Three Rivers Regional Commission : review of state funding

Performance Audit 12-05

September 2012

Georgia Department of Audits and Accounts
Performance Audit Division
Greg S. Griffin, State Auditor Leslie McGuire, Director

Why we did this review
This audit was conducted in compliance with O.C.G.A. 50-8-38 which requires that the State Auditor conduct performance audits of state funds received by the regional commissions in the state. Our review of the Three Rivers Regional Commission (TRRC) focused on evaluating compliance with requirements in state-funded contracts, determining if indirect and direct costs charged to state-funded contracts are reasonable, and evaluating internal controls related to risk areas identified in previous audits.
Who we are
The Performance Audit Division was established in 1971 to conduct indepth reviews of state programs. The purpose of these reviews is to determine if programs are meeting their goals and objectives; provide measurements of program results and effectiveness; identify other means of meeting goals; evaluate the efficiency of resource allocation; assess compliance with laws and regulations; and provide credible management information to decision-makers.
Website: www.audits.ga.gov Phone: 404-657-5220 Fax: 404-656-7535

Three Rivers Regional Commission
Review of State Funding
What we found The Three Rivers Regional Commission (TRRC) complied with most of the requirements related to its state-funded contracts with the Departments of Community Affairs (DCA), Human Services (DHS), and Natural Resources (DNR). However, our review also identified the following areas for improvement:
TRRC's aging services subcontracts need to be improved to include deliverables and all of the minimum contract requirements prescribed by DHS.
Better documentation is needed regarding TRRC's aging advisory council and rebidding activities related to its aging services subcontracts.
TRRC's Area Agency on Aging should follow state travel regulations as required by its contract with DHS.
TRRC should ensure that periodic reports required in its aging services contracts are submitted by subcontractors in a timely manner, that the reports are adequately monitored, and that its personnel better document their monitoring of the subcontracts.
TRRC needs to ensure that plans submitted under its coordinated planning contract are reviewed within established time limits and that parties affected by the plans are notified as required. In addition, TRRC should develop procedures to better monitor the planning activities of its member local governments and should continue providing assistance to help its members submit required plans in a timely manner.
Our review of direct and indirect costs only identified minor problems. TRRC needs to ensure that taxes are not paid on its telecommunications bills and that federal or state funds are not

used for food at employee meetings. We also identified a few items not allowable under federal regulations that were charged as indirect costs.
Our review of internal controls identified several areas for improvement. We found that TRRC needs to improve its announcement process for open meetings and prepare required affidavits for closed meetings. We also found that TRRC's travel regulations are less restrictive when compared to the Statewide Travel Regulations followed by most state entities and that TRRC should improve its review/approval process to better ensure that only appropriate travel expenses are reimbursed. In addition, controls over TRRC's petty cash accounts and purchasing activities should be strengthened. Finally, the TRRC Council should ensure that it completes the required annual performance appraisal for its executive director and improve controls related to employee ethics policies and employee continuing education requirements.
Like Georgia's 11 other regional commissions, the purpose of the Three Rivers Regional Commission is to develop, promote, and assist in establishing coordinated and comprehensive land use, environmental, transportation, and historic preservation planning in the state; assist local governments to participate in an orderly process for coordinated and comprehensive planning; and prepare and implement comprehensive regional plans which will develop and promote the essential public interests of the state and its citizens. TRRC has offices located in both Griffin and Franklin and serves 10 counties (Butts, Carroll, Coweta, Heard, Lamar, Meriwether, Pike, Spalding, Troup, and Upson). TRRC covers a service area of about 3,255 square miles with an estimated population of 489,781. In fiscal year 2011, TRRC had total revenues of about $8.9 million, of which $3.1 million was state funds.
In its response to a draft of this report, TRRC indicated overall agreement with the findings in the report. TRRC indicated that it has already taken corrective actions related to some findings and would continue to implement most recommendations as stated in the report. TRRC personnel indicated that this was only the second year since the two regional development centers merged, and that some policies and procedures were still in the process of being adopted and implemented. The first year of the merger was spent learning the different ways the former two agencies handled situations; whether it involved accounting procedures, state planning requirements, subcontracts, etc. TRRC indicated that only in the second year they were able to start to refine their procedures and policies in order to ensure that all local, state, and federal requirements would be met.

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Table of Contents

Audit Purpose

1

Background

1

Regional Commissions

1

Three Rivers Regional Commission

1

Financial Information

5

Reviews and Recommendations

Reviews of State-Funded Contracts

6

Aging Services Contract with DHS

6

TRRC's Aging Services Subcontract Monitoring

10

Coordinated Transportation Contract with DHS

12

TRRC's Coordinated Transportation Subcontract Monitoring

13

Coordinated Planning Contract with DCA

14

Historic Preservation Contract with DNR

16

Review of Direct and Indirect Costs

17

Direct Costs

18

Indirect Costs

19

Review of Internal Controls and Management Risk

20

Risks Identified in Prior Audits

20

Additional Risk Areas

23

Appendices

Appendix A: Objectives, Scope, and Methodology

26

Appendix B: TRRC Aging Services Subcontractors

28

Appendix C: Evaluation of Aging Subcontract On-site Monitoring Activities 29

Appendix D: TRRC Coordinated Transportation Subcontractors

30

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Three Rivers Regional Commission

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Audit Purpose
This audit was conducted in compliance with O.C.G.A. 50-8-38 which requires that the State Auditor conduct performance audits of state funds received by the regional commissions in the state. Details regarding the audit's objectives, scope and methodology are provided in Appendix A.
The findings and recommendations in the report have been discussed with Three Rivers Regional Commission (TRRC) personnel. A draft copy of this report was provided to TRRC for its review and comment. In addition, specific findings were sent to the Department of Community Affairs for its review and comment. Pertinent responses have been included in the report as appropriate.
Background
Regional Commissions House Bill 1216 (effective July 1, 2009) replaced the 16 regional development centers (RDCs) in the state with 12 regional commissions (RCs) whose purpose is to develop, promote, and assist in establishing coordinated and comprehensive land use, environmental, transportation, and historic preservation planning in the state; assist local governments to participate in an orderly process for coordinated and comprehensive planning; and prepare and implement comprehensive regional plans which will develop and promote the essential public interests of the state and its citizens. Eight of the original RDCs were combined and the coverage areas of the new regional commissions are based on population. With the exception of the Atlanta Regional Commission (which serves a significantly larger population), the goal was for all the regional commissions' service areas to be approximately the same size.
Three Rivers Regional Commission
The Three Rivers Regional Commission (TRRC) was created by the merger of the McIntosh Trail RDC and the Chattahoochee Flint RDC in 2009. It has offices in Griffin and Franklin and serves 10 counties, covering a service area of about 3,255 square miles with an estimated population of 489,781. TRRC serves Butts, Carroll, Coweta, Heard, Lamar, Meriwether, Pike, Spalding, Troup, and Upson counties (as shown in Exhibit 1 on the next page).
State law provides that each county and municipality is automatically a member of the regional commission whose boundaries include the county or municipality. TRRC offers a broad range of direct services to its 53 member local governments including planning assistance, grant administration, technical assistance related to zoning, historic preservation planning, water quality monitoring and planning, and GIS mapping. In addition, the TRRC oversees services for the elderly in its region through subcontracts with local service providers and oversees a transportation system in its counties through subcontracts with local transit providers.

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Exhibit 1 Three Rivers Regional Commission

Former Chattahoochee-Flint RDC Counties Former McIntosh Trail RDC Counties

Carroll

Heard

Coweta

Spalding Butts

Franklin

Troup

Meriwether

PIke Lamar
Upson

Griffin

SOURCE: Three Rivers Regional Commission

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TRRC is governed by a council composed of the chief elected official of each county, one elected official from one municipality in each county, one nonpublic member from each county, three residents of the region appointed by the Governor (one of whom shall be either a school board member or school superintendent), one nonpublic member appointed by the Lieutenant Governor, and one nonpublic member appointed by the Speaker of the House. As of April 2012, TRRC's Council had 33 members and 2 vacancies. The council's responsibilities include appointing the commission's executive director and adopting its annual work plan and budget.
As shown in Exhibit 2 below, TRRC has 30 employees in five departments and operates under the day-to-day direction of an executive director.

Exhibit 2 Three Rivers Regional Commission
Organizational Chart
Council
Executive Director
(Griffin)

Area Agency on Aging
Director (Franklin) 14 Employees (Franklin)

Governmental Services
Department
Director (Griffin) 2 Employees (Griffin)

Clerical Department
Office Manager (Franklin) 1 Employee (Griffin)

Source: Three Rivers Regional Commission Records

Administrative Services
Department
Director (Griffin) 1 Employee (Griffin) 2 Employees (Franklin)

Planning Department
Director (Griffin) 2 Employees (Griffin) 3 Employees (Franklin)

As shown in Exhibit 3 on the next page, four of TRRC's departments are responsible for the approximately $3.1 million of state funds expended by the commission in fiscal year 2011.

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Department

Exhibit 3 TRRC State Fund Expenditures by Department
Fiscal Year 2011
Activities

State Funds

Area Agency on Aging (AAA)

Administers the aging services contract with the Department of Human Services (DHS). Because regional commissions are not authorized to deliver human services directly, they subcontract for the services provided. The AAA is responsible for selecting subcontractors, monitoring the subcontractors, and reporting to DHS's Division of Aging Services.

$1,701,9701

Governmental Services and Administrative Services

Administers the Coordinated Transportation contract with DHS. TRRC is responsible for selecting subcontractors, monitoring the subcontractors, and reporting to DHS's Regional Transportation Office.

$1,170,121

Planning

Responsible for the coordinated planning contract with the Department of Community Affairs (DCA). TRRC is responsible for submitting quarterly reports detailing the progress made by the regional commission. TRRC is also responsible for reviewing drafts of local comprehensive plans, conducting reviews of Developments of Regional Impacts, and monitoring planning in its region.

$188,9522

Responsible for the Historic Preservation contract with the Department of Natural Resources (DNR). TRRC responsible for conducting an end-of-year report on the historic preservation activities conducted by the regional commission. In addition, TRRC is required to employ a qualified planner to assist with historic activities of the communities in the region. TOTAL STATE FUNDING

$5,2503 $3,066,2934

1 From DHS program reports and includes $6,089 of income tax check off funding 2 From DCA records 3 From DNR staff 4 Total based on detailed information from DHS and DNR is about $11,000 more than the total state funding reported in TRRC's
financial audit (see page 5).

Sources: TRRC Fiscal Year 2011 Financial Audit, TRRC records, DNR records/staff, DCA records, DHS program reports

In addition, TRRC's Administrative Services Department has a major role in determining and assigning indirect costs to the regional commission's programs which also impacts state expenditures. Costs that can be attributed to one program are direct costs and are charged to the specific program. (Examples of direct costs are contract services, salaries, supplies and materials, and travel.) Indirect costs are those costs that cannot be assigned directly to specific programs with reasonable effort or expense. TRRC establishes an indirect cost rate using a federally-approved indirect cost rate proposal and supporting documentation, which is submitted to the U.S. Department of Commerce (TRRC's cognizant federal agency). TRRC uses an internal service fund to accumulate and allocate indirect costs that are allocated to the various programs based on the proportion of direct salaries and benefits. According to TRRC personnel, any costs that cannot be directly charged and shown to benefit more than two programs are charged to the general fund.

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Financial Information
TRRC's statements of revenues, expenditures, and changes in fund balances for fiscal years 2010 and 2011 are shown in Exhibit 4 below. The table also includes the budgeted figures for fiscal year 2012. (Actual figures for fiscal year 2012 will not be available until after the close of the accounting cycle in August.) Regional commissions obtain their revenue for operations through a combination of state and federal grants and contracts, dues paid by member governments, and charges for specific services. In fiscal year 2011, TRRC had total revenues of about $8.9 million, of which $3.1 million was state funds.

Exhibit 4

TRRC's Revenues, Expenditures, and Fund Balances

Fiscal Years 2010 - 2012

Revenues1

Description

FY 2010 Actual

FY 2011 Actual

Federal Sources

$5,259,403

$4,884,729

State Sources Local Sources2
Other3

2,305,528 930,109 112,616

3,055,294 698,421 300,754

FY 2012 Budget
$5,345,850 2,908,121 848,432 361,108

Total Revenues Expenditures4
Salaries Fringe Benefits Total Personal Services
Contracts Travel Professional Services Other Total Operating Expenditures5 Indirect Expenditures5
Total Expenditures5
Excess (Deficiency) of Revenues5

$8,607,656
$1,299,098 295,169
1,594,267 5,139,345
76,487 21,836 859,610 7,691,545 805,486
$8,497,031
$110,625

$8,939,198
$1,290,550 262,132
1,552,682 5,525,543
91,468 58,884 921,307 8,149,884 684,997
$8,834,881
$104,317

$9,463,511
$1,372,857 289,887
1,662,744 6,131,231
125,631 68,403
713,662 8,701,670
721,067
$9,422,737
40,774

Fund Balance End of Year

$1,099,995

$1,204,312

$1,245,086

1 Fiscal year 2010 and 2011 revenue from financial audits; fiscal year 2012 revenue from TRRC's fiscal year 2012 budget 2 Comprised of local grants and dues 3 Comprised of interest income, miscellaneous income, and program income/in-kind, and rental income 4 Fiscal year 2010 and 2011 total personal services, contracts, travel, professional services are from TRRC's actual indirect cost

allocation plans. The total operating expenditures and indirect expenditures are from the financial audits and the other

expenditures were adjusted in order for the direct expenditures to total to the expenditure figures in the financial audits. 5 Fiscal year 2010 and 2011 figures from financial audits; fiscal year 2012 figures from TRRC's fiscal year 2012 budget

Sources: TRRC actual indirect cost allocation plans for fiscal year 2010 and 2011, TRRC Fiscal Years 2010-2011 Financial Audits; TRRC fiscal year 2012 budget; TRRC records; audit team analysis; interviews with TRRC personnel

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Reviews and Recommendations

Reviews of State-Funded Contracts
Regional commissions typically have contracts with state agencies such as the Departments of Community Affairs, Human Services, Natural Resources, Labor, and Transportation. However, not all of these contracts are funded with state funds as some contracts may include "pass-through" federal funding. The contracts administered by TRRC that include state funds are shown in Exhibit 5 below.

Exhibit 5 State Fund Sources at TRRC
Fiscal Year 2011

TRRC Department

From

Purpose

State Funds Total Funds

Area Agency on Aging

DHS DHS

Aging Services Income Tax Check Off1

$ 1,695,881 $ 6,089

$6,125,787 $ 6,089

Governmental Services and Administrative Services

DHS

DHS Coordinated Transportation

$ 1,170,121 $ 2,432,360

Planning

DCA DNR

Coordinated Planning Historic Preservation

$ 188,952 $ 5,250

$ 188,952 $ 13,125

Total

$ 3,066,2932

$ 8,766,313

1 Funds are passed through to counties to fund home delivered meals.
2 Total based on detailed information from DHS and DNR is about $11,000 more than the total state funding reported in TRRC's financial audit (see page 5).

Source: Contracts, TRRC Fiscal Year 2011 Financial Audit, interviews, DHS program report, DNR records

It should be noted that our review included all state funds except the Income Tax Check Off. The funds for the Income Tax Check Off are simply passed-through TRRC from DHS to senior centers in TRRC's service area to provide funding for home-delivered meal services.

Aging Services Contract
The Department of Human Services' (DHS) Division of Aging Services (DAS) is responsible for administering a statewide system of services for senior citizens, individuals with disabilities, their families, and caregivers. DAS contracts with Area Agencies on Aging (AAAs), which are responsible for coordinating and integrating services funded by both public and private resources and for developing a coordinated and comprehensive community-based service system in their areas. Most of the AAAs in the state are operated by regional commissions; however, the RCs are not allowed by state law to deliver human services directly. As a result, the regional commissions subcontract with vendors in their regions to deliver human services directly to clients. The purpose of TRRC's aging services contract is to implement a comprehensive delivery system of services for elderly and/or

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disabled persons in order that they may live independently in their communities for as long as possible. During fiscal year 2011, the TRRC's Area Agency on Aging had 18 contracts with 17 subcontractors (See Appendix B for a list of subcontracts and services provided.) to provide home-delivered meals, congregate meals, homemaker services, respite care, etc. We selected a sample of 13 requirements included in the contract's provisions, laws, rules, and regulations to review. Our review identified that TRRC's Area Agency on Aging complied with most of the requirements related to its aging services contract by
utilizing the Aging Information Management System (AIMS) to report information as required;
adopting policies and procedures for the initial screening and referral of clients for services that comply with established requirements;
rescreening clients on waiting lists within required timeframes;
providing the specific services and quantity of those services required in the contract. For example, the contract required 4,540 service units of homemaker services to be provided. A review of program records indicated that 4,540.25 units were provided in fiscal year 2011;
working to mitigate an unmet need it identified in its service area. Discussions with AAA personnel indicated that they identified that adult day care is unavailable in one of its counties. AAA staff worked with providers and volunteer groups to try to identify methods for providing services to clients who are not served;
establishing and maintaining a critical incident reporting procedure as required to help ensure the health and safety of clients served under the contract. In fiscal year 2011, 51 reports of critical incidents, serious injuries, or unexpected deaths were reported to DAS;
maintaining inventories of non-expendable personal property purchased with funds received from DHS under the aging services contract as required;
making client records, administrative records, financial records, documents, etc., available to representatives of state and federal governments as required; and
complying with federal requirements for annual financial audits.
However, we identified four areas for improvement related to TRRC's aging services contract that are discussed on the following pages.

TRRC should take steps to improve its aging services contracts to ensure that they include the contract's deliverables and all of the minimum contract requirements prescribed by DHS.
Our review of three of TRRC's 18 subcontracts for aging services indicated that TRRC's subcontracts were vague and did not clearly state the services to be provided by the subcontractors. For example, we identified the following deficiencies related to TRRC's Elderly Legal Assistance Program (ELAP) subcontract.

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Specific deliverables, such as the number of service hours to be delivered, the number of education classes to be delivered, the number of days per year/month that each county will be visited, limits on types of cases, were not included in the ELAP contract.
Requirements related to access to records and records retention were not included in the ELAP contract as required by DHS.
Specific strategies to meet the needs of targeted populations were not contained in the ELAP contract as required by DHS.
Documents that were referenced in the contract were not clearly identified or included. For example, the ELAP contract states that provisions required by DHS were included in Attachment A. However, the contract did not have an Attachment A. TRRC staff indicated that Attachment A should have been the Online Directives Information System (ODIS) that contains DHS's policies and procedures manuals.
When the audit team brought these deficiencies to the attention of TRRC staff, the staff indicated that they would take steps to review all of its subcontracts and improve the contracts for fiscal year 2013 to ensure that the contracts contain information on deliverables and all of the minimum contract requirements.
In its response to this report, TRRC indicated that its fiscal year 2012 and 2013 aging subcontracts were modified to more closely follow the state requirements.

TRRC should ensure that it documents that its advisory council's bylaws comply with the requirements in its aging services contract and that its advisory council meets as required.
TRRC has established an advisory council and its council has established bylaws as required by its aging services contract. However, we noted the following areas for improvement:
TRRC does not have documentation that its bylaws were adopted by the council. (TRRC staff noted that the bylaws were adopted at least 15 years ago and the documentation has been misplaced.)
The advisory council's bylaws require that the council meet at least quarterly; however, in 2011, the council did not meet during the second quarter because of an issue with the meeting agenda.
TRRC should take steps to document that its bylaws meet all requirements in the aging services contract and ensure that its advisory council meets quarterly as required by its bylaws. Subsequent to our review, TRRC amended its bylaws and documented the adoption of the bylaws by the advisory council.

TRRC's Area Agency on Aging should follow state travel regulations as required by its contract with DHS.
While TRRC's aging services contract does not specifically require that its AAA follow Statewide Travel Regulations, DHS personnel indicated that Statewide Travel Regulations

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are considered to be included in the "applicable laws, rules, and regulations" that AAAs are required to follow by the contract. In July 2010, DHS notified all AAAs in the state that they were required to follow the Statewide Travel Regulations.
A comparison of TRRC's travel regulations to the Statewide Travel Regulations identified that TRRC's regulations were in some aspects less restrictive than the Statewide Travel Regulations. For example, TRRC's regulations allow employees to be reimbursed for meals up to $44 per day in high cost areas while the Statewide Travel Regulations allow employees to be reimbursed up to $36 in high cost areas. (Other issues related to TRRC's travel policy and employee reimbursements are discussed in the findings on pages 21-23 of this report.) When the audit team brought this to TRRC management's attention, they reported that they thought that DHS had rescinded its directive that AAAs follow the Statewide Travel Regulations. The audit team confirmed with DHS personnel that the directive was not rescinded and that all AAAs are required to follow the Statewide Travel Regulations.
TRRC's Area Agency on Aging should follow the Statewide Travel Regulations as required by DHS.
In their response, TRRC personnel indicated that although TRRC's travel policies differ slightly from the state travel regulations, it is important to remember that TRRC is not considered a state agency. TRRC also noted that the Department of Human Services aging services contract does not require that TRRC follow the state travel regulations. TRRC would also like to stress that it could border upon employment discrimination if TRRC reimburses one set of employees differently than another set of employees. TRRC also noted that no other state or federal agency requires them to follow state travel regulations.
DOAA comments: Discussions with DHS personnel indicated that DHS does expect the AAA's to follow state travel regulations and that it intends to modify its aging services contracts to include specific language regarding the requirement to follow the Statewide Travel Regulations.

TRRC needs to better document some of the rebidding activities related to its aging services subcontracts.
TRRC rebids its aging services subcontracts every four years as required by DHS. However, our review of the bid files for nine proposals and four RFP announcements processed during 2011 identified the following minor documentation issues related to TRRC's rebidding activities:
When bid proposals were reviewed by a team of TRRC reviewers, we could not tell if all team members had approved the scores that were recorded. Four of the nine proposals we reviewed involved review teams; however, the members of the review teams were not identified in the documentation. Each of the proposals included three review components (administrative review form, technical review form, and budget review form). None of the proposals had the same number of reviewer initials recorded on all three review components. For example, one of the proposal

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scoring packets had two initials on the administrative review and technical review forms and four initials on the budget review form.
Of the four RFP announcements reviewed, one RFP announcement did not run 30 days before the response was due as required. TRRC staff sent the information to the newspaper prior to the deadline; however, the announcement ran late. TRRC staff do not review publication information from newspapers to ensure that announcements run when requested.
TRRC should take steps to ensure that individuals participating in bid review teams are identified and all team members should sign or initial the review components to document that they agree with the recorded scores. TRRC should also start reviewing documentation received from newspapers running the RFP announcements to ensure that the announcements run on time.

Aging Services Subcontract Monitoring
Because regional commissions are not authorized to provide direct human services to the elderly in their region, they contract with vendors (or subcontractors) located within their regions to provide these services. These subcontractors operate senior centers and provide congregate and home-delivered meals, in-home care and services, and legal assistance. (See Appendix B on page 28 for a list of TRRC's subcontractors and the services provided.) DAS requires that the AAA's monitor their subcontractors to ensure that they are providing the required services.
Our review of TRRC's subcontract monitoring found that TRRC has staff dedicated to monitoring its aging services subcontractors. They conduct site visits in accordance with established policies, issue monitoring reports in a timely manner, follow up on problems identified during monitoring as required, and conduct fiscal monitoring as required by DHS. We reviewed TRRC's fiscal year 2011 monitoring activities for eight of TRRC's 18 subcontracts (which received 77% of state funds paid to subcontractors under the aging services contract) and selected a sample of significant requirements for review. Sixteen of the requirements were related to periodic reports and financial audits that subcontractors submit to TRRC and 76 of the requirements were related to on-site monitoring visits to the subcontractors. The areas in which TRRC's subcontract monitoring needs to be improved are discussed on the following pages.

TRRC needs to ensure that its subcontract monitoring procedures adequately evaluate whether or not contract requirements have been met and should require that its monitoring personnel better document their activities.
The audit team selected a sample of 76 subcontract requirements that should be monitored during on-site visits by TRRC's monitoring personnel. As shown in Exhibit 6 on the next page, we found that 27 (36%) of the requirements were adequately monitored and documented. As discussed below, the monitoring procedures for the remaining 49

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requirements did not appear to be adequate and/or documentation of the monitoring
activities was not sufficient for us to verify that monitoring activities had been performed.
Nine (12%) of the 76 selected requirements had inadequate monitoring procedures. For example, the TRRC monitor simply checked the on-line aging database to verify that a subcontractor for long term care ombudsman services conducted the required number of community education sessions. This procedure was inadequate because the number of sessions reflected in the on-line database was self-reported by the service provider and was not verified through other independent documentation of sessions held, such as sign-in sheets. Appendix C (on page 29) provides a listing of the contract requirement categories of requirements with inadequate monitoring procedures.

Exhibit 6 Evaluation of On-Site Monitoring Activities
Fiscal Year 2011

Description

Described Monitoring Procedures Adequate

Monitoring Adequately Documented Monitoring Not Adequately Documented

Described Monitoring Procedures Not Adequate

Source: FY 2011 TRRC monitoring reports

Total

27

67

40

76

9

Forty (53%) of the 76 reviewed requirements did not have adequate documentation that the described monitoring procedures had been performed. Over half (22 of 40) of the instances in which the documentation was inadequate resulted from the TRRC monitor not identifying which files were reviewed. For example, a subcontractor that provided homemaker services was required to conduct client assessments within ten days of the date the service referral was received. TRRC staff reported that the monitor checks to ensure that this is done but did not document which client files were reviewed or the results of the individual reviews. Appendix C (on page 29) provides a listing of the categories of contract requirements with inadequate documentation of monitoring activities.
TRRC should ensure that its subcontract monitors use procedures that provide an adequate
indication of whether or not requirements are being met by the service providers. TRRC
should also improve the documentation of its monitoring activities by documenting how the
procedures were conducted and by identifying the files that were reviewed. It should be noted that subsequent to our review, TRRC provided the audit team with a copy of the latest
monitoring report, which demonstrated that TRRC has made improvements to its
monitoring activities by more clearly documenting activities and identifying the files
reviewed during visits.

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TRRC should document when it receives the reports required in its subcontracts.
Aging services subcontractors are required to submit monthly financial and programmatic reports and annual financial audits to TRRC. These reports are to be used to monitor subcontractor performance, calculate payments to subcontractors, and monitor financial viability of the subcontractors. The audit team reviewed 16 such reporting requirements in a sample of eight of TRRC's aging subcontracts for compliance. Although all required reports for our sample were received by TRRC, we could not determine if the majority were received on time.
All eight of the subcontracts reviewed require that monthly financial and programmatic reports be submitted to TRRC's Area Agency on Aging by the fifth working day after the end of the month. Of the 24 report submissions that were required during a three month period, TRRC could not locate 22 of the submissions. Of the two reports that could be located, each contained submission dates (because they were received by fax). One of the reports was submitted on time and the other was submitted 19 business days late.
In addition, all eight of the subcontracts reviewed require that the subcontractor submit its annual financial audit within 180 days after the close of the contract period. However, because TRRC's aging services staff do not document date of receipt, we could not determine if the financial audits were received on time.
To ensure compliance with contract provisions, TRRC should document the date subcontractor reports are received.

Coordinated Transportation Contract
The Department of Human Services (DHS) is responsible for administering a statewide transportation system to provide individuals access to needed services to help them achieve healthy, independent, self-sufficient lives. DHS contracts with regional commissions throughout the state to administer coordinated transportation systems in their regions. The regional commissions, in turn, subcontract with transit providers to transport individuals. Human service providers (e.g., Senior Centers, DFACS offices, etc.) are responsible for determining which individuals are eligible to receive services under the coordinated system and the type of transportation appropriate for the individual. The state agencies and programs that utilize the coordinated transportation system and the types of trips that are provided by the transportation providers are shown in Exhibit 7 on the next page.

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Exhibit 7 Examples of Coordinated Transportation Clients and Types of Trips

Clients Of Division of Aging Services

Trips To and From senior centers, medical appointments, shopping, work, field trips, etc.

Division of Family and Children Services

work experience sites, medical appointments, mental health centers, transitional support service trips, substance abuse treatment, etc.

Department of Behavioral Health and Developmental Disabilities

employment locations, day centers, mental health appointments, community training and integration activities, job training, medical appointments, social services, and other miscellaneous trips

Georgia Department of Labor

school, jobs, job search and job placement, job training, workshops and assessment sites

Other State Entities

miscellaneous locations

Source: DHS Transportation Manual

During fiscal year 2011, TRRC had four subcontracts with service providers to provide coordinated transportation services in its 10 county region. We selected a sample of eight requirements included in the contract's provisions to review. Our review indicated that TRRC had complied with the eight requirements related to its coordinated transportation contract by
providing elderly and disabled persons with coordinated transportation;
conducting annual monitoring site visits to its subcontractors;
developing and following written procedures for internal monitoring of compliance with DHS requirements, including routine vehicle inspections;
conducting financial monitoring of its subcontractors;
making consumer/client/customer records, administrative records, financial records, documents, papers, etc. available to representatives of state and federal governments;
submitting required reports in the appropriate formats to DHS;
establishing and maintaining a critical incident reporting procedure as required to help ensure health and safety of clients served under the contract. In fiscal year 2011, no critical incidents were reported; and
submitting TRRC's annual financial audit to DHS as required.

Coordinated Transportation Subcontract Monitoring
Regional commissions contract with vendors (or subcontractors) located within their regions to provide transportation services for senior citizens, individuals with disabilities, and other eligible individuals in the region. TRRC is responsible for coordinating the services and selecting the vendors to provide transportation services in its region. (See Appendix D on page 30 for a list of TRRC's subcontractors and the counties served by each.) DHS

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requires that regional commissions monitor their subcontractors to ensure that they are providing the required services.
Our review of TRRC's subcontract monitoring found that TRRC has staff dedicated to monitoring its coordinated transportation subcontractors, conducting site visits in accordance with established policies, issuing monitoring reports in a timely manner, following up on problems identified during monitoring, and conducting fiscal monitoring as required by DHS. We reviewed TRRC's fiscal year 2011 monitoring activities for one of the four subcontracts and selected 21 significant requirements for review. Four of the requirements were related to periodic reports and financial audits that the subcontractor submits to TRRC and 17 of the requirements were related to on-site monitoring visits to the subcontractor. We found that all of the requirements were adequately monitored and documented.

Coordinated Planning Contract
The Department of Community Affairs (DCA) contracts with the regional commissions for various activities related to implementing the Georgia Planning Act. The contracts require the regional commissions to perform nondiscretionary services mandated by the act and allow for discretionary projects such as developing a new zoning ordinance or putting a local geographic information system in place to be included. State law specifically requires that regional commissions collect annual dues averaging at least $1 for each resident of the region to be eligible to receive a planning contract from DCA.
Our review of TRRC's compliance with the DCA planning contract indicated that TRRC has
had an annual financial audit performed and submitted it to DCA; submitted required quarterly progress reports; maintained planning files for each local government in its region; monitored planning in the region; submitted regional plan updates; reviewed drafts of local comprehensive plans (or plan components), local planning
maps, and land use maps; and conducted developments of regional impact (DRI) reviews of projects that met
certain thresholds (e.g., an office building more than 400,000 square feet) to determine if the project could have an adverse effect on neighboring municipalities.
The audit team reviewed the files of five comprehensive plan component reviews and three developments of regional impact (DRI) reviews conducted by TRRC in fiscal year 2011 to determine if TRRC was complying with requirements in the DCA rules (such as meeting deadlines for completing reviews and issuing findings related to the reviews). Of the 51 combined contract requirements reviewed, TRRC met 34 (67%) of the requirements and did not meet 17 (33%) of the requirements. The 17 requirements that were not met were instances in which TRRC missed deadlines or did not provide required notifications as

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discussed below. In addition, we also identified that TRRC needed to continue its efforts to help local governments submit required plans in a timely manner.

TRRC needs to take steps to ensure that submitted plans are reviewed within the time limits established by the Department of Community Affairs and that interested/affected parties are notified as required.
We reviewed 51 contract requirements related to five comprehensive plan component reviews and three developments of regional impact (DRI) reviews that were conducted by TRRC in fiscal year 2011. Twenty-seven of the requirements related to deadlines for the submission of plans/reviews. We found that TRRC did not meet 14 (52%) of the deadline requirements, and, as shown in Exhibit 8, TRRC missed the deadlines by two to 74 calendar days. TRRC did not identify why most of the deadlines were missed; however, it noted that six of the missed deadlines were caused by local government delays, misplaced paperwork, and/or the impact of holidays on the work process. In addition, TRRC planning staff noted that problems with DCA's online reporting system for DRI reviews, which contributed to two of the six delays have now been rectified.

Exhibit 8 TRRC Planning Deadlines Missed
Fiscal Year 2011

Days Late
Missed Deadline By Less than 10 days Missed Deadline By From 11 to 20 days Missed Deadline By From 21 to 74 days TOTAL

Number Deadlines
Missed
7 2 5 14

Source: Audit Team review of TRRC files

Our review also identified 21 requirements related to notification of affected or interested parties. Examples of affected or interest parties include local governments, state agencies and other regional commissions that might be affected by the plans being evaluated. We found that TRRC did not meet three of the reviewed requirements related to notification. TRRC did not identify why the required notifications were not made.
TRRC should improve its local plan review process and develop a system or strategy to ensure that plans submitted by the local governments are reviewed within the time limits established by the Department of Community Affairs. It should also take steps to improve its controls over notification of interested/affected parties to ensure that it makes the required notifications.

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TRRC should improve its procedures to better monitor the planning activities of its member local governments and should continue providing assistance to help its members submit required plans in a timely manner.
Past DCA performance audits of the RDCs identified the timely adoption of comprehensive plans, solid waste plans, etc. as a measure of the RDC's planning effectiveness. While this measure is an indicator of how well planning activities are being carried out in the TRRC region, it should be noted that TRRC personnel have no authority to require local governments to submit or adopt their plans. In calendar year 2011, we found that 15 plans were due from local governments in TRRC's region. Of these 15 plans, 7 (47%) were not submitted and adopted by their established deadlines. (Four plans were submitted and adopted from 94 to 185 days late and three plans were less than 30 days late).
The audit team reviewed the files for three of the seven plans that were not submitted in a timely manner and found that in two of the cases, the TRRC planning staff was proactive in encouraging and advising the local governments involved to submit their plans or adoption resolutions; however, one local government did not respond in a timely manner and the other submitted incorrect information to TRRC. In the case of the third plan, the local government submitted its formal adoption resolution to TRRC on time; however, it was misplaced and TRRC did not forward it to DCA for a number of months.
TRRC should continue to be proactive in contacting their member governments to offer assistance and to remind them when their plans are due. In addition, TRRC should improve its plan review process to ensure that plan information that is submitted to them by their member local governments is forwarded to DCA in a timely manner.

Historic Preservation Contract
TRRC's historic preservation contract with the Department of Natural Resources (DNR) provides funds to assist the regional commission with the cost of employing a qualified planner to provide assistance with historic preservation activities to communities in its region. In fiscal year 2011 the historic preservation contract included $5,250 of state funds. Our review of TRRC's compliance with contract requirements identified that TRRC has provided technical assistance to local governments, followed applicable state and federal laws and standards for historic preservation, and completed a specific scope of work as required by the contract. In addition, interviews with TRRC and DNR staff indicated that the regional commission has employed a qualified planner. During our review we identified several contract compliance issues discussed in the findings that follow.

TRRC did not comply with the fiscal year 2011 historic preservation contract requirement that at least 40% of its historic preservation planner's time be spent on historic preservation activities; however, that requirement has been removed from the fiscal year 2013 contract.
TRRC's fiscal year 2011 historic preservation contract specifically requires that 40% of the planner's time be spent on historic preservation activities. The Commission's planner

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reported to DNR that she spent 60% of her time (equivalent to $49,290) on historic preservation activities; however, our review of her fiscal year 2011 time sheets identified that only 7.25% of her time (equivalent to $5,956) was classified as related to historic preservation. When asked about this discrepancy, planning staff indicated that while economic development projects may not be classified as "historic preservation projects," they typically include historic preservation activities. Staff also indicated that the 60% she reported was only an estimate and that the planner did not fully track actual time spent on historic preservation activities.
It should be noted that TRRC's fiscal year 2011 historic preservation contract only provided total funding of $14,818, which is significantly less than the value of the contract's requirement that 40% of the planner's activities be devoted to historic preservation activities (40% of the planner's salary and fringe benefits would be $32,860). DNR reported that over time, the historic preservation contract amount has decreased from about $35,000 to $14,818 as a result of the deteriorating financial condition of the state while the time requirement for the planner was not changed. DNR removed the requirement that a specified percentage of a planner's time be spent on historic preservation activities from its fiscal year 2013 contracts with regional commissions.

TRRC did not have an active Regional Historic Preservation Advisory Committee as required by its fiscal year 2011 historic preservation contract. However, requirements related to Regional Historic Preservation Advisory Committee activities have been eliminated from TRRC's 2012 historic preservation contract.
TRRC's fiscal year 2011 historic preservation contract required TRRC to "establish and meet at least quarterly with the Regional Historic Preservation Advisory Committee." The contract further required that DNR be provided membership lists and minutes of the committee meetings. TRRC planning staff reported that this committee was disbanded some time prior to 2005 and efforts to reform the committee were not successful.
It should be noted that the fiscal year 2012 historic preservation contract does not include any requirements related to a historic preservation advisory committee.

Review of Direct and Indirect costs
All programs have costs associated with administering them and providing services. These costs are charged to the program either as a direct cost or as an indirect cost. Direct costs can be readily identified with a particular grant, contract, or other activity of an organization. Examples of direct costs include equipment for a program, personal services costs, and travel costs.
Indirect costs are costs that are incurred for common or joint objectives and cannot be readily identified with a particular grant, contract, or other activity of an organization.

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Examples of indirect costs include janitorial services, utilities, the cost of the annual financial audit, and insurance.
To be allowable, both direct and indirect costs need to meet the following criteria:
reasonable and necessary, treated consistently, authorized (or not prohibited) under federal, state or local laws or rules, in accordance with generally accepted accounting principles, and adequately documented.

Direct Costs
Our review only identified minor problems with TRRC's direct charges. We found that TRRC has established a process for approving and applying costs directly to its programs to ensure that only appropriate costs are charged. The process involves approval of each charge by a department director, the regional commission's financial staff, and the commission's executive director.
We reviewed detailed credit card transactions to identify direct charges for the aging services, coordinated planning, the general fund, and transportation programs. We selected a sample of 60 direct charges from various programs to review the associated invoices and noted the minor issues with the direct charges that are discussed in the pages that follow. In addition, we reviewed all travel reimbursements for seven employees for fiscal year 2011 and, with the exception of minor issues discussed on pages 21-23 of this report, did not identify any instances of unallowable travel expenses.

TRRC should ensure that taxes are not paid on its telecommunications bills and federal or state funds should not be used to pay for food provided at employee meetings.
The audit team's review of a sample of 60 direct charges from various programs (including 47 invoices) identified the following minor issues related to TRRC's direct charges:
Although TRRC is a tax exempt organization, we found that it has been paying taxes on its telecommunications bills (one land-line and two cell phone invoices were in our sample totaling $96 in paid taxes). TRRC did not use the statewide telecommunications contract which included an exemption for taxes and TRRC personnel had not taken steps to have the taxes removed from the telecommunications bills we reviewed. When the taxes were pointed out to TRRC staff, they reported that they would send the vendors tax exempt forms and work to remove taxes from all their telecommunications bills.
While food for meetings is typically not allowed to be paid with federal or state funds, one invoice in our sample included snacks provided at a meeting ($21 for bottled water and potato chips). TRRC had no documentation regarding the meeting's purpose, agenda, or attendees. TRRC staff indicated that they were not aware that food expenditures were typically not allowed and that people just expected snacks at meetings. When limitations on meeting expenditures were

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discussed with TRRC staff, they indicated that TRRC membership dues would be used for future food costs related to meetings.

Indirect Costs
Our review of TRRC's fiscal year 2011 indirect costs indicated that its indirect cost rate is relatively low compared to the other regional commissions in the state. The amounts charged to individual categories in TRRC's indirect cost pool (e.g., travel, supplies and printing, telecommunications) were generally in-line with other regional commissions of a similar size. In addition, TRRC had an indirect cost certificate, organizational chart, and functional statement on file as required by federal regulations.
We reviewed a listing of all of TRRC's indirect charges for fiscal year 2011, and selected a sample of 40 charges for more detailed review. All of the invoices reviewed had the appropriate documentation including copies of receipts, and evidence of delivery (where appropriate), and supervisory review. Of the 40 charges that were reviewed, 33 appeared appropriate. Relatively minor problems with the other seven charges are discussed below. We also reviewed the timesheet charges to TRRC's indirect cost pool for fiscal year 2011 and found that employee time charged as indirect appeared to be appropriate.

TRRC should ensure that taxes are not paid on its telecommunications bills that are charged to indirect costs and items that are not allowable under federal regulations should not be charged as indirect costs.
Our review of a sample of 40 indirect charges identified seven charges that included taxes and items that are not typically allowed under federal regulations. As discussed below, we found that TRRC was paying taxes on its telecommunications bill and we identified several items that were charged to indirect costs that were not allowable under federal regulations.
While TRRC is a tax exempt organization, we found that it was paying taxes on its telecommunications bills (one land-line and two cell phone invoices were in our sample totaling $49 in paid taxes) that were charged as indirect costs. TRRC did not use the statewide telecommunications contract which included an exemption for taxes and TRRC personnel had not taken steps to have the taxes removed from the telecommunications bills we reviewed. When the taxes were pointed out to TRRC staff, they indicated that they would send the vendors tax exempt forms and work to remove taxes from all their telecommunications bills.
Our review identified four transactions charged to indirect costs that were not allowable under federal regulations. The unallowable charges included: advertising/promotional item purchases (two invoices totaling $627 for 209 pocket calendars with the TRRC logo), payments to attend an awards luncheon (one invoice for $65 paid for five staff members to attend a student/teacher awards luncheon), and the purchase of an item for the personal use of employees (one invoice for $262 for a coffee brewer and supplies for staff use). When limitations on meeting expenditures were discussed with TRRC staff, they indicated that they would review federal indirect cost regulations and that TRRC membership dues

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would be used for any future charges that were not allowable under federal regulations.

Internal Controls and Management Risk
Risks Identified in Prior Audits
We reviewed performance audits that DCA conducted of the regional development centers (RDCs) during the 1990's and 2000's to identify risk areas. DCA found problems at various RDCs with petty cash, revolving loan funds, motor vehicle management, employee fringe benefits, open meetings requirements, and travel expenses. Our review of these areas at TRRC indicated that it does not have a revolving loan fund or a motor vehicle fleet. Our review of TRRC's fringe benefits indicated that its fringe benefit rate was a relatively low 30.52% for fiscal year 2011 compared to the typical state agency's fringe benefit rate of 49.44%.
However, we did identify the need for improvements in the areas of petty cash, open meetings, and travel expenses that are described below.

TRRC needs to improve its announcement process for open meetings and prepare required affidavits for closed meetings.
Our review of TRRC's fiscal year 2011 Council meeting minutes indicated that they have generally complied with the requirements in Georgia's Open Meetings Laws. The meetings were open to the public, a quorum was present at every meeting, and the meeting announcements contained all of the required information and were sent to the legal organs (newspapers) of TRRC's member municipalities. However, we did identify the following areas in which TRRC could improve its compliance with open meetings laws.
TRRC has not been posting the meeting announcements at the meeting location as required by law.
TRRC did not have affidavits on file related to their closed meetings in November and December 2010. State law requires the meeting minutes contain a notarized affidavit stating under oath that the subject matter of the closed portion of the meeting was devoted to matters within the exceptions provided by law. After being notified of requirement, TRRC drew up affidavits for these meetings and reported that they will prepare required affidavits for closed meetings in the future.
TRRC should ensure that they post announcements of their meetings at the meeting place as required by law. TRRC should also ensure that affidavits are drawn up for each closed meeting/executive session. It should be noted that state law related to open meetings was revised in 2012. TRRC should review the requirements and ensure that it complies with the changes related to open meetings.

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Several aspects of TRRC's travel policies are less restrictive than the Statewide Travel Regulations followed by most state entities.
To evaluate TRRC's travel policies, we compared them to the Statewide Travel Regulations. Although not required to follow the Statewide Travel Regulations, these regulations serve as a proxy for determining reasonable expenses incurred by publically funded agencies in Georgia. Our review found that TRRC's travel policies are less restrictive in the following ways:
While TRRC's base limits for meal reimbursements are the same as the Statewide Travel Regulations, TRRC's daily meal reimbursement limit for high cost areas is higher ($44) than the Statewide Travel Regulations limit ($36). Our review of employee travel for seven employees during fiscal year 2011 identified 83 instances in which employees were reimbursed for meals that exceeded the Statewide Travel Regulations limits. The total amount reimbursed in excess of the Statewide Travel Regulations limits was $271.
During fiscal year 2011, TRRC's policies allowed employees to be reimbursed for lunch expenses if they left the office at least an hour before their normal lunch time and returned at least an hour after their normal lunch time. The Statewide Travel Regulations do not allow reimbursement for lunch unless the employee travels overnight or is in travel status for more than 13 hours and travel more than 30 miles from home or headquarters. Our review of employee travel for seven employees identified 230 lunches related to same day travel totaling $1,713 that were reimbursed in fiscal year 2011. It should be noted that during fiscal year 2012 TRRC amended its travel policies to require the employee be on overnight travel to be reimbursed for lunch.
TRRC's travel policy states that an employee will be reimbursed for mileage for trips originating from their home to their work site for the entire distance traveled. Statewide Travel Regulations provides that reimbursable mileage starts at the employee's home and ends at the work site with a reduction equal to the number of miles that the employee would normally drive in a one-way commute. TRRC staff stated that they used to subtract normal commuting mileage from travel miles but found that it was time-consuming and that situations would arise that would make it difficult to determine which miles should be considered commuting miles and which miles should be considered to be business miles. Sufficient information was not available for the audit team to determine mileage reimbursed in excess of Statewide Travel Regulation limits.
TRRC allows its employees to use TRRC purchasing cards to pay for meals while on travel status. Statewide Purchasing Card Policy prohibits state employees from using state purchasing (credit) cards to cover meals while on travel status. TRRC's use of purchasing cards for travel makes it difficult for approvers to ensure that employees are not claiming reimbursement for travel expenses that are on TRRC's purchasing cards since travel reimbursements and purchasing card statements are handled by different financial staff members. We did not review all purchasing card expenditures to identify how often the cards were used for travel expenses.
As a recipient of public tax dollars, TRRC should consider making its travel policy at least as strict as the Statewide Travel Regulations. DHS already requires regional commission aging programs to follow the statewide travel regulations. Therefore, TRRC can either make its

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travel policies as strict as the Statewide Travel Regulations for all of its employees or require that its aging services staff follow a separate travel policy that is at least as restrictive as the Statewide Travel Regulations.

TRRC should improve its review/approval process to better ensure that only appropriate travel expenses are reimbursed.
We reviewed fiscal year 2011 employee travel reimbursements for seven TRRC employees, which represented 38% or $27,022 of the total reimbursements, to determine if the expenses appeared to be necessary and reasonable.1 Our review identified the following areas in which TRRC's travel expense approval procedures should be improved:
Controls should be improved to ensure that all reimbursements are approved by supervisory personnel. Our review noted travel reimbursement forms that were approved by an executive assistant and forms that were not approved by any reviewer. Six of the seven employees whose travel reimbursements were reviewed had at least one travel reimbursement request in fiscal year 2011 that was processed without supervisory approval. Of the 155 reimbursements we reviewed, 24 (15%) reimbursement requests representing $5,301 in travel costs did not have supervisory approval.
TRRC's current travel policies (effective March 1, 2011) require that receipts be submitted for all meal reimbursements; however, we found that travel reimbursements for meals were routinely approved without submitted receipts. TRRC staff stated that as long as meal expenses are not unreasonable, they have not been requiring receipts. Of the 144 reimbursements we reviewed that required receipts, 141 included meals (totaling $1,386) without receipts.
Controls should be improved to ensure that employees are not reimbursed for meal costs that exceed established meal cost limits unless specific authorization is granted. TRRC staff stated that they do not strictly hold employees to the established meal limits. For example, they noted that sometimes employees attend meetings with meal costs that are above the meal limits. However, they reported that explanations were not noted on travel reimbursement forms specifically authorizing reimbursement for meals that exceed limits. Among the seven employees whose travel reimbursement requests were reviewed by the audit team, TRRC reimbursed $110 above meal limits for 26 meals.
TRRC's executive director should use the standard form for travel reimbursements as required by TRRC's travel policy. TRRC policy requires that a travel request must be submitted and must include the reason for the travel, departure and return times, and the amount of the travel expenses. TRRC's executive director has been submitting individual receipts for expenditures that are reimbursed after a Council member's review and approval. The receipts do not identify the times that travel started and ended or the reason for the travel. During fiscal year 2011, TRRC's executive director was reimbursed $2,523 for travel.
In general, TRRC reimburses its employees 50 per mile when using a personal
1 The audit team reviewed 100% of the travel reimbursements for these seven employees; however, the results of the review should not be projected to the remainder of TRRC's travel reimbursements.

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vehicle for business purposes. However, in lieu of mileage reimbursement, the executive director indicated that the Council has approved a $600 monthly allowance for the executive director based on a claim that he traveled in excess of 1,200 business miles per month. Currently, the executive director does not document his business-related travel. If the executive director is driving less than 1,200 business miles per month, it may be more cost effective to reimburse mileage rather than give a monthly car allowance.
TRRC should improve controls over its travel review and approval process to ensure that travel reimbursements are allowable and reasonable. TRRC should improve efforts to ensure that no travel reimbursement requests are processed unless they have been approved by supervisory personnel. TRRC should also require that employees submit receipts for meals as required by its travel policy. In addition, TRRC should enforce meal reimbursement limits identified in its travel policies and any exceptions should be specifically authorized. Finally, TRRC's Council should require its executive director to complete the appropriate form for his travel reimbursement requests and consider directing him to document his business mileage to justify his car allowance.

TRRC needs to improve controls over its petty cash accounts.
TRRC maintains petty cash funds at both its Griffin office ($75 limit) and its Franklin office ($1,000 limit). We reviewed petty cash procedures at both offices and reconciled the cash on-hand with receipts. While the cash on-hand at the both offices reconciled to receipts, we noted the following areas for improvement:
We identified that a cash advance of $50 had been issued to an employee at the Franklin office without requiring that the employee sign for the advance. The Franklin office staff showed the receipt and the excess cash returned to the audit team later in the day.
We noted that the Griffin office routinely used funds from an employee-funded social (coffee/drink) fund to purchase items for the regional commission and the social fund was later reimbursed from petty cash funds which resulted in the comingling public funds with private funds. Staff indicated that at times it was more convenient to use the social fund's debit card (and reimburse the social fund later) than to obtain an advance from the petty cash fund.
TRRC should ensure that advances are not issued without signed receipts. In addition, TRRC should discontinue the practice of using an employee fund's debit card to make regional commission purchases instead of petty cash advances.

Additional Risk Areas
In addition to our review of the performance audits conducted by DCA, we identified several areas that have the potential for internal control weakness. These areas include use of purchasing cards, auditor selection procedures, dues collections, inventory procedures, purchasing procedures, and employee oversight procedures. We found that TRRC does not

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use gas cards and with the exception of using purchasing cards for travel as discussed on page 21, we did not identify any problems with TRRC staff's use of purchasing cards. We also found that TRRC selected its financial auditor through a bid process and no material problems were identified. Finally, we did not identify any problems with TRRC's dues assessments or its property inventory procedures.
However, we identified the following areas for improvement related to TRRC's purchasing procedures and its employee oversight procedures.

The Council should ensure that it completes the required annual performance appraisal for its executive director and improve controls related to its employee ethics policies and employee continuing education requirements.
State law has specific provisions related to oversight of regional commission personnel. The audit team reviewed these requirements and noted the following areas for improvement.
The Council should complete an annual performance appraisal for its executive director as required by state law. Annual performance appraisals of Regional Commission executive directors help ensure that adequate oversight is being provided by the Commission's Council. TRRC personnel reported that its executive director's annual appraisal is normally completed in January of each year. TRRC personnel also reported that they requested that an appraisal be completed in January 2012; however, the appraisal was not completed. The appraisal was completed in April after the audit team brought the problem to TRRC's attention.
TRRC should ensure that its conflict of interest policies include all requirements identified in state law and should consider requiring annual conflict of interest disclosure statements from its employees. State law specifically prohibits regional commission employees, their family members, and businesses in which either the employee or family members have a substantial interest from transacting any business with the regional commission. In addition, state law requires annual disclosure of any business transactions with local governments by employees, their family members, and any businesses in which either the employee or family members have a substantial interest.
Our review of TRRC's personnel policies identified that they do not include any reference to the prohibition against employees and their family members transacting business with the regional commission and do not include any provisions requiring that employees acknowledge the limitations on doing business with the regional commission. While TRRC submits employee disclosures of business transactions with local governments to DCA, TRRC does not require annual disclosure from employees on potential conflicts of interest.
While TRRC provides on-going training to its employees, it needs to develop a DCA-approved continuing education plan as required by state law.
The Council should ensure that annual appraisals for is executive director are completed as required by state law. TRRC should also strengthen its disclosure provisions and require that employees sign an annual statement acknowledging that they understand limitations on doing business with the regional commission and their responsibility to disclose any

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business relationships they may have with local governments. In addition, TRRC should specifically address employee limitations on doing business with the regional commission and local governments in their policies. Finally, TRRC should develop a continuing education plan and obtain approval from DCA for the plan as required by state law.

TRRC needs to improve controls over its purchasing activities.
State law has specific provisions related to controls over regional commission purchasing activities. The audit team reviewed a sample of 100 of TRRC's purchases during fiscal year 2011 to determine if it was in compliance with state purchasing requirements. Our review identified that it obtained multiple quotes for goods and services and was in compliance with most of the requirements. However, we noted that TRRC did not meet the following specific requirements:
TRRC has not developed written procurement procedures. State law specifically requires that regional commissions develop a system of competitive bidding related to the purchase of supplies, equipment, and services and the letting of other contracts and to submit the written procedures to the regional commission's Council and to the Commissioner of DCA. When we brought this to TRRC's attention, staff developed written procurement procedures and presented the procedures to its Council for adoption. Once adopted, TRRC reported that it would submit the policies to DCA.
TRRC did not submit a report to the Board of Community Affairs with the name, address, and public funds received by each contractor exceeding $500 as required. The last report submitted was for fiscal year 2010. DCA confirmed that it had not received the 2010 report and noted that it does not actively monitor if these reports are submitted in a timely manner. TRRC personnel indicated that they would work to ensure that the report was submitted for 2012.
TRRC should submit its procurement policies to DCA. In addition, TRRC should ensure that it completes and submits the required report on its contractors. DCA should monitor its receipt of these reports to ensure that they are submitted in a timely manner.

In their response to this finding, DCA personnel indicated that they are currently in the process of establishing procedures and creating a new spreadsheet for tracking the receipt of these reports.

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Appendix A
Objectives, Scope, and Methodology
Objectives
This performance audit of the Three Rivers Regional Commission was conducted in compliance with O.C.G.A 50-8-38 which requires that the State Auditor conduct performance audits of state funds received by the regional commissions in the state. The specific objectives of this performance audit were to 1) identify state funds received by the regional commission, 2) determine if the regional commission is complying with the terms of its state funded contracts, 3) determine if the regional commission's subcontracts are adequately managed and monitored, 4) determine if indirect and direct costs charged to state funded contracts are reasonable, and 5) determine if the internal controls and the control environment are adequate to reasonably ensure against loss. Given the statutory language requiring performance audits of regional commissions' use of state funds, the audit did not include a review of those activities that were solely federally or locally funded. It should also be noted that the Three Rivers Regional Commission had four pending lawsuits as of January 2012; however, these suits were related to personnel issues, and had no impact on this audit's objectives; we did not review the details of these suits.
Scope
This performance audit generally covered activity related to the Three Rivers Regional Commission's use of state funds that occurred during fiscal year 2011 with consideration of earlier or later periods when relevant. Information used in this report was obtained by: reviewing relevant laws, rules, and regulations, interviewing agency officials and staff from TRRC, DNR, DHS, and DCA, analyzing data and reports from DHS's AIMS, comparing indirect costs and indirect cost rates across all regional commissions, and comparing TRRC's travel policies to the Statewide Travel Regulations.
Government auditing standards require that we also report the scope of our work on internal control that is significant within the context of the audit objectives. We reviewed internal controls as part of our work on Objectives 2 through 5. Specific information related to the scope of our internal control work is described by objective in the methodology section below.
Methodology
To identify state funds received by TRRC, the audit team reviewed TRRC's fiscal year 2011 financial audit. The audit team identified the state funds used in each contract and verified that the funds listed were state funds and not federal funds that passed through state agencies. The audit team reconciled the funding amounts to document the total amount of state funds received in fiscal year 2011.
To determine if the regional commission is complying with the terms of its state-funded contracts, the audit team interviewed staff at TRRC, DNR, DHS, and DCA. The audit team reviewed TRRC's aging services contract with DHS, coordinated transportation contract with DHS, local planning contract with DCA, and its historic preservation contract with DNR. We identified the major requirements of each of these contracts and conducted interviews and file reviews to determine TRRC's compliance with these contracts. Due to sample size, the results of this review cannot be projected to TRRC's compliance with all

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contract requirements.
To determine if the regional commission's aging services subcontracts are adequately managed and monitored, the audit team used state funding figures to select a sample of 8 of TRRC's 18 subcontracts between TRRC's AAA and vendors that provide services to the elderly in TRRC's region. The team determined the adequacy of monitoring activities related to these subcontracts by identifying the requirements included in each of these contracts and reviewing TRRC's monitoring activities related to a sample of the requirements. Due to sample size, the results of this review cannot be projected to the monitoring of all subcontracts.
To determine if the regional commission's coordinated transportation subcontracts are adequately managed and monitored, the audit team selected one of the four subcontracts between TRRC and transit providers in TRRC's region. The team determined the adequacy of monitoring activities related to the subcontract by identifying the requirements included in the contract and reviewing TRRC's monitoring activities related to a sample of the requirements.
To determine if indirect and direct costs charged to state-funded contracts are reasonable, the audit team reviewed direct and indirect costs charged by TRRC in fiscal year 2011. We reviewed TRRC's indirect cost methodology, obtained a list of all indirect charges for fiscal year 2011, and selected a risk-based sample of 40 charges to review in detail. We also compared TRRC's indirect costs and indirect cost rate to other regional commissions that are similar in terms of the number of employees. We reviewed the process used to assign direct costs to the various grant/programs that received state funds. We reviewed all direct costs (60 charges) from 13 of TRRC's fiscal year 2011 credit card statements to identify direct charges for review, since credit card purchases tend to be high risk. We compared the indirect and direct charges to the federal A-87 circular, state laws and rules, and requirements in contracts for compliance. Due to sample size, the results of this review cannot be projected to all of TRRC's indirect and direct transactions.
To determine if the internal controls and the control environment are adequate to reasonably ensure against loss, we reviewed performance audits conducted by DCA in prior years to identify areas in which they noted problems. This review indicated that DCA concentrated on travel expenses, motor vehicle management, compliance with Open and Public Meetings Act, pension plans, comprehensive planning initiatives, and member satisfaction. We also reviewed areas that are known to be high risk areas. The audit team reviewed TRRC's controls regarding travel reimbursements, financial audits, inventory procedures, the employee pension plan, the fringe benefits offered to TRRC employees, compliance with open meetings laws, and compliance with state law related to regional commissions.
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Senior Center Congregate Meals Home Delivered Meals Senior Recreation Friendly Visiting Telephone Reassurance Long-Term Care Ombudsman Care Coordination Adult Day Care/Alzheimer's Day Care Elderly Legal Assistance Program Respite Care Personal Care Homemaker Services Medications Management Exercise/Physical Fitness Health Promotion and Disease Prevention Information and Assistance Opportunities for Participant Volunteering Outreach Services Nutrition/Health Screening or Education

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Appendix B TRRC Aging Services Subcontractors
Fiscal Year 2011

Provider

Fiscal Year 2011 Funding

McIntosh Trail Management Services, Inc. Council for Aging for McIntosh Trail Help at Home, Inc. Cambridge House of Newnan Georgia Legal Services Program Troup County Parks & Recreation McIntosh Trail Community Service Board Heard Senior Center Upson County Commission City of Grantville Carrollton Parks & Recreation Department Coweta County Commission City of Manchester City of Villa Rica Haleness, Inc. Lamar County City of Greenville TOTAL Sources: TRRC staff and DHS reports

XX

XXXXXX

X

XXXX

XXX

X

X

X

XXXXXX

X

XXXX

X

XXXXXX

X

XXXX

XXXXXX

X

XXXX

XXX XXX

X

XXXX

XXXXXX

X

XXXX

XXXXXX

X

XXXX

XXXXXX

X

XXXX

XXXXXX

X

XXXX

X

X

X

XXXXXX

X

XXXX

XXXXXX

X

XXXX

11 11 11 11 11 11 2 1 2 1 1 1 1 1 11 1 11 11 11 12

TOTAL $1,044,366
$471,060 $408,562 $112,496 $152,093 $446,522 $153,311 $150,992 $143,288 $128,213 $195,929 $199,893 $126,670 $145,355
$86,776 $106,543
$36,185 $4,108,254

STATE $530,162 $109,367 $108,100
$83,637 $57,487 $51,768 $51,269 $38,464 $33,384 $29,189 $26,097 $25,014 $24,560 $22,951 $18,992 $16,127
$8,370 $1,234,938

28

Appendix C Evaluation of On-Site Monitoring Activities
Fiscal Year 2011

Description

Monitoring Problem Areas

Monitoring Adequately Documented

Described Monitoring Procedures
Adequate

Monitoring Not Adequately Documented

Described Monitoring Procedures
Not Adequate

No Problems
Criminal Background Checks (5) Staff Training/Certification/Staff Training Components (4) Reassements and/or Supervisory Review (4) Monitoring Visits (4) Servcie Plan / Agreement Components (3) Senior Center Operations Requirements (2) Advocacy Activiites (2) Use of Volunteers (2) Plan of Action Monitoring (2) Client File Components (1) Program Description Components (1) Health Statement Components (1) Assessment and Service Plan Development (1) Suspected Abuse Policy and Training (1) Food Borne Illness Procedures (1) Denial of Services (1) Marketing of Services (1) Service Initiation (1) Complaints and Incidents (1) Security of Files (1) Client Assessments (1) Record Retention / Maintenance (2) Involvement with Councils (2) Community Education Sessions (2) Transportation Records (1) Complaints and Incidents (1) Records Retention (1)

Source: TRRC fiscal year 2011 Aging subcontract monitoring reports

TOTAL 27
67 40
76
9

29

Three Rivers Regional Commission

Three Rivers Regional Commission

30

Appendix D
TRRC Coordinated Transportation Subcontractors
Fiscal Year 2011

Provider Council on Aging Quality Transportation Heard County Transit Troup County Transit TOTAL
Source: TRRC records

Counties Served Butts, Lamar, Pike, Spalding, Upson Carroll, Coweta, Meriwether Heard Troup

State Funds $435,490 $538,860 $24,670 $135,847
$1,134,866

Total Funds $841,138
$1,091,853 $62,957
$298,395 $2,294,343

For additional information or for copies of this report call 404-657-5220 or see our website: http://www.audits.ga.gov/rsaAudits