Rumor Has It: AOC Voluntarily Submits to Audits?

Rumor has it that the California Administrative Office of the Courts may be in the midst of signing a contract with the Department of Finance to have the latter conduct periodic audits of the former.   So that would come out to about an audit every three years according to some of my sources.  If you’ve got more info on this, do drop me a line.

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25 responses to “Rumor Has It: AOC Voluntarily Submits to Audits?

  1. Would that include what has happened to the $76,500.00 that the Shapiro Family Charitable Trust has given the AOC since 2002?

  2. Would that include how much was spent on lobbying against audits?

  3. well finally? maybe common sense is prevailing? Cynical flea thinks that there is something else behind this deal that is not going to be in the best interests of transparency. But we shall see.

  4. WiseEmployee

    If the AOC pursued this contract for audits then they negotiated the terms of the agreement. So what will likely be audited is what the AOC has agreed to and not much else. This is an AOC controlled deal. It is highly probable that this contract with the Department of Finance is a preemptive move intended to thwart future efforts for more thorough and annual financial audits of the AOC.

  5. SF Court Observer

    Wise employee is wise—-a negotiated, preemptive and the equivalent of eye-wash.

    I believe it follows that if CJ George makes 14 of the 21 appointments to the JC—stacking the table with known support—one can be certain any audit process that is agreed upon will be completely handled and managed.

  6. Obi-Wan Kenobi

    If it it true, it is in response to AB2521 (Torrico) that strips the AOC’s ability to audit the trial courts and simultaneously has the AOC subject to its own annual audit via the State Controllers Office or the Bureau of State Audits.

    BILL NUMBER: AB 2521 INTRODUCED
    BILL TEXT

    INTRODUCED BY Assembly Member Torrico

    FEBRUARY 19, 2010

    An act to amend Section 77206 of the Government Code, relating to courts.

    LEGISLATIVE COUNSEL’S DIGEST

    AB 2521, as introduced, Torrico.

    Courts: budget and fiscal management.
    Existing law authorizes the Judicial Council to regulate the budget and fiscal management of the trial courts, and requires the
    Judicial Council to adopt regulations for recordkeeping and accounting by the courts ensuring that all revenues and expenditures
    relating to court operations are known. At the request of the Legislature, the Controller may perform and publish financial and fiscal compliance audits of the reports of court revenues and expenditures. The Controller is required to report the results of these audits to the Legislature and the Judicial Council, and the
    Judicial Council or its representative may perform audits and reviews of all court financial records wherever they may be located.

    This bill would eliminate the authority of the Judicial Council pursuant to those provisions to perform audits and reviews of court financial records.

    Vote: majority.
    Appropriation: no.
    Fiscal committee: yes.
    State-mandated local program: no.

    THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

    SECTION 1. Section 77206 of the Government Code is amended to read:
    77206. (a) Notwithstanding any other provision of law, the Judicial Council may regulate the budget and fiscal management of the trial courts. The Judicial Council, in
    consultation with the Controller, shall maintain appropriate regulations for recordkeeping and accounting by the courts. The Judicial Council shall seek to ensure, by these provisions,
    that (1) the both of the following:
    (1) The fiscal affairs of the trial courts are managed efficiently, effectively, and responsibly and (2)

    (2) All moneys collected by the courts, including filing fees, fines, forfeitures, and penalties, and all revenues and expenditures relating to court operations are known. The
    The Judicial Council may delegate their authority under this section, when appropriate, to the Administrative Director of the Courts.

    (b) Regulations, rules, and reporting rquirements adopted pursuant to this chapter shall be exempt from review and approval or
    other processing by the Office of Administrative Law as provided for in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2.

    (c) The Controller, at the request of the Legislature, may perform and publish financial and fiscal compliance audits of the reports of
    court revenues and expenditures. The Controller shall report the results of these audits to the Legislature and the Judicial Council.
    \The Judicial Council or its representative may perform audits and reviews of all court financial records wherever they may be located.
    (d) The Judicial Council shall provide for the transmission of summary information concerning court revenues and expenditures to the Controller.(e) The Judicial Council shall adopt rules to provide for reasonable public access to budget allocation and expenditure
    information at the state and local level. (f) The Judicial Council shall adopt rules ensuring that, upon written request, the trial courts provide, in a timely manner, information relating to the administration of the courts, including
    financial information and other information that affects the wages, hours, and working conditions of trial court employees.

    Score another one for the rebel alliance.

    Thank you Mr. Torrico. We needed that. 🙂

  7. ConcernedReConsolidation

    Yes, Obi. The Recorder is indicating this morning that the AOC was well aware of the impending bill and that it was “watching for the language in the bill to come into focus.”

  8. The Recorder

    By Kate Moser

    March 2, 2010

    SAN FRANCISCO — A bill recently introduced in the state Legislature would radically change oversight for trial courts. It also calls for regular audits of the Administrative Office of the Courts.

    Assemblyman Alberto Torrico, D-Newark, introduced AB 2521, which would eliminate the Judicial Council’s authority to audit trial courts. The bill would also institute regular audits of the AOC by the state Controller’s office or the Bureau of State Audits.

    “We think this is a good government and accountability bill,” said Michelle Castro, a lobbyist for the Service Employees International Union, which is sponsoring the legislation.

    While the bill would make it so that the AOC is audited like other state agencies are, Castro added, trial courts would bring in outside auditors. She said both changes would restore “accountability and transparency” that she contends the courts lost after the Trial Court Funding Act.

    The Judicial Council is watching for the language in the bill to come into focus.

    “It’s too early for us to know what the goal is,” said Donna Hershkowitz, assistant director of the AOC’s Office of Governmental Affairs. “The Judicial Council, through the AOC, currently audits trial courts. This is an expertise that we have. At this point we would need to hear more about why they would think it would make sense to move the audit function.”

    The AOC’s audit services team, currently staffed with 14 people, audits each of the trial courts about every four years, though it would like to conduct the audits more frequently if it had the staff, said AOC spokesman Philip Carrizosa.

    One trial court audit that has made waves was Placer County’s. The report last year said that court’s former CEO had collected more than $470,000 in unauthorized compensation between July 2001 and March 2009.

    At a regular business meeting Friday, the Judicial Council discussed a recommendation to put final audit reports online.

    “The public has a right to know how we’re doing, and hopefully it really is about continuous improvement,” said council advisory member and Marin County Superior Court CEO Kim Turner. “It’s not about nailing some court for some particular practice.”

    The council voted to table the discussion until it could get more input from court executives and presiding judges, after Judge Dennis Murray of Tehama County Superior Court raised questions about what kind of information would be made public.

    “When you put it on a Web site, it’s a self-improvement tool that the whole world gets to see,” Murray said Monday. “At least the presiding judges should know so they can give input as to what may or may not be appropriate for that kind of distribution.”

    At Friday’s meeting, the council also discussed a separate plan in the works for the state Department of Finance to periodically audit the AOC. The audits would be done by a unit within that department that audits executive branch agencies, Hershkowitz said.

    Subscription Required

  9. For the AOC to claim expertise in trial court audits is a joke. Most of the folks in the audit group never worked for a court and the AOC outsources the “operational audits” to an accounting firm in Sacramento who knows nothing about courts as well.

  10. PattyJaneSmith

    Courtflea – what is the difference between an operational audit and a fiscal audit? Any insight would be very appreciated.

    • Chuck Horan

      Operational audit is when they look at what you do.
      Fiscal is when they look at the $.

      I sent the head of AOC Internal Audits an email today, asking two simple questions:
      1. Has the AOC ever been audited by any outside agency.
      2. Has the AOC ever been auded by its own Internal Audit dept.
      If yes to either, then when?

      While I wait for a response, does anybody know the answer?

  11. Shrill & Uninformed

    If I may.

    Operational audits are ones that focus primarily on management methods. Generally at the end of an Operational Audit a management letter is provided which lays out, in the auditors opinion, shortcomings and weaknesses in the ongoing operation of the entity. Management is provided several opportunities to respond.

    Financial (more on the fiscal term later) audits are more of the traditional audit where transactions are tested and internal controls are reviewed. The final portion of this type of audit is the issuance of the accountant’s opinion letter.

    Anyone who owns a share of publicly traded stock is provided with the accountant’s opinion letter with his audited financial statements in the form of the Annual Report.

    I am most troubled by the person charged by the Judicial Council with overseeing the conduct of these audits.

    Listen to the presentation at the Council meeting, it’s available on-line.

    In it John Judnick stumbles around, trying to alternately impress then obfuscate then finally engage in some good old ass kissing with this whole process, his lack of qualifications and background becoming apparent to all.

    In his presentation John told the Council that part of his responsibility was an attestation function. The attestation function is the hallmark of an audit performed by a qualified, independent accountant.

    Two problems here: one, an internal auditor cannot possibly be independent. Independence is so important in the audit process that it is the second Generally Accepted Auditing Standard only following training (read qualifications both academic and hands on training), another of John’s problems.

    Secondly, even if John possessed every other attribute of an auditor he is not a CPA. Only a CPA can provide the attestation function.

    In his presentation John misused terms, made up definitions and generally flailed about. There is no such thing as a fiscal audit. It just doesn’t describe the process.

    Bill and Stephen Nash tried to save John, but I think the damage has been done.

    John Judnick is one more hiring error made by the Gang Who Never Admits to Mistakes.

  12. WiseEmployee

    Judge Horan – would you kindly share the response you get from the AOC? Thank you!

    • Yes, I’ll do my best to remember. Often it takes weeks, or even months, to get a complete answer to what seems like a very simple question.

      A judge in the Alliance has been trying for almost 6 months to get complete answers about CCMS spending. Quite difficult, but perhaps the State Auditor will have better luck on that one.

      (BTW, a big issue on the CCMS issue is did the AOC have consent from the affected trial courts before spending money from the trial court trust fund on the project. Since 2006, the law is that the AOC can spend from the trust fund on statewide IT projects, but only with the consent of the trial courts. Did they get it? From some? From all? From none? Another interesting question.

      • judicial observer

        Judge Horan,

        I have heard that the AOC considers the lack of objection by a trial court to be consent. Is this true? If so, when or how is the trial court to object?

        If trial court leadership attends the PJ and Executive Officer conferences and do not object to the use of these funds during discussion of CCMS, can this be a form of consent?

        From what little I have heard, I suspect that is or will be the position of the AOC and the Judicial Council. The leadership in San Francisco seems to view playing by the rules a nuisance to be avoided.

  13. PJS, Judge Horan’s explanation is excellent. Operational audits include seeing if the court is complying with codes, CRC, etc. But those that do the audit are not familiar with the codes, Rules, etc. Then they (the AOC in setting up the audit questions which amount to about over 200 pages) blurr the lines of what they are looking for in an “operational” audit. John Judnick, the internal auditor at one meeting of CEOs/PJs acutally bragged that in an “operational audit” they found that a judge had been viewing sexual types of websites on his court computer! While I dont condone that, what the heck does that have to do with courts complying with statues? There are no guidelines for what the audit should entail, like a fiscal audit that checks to see if you are not only complying with statues related to fines and fees but also complying with standard accounting practices. In other words, it is the AOC’s attempt to find out what is happening at courts and making up the rules as they go along, with no set policies and procedures to base their audit findings on (except the few related to statue and then since the auditors don’t understand that, they still make incorrect audit findings, not to mention the AOC financial polices were created by those that had no clue at the AOC), so the CEOs and Judges don’t know how to comply and get stung in the process. I know there are folks that post on this site that could explain it much better than I, so I hope they do. This is my amaturish attempt to do so.

    • And the audit will just show how much money was spent and how, not whether the expenditure of these taxpayer dollars was a complete waste of taxpayer dollars.

  14. Obi-Wan Kenobi

    There is another aspect about this audit that is a bit disturbing. The legislature has done the equivalent of issuing a search warrant for two months into the future.

    Imagine what you could do if you were pre-notified that 2.5 months for now, the cops were going to serve a search warrant on you looking for x.

    With a 2.5 month warning, a whole lot of vanishing can happen or better yet, revisionist history can be re-written.

    The AOC is laughing all the way to the bank. Hopefully when the legislature orders their next audit, their auditors are on site before the legislators go home. Giving the AOC 2.5 months heads up allows them to completely clean up their act to the best of their abilities.

    • JusticeCalifornia

      Interesting story just posted about Jack Urquhart. It looks like the AOC is just getting warmed up. Let’s see, as the audit progresses, if the AOC will suddenly, “due to the budget crisis”, “lay off”, or “retire with benefits and incentives”, key employees who a) broke the law; or b) “know” too much; or c) are not “team players”– and then put in place loyal personnel who do not know where proverbial bodies are buried, or who could very easily (purposefully or unintentionally) hide the keys to the closets containing the skeletons.

      Marin County has been been there, done that.
      Ron George appointed Marin CEO Kim Turner to the Judicial Council in June 2009, after the legislative audit of the Marin family court was announced. One focus of the audit is Marin Family Court Services, whose employees are under Turner’s supervision, and some of whom (including the longtime MFCS supervisor) testified under cross-examination in the last few years that as a practice MFCS did not know or follow state and local custody laws, procedures, and rules of court. Turner was apprised of the problems and did nothing.

      Once the family court audit commenced the longtime problematic MFCS supervisor “retired”, and Turner replaced him with existing loyal but unqualified personnel due to “budget issues”. Rumor also has it she instructed Marin court employees not to talk to auditors, but instead to refer the JLAC family court auditors to “Admin”, meaning Kim Turner. Turner also suddenly cut back the hours for those wishing to look at court files, due to “budget constraints”, and extended the turnaround time for getting copies.

      And, stories of “cleansed” files –for example, removing incriminating judicial records and challenges from files; keeping key files “in the courtroom” and therefore unavailable; “losing” pictures of injured children, or replacing graphic color images of injured children with poor quality black and white images, have long abounded. Most recently, stories about changing the court register of actions, and court minutes, and calling it a “correction”, have been reported.

      Turner reportedly also just implemented a new phone system, so she can keep track of, monitor and access ALL phone and e-mail communication and messages at the courthouse, and a new electronic (but not video, as court users requested) recording system in the courtrooms, which can capture previously unmonitored conversations (such as those between attorneys and their clients, and judges with their court personnel).

      Orwell’s 1984 indeed.

      Here is the moral to this rather long story: Turner is on the Judicial Council and may be sharing her ideas about how to “manage” pesky audits and employees. So perhaps it would be wise to keep good (and especially good but incriminating) records safe and intact, you never know when you will need them. Memorialize everything. And watch your workplace communications.

      As always, if anyone disputes what I have reported, I invite correction.

  15. Go get em guys! The Courtflea is going to take a break for a while.

  16. I don’t have a premium subscription to “The Recorder,” so I cannot access this article: “Is AOC Leaker a Whistle-Blower? Lawmakers and court officials seemed to agree last year that AOC staff aren’t covered by the Whistleblower Protection Act. But maybe it’s not so clear…”

    http://www.law.com/jsp/ca/index.jsp

    Can anyone elaborate or give a synopsis?

  17. JusticeCalifornia

    And here are a couple of 3/5/10 stories from the Marin newspaper. . . .ahhh, Deloitte, you and your expensive computer consulting. . . .and oh my, it is never too late for reform, but it is interesting that action is finally being taken just as an outraged public and members of the legislature are questioning public waste of taxpayer funds. . . . and heavy handed, retaliatory actions taken against those complaining of waste and conflicts of interest. . .

    http://www.marinij.com/marinnews/ci_14521178

    http://www.marinij.com/marinnews/ci_14521190

  18. ConcernedReConsolidation

    A Summary: Urquart’s lawyers just filed a lawsuit in which they apparently are contending that he was covered under the Whistleblower Protection Act but the AOC has previously said that no employees are covered.

  19. ConcernedReConsolidation

    PS: Correction – the article does not say that the suit was just filed. I gather from another source that it was filed in January.