Report 2017-104 Recommendation 32 Responses

Report 2017-104: Montebello Unified School District: County Superintendent Intervention Is Necessary to Address Its Weak Financial Management and Governance (Release Date: November 2017)

Recommendation #32 To: Los Angeles Regional Adult Education Consortium

To ensure that state adult education funds are used in the most efficient and effective manner, the consortium should, within one year, develop policies and procedures to ensure the proper collection and reporting of enrollment, attendance, and expenditure data by consortium members. Periodically review enrollment, attendance, and expenditure data to ensure their accuracy.

Annual Follow-Up Agency Response From November 2023

The Los Angeles Regional Adult Education Consortium has moved forward with the implementation of monitoring procedures to ensure appropriate oversight. LARAEC has engaged with a third-party auditing firm and is in the process of completing a review. Given these major accomplishments, LARAEC has fully implemented the recommendations outlined in the MUSD November 2017 Audit, Items 31 and 32.

As noted in the prior response, on March 17, 2021, the LARAEC Executive Board approved the newly developed Member Districts Monitoring Procedures (a copy of the LARAEC Member District Monitoring Procedures was previously submitted to the state auditor's office). On May 19,2021, the LARAEC Executive Board scheduled the first review date in January, 2022 and discuss hiring a 3rd party auditor to conduct the reviews. On November 17, 2021, the LARAEC Executive Board approved an engagement letter (with Eide Bailly, LLP) to provide 3rd party auditing services on behalf of the consortium. During contract approval Eide Bailley ended the engagement as reported during the December 14, 2022 LARAEC Executive Board meeting.

Since the last communication, LARAEC engaged Clifton Larsen and Allen (CLA, a 3rd party auditor) to carry out the Member-district Monitoring Procedures as discussed at the February 2023 Executive Board meeting and as evidenced by the scope of work provided as Exhibit 14. CLA initiated the LARAEC monitoring procedures of the five districts in April 2023. As part of the auditing process and at the request of the auditing firm and member-districts, new clarifications and procedures were added to the original monitoring document and approved on October 18, 2023. These additions created uniform forms and definitions and provided clarity for verifying assurances. This process of conducting the first review strengthened the process for future years. LARAEC is scheduled to begin its next monitoring phase in Summer 2024.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The consortium developed procedures to oversee the reporting and collection of key data and contracted with a third party to conduct monitoring of consortium members.

Annual Follow-Up Agency Response From October 2022

In addition to implementing a funding formula, the consortium has also implemented comprehensive Member District Monitoring Policies and Procedures to ensure appropriate oversight. Given these major accomplishments, LARAEC has Fully Implemented the recommendations outlined in the MUSD November 2017 Audit, items 31 and 32.

A) On March 17, 2021, the Consortium leadership held a board meeting to approve the implementation of the newly developed LARAEC Member District Monitoring Policies and Procedures (a copy of the LARAEC Member District Monitoring Policies and Procedures document is included in the board packet as Attachment A). The following items were addressed: 1. The board approved the implementation of the LARAEC Member District Monitoring Policies and Procedures effective as of July 1, 2021. 2. The board approved the implementation of training to assist districts with rollout of the LARAEC Member District Monitoring Policies and Procedures. Exhibits 8&9

B) On May 19, 2021, the Consortium leadership held a board meeting in part to discuss the first set of "reviews" or audits as part of its oversight responsibilities. The following items were addressed: 1. The board tentatively scheduled the first review date in January, 2022. 2. The board discussed hiring a 3rd party auditor to conduct the reviews. Exhibits 10&11

C) On November 17, 2021, the Consortium leadership held a board meeting in part to discuss and adopt the Eide Bailly, LLP engagement letter to provide 3rd party auditing services on behalf of the consortium according to the engagement letter and timeline provided (a copy of the Eide Bailly Engagement Letter and amended timeline is included in the board packet under item 5.1). The following items were addressed: The board approved hiring Eide Bailly, a 3ds party auditor, to conduct the reviews according to the engagement letter provided. Exhibit 12&13

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

We assessed this recommendation as partially implemented pending LARAEC completing periodic reviews of consortium member's enrollment, attendance, and expenditure data. LARAEC has taken meaningful steps to develop procedures to oversee the collection and reporting of key data. However it is still in the process of contracting with a third party to conduct periodic reviews that will ensure the information provided by consortium members is accurate.

Annual Follow-Up Agency Response From October 2019

Vasquez and Co., LLP was hired by the Consortium to develop policies and procedures for the oversight and monitoring of CAEP funds. Their fieldwork commenced in July of 2019.The first draft of the policies is expected by the end of November 2019.The final draft is expected by the end of December 2019.Training on the new policies and procedures for all LARAEC member districts will start subsequent to the annual adoption of the document.The new policies and procedures will be in effect as of July 1, 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

Additional steps implemented since the 6-Month report as are follows:

Changes in personnel at MUSD Adult Education resulted in temporary delays of the quarterly reports from MUSD to the Consortium, a report for SY 2016 - 17 will be presented by MUSD on the next LARAEC Regular Board Meeting on November 16, 2018.

The LARAEC Executive Board has approved hiring two independent auditor firms: 1)Vasquez & Company LLP to create, review, and enhance fiscal policies and procedures and 2)Vaverinek, Trine, Day Y Co., LLP to conduct regular consortium audits to ensure the accuracy of enrollment, attendance, and expenditure data.

Exhibit 2A: LARAEC Regular Board Meeting Agenda, August 17, 2018, and Minutes. Exhibit 2B: LARAEC Regular Board Meeting Agenda, September 21, 2018, and Minutes.

The Executive Board of LARAEC would like to thank the State Auditor's Office for allowing the opportunity to enhance its policies and practices through the implementation of the recommendations listed on the MUSD Audit Report dated November 2, 2017 (State Audit #1017-104). The implementation of the noted recommendations has resulted and increased accountability and transparency. More importantly, LARAEC's students will benefit from the implementation of a more efficient and effective educational program. All of the implemented activities, over the course of the last year, thus, conclude with the full implementation of the recommendations offered by the State's Auditor's Office.

Exhibits

1. Exhibit 1: LARAEC Workshop Agenda, September 21, 2018 and Minutes

2. Exhibit 2A: LARAEC Regular Board Meeting Agenda, August 17, 2018, and Minutes.

3. Exhibit 2B: LARAEC Regular Board Meeting Agenda, September 21, 2018, and Minutes.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

This recommendation is partially implemented based on LARAEC engaging with vendors who will help it develop policies and conduct regular audits. Full implementation is pending LARAEC adopting the policies and procedures developed by its contractors around the proper collection and reporting of enrollment, attendance, and expenditure data.

6-Month Agency Response

Additional steps implemented since the 60-day report are as follows:

1. The LARAEC board-approved quarterly report metrics and MUSD will submit its first report to the consortium starting on August 15, 2018. Exhibit Al February 23, 2018 Open Meeting Agenda and Minutes, Exhibit A2 March 16, 2018 Open Meeting Agenda and Minutes

2. Subsequent to the January 19, 2018 LARAEC Open Meeting, when the Executive Team directed the LARAE C's Project Director to solicit high level proposals from auditing firms, the Point Persons Team presented to the Executive Board auditing firm's proposal without consensus on who to hire during the March 16, 2018 LARAEC Open Meeting. Exhibit A2 March 16, 2018 Open Meeting Agenda and Minutes. Subsequently, the Executive Board directed the Point Persons Team to hold a Bidders' Conference. The Bidders' Conference is scheduled for May 24, 2018.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

1. LARAEC will require quarterly reports from Montebello Adult Education to provide updates on MUSDs efforts to ensure effectiveness of services, growth targets, and expenditures consistent with goals and activities aligned with LARAECs Regional Comprehensive Plan Exhibit 5b (Exhibit 5b - LARAEC's Open Meeting Agenda and Minutes, will be available subsequent to January 19, 2018, the meeting's date)

2. LARAEC will retain an independent auditor to review performance and fiscal activities. Exhibit 5b

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2017-104

Agency responses received are posted verbatim.