Verification of Payment Requests | Lost Coast Outpost | Humboldt County

Eric V. Kirk asks Cheryl Dillingham, Karen Paz Dominguez

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Verification of Payment Requests

If elected or re-elected will you insist that all hourly wage submissions be accompanied by time sheets?  That all reimbursement requests be accompanied with receipts or other documentation?  That copies of all vendor contracts be provided to your office, preferably upon signing, but certainly prior to any requests for compensation?  

If this is not to be your practice, then please explain why.  

— Eric V. Kirk

Responses

Karen Paz Dominguez

Thank you very much for your question, Eric. 

 It has always been my policy and practice to require sufficient substantiation to corroborate transactions, payments, and claims for reimbursement. It is a basic concept of accounting and auditing that we refer to as “professional skepticism”. In layman’s terms, it is to “trust but verify”. I believe this is why accountants are entrusted with great responsibilities like signing off on tax returns, issuing audit reports, and counting votes at the Oscars. 

When I started at the County in 2017, I was shocked to learn that journal entries moving millions of dollars between different funds were regularly posted without any documentation and hundreds of payments for services totaling millions of dollars were issued every week without service contracts and in some cases, without any invoices! Perhaps the worst part of this is that departments were used to not being questioned because the A-C office had barely enough staff to complete basic tasks, much less perform their audit functions. 

Transitioning this County away from a policy akin to a rubber stamp and toward one of transparency and accountability over public funds has been challenging but also very rewarding. 

For example, when DHHS Director, Connie Beck, expressed concern and frustration that my office had rejected several of their invoices due to not having service contracts, I considered her department’s low capacity to execute contracts quickly and how delayed payments might impact the programs that benefit the public I serve. I came up with a compromise and created a template Letter of Intent (LOI) that DHHS could use in the short-run while working on executing a formal contract. The LOI contained specific information describing the intended services to be provided and the rate of pay for those services. It also included the director’s acknowledgement that a contract was missing but would be created within six month. This compromise with DHHS accomplished several things:

1) DHHS would be able to process their service invoices more timely because they wouldn’t have to wait for the Board’s approval at a future board meeting to pay the invoices they already had in hand,

2) it provided the vendors security and peace of mind to have something in writing that guaranteed compensation for their services,

3) the public’s interest was protected with a clearly outlined arrangement that helped manage expectations as well as liability, and

4) the public would enjoy accountability and transparency as previous “handshake” deals were forced to be memorialized in writing.

In another example, I required the submission of approved timesheets for Sheriff employees when the payroll function was transitioned back to its rightful place in the Office of the Auditor-Controller but I was quickly discouraged from requiring such documentation. The Sheriff and his business manager made direct requests of me to “trust” them and not require timesheets. Their arguments were that it was too hard for Sheriff deputies to create or sign their own timesheets, that it was too time-consuming for them to organize individual timesheets to send to us, and that they should be trusted to maintain the timesheets for their department. The problems with these arguments were that without approved timesheets,:

1) the County was open to liability should an employee subsequently dispute their pay and claim they were entitled to additional compensation for additional time worked,

2) the County would not have a leg to stand on with CalPERS should a retired employee dispute their reported hours to calculate their retirement payments,

3) the County would take on additional risk of theft and/or fraud since time was being paid without substantiating evidence to prove the pay was earned,

4) the A-C Office would not be able to prevent errors in payroll or confirm accuracy of payroll, and

5) the Public/taxpayers would not have transparency and accountability over its highest expenditures.

I understood that the Sheriff department would need more time to change their practice since they were not prepared to move away from paper timesheets and use the County’s timekeeping software so I compromised with them and offered alternative methods of getting electronic submissions and approvals. Now, the Sheriff department is regularly sending timesheets for their employees and most of them have the employee’s approvals. Their process is not perfect by any means but they are making progress and that is a benefit to the public since they can now have some substantiation for the largest expenditure of the County. 

If re-elected, I intend to continue my policy and practice of requiring substantiation for all transactions. Anything short of that means a lack of due diligence and would result in an increased risk of error and fraud. The A-C’s Accounts Payable function will continue to require receipts, invoices, and contracts. The A-C’s Accounting function will continue to require substantiating evidence for all journal entry transactions that move the public’s funds. The A-C’s Payroll function will continue to require time sheets for all hourly wage employees and for employees whose reported salary hours need adjustments or corrections. I will happily discuss alternative accommodations with departments and agencies as needed but will never let the department regress back to the time of the rubber stamp. 

Cheryl Dillingham

Yes, absolutely.

All employees will be required to submit timesheets with their signature and their supervisor’s approval. Additionally certain types of paid leave and overtime may require additional approval. I will also make sure that all employees are accurately paid for the hours submitted on their timesheets and at the correct payrate.

All reimbursement requests or claims for payment must include adequate back up documentation such as receipts or invoices. There also needs to be approval by an authorized person.

All payments to vendors for services must have a properly authorized and executed contract. In most cases only the Board of Supervisors and purchasing agent can execute a contract. Department heads need delegated authority by the Board to sign a contract and this must be verified. Payments cannot exceed the amount approved in the contract or fall outside of the performance period.

Required documentation of payment requests and timesheets is also reviewed and verified by the independent auditors as part of the annual county audit. Not having audits completed for the last two years does not create transparency or provide assurances that proper accounting practices are occurring.