1. HSAB Audit Findings Addressed Lisa Tennyson, Grants Administrator OMB July 2012

2. Finding: BOCC Agreements for HSAB grant funding should contain specific information on which expenses qualify for funding and reimbursement by the County. Current: HSAB expenses allowed are described in Attachment C of the Agreement (contract). Also the reimbursement request goes directly to Finance. Actions implemented: – More specific information in Attachment C of contract language from the non-profits is required – The audit suggested sending HSAB requests to OMB/Grants before they go to Finance. County will request that copies of all invoices also be sent to OMB/Grants, to be reviewed in concurrence with Finance.

3. Finding: HSAB needs written policies and procedures codified and formally approved by the BOCC. Current: Guidelines, policies, procedures, and related resolutions have been codified and approved, but in piecemeal fashion over the years. BOCC approved recommendations in 2002 per Human Services Review Committee, in 2006 per Taskforce to eliminate duplication, in 2010 per Working Group, various budgetary actions, and various resolutions. (County keeps track of all guidelines, procedures and policies, and posts them on the web.) Actions to be taken: – Compile these current guidelines, policies and resolutions, as well as any new recommendations into a single document to be presented, discussed, and approved by BOCC.

4. Finding: Monitoring and performance measures need to be established. Current: County requires program outcome information, types and frequencies of services, client numbers, audited financials, organizational budgets, revenue and expenditure details, salary information, board of directors information (membership list of at least 5, board meeting minutes, proof of annual elections) as suggested by the Audit. Actions taken: – County has developed a spreadsheet for comparative and tracking purposes. It includes a variety of information such as the amount and use of county funding, and whether its used as match, clients served, geographic area served, CEO salary, total FTEs, total volunteers, as well as information identified as important in the Audit and Charity Navigator including total expenses, total revenue, ratio of program to admin. expenses, % of county funding to total revenue, % of fundraising to total revenue. County staff will distribute this information to BOCC and HSAB members prior to new funding recommendations each year. – County is developing an annual performance report form to be required of each organization to report these measures in relation to the grant year end; this will be a new Agreement requirement. – County identified many 990s in which programmatic and management expenses are misallocated and will make recommendations to those organizations to correct/modify. – County will review 990s specifically for: diversion of assets, loans to/from related parties and policies on CEO compensation, conflict of interest, whistleblower, records/retention, etc. (as suggested in the Audit) and recommend to organizations that they develop these policies, if they have not already. – The Audit also recommended periodic site visits. Although there is not enough manpower to do this for every organization, County will begin a schedule of site visits.

5. Finding: HSAB needs to establish or adhere to existing term limits for board members to promote independence, accountability and transparency. Current: Per resolution, each BOCC member appoints a representative to the HSAB; the term is 2 years. The resolution is quiet with respect to renewals of appointments/terms. HSAB members have been re-appointed and served multiple terms. – Independence - There is a lot of institutional knowledge that comes with serving repeated terms. – Accountability - The HSAB only makes recommendations; the BOCC reviews and must approve, and can modify any and all HSAB recommendations. – Transparency – Member names are listed on website, all meetings are publicly advertised, all agendas and meeting materials are posted on website, meeting minutes are taken at every single meeting and all are posted; newly implemented this year-the annual funding recommendation meeting is now video-recorded and posted. Action to be taken: – New resolution to either change the term or specify that the HSAB member term may be renewed.

6. Finding: All organizations applying for HSAB grant funding should submit a 990 or Statement of Functional Expenses. ( To address those organizations who only file a 990 EZ form, which does not have as much financial information.) Current: County requires audited financial statements for all organizations with operating budgets of $150,000 or more. County requires filed 990’s for all organizations. However, IRS permits 990EZs for small entities, that do not include expenditure detail. HSAB applications also require detailed revenue and expenditure schedules. Action Implemented: – County will require a Statement of Functional Expenses as part of the application for those organizations who file a 990EZ form. – County now requires proof of filing for IRS 990s.

7. Finding: The organization’s IRS Letter of Determination indicating 501c3 status should be checked for current status. Action taken: – County now requires that each funding application include a printout from the GUIDESTAR website that shows their 501c3 standing as current.

8. Addressing the specific organizational findings for Independence Cay and BPAA Addressing organizations (Independence Cay) who do not file their 990’s that they submit to us: The County has always required copies of organizations’ 990s, with the implicit understanding that these had been appropriately filed with the IRS. However, the County now requires proof of filed 990 in the funding application, and, “filed 990s” is the language now used in the contract. Addressing Independence Cay submitting the same invoice to 2 entities: The County has always required that each reimbursement request be accompanied with a certification by the organization that it has not requested/received funding for the expense from any other source. However, it is very difficult to know what they do with their other funding sources and there is no way to ensure that this does not happen. – Staff recommends BOCC consider penalties, moving forward, in cases of breach of contract, supplying false documents or information, double-dipping, etc. – The double-invoiced amount was subtracted from their FY 12 funding. Addressing BPAA’s review in the Audit, the organization is transitioning to new leadership and their new ED understands the Grants/Finance requirements. – We are also currently ensuring that all organizations know in the months leading up to the fiscal year end, how much money they have left to spend.