Chapter 2 – Fiscal Management

The Office of Audits and Court Compliance (OACCOffice of Audits and Court Compliance) conducts selected reviews of expenditures and reimbursements, as well as compliance with contracts and/or Department guidelines.

This Article outlines the process used by the OACCOffice of Audits and Court Compliance in reviewing, evaluating, and documenting fiscal operations of selected public and private providers under contract with the Department.

The OACCOffice of Audits and Court Compliance shall review and evaluate selected fiscal operations of other government agencies and the profit and non-profit organizations that have contracted or provided services to the Department. The purpose of this review is to verify compliance with the terms of the contract, State and departmental rules, laws, and regulations related to specific areas being reviewed.

The OACCOffice of Audits and Court Compliance objectives include:

• Verify the contractor’s or local government’s fiscal compliance with the terms and conditions selected for review in the contract.

• Verify that all questioned costs are carried through to a final resolution.

The OACCOffice of Audits and Court Compliance has the authority to review any contracts between the CDCRCalifornia Department of Corrections and Rehabilitation and public, private, profit or non-profit corporations, and/or individuals.

In addition, the OACCOffice of Audits and Court Compliance also reviews reimbursements to counties for costs incurred for parolee detention under State mandated laws.

Requests for audits or reviews to be performed by the OACCOffice of Audits and Court Compliance should be submitted in writing to the Deputy Director, OACCOffice of Audits and Court Compliance. A request should indicate the need for an audit or review, the desired scope of the audit or review, what areas and time periods to be audited or reviewed, and the date when the audit or review results are needed. A request should be submitted early enough to allow adequate time for the performance of the audit or review prior to the desired date. After consultation with the appropriate Director(s) and the Deputy Director, the OACCOffice of Audits and Court Compliance shall establish audit priorities.

Audits and disputed monetary findings shall be resolved as follows:

• The OACCOffice of Audits and Court Compliance will issue a draft report or management letter to the contractor or city/county setting forth its preliminary findings and recommendations.

• The contractor or city/county shall have thirty (30) calendar days from receipt of the draft report or management letter to provide a written response to the preliminary findings and recommendations. The contractor or city/county may also provide additional documentation for consideration in the preparation of the final report or management letter.

• The OACCOffice of Audits and Court Compliance will thereafter issue a final report or management letter to the contractor or city/county.

• The contractor or city/county shall have thirty (30) calendar days from receipt of the final report or management letter to make a written appeal of the findings. The written appeal must clearly identify the specific finding(s), or portion of the specific finding, disputed by the contractor or city/county. The written appeal must also (1) set forth all facts in support of the contractor’s or city/county’s position on each disputed finding, and (2) include all evidence and documentation in support of the contractor’s or city/county’s position on each disputed finding.

• The written appeal must further include a written certification signed by the contractor or city/county under the penalty of perjury pursuant to California Code of Civil Procedure Section 2015.5 that the appeal is made in good faith, and that the supporting evidence and documentation is accurate and complete.

• Upon receipt of a timely and complete written appeal a hearing date will be established by the OACCOffice of Audits and Court Compliance. The appeal shall be reviewed by the Administrative Review Committee (ARCAIDs Related Condition) consisting of:

  • Director, Division of Administrative Services, or a Designee (ARCAIDs Related Condition Chairperson).

  • Deputy Director, Office of Fiscal Services.

  • Director or a Designee as assigned by the Director responsible for the program area covered by the contract.

In addition to the above ARCAIDs Related Condition members, a representative from the Office of Legal Affairs will be present in an advisory non-voting role. The OACCOffice of Audits and Court Compliance shall serve as the liaison between the ARCAIDs Related Condition and involved parties.

• The ARCAIDs Related Condition shall notify the contractor or city/county of its findings within thirty (30) calendar days of the hearing. The ARCAIDs Related Condition’s findings shall be the Department’s final position on the audit or review. Any further questions from the contractor or city/county related to the final audit report or management letter shall be directed to the OACCOffice of Audits and Court Compliance.

• Any final report or management letter findings resulting in disallowances not appealed by the contractor or city/county must be repaid to the State within thirty (30) calendar days of receipt of the final report or management letter. Any ARCAIDs Related Condition findings resulting in disallowances must be repaid to the State within thirty (30) calendar days after the ARCAIDs Related Condition’s findings are issued.

• When payment is not received within the required timeframe, the amount involved shall be deleted from future monthly claims until the audit or review disallowance is fully paid. Nonpayment of an audit or review disallowance may result in immediate cancellation of the contract and notification to the DGSDepartment of General Services that the contractor has refused to honor the findings of the audit or review, whereupon appropriate action shall be taken to collect the amount due the State.

Contract provisions to settle unresolved disputes are provided in general conditions of the Contract Handbook for construction contracts. Those parties entering into construction contracts shall settle unresolved disputes using independent arbitration prior to litigation. This arbitration shall be conducted in accordance with the PCCPublic Contract Code Sections 10240 through 10240.13.

The Deputy Director, OACCOffice of Audits and Court Compliance, or Designee shall be responsible for ensuring that the contents of this Article are kept current and accurate.

GCGovernment Code § 13300.

PCPenal Code §§ 4016.5 and 5057.

PCCPublic Contract Code §§ 10240 – 10240.13.

SAMState Administrative Manual Chapter 20000.

ACAAmerican Correctional Association Standards 4-4031 through 4-4036.

CCPCode of Civil Procedure § 2015.5