Fresno County Court Revenues

FRESNO COUNTYAudit ReportCOURT REVENUESJuly 1, 2005, through June 30, 2011JOHN CHIANGCalifornia State ControllerOctober 2013

JOHN CHIANGCalifornia State ControllerOctober 23, 2013Honorable Vicky CrowAuditor-ControllerFresno CountyP.O. Box 1247Fresno, CA 93721Tamara BeardCourt Executive OfficerSuperior Court of California, Fresno County1100 Van NessFresno, CA 93724Dear Ms. Crow and Ms. Beard:The State Controller’s Office (SCO) audited Fresno County’s court revenues for the period ofJuly 1, 2005, through June 30, 2011.Our audit found that the county underremitted 203,975 in court revenues to the State Treasurerbecause California State University, Fresno underremitted 203,975 to the State.The county should differentiate the individual accounts making up this amount on the bottomportion of the monthly TC-31, Remittance to State Treasurer, in accordance with standardremittance procedures. The county should state on the remittance advice that the accountadjustments relate to the SCO audit for the period of July 1, 2005, through June 30, 2011.Please mail a copy of the TC-31 and documentation supporting the corresponding adjustment(s)to the attention of the following individuals:Jerry Zhou, CPA, Audit ManagerDivision of AuditsState Controller’s OfficePost Office Box 942850Sacramento, CA 94250-5874Cindy Giese, Collections SupervisorDivision of Accounting and ReportingBureau of Tax AdministrationPost Office Box 942850Sacramento, CA 94250-5872Once the county has paid the underremitted Trial Court Trust Fund, Court Facilities TrustFund, and State Court Facilities Construction Fund amounts, we will calculate a penalty onthe underremitted amounts in accordance with Government Code sections 68085, 70353,and 70377.

Honorable Vicky CrowTamara Beard-2-October 23, 2013If you have any questions, please contact Steven Mar, Chief, Local Government Audits Bureau,by phone at (916) 324-7226.Sincerely,Original signed byJEFFREY V. BROWNFIELD, CPAChief, Division of AuditsJVB/skcc: John Judnick, Senior ManagerInternal Audit ServicesJudicial Council of CaliforniaJulie Nauman, Executive OfficerVictim Compensation and Government Claims BoardGreg JolivetteLegislative Analyst’s OfficeSandeep Singh, Fiscal AnalystDivision of Accounting and ReportingState Controller’s OfficeCindy Giese, Supervisor, Tax Programs UnitDivision of Accounting and ReportingState Controller’s OfficeRichard J. Chivaro, Chief CounselState Controller’s Office

Fresno CountyCourt RevenuesContentsAudit ReportSummary .1Background .1Objective, Scope, and Methodology .1Conclusion .2Follow-Up on Prior Audit Findings .2Views of Responsible Officials .2Restricted Use .3Schedule 1—Summary of Audit Findings by Fiscal Year .4Schedule 2—Summary of Underremittances by Month, Trial Court Trust Fund .5Schedule 3—Summary of Underremittances by Month,State Court Facilities Construction Fund .6Findings and Recommendations .7

Fresno CountyCourt RevenuesAudit ReportSummaryThe State Controller’s Office (SCO) performed an audit to determine thepropriety of court revenues remitted to the State of California by FresnoCounty for the period of July 1, 2005, through June 30, 2011.Our audit found that the county underremitted 203,975 in courtrevenues to the State Treasurer because California State University,Fresno underremitted 203,975 to the State.BackgroundState statutes govern the distribution of court revenues, which includefines, penalties, assessments, fees, restitutions, bail forfeitures, andparking surcharges. Whenever the State is entitled to a portion of suchmoney, the court is required by Government Code (GC) section 68101 todeposit the State’s portion of court revenues with the county treasurer assoon as practical and provide the county auditor with a monthly record ofcollections. This section further requires that the county auditor transmitthe funds and a record of the money collected to the State Treasurer atleast once a month.GC section 68103 requires that the SCO determine whether or not allcourt collections remitted to the State Treasurer are complete. GC section68104 authorizes the State Controller to examine records maintained byany court. Furthermore, GC section 12410 provides the SCO withgeneral audit authority to ensure that state funds are properlysafeguarded.Objective, Scope,and MethodologyOur audit objective was to determine whether the county completely andaccurately remitted court revenues in a timely manner to the StateTreasurer for the period of July 1, 2005, through June 30, 2011. We didnot review the timeliness of any remittances the county may be requiredto make under GC sections 70353, 77201.1(b)(1), and 77201(b)(2).To meet our objective, we reviewed the revenue-processing systemswithin the county’s Superior Court, Revenue Collection Unit, andAuditor-Controller’s Office.We performed the following procedures: Reviewed the accuracy of distribution reports prepared by the countythat show court revenue distributions to the State, the county, and thecities located within the county Gained an understanding of the county’s revenue collection andreporting processes by interviewing key personnel and reviewingdocuments supporting the transaction flow-1-

Fresno CountyCourt Revenues Analyzed various revenue accounts reported in the county’s monthlycash statements for unusual variations and omissions Evaluated the accuracy of revenue distribution, using as criteriavarious California codes and the SCO’s Manual of Accounting andAudit Guidelines for Trial Courts Tested for any incorrect distributions Expanded any tests that revealed errors to determine the extent of anyincorrect distributionsWe conducted this performance audit in accordance with generallyaccepted government auditing standards. Those standards require that weplan and perform the audit to obtain sufficient appropriate evidence toprovide a reasonable basis for our findings and conclusions based on ouraudit objectives. We believe that the evidence obtained provides areasonable basis for our findings and conclusions based on our auditobjectives.We did not audit the county’s financial statements. We considered thecounty’s internal controls only to the extent necessary to plan the audit.This report relates solely to our examination of court revenues remittedand payable to the State of California. Therefore, we do not express anopinion as to whether the county’s court revenues, taken as a whole, arefree from material misstatement.ConclusionFresno County underremitted 203,975 in court revenues to the StateTreasurer. The underremittance is summarized in Schedule 1 anddescribed in the Findings and Recommendations section of this report.Follow-Up on PriorAudit FindingsThe county has satisfactorily resolved the findings noted in our prioraudit report, issued on January 31, 2007, with the exception of Finding 2,inadequate accounting and case management by the County Revenue andRecovery Department.Views ofResponsibleOfficialsWe issued a draft audit report on August 12, 2013. Vicki Crow, CountyAuditor-Controller, on behalf of both Fresno County and Superior Court,responded by letter dated August 20, 2013 (Attachment A) and agreedwith the audit results.-2-

Fresno CountyRestricted UseCourt RevenuesThis report is solely for the information and use of Fresno County, theFresno County Courts, the Judicial Council of California, and the SCO; itis not intended to be and should not be used by anyone other than thesespecified parties. This restriction is not intended to limit distribution ofthis report, which is a matter of public record.Original signed byJEFFREY V. BROWNFIELD, CPAChief, Division of AuditsOctober 23, 2013-3-

Fresno CountyCourt RevenuesSchedule 1—Summary of Audit Findings by Fiscal YearJuly 1, 2005, through June 30, 2011Description of FindingAccount Title1–Code SectionNon-payment of parking violations:ICNA–GC 70372(b)State Court Facility Construction Fund–GC 70372(b)Trial Court Trust Fund–GC 76000.3Net amount underpaid (overpaid) to the State TreasurerFiscal Year2009-102008-092010-11Total 19,6689,834— 46,27223,136— 54,56727,28423,214 120,50760,25423,214 29,502 69,408 105,065 203,975Reference 2Finding 1Finding 1Finding 1GC Government Code1The identification of State revenue account titles should be used to ensure proper recording when preparing the Remittance Advice Form TC-31 to the StateTreasurer.2See the Findings and Recommendations section.-4-

Fresno CountyCourt RevenuesSchedule 2—Summary of Underremittances by MonthTrial Court Trust FundJuly 1, 2005, through June 30, rJanuaryFebruaryMarchAprilMayJuneFiscal Year2010-11 1,9351,929Total underremittances to the State Treasurer 23,214NOTE: Delinquent Trial Court Trust Fund remittances not remitted to the SCO within 45 days of theend of the month in which the fees were collected are subject to penalty, pursuant to Government Codesection 68085(h). The SCO will calculate and bill the county for the penalty after the county pays theunderlying amount owed.-5-

Fresno CountyCourt RevenuesSchedule 3—Summary of Underremittances by MonthState Court Facilities Construction FundJuly 1, 2005, through June 30, 2011Month2008-09Fiscal erDecemberJanuaryFebruaryMarchAprilMayJune 2,4582,464 5,7845,784 6,8216,820Total underremittances to the State Treasurer 29,502 69,408 81,851NOTE: Delinquent State Court Facilities Construction Fund remittances not remitted to the SCO within 45 days ofthe end of the month in which the fees were collected are subject to penalty, pursuant to Government Code section70377. The SCO will calculate and bill the county for the penalty amount after the county pays the underlyingamount owed.-6-

Fresno CountyCourt RevenuesFindings and RecommendationsFINDING 1—Underremitted stateparking penaltiesCalifornia State University, Fresno (CSU Fresno) did not remit county orstate parking penalties from July 2005 through June 2011. The errorsoccurred because CSU Fresno’s accounting system has not beenprogrammed to comply with the statutory requirements affecting thedistribution of parking violations.Vehicle Code (VC) section 40200.4 requires the parking processingagencies to deposit with the county treasurer all sums due to the countyfrom parking violations.Government Code (GC) section 76000(c) requires the county to deposit a 2.50 parking surcharge in both the County Courthouse ConstructionFund and Criminal Justice Facilities Fund, from each parking finecollected. Further, this section requires 1 of each 2.50 parkingsurcharge be distributed to the State General Fund.GC section 70372 requires the county to distribute to the State CourtFacility Construction Fund an additional penalty of 4.50 for everyparking fine or forfeiture starting on January 1, 2009.GC section76000.3 requires the county to distribute to the State TrialCourt Trust Fund an additional penalty of 3.00 for every parking fine orforfeiture starting on December 7, 2010.The inappropriate distributions for parking surcharges and fines affectthe revenues reported to the State Trial Court Improvement Fund underthe Maintenance of Effort formula pursuant to GC section 77205. Inaddition, the inappropriate distribution had the following effect:Account TitleState Court Facility Construction Fund (ICNA) – GC 70372(b)State Court Facility Construction Fund – GC 70372(b)State Trial Court Trust Fund – GC 76000.3Understated/(Overstated) 120,50760,25423,214RecommendationCSU Fresno should remit 203,975 to Fresno County for submittal to theState Treasurer. The county should report on the remittance advice (TC31) increases of 120,507 to the State Court Facilities Construction Fund(ICNA) – GC section 70372(b), 60,254 to the State Court FacilitiesConstruction Fund – GC section 70372(b), and 23,214 to the State TrialCourt Trust Fund – GC section 76000.3.Auditor-Controller’s ResponseThe Auditor-Controller concurred with the finding, and suggested thatthe SCO send invoice of any payment and penalties directly to CSUFresno.-7-