we have deemed this recommendation to be resolved.

  • California State Auditor's Assessment of Status: Resolved
  • Completion Date:
  • Response Date: December 2014

Recommendation To: Veterans Affairs, Department of

For all contracts that involve recreation fund moneys or involve recreation fund enterprises, institute policies that require the contracts to be reviewed and approved by the secretary of Veterans Affairs, or upon delegation of the authority to do so, by a deputy secretary, prior to the contracts being executed.

Response

Veterans Affairs stated in December 2014 that the new policy it has drafted to address this recommendation would be in place by January 2015. A draft version of the policy was provided to our office for our review.

The draft policy requires that many, but not all, expenditures must be granted individual approval by Veterans Affairs headquarters before goods or services are procured, in addition to being listed on the home's annual budget. Examples of purchases requiring preapproval include purchases for events or holiday celebrations, entertainment or educational items, costs for seminars, and tickets and transportation to events. Together with the other internal controls the draft policy establishes, such as detailed quarterly financial statements and preapproval requirements for individual transactions by the undersecretary or his designee, Veterans Affairs' approach to addressing our recommendation appears to be sufficient. We will review the final policy after its implementation.

  • California State Auditor's Assessment of Status: Partially Implemented
  • Estimated Completion Date: January 2015
  • Response Date: December 2014

Recommendation To: Veterans Affairs, Department of

Institute a policy that requires all payments of recreation fund moneys to a person or business in the amount of $5,000 or more during a fiscal year and any contract involving recreation fund enterprises be presented to the recreation fund advisory board (now known as the Morale, Welfare, and Recreation Committee) at a public meeting for an advisory vote prior to the payment being made.

Response

Veterans Affairs stated in December 2014 that the new policy it has drafted to address our recommendation would be in place by January 2015. A draft version of the policy was provided to our office for our review.

The draft policy states that although the administrator of each home is ultimately responsible for approving the recreation fund's budget proposal, the administrator is required to seek the valuable input of the allied council (made up of elected representatives of the veterans home residents) and key employees of the home. Other than this statement, the draft policy does not specify any minimum requirements for when or how the administrator will solicit input from the home's residents. In July 2014, Veterans Affairs stated that its new policy would include enabling the homes' allied councils to work with home administrators on recreation fund spending plans and require Veterans Affairs to present regular reports on recreation fund expenditures to the residents. However, the draft policy did not reflect these intentions.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: January 2015
  • Response Date: December 2014

Recommendation To: Veterans Affairs, Department of

Institute a policy that requires any expenditure of recreation fund moneys to a person or business in the amount of $5,000 or more during a fiscal year be listed as a separate line item in the budget of the recreation fund as presented to the secretary for approval.

Response

Veterans Affairs stated in December 2014 that the new policy it has drafted to address our recommendation would be in place by January 2015. A draft version of the policy was provided to our office for our review.

The draft policy does not include a requirement that any recreation fund expenditure to a person or a business in the amount of $5,000 or more during a fiscal year be listed as a separate line item in the budget of the recreation fund presented to the secretary for approval. When we brought this to Veteran Affairs' attention, it stated that it understood our concern and that additional discussion would occur to see if this could be added to the final policy expected to be issued in January 2015.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: January 2015
  • Response Date: December 2014

Recommendation To: Legislature

Consider legislation to establish increased statutory controls over the management of the recreation fund maintained by each of the veterans homes to require that the funds be managed by the secretary of Veterans Affairs, in consultation with the administrator of each home, and be managed in a manner that is transparent to the public, takes into account the feelings of veterans, is consistent with the mission of the veterans homes, and is fiscally prudent.

Response

Veterans Affairs reported in July 2014 that it had worked with an assembly member to propose legislation that would address this recommendation. However, in September 2014 Veterans Affairs reported that the proposed legislation had failed. Despite this failure, Veterans Affairs stated that it intends to pursue legislative proposals in the next legislative session.

  • California State Auditor's Assessment of Status: Pending
  • Estimated Completion Date: Unknown
  • Response Date: September 2014

Current Status of Recommendations

All Recommendations in 2014-041