To: Board of Supervisors of Sonoma County
Department or Agency Name(s): Auditor-Controller-Treasurer-Tax Collector
Staff Name and Phone Number: Kanchan Charan, 565-8300
Vote Requirement: Informational Only
Supervisorial District(s): Countywide
Title:
Title
Sonoma County Fraud, Waste and Abuse Hotline Program Report
End
Recommended Action:
Recommended action
Review and accept the initial Sonoma County Fraud, Waste and Abuse Hotline Program Report for June 10, 2021 to September 30, 2022
end
Executive Summary:
The Auditor-Controller-Treasurer-Tax Collector (ACTTC) implemented a Fraud, Waste and Abuse Program on June 10, 2021, which includes a Fraud Hotline. The Fraud Hotline provides the means for employees and residents to anonymously report allegations of financial fraud, waste and abuse via phone, internet or email. <https://sonomacounty.ca.gov/administrative-support-and-fiscal-services/auditor-controller-treasurer-tax-collector/divisions/audit/fraud-hotline>
Summary of Fraud Hotline Activity for the period of June 10, 2021 to September 30, 2022:
• 46 - Cases Reported
• 37 - Cases closed
o 2 - Substantiated
o 3 - Not Substantiated
o 6 - Not investigated
o 26 - Outside scope of the Program
• 9 - Cases Open
Discussion:
The Auditor-Controller-Treasurer-Tax Collector’s Internal Audit Division (IAD), in agreement with a 3rd party provider, operates the Sonoma County Fraud, Waste and Abuse Hotline Program (Program) as authorized by California Government Code Section 53087.6. Pursuant to the Board of Supervisors approved Fraud, Waste and Abuse Hotline Program Guidelines, IAD investigates allegations of financial fraud, waste and abuse of resources. IAD refers allegations that are outside the scope of the Program to other departments, agencies or hotline programs as applicable.
The attached Fraud Hotline report summarizes investigations concerning allegations of fraud, waste, and abuse of resources that were completed between June 10, 2021 and September 30, 2022 and includes statistical summaries, substantiated case summaries, and corrective actions taken or planned. Summaries of substantiated cases can also be found on the Auditor-Controller-Treasurer-Tax Collector’s website at <https://sonomacounty.ca.gov/administrative-support-and-fiscal-services/auditor-controller-treasurer-tax-collector/divisions/audit/fraud-hotline>.
The Fraud Hotline received 46 cases during the reporting period - 37 cases were closed and 9 cases remain open. Of the 37 cases closed, 11 cases were within the scope of the Program and 26 cases were outside the scope of the Program and were referred out as appropriate.
Summary of Closed Cases by Department - Within Scope of the Program:
|
Department |
Substantiated |
Not Substantiated |
Not Investigated* |
Totals |
|
Auditor-Controller-Treasurer-Tax Collector |
1 |
0 |
0 |
1 |
|
Board of Supervisors |
0 |
0 |
1 |
1 |
|
Child Support Services |
0 |
0 |
1 |
1 |
|
Clerk-Recorder-Assessor-Registrar of Voters |
0 |
1 |
0 |
1 |
|
Community Development Commission |
0 |
0 |
1 |
1 |
|
Health Services |
1 |
0 |
1 |
2 |
|
Permit Sonoma |
0 |
2 |
2 |
4 |
|
Grand Total |
2 |
3 |
6 |
11 |
* Cases not investigated due to immateriality, the allegation was previously investigated, or insufficient information was provided.
Summary of Substantiated Cases:
Case Number: 53200
The Department of Health Services (DHS) incurred additional Wi-Fi device charges (waste) of $63,400 over a period of approximately three years.
Summary: In 2019, DHS provided a Wi-Fi device for an employee through the Information Systems Department (ISD) communications program. A 2GB data plan was selected rather than an unlimited plan for an additional charge of $10 per month. Because monthly data usage routinely exceeded 2GB, DHS incurred additional charges of $63,400 compared to the cost of an unlimited plan for the same period. Additional charges included service charges of $55,160 paid to Verizon and program administration charges of $8,240 paid to ISD.
Corrective action: In 2021, DHS switched to an unlimited plan and ISD performed a countywide review to ensure such a condition does not exist elsewhere in the County.
Case Number 52038
This case included several complaints regarding the Dimensions payroll timekeeping system implementation.
Background: The Auditor-Controller-Treasurer-Tax Collector contracted with ISD and Kronos Incorporated (Kronos) to transition the Kronos on-premises payroll timekeeping application, which was soon to be out of support, to a cloud-based application called Dimensions. In September 2019, the Board approved the original Dimensions project budget of $301,000 ($151,000 for Kronos and $150,000 for ISD). In April 2021, the Board approved additional project funding of $218,490 ($143,490 for Kronos, net of a $49,000 service concession, and $75,000 for ISD). The project was completed in May 2022.
Substantiated complaint #1 - The County paid Kronos approximately $71,000 in development costs for the Activities module that was not completed (waste). During the same period, approximately $88,000 was paid to ISD for the Dimensions project; however, the cost attributable to the Activities module is not known because ISD tracked costs at the project level.
Summary: Kronos rolled out a Dimensions system-wide update during the County’s Dimensions project implementation that created a cost accounting code limitation issue. In response, Kronos recommended the implementation of an additional module called Activities to resolve the code limitation issue. Kronos recognized joint responsibility for this issue and provided a service concession of $49,000 on the Activities module implementation. During the implementation, it was determined that the Activities module would not resolve the code limitation issue and it was not completed.
Substantiated complaint #2 - A system requirement investigation was not conducted or documented at the beginning of the project or when the code limitation issue was determined, which contributed to the cost of the Activities module (waste) and some project delays.
Summary: Based on initial discussions with the Kronos, the project team viewed the Dimensions project as a simple upgrade rather than a full implementation and thought the cloud-based time keeping application would have the same functionality as the on-premises application. As a result, a system requirement investigation was not conducted and cost accounting code requirements were not included in the vendor contract. If these steps were performed, the cost accounting code requirement would have been documented and the County most likely would not have incurred costs for the Activities module that was ultimately not completed.
Additionally, the County did not have a dedicated project manager and project support staff, which contributed to project delays but would have significantly increased the total project cost. Further, four disasters, including COVID, and project team turnover contributed to project delays.
Corrective action: The ACTTC will ensure a system requirement investigation is conducted as part of the project management process for similar projects in the future and key system requirements will be identified in the vendor contract. Additionally, project staffing levels and subject matter expertise will be evaluated as part of project planning and risk assessment process.
Not substantiated/not investigated - Several other complaints included in this case were either not substantiated or not investigated due to insufficient information.
Strategic Plan:
N/A
Prior Board Actions:
The Board of Supervisors approved the Sonoma County Fraud, Waste and Abuse Hotline Program Guidelines, administered by the Auditor-Controller-Treasurer-Tax Collector, on June 8th, 2021.
Fiscal Summary
|
Expenditures |
FY 22-23 Adopted |
FY23-24 Projected |
FY 24-25 Projected |
|
Budgeted Expenses |
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Additional Appropriation Requested |
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Total Expenditures |
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Funding Sources |
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General Fund/WA GF |
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|
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State/Federal |
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Fees/Other |
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|
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|
Use of Fund Balance |
|
|
|
|
Contingencies |
|
|
|
|
Total Sources |
|
|
|
Narrative Explanation of Fiscal Impacts:
N/A
|
Staffing Impacts: |
|
|
|
|
Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
|
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|
|
|
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|
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|
|
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Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
Fraud Hotline Report June 10, 2021 to September 30, 2022
Related Items “On File” with the Clerk of the Board:
N/A