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8 <br />2023-2024 San Mateo County Civil Grand Jury <br />● We have been using the external auditors and have been reviewing the internal <br />controls with them annually. <br />● This is done with the regular annual audit. We do not have reasons to justify an <br />additional assessment. <br />● Annually, the internal controls are updated as part of our external audit, not <br />separately from the external audit process. <br /> <br />The reports from external auditors include limitations on the results of its review of internal <br />controls they conduct in connection with an audit. These limitations include statements like “we <br />did not identify any deficiencies in internal control that we consider to be material weaknesses” <br />and “material weaknesses may exist that have not been identified.” The external auditor reports <br />are clear that they do not express an opinion on the effectiveness of internal controls. <br />The Civil Grand Jury interviewed a Certified Public Accountant who audits local governments <br />and agencies and confirmed that management should assess its internal controls independently of <br />the external auditor’s work, noting management can separately refer to the independent auditor’s <br />work in its report to its governing board regarding internal controls. <br />Furthermore, the Certified Public Accountant and interviewees generally agreed that if <br />management performed its own assessment of its internal controls, the results of that assessment <br />can be shared with the external auditor and the auditor may use those results in designing audit <br />work, increasing efficiency. Increases in efficiency in external audits likely at least partially <br />offset any incremental staff work in conducting management’s assessment. <br />Survey Responses <br /> <br />Survey requests were sent to 75 entities, including municipalities, school districts, independent <br />special districts and joint power authorities. Responses were received from 54 entities. <br /> <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 its internal <br />controls and how the results of those assessments are reported to governing boards and to the <br />public. This assessment 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 its internal controls and communication, both <br />internally within an entity and externally to the entity’s constituents, are key principles of <br />internal controls. <br />6.C. - Page 12 of 22 <br />91