OFFICE OF THE AUDITOR-CONTROLLER

June 19, 1995

TO: Rodney S. Melville, Presiding Judge of the Superior Court

Robert Glick, Grand Jury Foreman

FROM: John Torell, CPA, Asst. Auditor-Controller

RE: Grand Jury Interim Final Report - The Annual Financial Audit

Per the Grand Jury's request, and as required by law, we are responding to the recommendations made in the subject report.

Recommendation 1: A periodic review of the audit contract should be made by the Auditor-Controller's internal audit staff to ensure that compliance is being met by the contractor.

Auditor-Controller Response: As pointed out in the Grand Jury report, the previous outside audit firm has been replaced. The, Auditor-Controller's office is currently reviewing the new contractor's contract compliance efforts on a weekly basis.

Recommendation 2: The Grand Jury should establish a year-round standing Financial Audit Committee to work with the Auditor Controller's Office in an on-going manner to ensure that appropriate collections are made so that what has occurred during the year contains no surprises at year's end.

Auditor-Controller's Response: We agree with the above recommendation. As a party to the contract for the County's annual financial audit, the Grand Jury would, we believe, enhance its participation in the annual audit process if it were to establish a Financial Audit Committee of Jury members.

Recommendation 3: An audit of compliance with Government Code Section 53601 and the County's published investment policy should be conducted by the independent auditor quarterly and reported to the County Board of Supervisors in order to ensure compliance.

Auditor-Controller's Response: We agree with the Grand Jury the need for increasing the frequency of independent reviews of the County's investments for compliance with the County's investment policy and applicable statutes. The Board of Supervisors has, by ordinance, directed the Auditor-Controller to perform an independent review of investment activities on a quarterly basis and to expand the scope of that review to include an opinion on the type and amount of assets in the Treasury.

If any further information or clarification is desired, please do not hesitate to call upon us.

c: Kent Taylor, County Administrator