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2 <br />2023-2024 San Mateo County Civil Grand Jury <br />Too many examples of lack of or failed internal controls exist, including recent news stories <br />about taxpayer money used for constructing personal residences in train stations in Burlingame <br />and San Mateo that are referenced in the attached Appendix. <br />The Civil Grand Jury learned from survey respondents that all of them do have established <br />internal controls and publish external audit reports. Most of them, however, do not assess <br />internal controls and do not communicate with governing boards or the public regarding <br />management of internal controls. Of the few entities that do assess internal controls, they do not <br />report those results. <br />The Civil Grand Jury recommends timely and documented assessments of internal controls with <br />clear, appropriate reports from management to governing boards and to the public to reduce the <br />risk of failed internal controls, to enhance public confidence in our government and to improve <br />the efficiency of external audits. <br />By rule of the Civil Grand Jury, the recommendations included in this report can only be sent to <br />entities that participated in interviews with the Civil Grand Jury. While the Civil Grand Jury <br />could not efficiently interview all entities that participated in surveys, common sense suggests <br />that these recommendations are applicable to all entities within San Mateo County. The current <br />Civil Grand Jury encourages future civil grand juries to investigate the recommendations in this <br />report as appropriate, to help optimize trust in the integrity of internal controls in San Mateo <br />County government. <br />GLOSSARY <br />Assessment and Evaluation <br />Assessment for the purpose of this report is defined in the Green Book as follows: “To determine <br />if an internal control system is effective, management assesses the design, implementation, and <br />operating effectiveness of the five components and 17 principles.” Examples in an internal <br />control assessment include to confirm and document that all requisitions are properly approved <br />and that payments for goods or services are made by authorized individuals. This process helps <br />management and stakeholders have confidence in the reliability of financial reporting, <br />compliance with laws and regulations, and the overall integrity of the organization's operations. <br />In general, Assessment and evaluation can be used interchangeably. <br />Committee of Sponsoring Organizations of the Treadway Commission (COSO) <br />The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is an <br />organization that develops guidelines for businesses to evaluate internal controls, risk <br />management, and fraud deterrence. <br />Enterprise Risk Management (ERM) <br />Enterprise risk management is an entity-wide strategy to identify and prepare for hazards with <br />the entity’s finances, operations, and objectives. <br /> <br /> <br />6.C. - Page 6 of 22 <br />85