CALIFORNIA COMMUNITY COLLEGES CHANCELLOR’S OFFICE · WEDD grant-funded programs and, on a sample basis, examined data for validity and accuracy Obtained and reviewed the grantee’s

CALIFORNIA COMMUNITY

COLLEGES CHANCELLOR’S OFFICE

Review Report

REVIEW OF WORKFORCE AND ECONOMIC

DEVELOPMENT DIVISION

GRANT-FUNDED PROGRAMS

July 1, 2013, through September 30, 2015

BETTY T. YEE California State Controller

November 2016

BETTY T. YEE California State Controller

November 10, 2016

The Board of Governors of the California Community Colleges

1102 Q Street

Sacramento, CA 95811

Dear Board of Governors:

The State Controller’s Office reviewed the California Community Colleges Chancellor’s

Office’s (CCCCO) Workforce and Economic Development Division (WEDD) grant-funded

programs for the period of July 1, 2013, through September 30, 2015. The CCCCO management

is responsible for maintaining a system of internal control over WEDD grant-funded programs,

and for ensuring compliance with state and federal requirements.

Our review identified significant deficiencies in the CCCCO’s internal controls over the WEDD

grant-funded programs. If not mitigated, these control deficiencies leave the CCCCO at risk of

continued inefficient use of grant funds and missed opportunities to use those funds for other

needs, and of receiving claims for unallowable expenditures and unreliable reports of outcome-

based data.

We found that the CCCCO lacks the monitoring and oversight of WEDD grant-funded program

grantees to ensure compliance with state and federal requirements. This control deficiency

contributed to inefficient use of grant funds. Of the 347 WEDD grants in fiscal year

(FY) 2013-14 and FY 2014-15, 150 have unspent balances totaling more than $30 million as of

May 2016. The control deficiency also contributed to grantees claiming $430,286 in unallowable

and questioned expenditures, making questionable expenditure transfers totaling $287,196 to

other funds, and reporting unreliable outcome-based data.

The CCCCO also lacks adequate controls to ensure that grant expenditures are allowable,

adequately supported, and properly recorded. Of the eight employees reviewed, we found five

whose salaries were transferred to or from Perkins 1B funds without adequate justification or

supporting documentation. Accordingly, we questioned $82,395 in salaries transferred to Perkins

1B funds and $13,390 in salaries transferred from Perkins 1B funds to another fund. In addition,

26 of 47 in-state airfare expenditures we reviewed, totaling $9,104, lacked documentation to

support that the expenditures were incurred while working on the grant objectives. Of the 26

expenditures, five were improperly reported as in-state airfare expenditures.

The Board of Governors -2- November 10, 2016

If you have any questions, please contact Andrew Finlayson, Chief, State Agency Audits Bureau

by phone at (916) 324-6310.

Sincerely,

Original signed by

JEFFREY V. BROWNFIELD, CPA

Chief, Division of Audits

JVB/rg

Attachment

cc: Erik E. Skinner, Interim Chancellor

California Community Colleges Chancellor’s Office

Van Ton-Quinlivan, Vice Chancellor, Workforce and Economic Development


Pamela D. Walker, Vice Chancellor, Educational Services


Debra Jones, Director, Workforce and Adult Education


Javier Romero, Grant Unit Manager


Review of Workforce and Economic

California Community Colleges Chancellor’s Office Development Division Grant-Funded Programs

Contents

Review Report

Summary ............................................................................................................................ 1

Background ........................................................................................................................ 1

Review Authority ............................................................................................................... 3

Objectives, Scope, and Methodology ............................................................................... 3

Conclusion .......................................................................................................................... 4

Views of Responsible Officials .......................................................................................... 5

Restricted Use .................................................................................................................... 5

Findings and Recommendations ........................................................................................... 6

Attachment A—California Community Colleges Chancellor’s Office’s Response to

Draft Review Report



-1-

Review Report The State Controller’s Office (SCO) reviewed the California Community

Colleges Chancellor’s Office’s (CCCCO) Workforce and Economic

Development Division (WEDD) grant-funded programs for the period of

July 1, 2013, through September 30, 2015. The CCCCO management is

responsible for maintaining a system of internal control over WEDD

grant-funded programs, and for ensuring compliance with state and federal

requirements.

Our review identified significant deficiencies in the CCCCO’s internal

controls over the WEDD grant-funded programs. If not mitigated, these

control deficiencies leave the CCCCO at risk of continued inefficient use

of grant funds and missed opportunities to use those funds for other needs,

and of receiving claims for unallowable expenditures and unreliable

reports of outcome-based data.

We found that the CCCCO lacks the monitoring and oversight of WEDD

grant-funded program grantees to ensure compliance of with state and

federal requirements. This control deficiency contributed to inefficient use

of grant funds. Of the 347 WEDD grants in fiscal year (FY) 2013-14 and

FY 2014-15, 150 have unspent balances totaling more than $30 million as

of May 2016. The control deficiency also contributed to grantees claiming

$430,286 in unallowable and questioned expenditures, making

questionable expenditture transfers totaling $287,196 to other funds, and

reporting unreliable outcome-based data.

The CCCCO also lacks adequate controls to ensure that grant expenditures

are allowable, adequately supported, and properly recorded. Of the eight

employees reviewed, we found five whose salaries were transferred to or

from Perkins 1B funds without adequate justification or supporting

documentation. Accordingly, we questioned $82,395 in salaries

transferred to Perkins 1B funds and $13,390 in salaries transferred from

Perkins 1B funds to another fund. In addition, 26 of 47 in-state airfare

expenditures we reviewed, totaling $9,104, lacked documentation to

support that the expenditures were incurred while working on the grant

objectives. Of the 26 expenditures, five were improperly reported as in-

state airfare expenditures.

The California Community Colleges form the largest postsecondary

educational system in the world. The California Community Colleges

serve more than two million students annually. The system consists of

72 semi-autonomous community college districts encompassing

113 colleges, 78 approved off-campus centers, and 24 separately reported

district offices.

The CCCCO has general responsibility for leadership and coordination, as

well as specific functions such as serving as the fiscal agent for

appointment of state funds, approving educational programs proposed by

the colleges, and reviewing plans for construction projects. The CCCCO

also provides services to the colleges such as maintaining a comprehensive

information system; coordinating, following and sponsoring legislation;

Summary

Background



-2-

and providing assistance in the areas of student, program and fiscal

services.

The CCCCO WEDD is responsible for supporting instruction, managing

grants to community colleges, providing technical assistance, and

implementing various special programs. The division is composed of three

units: Career Technical Education, Economic and Workforce

Development, and Nursing and Allied Health. The division staff

coordinates jobs and career opportunities for community college graduates

to advance California’s economic growth and global competitiveness.

Among the activities of the CCCCO, the programs of the WEDD bridge

the skills and jobs mismatch and prepare California’s workforce for 21st

century careers. The WEDD serves as administrator for several streams of

state and federal funds, including the Carl D. Perkins Career and Technical

Education Act of 2006, Economic and Workforce Development Program,

and Career Technical Education Pathways Program.

The WEDD collaborates with employers, organized labor, local

communities, community colleges, and other education parties through

programming supported by these funds to close the skills gap and foster

successful student completion.

Carl D. Perkins Career and Technical Education Act of 2006

The Carl D. Perkins Career and Technical Education Act of 2006 is the

principal source of federal funding to states for the improvement of

secondary and postsecondary career and technical education programs.

Ten percent of Perkins funds awarded to the CCCCO are used for state

leadership activities; these funds are referred to as Perkins 1B funds. Five

percent of Perkins funds may be used by the CCCCO for state

administrative activities; these funds are referred to as indirect funds.

Award grants and project funds go to community college districts

accomplishing the goals and objectives of the program.

Economic and Workforce Development Program

Senate Bill (SB) 1402 reauthorized the CCCCO’s Workforce

Development Program with the Legislature’s intent to encourage

continued coordination between schools that maintain kindergarten and

grades 1 to 12, inclusive, and higher education systems to advance career

technical education to perform the following:

Advance California’s economic growth and global competitiveness;

Advance California’s economic and jobs recovery;

Use labor market information to identify industries’ needs;

Share labor market information with other state agencies; and

Work with industry representatives to assist incumbent workers in the

State to become more competitive in the labor market, increase

competency, and identify career pathways to economic self-

sufficiency.



-3-

Career Technical Education Pathways Program

SB 1070 requires the CCCCO and the Superintendent of Public Instruction

to assist economic and workforce regional development centers and

consortia, community colleges, middle schools, high schools, and regional

occupational centers and programs to improve linkages and career

technical education pathways between high schools and community

colleges to accomplish specified objectives. This assistance would be

required to be provided in the form of contracts and competitive grants

administered jointly by the CCCCO and the Superintendent for programs

and initiatives that demonstrate a plan for close collaboration among

regional institutions and entities to jointly accomplish specified goals.

Authority for this review is provided by Government Code section 12410,

which states, “The Controller shall superintend the fiscal concerns of the

state. The Controller shall audit all claims against the state, and may audit

the disbursement of any state money, for correctness, legality, and for

sufficient provisions of law for payment.”

The objectives of the review were to determine whether:

• The CCCCO maintained adequate internal controls to ensure that the

WEDD grant funds were expended in accordance with federal and

state laws and regulations;

• The CCCCO has complied with applicable federal and state

competitive bidding and award requirements;

• Data presented in the CCCCO’s legislative report related to WEDD

grant-funded programs are valid and accurate;

• The grantees’ hiring process and payroll transactions for WEDD

grant-funded employees adheres to applicable federal and state laws

and regulations; and

• The WEDD grant-funded program costs claimed by CCCCO and

grantees within the review period are reasonable, allocable, and

allowable in accordance with federal and state laws and regulations.

The original review period was February 1, 2014, through September 30,

2015. On November 10, 2015, we changed the review period to July 1,

2013, through September 30, 2015. The change was deemed necessary to

address the review objectives.

We limited our review scope to active programs administered by the

WEDD and funded through SB 1070, SB 1402, and Perkins 1B funds

during the review period.

Objectives, Scope,

and Methodology

Review Authority



-4-

To meet the review objectives, we performed the following:

Reviewed grant agreements and federal and state laws and regulations

to determine the requirements for bidding and award of grants and

allowable expenditures for WEDD grant-funded programs

Obtained and reviewed the CCCCO written policies and procedures

related to bidding and award of grants, program expenditures

accounting, and grant management

Conducted interviews with the CCCCO and grantee employees

On a sample basis, examined WEDD grant-funded program records

and source documents maintained by the CCCCO and grantees to

substantiate claimed costs, and determined compliance with

applicable federal and state laws and regulations

Obtained and reviewed the CCCCO’s legislative report related to

WEDD grant-funded programs and, on a sample basis, examined data

for validity and accuracy

Obtained and reviewed the grantee’s written policies and procedures

for personnel and payroll transactions related to WEDD grant-funded

employees and, on a sample basis, examined payroll transactions to

substantiate claimed costs and determine compliance with applicable

federal and state laws and regulations

Our review identified significant deficiencies in the CCCCO’s internal

controls over the WEDD grant-funded programs. If not mitigated, these

control deficiencies leave the CCCCO at risk of continued inefficient use

of grant funds and missed opportunities to use those funds for other needs,

and of receiving claims for unallowable expenditures and unreliable

reports of outcome-based data.

We found that the CCCCO lacks the monitoring and oversight of WEDD

grant-funded program grantees to ensure compliance with state and federal

requirements. This control deficiency contributed to inefficient use of

grant funds. Of the 347 WEDD grants in FY 2013-14 and FY 2014-15,

150 have unspent balances totaling more than $30 million as of May 2016.

The control deficiency also contributed to grantees claiming $430,286 in

unallowable and questioned expenditures, making questionable

expenditure tranfers totaling $287,196 to other funds, and reporting

unreliable outcome-based data.

The CCCCO also lacks adequate controls to ensure that grant expenditures

are allowable, adequately supported, and properly recorded. Of the eight

employees reviewed, we found five whose salaries were transferred to or

from Perkins 1B funds without adequate justification or supporting



Perkins 1B funds to another fund. In addition, 26 of 47 in-state airfare

expenditures we reviewed, totaling $9,104, lacked documentation to

support that the expenditures were incurred while working on the grant

objectives. Of the 26 expenditures, five were improperly reported as in-

state airfare expenditures.

Conclusion



-5-

We issued a draft review report on October 4, 2016. Erik E. Skinner,

Interim Chancellor, responded by letter dated October 14, 2016

(Attachment A). The CCCCO agrees that corrective actions are necessary

to improve internal controls, efficiency on the use of funds, documentation

of costs claimed, and reliability of outcome-based data. However, the

CCCCO disagrees on the unallowable and questioned expenditures in

Finding 1, indicating that these expenditures were incurred for the grant

purpose. We believe that the basis of CCCCO’s disagreement with the

finding is incorrect or unsupported. Accordingly, we maintain our original

view on the conclusions, findings, and recommendations we made

regarding this review. Our full comments to the CCCCO’s responses to

each finding are included in the Findings and Recommendations section.

This report is solely for the information and use of the Board of Governors

of the California Community Colleges, the CCCCO and the SCO; it is not

intended to be and should not be used by anyone other than these specified

parties. This restriction is not intended to limit distribution of this report,

which is a matter of public record.

Original signed by

JEFFREY V. BROWNFIELD, CPA

Chief, Division of Audits

November 10, 2016

Views of

Responsible

Officials

Restricted Use



-6-

Findings and Recommendations

The CCCCO lacks the monitoring and oversight of WEDD grant-funded

program grantees to ensure compliance with state and federal

requirements. This control deficiency contributed to inefficient use of

grant funds. Of the 347 WEDD grants in FY 2013-14 and FY 2014-15 that

we reviewed, 150 have unspent balances totaling more than $30 million as

of May 2016. The control deficiency also contributed to grantees claiming

$430,286 in unallowable and questioned expenditures, making

questionable expenditure transfers totaling $287,196 to other funds, and

reporting unreliable outcome-based data. If not mitigated, this control

deficiency leaves the CCCCO at risk of continued inefficient use of grant

funds and missed opportunities to use those funds for other needs; and of

receiving claims for unallowable expenditures and unreliable reports of

outcome-based data.

Inefficient use of WEDD grant funds

The CCCCO awarded 214 and 133 WEDD grants funded by SB 1070,

SB 1402, and Perkins 1B funds, or a combination thereof, FY 2013-14 and

FY 2014-15, respectively. State and federal laws and regulations require

the CCCCO to provide monitoring and oversight of the grantees’ use of

these grant funds. The CCCCO assigns a project monitor for each grant.

The project monitor determines whether the grantees meet the grant

objectives and evaluates whether the funding amount needs adjustment.

The CCCCO requires grantees to submit quarterly reports that contain a

summary of expenditures for a quarter. After the close of grant awards,

grantees also submit a final report that include the cumulative expenditure

history for each grantee’s award.

The project monitors’ evaluation of grants indicated that there were no

instances in which a grantee failed to meet the grant objectives. However,

we noted the CCCCO’s practice to extend the grant period beyond one

year to allow grantees to expend remaining funds even though the project

monitor determined that the grant objectives were already met. In addition

to the grant-period extension, grantees normally received additional grants

in the subsequent year for multi-year grants without modifying the funding

amounts. State laws require the CCCCO to consider past performance of

grantees prior to awarding additional funds.

FINDING 1—

Inadequate

monitoring and

oversight of

grantees to ensure

their compliance

with state and

federal

requirements



-7-

The table below shows the number of grants that were extended beyond

one year:

Quarter In Which Expenditures Were

Last Reported

Number of Grants Per

Fiscal Year

2013-14 2014-15

5 31 17

6 38 63

7 86 2

8 23 1

Total number of grants with reported

expenditures after one year 178 83

_______________________

Source: CCCCO’s online reporting system

Of the 214 FY 2013-14 grants, 178 (83%) reported expenditures for the

period after one year (quarters 5 to 8). Of the 133 FY 2014-15 grants, 83

(62%) reported expenditures for the period after one year. For example,

23 FY 2013-14 grants reported expenditures for the eighth quarter, or two

years after the beginning of the grant period.

Further, even though grants were extended, we also identified many grants

that had unspent funds at May 2016, as summarized in the following table:

For Grants Awarded For The

Fiscal Year

2013-14 2014-15

Number of grants with unspent

funds as of May 2016:

Grants with final report 51 44

Grants without final report 12 43

Total 63 87

Unspent funds as of May 2016:

Grants with final report $1,352,670 $ 4,524,746

Grants without final report 6,144,078 18,946,245

Total $7,496,748 $23,470,991

_______________________

Source: CCCCO’s online reporting system

We found 63 of the FY 2013-14 grants and 87 of the FY 2014-15 grants

with unspent balances of over $7 million and $23 million, respectively.

Unspent grant funds reduce the number of awards issued to beneficiaries

and therefore limit the program’s potential effectiveness. The systemic

extension of grant periods and unspent grant funds indicate both

inefficiencies in the CCCCO’s use of the funds as well as deficiencies in

the CCCCO’s monitoring and oversight of the program. If not mitigated,

this could lead to continued inefficient use of resources and missed

opportunities to use those funds for other needs.



-8-

Unallowable and questioned grantee expenditures

Of the 214 and 133 grants awarded in FY 2013-14 and FY 2014-15,

respectively, we selected 16 for review to determine whether the grantees

claimed expenditures that were allowable and adequately documented,

and performed activities to meet the grant objectives. While we

determined that the CCCCO assigns a project monitor to review quarterly

reports and determine whether the grantee meets the grant objectives, we

found that the CCCCO lacks monitoring and review of expenditures

reported by grantees.

We found that the grantees charged $66,694 in questioned salaries and

other charges to WEDD grants we reviewed. For the 16 grants we

reviewed, we noted 55 individuals whose salaries were charged, in whole

or in part, to at least one of the grants during the review period. Of the 55

individuals, we found eight whose salaries and other charges were charged

to the grants using questionable practices, as shown in the following table:

Issues

Number of

Individuals

Affected

Questioned

Amount

Distribution of salaries to grants

was approved three to five

months after the expenditures

were incurred

3 $16,9721

Timesheet was signed by the

employee and approved by the

supervisor between one to six

months after the pay period

1 38,006

Salaries charged to the grant

without approval

3 11,692

Individual was reimbursed for

conference expenses but no

salaries and benefits were

charged

1 24

Total 8 $66,694

We also found that, in 14 of the 16 grants we reviewed, the grantees

transferred salaries and benefits between grant funds, using adjusting

journal entries, without adequate supporting documentation. Federal

regulations require documentation of time and effort of employees paid

from grant funds. The grantees could not provide time and effort

documentation for those individuals whose salaries were transferred.

Accordingly, we questioned $358,370 in salaries and benefits transferred

to WEDD grants funded by SB 1070, SB 1402, and Perkins 1B funds; and

$287,196 in salaries and benefits transferred from WEDD grants funded

by SB 1070, SB 1402, and Perkins 1B funds to other funds. These

questionable transactions occurred because the CCCCO did not provide

adequate monitoring and oversight to ensure compliance with state and

federal requirements.

1 This amount is net of $23,462 that was transferred from a WEDD grant fund to another fund.



-9-

The following table summarizes the questioned salaries and benefits

charged to WEDD grant funds using journal entries without adequate

supporting documentation:

Grant Funding Source

Number of

Journal

Entries

Cost

Transferred In

Cost

Transferred

Out

1 SB 1402 9 $92,509 $12,326

2 SB 1402, SB 1070 20 81,434 102,437

3 SB 1402, SB 1070 13 38,849 93,301

4 SB 1402 3 36,349 -

5 SB 1402 3 22,589 11,295

6 Perkins 1B 1 22,502 -

7 SB 1402, SB 1070 8 18,856 7,172

8 SB 1402 4 17,542 22,502

9 SB 1402 2 17,518 4,695

10 SB 1402 8 8,692 18,928

11 SB 1402 1 1,385 -

12 Perkins 1B 2 145 5,104

13 SB 1402 2 - 2,792

14 Perkins 1B 2 - 6,644

Total 78 $358,370 $287,196

_______________________

Source: Grantees’ accounting records

For example, the grantee for one grant did not charge salaries during the

grant year until six days before the funding was to expire. The grantee

made a journal entry to transfer $22,502 in salaries and benefits to a

Perkins 1B-funded grant from another grant. The supporting

documentation provided to us did not identify the individual whose

salaries were moved, the pay period affected, or any evidence that the

individual performed any duties to meet the Perkins 1B-funded grant

objective.

Further, we found that the grantee for one grant claimed $5,222 in

unallowable costs for salaries and benefits. The grant includes a share of

$100,000 in SB 1070 funds, which did not approve the use of funds to pay

for salaries and benefits. While the grantee’s quarterly report did not show

charges for salaries and benefits, we found that the grantee claimed

expenditures under other operating expenditures and services. We

determined through examination of accounting records that the

expenditures included $5,222 in salaries and benefits. The grantee’s

classification of these salaries and benefits as “other operating

expenditures and services” avoided the grant’s limitations on

expenditures.

Unreliable and unsupported outcome-based data

The grantees’ quarterly reports also include outcome-based data, which

the CCCCO uses in its annual report to the Governor and the Legislature,

as required by SB 1402 and SB 1070. While we determined that the

CCCCO assigns a project monitor to review quarterly reports and



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determine whether the grantee meets the grant objectives, we found that

the CCCCO lacks monitoring and review of outcome-based data reported

by grantees.

We found that the grantees for 13 grants reported unreliable and

unsupported outcome-based data. Of the 16 grants we reviewed, 13

required the grantees to submit outcome-based data, which the CCCCO

uses in its annual report to the Governor and the Legislature. The CCCCO

lacks written guidance in collecting and reporting of the outcome-based

data, including defining the data categories. The grantees for 13 grants

completed their reports based on their own interpretation of the data

categories. The grantees also could not provide documentation to support

the reported data. The lack of written guidance resulted in the CCCCO

receiving unreliable and unsupported outcome-based data in its annual

reports to the Governor and the Legislature. Also, the CCCCO is at risk of

using unreliable data in carrying out its grant oversight responsibilities and

in making future funding decisions.

Recommendation

We recommend that the CCCCO monitor WEDD grant funds, and

evaluate funding needs to meet grant objectives based on prior-year

performance, and adjust subsequent years’ funding accordingly.

The CCCCO also should provide adequate monitoring and controls over

expenditures that grantees reported to ensure that the expenditures are

allowable and adequately documented.

In addition, the CCCCO should provide adequate monitoring and controls

over outcome-based data that grantees submit electronically to ensure that

the data is reliable and accurate.

CCCCO’s Response

On page 6, the report states that 150 grants in FY 2013-14 /2014-15 had

unspent balances of over $30 million. As the result of an improved “close

out” process, that number has been reduced to approximately $8 million,

and should reduce by another $2.6 million during the allowable

encumbrance period. This equates to approximately 4 percent of total

funding in these 150 grants. Additional steps to pro-actively monitor

expenditures will redirect funds from underperforming grants in the

future.

On page 6, the report states that $430,286 of the reported expenditures

were “unallowable.” These expenditures are in fact “allowable”

according to existing laws and regulations. In our view, a more accurate

representation of the issue is that grantees need to better document

changes in their final workplans/budgets from their original submission.

We agree with the need for improved documentation and will institute

changes to address this issue.

As part of Finding#1, the report questioned the reliability of our

outcome-based data. WEDD launched in 2016 an ambitious new data

tool called the LaunchBoard that automates data feeds from existing

reliable data bases in order to avoid introducing human error. This new

data tool has brought national acclaim to California within the

Workforce Data Quality Campaign movement. We are confident that,



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going forward, outcome-based data will be reliable and standardized.

…on page 6 of your report, you affirm “…there were no instances in

which a grantee failed to meet the grant objectives.”

See Attachment A for the CCCCO’s full response.

SCO Comment

The finding remains unchanged; however, we have clarified a statement

on page 6.

As stated in the finding, the CCCCO lacks the monitoring and oversight

of WEDD grant-funded program grantees to ensure compliance with state

and federal requirements, which contributed to the following:

Inefficient use of WEDD grant funds, as showed by over $30 million

in unspent balances

Unallowable and questioned grantee expenditures totaling $430,286

Unreliable and unsupported outcome-based data

The CCCCO asserted that, subsequent to the period covered by our review,

it has implemented an improved “close out” process and reduced the

amount of unspent balances. We have not reviewed and cannot comment

on the validity of these asserted measures as these were implemented

subsequent to the review period and after the review was conducted.

Our review found $430,286 in unallowable and questioned grantee

expenditures. These expenditures include $5,222 in salaries and benefits

claimed by the grantee as “other operating expenditures and services.” The

grant did not approve the use of funds for salaries and benefits; therefore,

the salaries and benefits claimed by the grantee are unallowable.

The expenditures also include $425,064 in questioned salaries, benefits

and other charges, including $358,370 that was transferred to WEDD grant

funds, which were not supported by necessary documentation of

individuals’ actual time and effort. The grantees did not provide alternative

means for us to validate that the expenditures claimed were for the time

spent while working on the grant objectives.

The CCCCO did not dispute our finding on grantees reporting unreliable

and unsupported outcome-based data. The CCCCO asserted that

subsequent to the review period, it has implemented a new data tool that

will make outcome-based data reliable and standardized. We have not

reviewed and cannot comment on the validity of these assertions as the

tool was implemented subsequent to the review period.

We modified our statement on page 6 to clarify that the project monitors’

evaluation of grants, and not our review of the project monitors’

evaluation, indicated that there were no instances in which a grantee failed

to meet the grant objectives. Our review objectives focused on program

efficiency, compliance, and internal control. Our review did not include

assessments of program effectiveness. Therefore, we cannot conclude or

comment on the effectiveness of the programs.



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The CCCCO lacks adequate controls to ensure that grant expenditures are

allowable, adequately supported, and properly recorded. Of the eight

employees were reviewed, we found five whose salaries were transferred

to or from the Perkins 1B fund without adequate justification or supporting



Perkins 1B funds to another fund. In addition, 26 of 47 in-state airfares

expenditures, totaling $9,104, lacked documentation to support that the

expenditures were incurred while working on the grant objectives. Of the

26 expenditures, five were improperly reported as in-state airfares

expenditures.

Questioned transfers of salaries

Between July 2013 and September 2015, the CCCCO had 81 employees

whose salaries were charged, in whole or in part, to Perkins 1B or SB 1070

funds. A total of $6,700,845 in salaries were charged during the period.

We judgmentally selected eight employees for review to determine

whether salaries charged to the funds were allowable and adequately

supported. Federal regulations require adequate documentation of

expenditures claimed to be allowable. Of the eight employees, we found

five whose salaries were transferred to or from Perkins 1B funds without

adequate justification or documentation, as summarized in the table below:

Employee

Number of

Monthly

Pay Periods

Involved

Salaries

Transferred

To

Perkins 1B

Salaries

Transferred

From

Perkins 1B

1 10 $42,165 $ -

2 1 843 -

3 5 - 13,390

4 12 19,045 -

5 10 20,342 -

Total 38 $82,395 $13,390

The salaries transferred for five employees included 38 monthly pay

periods. In 36 of the 38 monthly pay periods, the timesheets we reviewed

showed that the employees did not work on the Perkins 1B program. For

example, the timesheets for one employee from July 2013 through April

2014 showed that the employee did not work on the Perkins 1B program.

The employee separated from state service on April 30, 2014. In June

2014, the CCCCO charged $42,165, representing 50% of the employee’s

salaries from July 2013 through April 2014, to the Perkins 1B fund. The

CCCCO later provided an email indicating that the charges were based on

the review of the program activities and the work performed by the

employee. However, the CCCCO could not provide additional

documentation to support that assertion.

In the remaining two pay periods, the timesheets were revised to show the

employees’ hours worked on the Perkins 1B program. However, the

revision was neither justified nor made in a timely manner. For example,

the CCCCO charged $843 in salaries for one employee to the Perkins 1B

FINDING 2—

Questioned salaries

and travel charges



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fund to cover for the shortage in another grant fund. The employee’s

timesheet was revised five months after the pay period.

The frequent cost transfers, unjustified cost transfers, and cost transfers

made long after the original cost is incurred raise questions about the

allowability of expenditures charged to Perkins 1B funds and the

reliability of the CCCCO accounting system and internal controls.

Accordingly, we questioned $82,395 in salaries transferred to Perkins 1B

funds and $13,390 in salaries transferred from Perkins 1B funds to another

fund.

Questioned travel expenses

Between February 2014 and September 2015, the CCCCO charged

$206,481 in non-payroll-related expenditures to the Perkins 1B and

SB 1070 funds. We judgmentally selected 49 non-payroll-related

expenditure transactions totaling $21,888. We reviewed the selected

transactions to determine whether costs charged to the funds were

allowable and adequately supported. Federal regulations require adequate

documentation of expenditures claimed to be allowable. The 49

transactions included 47 in-state airfare expenditures and two for meetings

and conferences. Of the 47 in-state airfare expenditures, 26 totaling $9,104

lacked adequate supporting documentation. One transaction could not be

traced to any documentation. We traced 25 of the 26 transactions to

account statements from the financial institution. Without further

documentation, however, the CCCCO could not ensure that travel

expenditures were incurred while working on the grant objectives.

We also found that the CCCCO improperly reported five of the 26

transactions as in-state airfare expenditures. Account statements from the

financial institution indicated that these transactions pertained to out-of-

state airfares. Also, as a result of the lack of supporting documentation,

we could not determine whether the CCCCO properly reported seven other

transactions as in-state airfare expenditures.

Recommendation

The CCCCO should implement internal controls to ensure that:

Accounting staff are reporting salaries based on actual hours by grant

or activity.

Cost transfers are supported by documentation and fully explained and

justified.

Supporting documentation is maintained for expenditures charged to

the grants.

CCCCO’s Response

The Chancellor’s Office will implement improved internal controls to

ensure that grant expenditures are allowable, adequately supported, and

properly recorded. For example, new procedures will be instituted to

ensure the documentation is maintained to explain and justify cost

transfers.



-14-

SCO Comment

The finding remains as stated. The CCCCO did not dispute the finding and

indicated that it will implement corrective actions.



Attachment A—

California Community Colleges Chancellor’s Office’s

Response to Draft Review Report

State Controller’s Office

Division of Audits

Post Office Box 942850

Sacramento, CA 94250-5874

http://www.sco.ca.gov

S16-SAA-9000

Documents

CALIFORNIA COMMUNITY COLLEGES CHANCELLOR’S OFFICE · WEDD grant-funded programs and, on a sample basis, examined data for validity and accuracy Obtained and reviewed the grantee’s