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1 <br />2023-2024 San Mateo County Civil Grand Jury <br /> <br />Assessing and Reporting Internal Controls <br />in San Mateo County Agencies and School Districts <br /> <br /> <br />“FAILURE OF ANY CONTRIBUTES TO PUBLIC DISTRUST OF ALL” <br /> <br />ISSUE <br />San Mateo County, Cities, Special Districts, Joint Power Authorities, or Schools are not <br />assessing internal controls and are not reporting the results of assessments to governing boards <br />and the public. <br /> <br />SUMMARY <br />Our government faces risks, including fraud and waste. <br />Internal controls are put in place by an entity's oversight body, management, and other personnel <br />to provide reasonable assurance that the entity will achieve its objectives. Internal controls in our <br />government are key to ensuring that goals are met without fraud and waste and are critical to the <br />public trust. An example of an internal control is having separate people approve a transaction <br />before paying the bill for that transaction. <br />Internal controls hit the public eye back in the 1990s, after the scandals at Enron, WorldCom and <br />other organizations, all of which served as examples of fraud and waste. The United States <br />Congress reacted in 2002 by enacting the laws known as Sarbanes–Oxley that impact publicly- <br />traded companies. In 2015, the State of California issued “Internal Control Guidelines - <br />California Local Agencies” covering the need for internal controls in government entities. <br />Given the enormity of the challenge of reviewing individual controls at any one agency, the Civil <br />Grand Jury looked into the way government entities in San Mateo County assess their internal <br />controls and how the results of those assessments are reported to governing boards and to the <br />public. Assessments and reporting should follow the State of California guidelines and the <br />underlying referenced guidelines from the Green Book and the Committee of Sponsoring <br />Corporations. Management’s assessment of internal controls and communication, both internally <br />within an entity and externally to the entity’s constituents, are key principles of internal controls. <br />6.C. - Page 5 of 22 <br />84