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From YouTube: 09/03/2020 - Legislative Commission's Audit Subcommittee
Description
This is the second meeting of the 2019-2020 Interim. Meeting rescheduled from July 14, 2020. Please see agenda for details.
For agenda and additional meeting information:https://www.leg.state.nv.us/App/Calendar/A/
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A
I
guess
we're
ready
to
start
okay
good
morning,
I'd
like
to
call
to
order
the
audit
subcommittee
for
the
legislative
commission.
This
is
september
3rd
2020.,
I'd
like
to
welcome
everybody
to
our
second
meeting
of
the
audit
subcommittee
during
this
interim.
A
A
The
rescheduled
meeting
for
july
14
was
also
cancelled
due
to
conflict
with
the
31st
special
session
of
the
legislature,
I'd
like
to
provide
special
thanks
to
state
agency
representatives
that
are
participating
in
today's
meeting
over
the
past
several
months.
Many
of
us
have
participated
in
meetings
using
this
new
format
of
a
zoom
style
meeting,
and
the
only
important
thing
is
that
when
you're,
not
speaking,
please
mute
your
microphone
so
that
it
doesn't
create
interference
for
the
secretaries
who
will
be
recording
and
transcribing
the
meeting
at
this
time.
A
I'm
here
thank
you
for
that.
I
believe
miss
benitez
thompson
will
be
hopefully
joining
us
before
we
begin
I'd
like
to
share
a
few
housekeeping
items
for
review
for
the
benefit
of
the
the
audience
and
those
wishing
to
speak.
Although
we
are
meeting
remotely
many
of
the
same
processes
that
we
normally
ascribe
to
remain
in
order,
we
will
have
two
periods
of
public
comment
today.
One
at
the
beginning
of
the
meeting
and
one
at
the
end
of
the
meeting
public
comment
is
limited
to
three
minutes
per
speaker.
A
A
A
A
Thank
you.
What
we'll
do
is
I'll,
just
wait,
probably
another
minute
in
case
somebody
is
in
the
process
of
dialing
in
so
we'll
just
stand
at
ease
for
for
one
minute.
Thank.
A
A
Okay,
since
we
have
not
received
anyone
else
wishing
to
provide
public
comment,
this
time
once
again,
they'll
be
able
to
provide
public
comment
at
the
end
of
the
meeting.
So
I'd
like
to
move
forward
at
this
time
to
item
agenda
item
number
three,
which
is
the
approval
of
the
minutes
for
the
meeting
held
on
february
18
2020..
A
Are
there
any
questions
regarding
these
minutes.
A
If
not
I'll
accept
a
motion
to
approve
the
minutes
so
moved,
we
have
a
motion
by
assemblywoman
carlton,
a
second
by
senator
goku
chia.
Is
there
any
discussion,
mr
crossman,
would
you
be
kind
enough
to
take
role
on
this
item.
A
F
A
Yes,
thank
you,
mr
crossman.
The
motion
passes.
A
A
2019.,
mr
crossman,
would
you
like
to
provide
some
opening
remarks.
B
Thank
you,
chair
for
the
record
dan
crossman
legislative
auditor.
The
single
audit
for
the
fiscal
year
ended
june
30th
2019
was
performed
under
contract
by
the
firm
ike
bailey.
The
single
audit
is
required
by
the
federal
government
for
entities
that
accept
and
expend
federal
funds
above
a
certain
level.
The
statewide
single
audit,
pursuant
to
the
federal
government's
office
of
management
and
budgets,
uniform
guidance
requirements,
incorporates
an
audit
of
the
state's
financial
statements
and
an
audit
of
compliance
with
requirements
related
to
the
state's
use
of
federal
funds.
B
I'd
like
to
express
our
appreciation
for
the
professionalism
and
flexibility
of
I
bailey
and
completing
the
single
audit
this
year.
The
audit
process
is
challenging,
as
the
auditors
work
with
various
state
agencies
staff
to
accomplish
their
work
and
does
require
thousands
of
hours.
B
A
C
Thank
you
senator
parks.
I
am
just
want
to
do
a
quick
introduction,
tami
miramontes,
I
was
served
as
the
engagement
partner
and
the
project
manager
for
both
the
single
audit
and
the
financial
statement.
C
So
as
part
of
the
the
single
audit,
we
actually
issue
three
reports
as
a
result
of
those
procedures,
and
I
know
that
you
have
been
provided
the
the
single
audit
report
and
it's
a
very
lengthy
document.
So
I
just
want
to
point
out
where
our
reports
are
in
case.
You
wanted
to
peruse
those
or
look
at
those
at
any
time.
C
So
our
first
report
is
actually
on
pages
one
through
three
of
the
single
audit
report,
and
this
is
our
our
main
independent
monitors
report
over
the
financial
sickness
themselves
and
in
that
report
we
have
provided
an
unmodified
opinion,
which
is
the
highest
level
of
assurance
that
you
can
get
that
says
that
the
financial
statements
are
materially
correct
as
they
have
been
presented
and
then
moving
on.
We
have
a
second
report
which
we
issue
in
accordance
with
government
auditing
standards.
C
Yes,
it
can
be
found
on
page
98..
We
did.
I
actually
identify
seven
material
weaknesses
in
this
report
and
those
related
to
errors
and
reporting
highway
fund
payables
and
inventory
permanent
school
fund
receivables,
state
agency
funds
for
bond
assets.
C
There
were
21
of
those
types
of
findings
in
the
report
and
then
our
auditor's
report
on
compliance
also
noted
that
the
schedule
of
expenditures
of
federal
awards
is
accurately
stated.
The
cifa
shows
over
5.86
billion
dollars
in
federal
awards
as
extended
by
the
state
and
fiscal
year.
19
and
cfa.
C
C
A
single
audit
report
also
contains
managers
response
to
auditor
findings,
including
the
prior
year
audit
findings
and
corrective
action
plans
prepared
by
the
agencies.
These
are
the
blue
pages
in
the
back
half
of
the
hard
copy
report
as
part
of
the
audit
process.
We,
as
I
bailey
confirmed
the
status
of
these
findings,
really
related
to
programs
audited
in
the
current
year.
C
G
G
Unfortunately,
last
year,
the
requirements
and
the
audit
requirements
sort
of
changed
and
we
were
required
to
audit
less
and
that
was
through
direction
and
from
the
office
of
management
budget
that
the
president
has
sent
out
a
directive.
So
you
can't
necessarily
take
a
one-to-one
comparison
to
the
prior
year
because
we
weren't
necessarily
auditing
the
same
amount
of
requirements,
but
I
would
like
to
highlight
a
couple
of
things
where
it
is
sort
of
apples
to
apples.
G
G
If
we
look
at
the
prior
year
report,
we
had
22
material
non-compliances,
so
it
seems
like
there's
a
significant
improvement,
but
again
that's
a
little
misleading
because
of
the
change
in
audit
requirements
that
we
were
required
to
audit
last
year.
G
So
to
put
in
more
context,
we
have
to
follow
up
on
prior
year
findings
and
of
the
22
prior
year.
Material
non-compliances
14
were
not
corrected
and
8
of
the
22
were
corrected,
so
really
only
about
a
a
one-third
correction
rate
on
material
non-compliances
continue.
A
continuing
theme
for
the
last
couple
of
years
are
the
areas
of
material
non-compliance
or
where
the
state
historically
struggles
with
compliance
and
those
two
finding
areas
really
are:
procurement,
suspension
and
department
and
sub
recipient
monitoring
of
the
33
current
year
findings.
Seven
of
them
were
related
to
sub-recipient
monitoring.
G
Four
of
them
were
related
to
procurement,
suspension
and
debarment,
and,
as
I
just
mentioned
on
those
14
findings
from
2018
that
were
not
corrected,
seven
of
those
related
to
procurement,
suspension
and
department
and
five
of
those
related
to
sub-recipient
monitoring.
So
it's
really
sub-recipient
monitoring
and
procurement,
suspension
and
department
that
continue
to
be
the
two
hardest
compliance
areas
for
state
agencies
to
comply
with,
and
that
has
been
kind
of
the
historical
trend
over
the
last
couple
of
years.
G
We
are
as
dan
crossman
mentioned
earlier
and
tammy
mentioned.
We
are
available
for
any
questions
that
you
may
have,
and
I
know
that
it's
kind
of
hard
to
digest
all
of
these
findings.
So
we
we
appreciate
and
welcome
any
any
questions.
A
Thank
you.
Thank
you,
mr
schlicker.
A
I'd
like
to
at
this
point
turn
it
over
to
committee
members
to
see
if
they
any
members
have
any
questions
for
either
miss
miramontes
or
mr
schlicker.
A
Yes,
assemblywoman
carlton,
please
thank.
D
You
so
the
the
comment
that
was
made
that
piqued
my
interest
was
that
we're
not
looking
at
the
same
things.
So
it's
going
to
be
hard
to
do
a
comparison
because
of
the
change
in
requirements
at
I
believe
you
said
the
gao
level.
So
what
what
don't
we
know
now?
What
what
did
we
not
look
at?
D
G
Yes,
it
does
again
kurt
schlicker
with
I
bailey
for
the
record
through
the
chair
to
assemblywoman
carlton
yeah,
the
unfor-
well,
not,
unfortunately,
but
what
happened
is
in
previous
years
prior
to
2019,
we
would.
Auditors
were
required
to
do
kind
of
a
materiality
determination
on
what
compliance
requirements.
We
would
audit.
So
we
would
look
at
the
federal
guidelines
and
then
break
them
into
compliance
requirements
and
to
put
in
perspective,
there's
12
compliance
requirements,
for
you
know
big
buckets
that
each
grant
may
have
on
average
somewhere
to
seven
to
ten
compliance.
G
Requirements
are
applicable
to
any
one
grant
last
year
in
2019
that
was
mandated
to
audit
a
maximum
of
six
requirements
and
that
mandate
was
pushed
by
president
trump
and
then
the
federal
agencies
carried
it
out
and
then
dictated
which
six
compliance
requirements.
They
wanted
auditors
to
look
at,
so
we
followed
federal
agency,
mandatory
guidance
on
which
six
requirements
to
look
at
and
so
many
requirements.
G
We
did
not
look
at
in
the
scope
of
the
current
year
audit,
but
if
they
had
a
prior
year
finding
from
say
2018,
we
were
required
to
follow
up
on
the
status
of
that
prior
year.
Finding
so
in
the
hard
copy
of
the
single
audit
report
in
that
blue
section
in
the
back.
That's
that's
where
what's
called
the
status
of
prior
year
findings,
and
then
we
verify
so
to
speak.
G
What
the
state's
response
is
on
those
prior
year
findings,
and
so
like
I
said
there
was
22
material
non-compliances
in
2018
and
14
of
those
were
not
corrected,
but
we
only
reported
four
repeat
material
non-compliances
and
that's
simply
because
we
didn't
have
we
didn't
audit
those
same
compliance
requirements
in
the
in
the
current
year.
As
you
know,
due
to
federal
mandate,
it's
not
that
we,
you
know
didn't,
want
to
or
didn't
or
didn't
need
to.
G
It
was
that
literally,
the
federal
agency
said:
do
not
look
at
these
compliance
requirements
now
to
be
fair
federal
agencies
picked,
which
requirements
they
thought
was
most
important
or
requirements
that
they
may
look
at
themselves.
So
if
oig
comes
out
and
does
an
audit,
they
may
focus
on
certain
compliance
requirements
and
maybe
not
rely
on
an
external
auditor
to
look
at
anymore
so
that
that
is
unknown
though-
and
I
don't
really
have
the
answer
to
to
that-
if
they
choose
to
do
that.
D
G
Again,
kurt
schlicker
for
the
record
through
the
chair
to
assemblywoman
carlton,
the
the
mandate
was
down
to
six
requirements,
and
that
was
what
the
current
administration
asked
for.
I
I
don't
have
an
answer
of
whether
or
not
federal
auditors
from
the
office
of
inspector
general
will
look
at
those
other
requirements.
G
D
A
I
thank
you
assemblywoman
carlton.
Are
there
further
questions
from
members
of
the
committee.
A
E
A
Thank
you
a
second
from
senator
gokuchiya
discussion
on
the
emotion,
okay,
not
hearing
any
I'd
like
to
ask
mr
crossman
to
take
a
roll
call.
H
A
Thank
you.
The
motion
passes
I'd
like
to
express
my
appreciation
to
both
miss
miramontes
and
mr
schlicker
for
their
presentation
today.
Thank
you
very
much
for
your
your
service.
Okay.
That
concludes
item
number.
Four,
a
I'd
like
to
proceed
on
to
item
number
4b
and
that
is
a
review
of
the
public
employees,
benefit
program.
Contract
management.
I
Peterson
good
morning,
chair
committee,
members
for
the
record,
I
am
james
thorne,
deputy
legislative
auditor,
beginning
on
page
one
and
continuing
through
page
four.
We
provide
background
information
on
the
public
employees
benefits
program,
including
the
agency's
mission
membership,
main
service
contracts
and
amounts
a
summary
of
revenues
and
expenditures
and
reserve
levels.
I
I
The
audit
findings
began
on
page
six.
That's
contracting's
contracting
practices
changed
over
the
past
several
years,
focusing
more
on
amending
and
extending
contracts
through
private
negotiations.
Instead
of
competitive
procurements
between
fiscal
years,
2015
and
2019
pep
authorized
nearly
96
million
in
contract
services
that
were
not
competitively
bid
through
a
request
for
proposal
rfp
process
on
page
7
and
exhibit
5
on
page
8.
We
note
that
14
of
19
active
service
contracts
in
fiscal
year
2019
had
been
extended.
I
As
a
result,
the
average
contract
term
increased
from
almost
five
and
a
half
years
to
over
eight
and
a
half
years
with
two
contracts.
Having
11-year
terms,
however,
state
policy
indicates,
contracts
should
be
competitively
solicited.
At
least
every
four
years.
Competitive
solicitation
helps
ensure
fair
competition.
The
selected
vendor
is
in
the
best
interest
of
the
state,
exhibit
six.
On
page
nine
shows
pab
contracting
activities
between
fiscal
years,
2009
and
2019.
I
The
exhibit
shows
that
for
the
first
six
years,
no
contract
extensions
were
performed
and
21
competitive
bids
took
place
through
an
rfp
process.
However,
under
pebb's
management
over
the
past
five
years,
23
contract
extensions
were
performed
and
only
12
competitive
bids
took
place
while
pep
claims
a
longer
contract
term
is
more
desirable
for
some
contracts.
Amending
and
extending
contracts
indefinitely
does
not
help
ensure
the
state
and
participants
receive
the
best
value.
I
Page
10
discusses
how
private
negotiations
became
a
standard
practice
as
best
management
extended
vendor
contracts
for
multiple
years,
as
noted,
in
exhibit
7
on
page
10.
Negotiations
for
one
contract
included
two
vendor
paid
trips
at
the
request
of
peb
management,
in
which
peb
employees
receive
transportation,
lodging
and
meals
in
excess
of
seven
thousand
dollars,
as
mentioned
on
page
11,
both
ethics
laws
and
executive
order,
which
was
adopted
by
pev
in
2014,
prohibit
pep
employees
from
accepting
gifts,
including
services
such
as
transportation,
travel,
lodgings
and
meals.
I
I
When
agencies
employees
accept
gifts
from
vendors,
the
potential
exists
for
impropriety
or
the
appearance
of
impropriety
to
be
present
within
the
agency
and
increases
the
risk
that
decisions
made
by
management
will
not
be
in
the
best
interest
of
the
state
on
pages
12
and
13
and
exhibit
8.
We
note
that
peb
management
claimed
that
competitive
bidding
up
for
contracts
was
unnecessary
as
they
performed
regular
market
checks
to
determine
the
value
of
the
services.
Their
current
vendors
were
providing
market
checks
compared
pebb's,
vendor
services
and
pricing
to
other
vendors,
for
which
pev's
actuary
had
information.
I
However,
market
checks
were
only
performed
multiple
years
for
one
vendor
and
showed
pebb
was
paying
more
than
other
plans
of
similar
size.
In
addition,
peb
management
stated
that
market
checks
helped
to
negotiate
better
rates,
but
the
following
year's
market
check
again
showed
pep
continued
to
pay
more
by
up
to
2.3
million
dollars.
I
In
addition
to
market
checks,
pebb
often
cited
cost
savings
is
a
reason
for
extending
contracts,
as
discussed
on
page
13..
However,
the
analysis
for
cost
savings
are
often
limited
and
not
comprehensive.
The
agency's
contracting
practices
have
allowed
for
private
negotiations
that
have
led
to
contracts
with
higher
costs
and
rates
that
are
not
easily
defined.
I
Furthermore,
when
a
contract
management
process
lacks
competition,
it
gives
preferential
treatment
to
some
vendors.
It
makes
it
difficult
to
determine
if
the
state
and
pet
participants
receive
the
best
services
at
the
best
prices.
On
page
14
and
15.
We
note
state
law
designates
the
peb
board
as
the
governing
body
responsible
for
the
agency's
contracting
practices
and
use
of
agency
resources
on
page
16.
We
note
two
occasions
in
which
pep
significantly
modified
existing
contracts
by
passing
competitive
solicitation
requirements
for
new
services.
I
When
contract
amendments
significantly
modify
the
original
scope
of
work.
Other
vendors
would
deny
the
opportunity
to
compete
and
offer
different
solutions
and
pricing
helping
ensure
the
state
obtains
the
best
value.
Exhibits
9
on
page
18
shows
that
for
6
of
18
contract
extensions
tested,
feb
did
not
receive
proper
approvals.
I
I
Furthermore,
on
page
19,
the
board
had
approved
contract
amendments
without
supporting
documentation
to
validate
statements
made
by
peb
management.
We
observed
peb
management
provided
statements
to
its
board
that
negatively
negatively
portrayed
the
competitive
bidding
process
indicating
that
bidding
was
too
costly
of
little
value
or
state
risk.
Paying
more
with
a
new
vendor
in
recent
years,
the
board
approved
modification
of
pep's
policies
and
procedures,
placing
less
emphasis
on
competitive
procurement
and
board
oversight,
as
discussed
on
page
20
and
21..
I
For
example,
in
september
2015,
peb
management
brought
forward
policy
changes
that
removed
the
first
step
in
contracting
practices
that
required
the
agency
to
develop
an
rfp
when
a
contract
is
scheduled
to
expire
or
a
new
service
is
required
in
place
of
this
process.
The
policy
changes
require
pep
staff
to
create
a
list
of
contracts
scheduled
to
expire
and
provide
the
board
with
recommendations
for
extensions
to
existing
contracts,
as
shown
in
exhibit
10.
I
A
You
thank
you,
mr
thorn.
I
appreciate
that
presentation.
I'd
like
to
at
this
time
open
it
up
to
the
members
of
the
committee
to
any
questions
they
may
have
for
audit
staff.
A
Yes,
thank
you
assemblywoman
carlton,
please
thank.
D
A
D
D
I
Sharon
parks
through
you,
james
thorne,
for
the
record.
I
think
there
were
some
leadership
changes
that
had
occurred
within
peb,
as
we
had
noted
when
I
think
it's.
Let
me
share
the
exhibit
number
here:
real
quick,
but
in
one
of
the
exhibits
we
kind
of
show
that
there's
a
change.
This
is
exhibit
six.
On
page
nine,
we
kind
of
show
a
change.
I
There
was
a
change
in
leadership
that
took
place,
which
kind
of
led
to
a
culture
change
and
then
again,
on
page
20
of
the
report,
we
talked
about
policy
changes
that
were
implemented
and
approved
by
the
board,
and,
I
would
say
in
the
board's
defense,
you
know
a
lot
of
the
reasoning
provided
to
the
board
by
pet
management
indicated.
I
I
D
And-
and
I
appreciate
that,
but
I
think
we
need
to
know
what
we
need
to
do,
especially
like
at
the
interim,
retirements
and
benefits
committee
level.
D
Is
there
some
we
I'd
like
a
recommendation
from
you
or
and
not
at
this
moment?
You
guys
could
come
up
with
something
for
us,
but
I
think
that
committee
somehow
needs
to
be
aware
of
these
things,
because
that's
part
of
what's
going
on
there
and
these
benefits
are
very
important
to
state
employees.
I
mean
and
the
fact
that
this
happened.
D
State
employees
may
have
been
very
mis-served
and
somehow
the
ball
was
hidden
from
us
on
this,
so
I
I
think
we,
it
would
be
very
important
for
us
to
make
sure
that
that
committee
has
the
information,
because
this
happened
in
15
16
17.
We
could
have
stopped
this
in
the
17
session.
D
I
mean
if
they
got
away
with
it
in
15.
If
we'd
have
known
in
17,
we
could
have
adjusted
and
then
those
last
couple
of
years
there
wouldn't
have
been
as
much
harm.
So
I
think
I'd
like
to
make
sure
that
that
other
committee
has
the
resources
it
needs
to
catch.
These
types
of
things,
because
to
me
this
is
just
this-
is
this-
is
beyond
unethical
what
they
did.
I
mean
we
can't
even
have
a
cup
of
coffee
with
somebody,
but
yet
they
took
trips,
so
won't
go
into
consequences
right
now.
D
A
Thank
you,
assemblywoman
carlton.
Is
there
any
response
from
mr
barn?
Regarding
the
last
question
from
assemblyman
carlton.
I
Mr
chairman,
james
thorne,
for
the
record,
I
would
say
that,
being,
I
guess,
using
state
purchasing
as
a
as
an
ally
always
being
able
to
refer
to
them
if
there's
ever
concerns
regarding
contracting
issues
as
well
as
nrs
333,
which
lists
the
procurement
laws
and
and
purchasing
laws
as
well
as
contracting
practices.
I
A
H
Thank
you
so
much,
and
so
my
question
is
kind
of
along
in
the
same
lines
that
the
recommendations
I
very
much
appreciate,
but
they
they
kind
of
come
back
to
that
self-governance
aspect
of
the
board,
just
that
the
agency
needs
to
develop
more
policies,
and
then
hopefully
you
know
those
policies
will
be
forwarded
are
followed
and
obviously
we'll
bird
dog
this
for
a
little
bit.
We
have
lots
of
nrs
that
they're
supposed
to
be
following.
I
don't
know
that
it's
necessarily.
We
need
more
laws.
H
I
think
it's
on
page
yeah
15,
you
outline
not
only
the
the
nrs
333
on
purchasing
that's
supposed
to
be
followed,
but
the
287
stuff
save
the
state
administrative
manual.
So
I
feel,
like
we've,
got
lots
of
lots
of
the
policy
lots
of
the
words
on
paper
that
talk
about
how
compliance
should
happen,
and
I'm
just
wondering
from
previous
audits,
where
we
saw
you
know
lots
of
level
of
oversights
that
that
weren't
really
getting
to
address
the
problem.
Did
you
see
other
type
of
recommendations
that
were
more
effective
in
kind
of
getting
sunshine
in.
J
For
the
record,
todd
peterson
audit
supervisor,
chair
parks
through
you,
you
know
in
prior
audits-
we
don't
at
all
times
see
like
a
governing
body
like
pebb
has
a
board.
J
So
you
know,
recommendations
in
in
other
audits
are
made
towards
strengthening
either
the
policies
and
procedures
of
the
agency
or,
when
applicable,
requesting
changes
to
state
law
to
help
tighten
up
the
oversight
of
an
agency.
In
this
case,
I
think,
with
the
public
employees
benefits
program,
you
have
a
board
and
you
know,
training
on
their
part
and
and
the
ability
for
them
to
to
question
the
actions
of
the
agency
would
go
a
long
ways
to
helping
resolve
these
issues.
J
I
think
too,
for
the
the
board
members
to
have.
You
know
that
critical
eye
that
professional
skepticism,
when
when
contracts
or
amendments
are
presented
to
them,
not
only
asking
questions,
but
once
they
receive
you
know
responses
from
agency
management,
but
to
question
those
and
to
require
supporting
documentation
for
the
positions
taken
by
the
agency
so
that
they
can
ensure
one
that
they're
in
compliance
with
state
laws
and
policies,
but
then
also
the
the
best
interest
of
the
state.
These
actions
are
being
taken
for
the
best
entrances
interests
of
the
state.
H
If
I
could
follow
up
when
you
the
recommendation
here,
where
you
talk
about
the
periodic
training
for
the
board
members
and
employees,
I
think
that's
good
would.
Would
you
say
that
your
office
would
be
equipped
to
handle
that?
I
almost
think
that
that
I
see
within
I.
I
think
it
needs
to
be
kind
of
someone
with
a
more
a
kind
of
that
audit.
H
I
because
I
I
see
how
the
conversations
go
with
the
with
the
board
and
with
staff,
and
you
know
when
they
have
the
conversations
where
the
board
does
say:
hey.
Aren't
we
supposed
to
do
an
rfp?
We
should
probably
be
doing
an
rfp
and
they've
got.
H
You
know
really
smart
astute
educated
people
on
the
board
and
they're
and
they
seem
to
when
they
know
to
ask
the
questions
when
they
know
there's
a
contract
up,
they
seem
to
be
asking
the
right
questions,
but
then
you
know
staff
will
say
well
it's
just
too
expensive
to
do
that.
It's
you
know
and
you've
got
staff
really
guiding
the
board
in
a
direction
to
say:
do
not
you
know
it's
just
gonna
be
way
too
expensive
for
those
pharmacy
benefit
managers
to
submit
an
rfp
process.
H
You
know
they
don't
have
the
money
for
that
or
they
don't
have.
You
know
the
you
know,
exchange
providers
might
not
have
the
money
to
do
an
rfp
process,
which
is
kind
of
almost
comical
in
a
way,
but
it
would
when
we
talk
about
that
training.
Could
that
be
something
that
that
you
folks
would
do
or
is
there?
H
I
don't
think
it's
a
a
one-time
power
point
for
them
to
kind
of
to
do
this.
What
just
get
your
your
thoughts,
I
I
know
your
office
does
a
lot,
I'm
not
necessarily
suggesting
you
say,
yeah,
we'll
we'll
do
that,
but
I'm
just
can
you
give
some
suggestions
that
when
we
say
training
how
we
could
get
more
a
little
bit
more
specific
as
to
who
the
best
who
who
who
best
might
provide
that
kind
of
training
at
a
level?
That's
really
meaningful.
J
J
You
know
we
have
estate
purchasing
that
has
professionals
that
that
you
know
teach
classes
on
contracting
and
the
requirements
and
and
so
they're
a
wonderful
resource.
We
have
the
you
know:
government
governor's
finance
office
with
their
internal
audit
and
that
function.
So
there
there's
many
resources
available
in
the
state.
H
One
last
follow-up
on
that
is-
and
I
think
this
distinction
here
is
important.
As
I
was
reading
the
report,
you
think
that
it
was
a
naiveness
of
these
laws
or
or
I
see
more
evidence
that
it
was
a
workaround
of
the
laws
which
I
guess
when
I'm
asking
these
questions
about,
how
you
train
for
compliance.
J
Non-Compliance
for
the
record
todd
peterson
out
of
supervisor
chairman
through
you
to
the
assembly
woman.
In
my
opinion,
you
know
what
a
lot
of
times
we
follow
the
path
of
least
resistance.
J
You
know
the
if,
if
the
agency,
if
agency
management,
I
don't
want
to
speak
for
agency
management,
but
you
know
they
they
felt
like
they
were
they're
able
to
get
a
reasonable
price
for
the
services
performed
and
do
it
without
having
to
go
through
some
of
the
effort
of
soliciting
proposals
and
and
evaluating
those.
J
That
could
be
part
of
the
reason
behind
why
seeing
things
didn't
follow
the
the
required
path
and
then,
as
far
as
the
board.
Once
again,
I
don't
want
to
speak
for
them,
but
I
think
they
put
a
a
great
bit
of
trust
in
the
agency
and
within
the
management,
and
we
we
did
see
as
as
part
of
our
auto
work
as
we
reviewed
board
minutes.
We
see
the
board
asking
some
some
wonderful
questions
and,
as
they
received
answers
from
management,
sometimes
those
those
answers
were
they
were
long.
J
They
were,
they
provided
information.
They
didn't
provide
documentation
that
necessarily
supported
what
was
being
said,
but
so
I
think
the
board
put
their
trust
in
management
and
after
a
while
felt
after
after
things
were
done
time
and
time
again,
it
was
just
kind
of
accepted,
as
as
the
way
things
were
allowed
to
be
done
and
and
what
was
acceptable.
J
E
Mr
chair
yeah.
E
Thank
you.
I
I
just
got
a
couple
questions
and
clearly
I
assume
the
pet
board
is
a
bonded
board.
You
know
and
yeah
we're
seeing
evidence
here
that
intentionally
or
not
they
did
skirt.
You
know
pieces
of
nrs,
the
board
has
the
authority
and
ultimately
the
fault
lies
with
them,
and
I
think
that
is
what
we
need
to
really
impress
on
the
board
and
the
fact
that
they
do
have
the
culpability
and
the
liability.
A
Mr
peterson
any
thoughts
there.
J
For
the
record
todd
peterson
through
your
chair
to
senator
bill
kacia,
as
mentioned
in
the
audit
report,
we
do
highlight
that
there
has
your
correct
senator
that
the
board
is
the
governing
body
and
the
through
statute.
There
has
been
a
lot
of
authority
and
responsibility
placed
with
them,
so
it
is
it's
an
important
board,
there's
important
decisions
that
are
made
there,
and
so
absolutely
they
need
to
take
that
responsibility
seriously,
which
I
believe
they
do
and
with
the
proper
amount
of
training
they
will.
J
For
the
record
todd
peterson
through
youth,
chair
to
senator
goku
chia
as
far
as
contracting,
I
I'm
not
aware
of
any
penalties.
If
that
would
be
applicable,
is
that
the
ethics
commission
would
impose
the
ethics
commission,
I
believe,
would
be
responsible
for
overseeing
and
enforcing
any
violations
of
the
ethics
laws.
E
All
right,
thank
you,
so
technically,
they're
responsible,
we
really
don't
know
who's
going
to
provide
the
oversight
to
them
as
well,
and
maybe
that's
something
we
need
to
look
at.
A
Thank
you
senator
gokuchi,
and
thank
you,
mr
peterson.
I
think
that
we
probably
have
comments
questions
for
the
executive
officer
when
we
invite
her
forward.
A
I
have
you
know
a
couple
observations,
and
that
is
that
I
guess,
as
I'm
reading
the
report,
I'm
kind
of
reading
a
little
behind
the
between
the
lines
and
on
page
14,
you
make
emphasis
of
the
fact
that
the
pep
board
needs
to
enhance
oversight
of
the
agency.
But,
as
I
read
the
report,
I
I
get
a
strong
sense
that
the
executive,
the
previous
executive
officer,
ran
wide
and
loose
on
this
whole
dealing,
especially
with
that
of
the
especially
the
extensions.
That's
how
maybe
we
could
find
out
a
little
more
about
that.
A
A
Findings
that
were
provided
so
if
I
could
get
an
answer
to
to
that
regarding
pep's
policy
policies
and
procedures
requiring
state
purchasing
to
approve
any
contract
extensions.
I
Mr
chair
james
thorne,
for
the
record.
Yes,
that's
correct,
there
is
policies
and
procedures
that
require
that
you
go
through
state
purchasing
when
you're
going
to
do
a
contract
extension,
they
have
a
contract
extension
justification
waiver
in
which
the
agency
would
complete
and
submit
the
state
purchasing
and
then
state
purchasing.
Giving
their
reasoning
would
then
make
a
decision
or
determination
on
whether
or
not
they
could
approve
the
extension
or
deny
the
extension.
A
Thank
you,
mr
thorne.
I
think
I
have
one
final
question
and
if
there's
any
other
committee
members
wishing
to
ask
questions,
that's
fine
too,
on
page
21,
you
make
reference
to
unnecessary
expenditures,
and
I
don't
know
if
I
fully
understand
at
the
very
bottom
of
page
21,
it
makes
reference
to
american
business
awards
and
stevie
awards.
Could
you
just
give
me
a
a
brief
explanation
of
what
these
awards
are
and
how
they
function?
A
Are
they
are
they
awards
for
outstanding
work
by
employees
or
how
does
that
work?
Thank
you.
I
Mr
chairman,
james
thorne,
for
the
record
I'll,
probably
defer
that
question
to
the
agency,
as
they
are
a
little
bit
more
familiar
with
the
business
awards.
However,
what
we
looked
at
was
that
they
had
won
awards
for
innovation
and
that
they
had
they
had
gotten
the
stevie
award
they
had
applied
for
it.
I
believe
twice
and
gotten
it
twice,
but
the
details
as
far
as
how
they
got
into
that
and
the
different
kinds
of
awards
that
they
could
apply,
for.
They
would
probably
be
better
suited
to
answer
that
question.
A
A
Okay,
I'm
not
seeing
any
once
again.
Thank
you,
mr
thorne
and
mr
peterson
for
your
presentation
at
this
time.
I'd
like
to
open
it
up
for
the
exec.
I
believe
the
executive
officer
miss
rich
from
beb.
F
F
F
Pebb
currently
has
six
major
contracts,
expiring,
and
all
of
these
contracts
are
either
out
to
bid
now
or
will
be
going
out
to
bid
soon
board.
Members
have
been
heavily
involved
in
the
development
of
the
request
for
proposals
or
the
rfps,
and
they
are
also
serving
as
evaluators
on
all
the
evaluation
teams.
F
So
in
addition,
there
will
be
an
agenda
item
on
the
next
board
meeting
to
address
the
recommended
policy
and
procedure
changes
as
well,
so
I
think
we're
making
some
progress
there.
I
do
also
want
to
add
that,
as
I
believe,
james
thorne
said
that
contract
all
these
contract
extensions
and
any
contract
in
general
does
have
oversight.
It
has
to
be
approved
by
the
purchasing
division,
also
by
the
governor's
finance
office
and
the
board
of
examiners
as
well.
So
so
there
are,
there
is
oversight.
F
All
of
the
contract.
Extensions
at
the
time
did
go
through
those
processes,
so
I
just
wanted
to
make
that
clear
as
well,
so
the
second
finding
I
won't
lie
it
was.
It's
concerning
the
auditors
had
a
concern
regarding
two
instances
when
an
existing
vendor
paid
for
transportation
and
lodging
for
pep
staff
to
travel
to
their
toronto
headquarters,
location
in
january
of
2017
and
the
audit
finding
refers
to
this
is
a
violation
of
the
gifting
policy.
F
F
I
also
do
want
to
add
that,
yes,
it
it's
very
concerning
that
there
was
a
contract
extension
that
came
after
that,
and
the
perception
is
just
as
important
as
anything
else
here,
and
I
do.
I
do
want
to
say
that
that
contract
extension
back
in
march
was
cancelled
by
the
board.
F
There
was
a
recommendation
by
staff
to
cancel
it
based
on
poor
performance,
and
they
will
so
that
that
bid
is
or
that
contract
is
now
out
for
solicitation
today,
so
that
that
contract
extension
was
cancelled
by
the
board
and
is
no
longer
in
effect
today.
F
I
do
also
want
to
add
that
this
will
be
an
agenda
item
at
the
pebb
september
board
meeting.
We
will
be
presenting
these
items
to
the
board.
I
will
be
making
the
recommendation,
based
on
these
audit
findings,
to
possibly
form
a
subcommittee
of
by
the
board,
to
then
establish
more
in-depth
policies
and
procedures
for
the
board,
and
also
internally
for
pep
staff
as
well.
A
I
think
at
this
point
I'll
open
it
up
for
questions
from
committee
members
assemblywoman
carlton.
Did
you
wish
to
follow
up
on
your
previous
questions
to
the
audience.
D
D
F
For
the
record,
laura
rich,
thank
you
for
the
question.
The
the
ethics
commission.
In
order
to
issue
a
formal
finding
must
do
a
formal
investigation,
so
they're
there
has
to
be
a
request
made
to
do
a
formal
investigation
on
on
on
any
ethics
potential
ethics
violation,
but
I
I
believe
the
auditing
team,
as
well
as
myself,
actually
reached
out
to
the
commission
on
ethics
director
and
presented
them
with
the
information
that
was
available
and
I
believe
it
sounds
like
we
presented.
F
We
presented
them
with
the
same
information
based
on
the
information
that
was
presented.
The
ethics
commission
did
say
that
there
is
precedence.
F
There
are
times
in,
especially
during
a
recession
or
when
an
agency
maybe
doesn't
have
sufficient
funding
where
it
has
been
deemed
appropriate
for
that
agency
or
the
vendor
to
pay
for
the
agency's
staff
to
travel
to
you
know
either
a
a
let's
say:
it's
a
some
kind
of
convention
or
a
training
opportunity
or
something
of
that
nature,
and
so
there
is
precedence
to
to
show
that
the
vendors
paying
for
travel
and
lodging
is
is
appropriate
in
this
situation.
F
F
Find
in
a
resolution
to
improve
performance
and
so
further.
D
Than
go
through,
thank
you.
I
don't
want
to
belabor
this
any
longer.
So
it's
my
understanding
that
no
complaint
was
actually
filed.
A
conversation
was
had,
but
if
an
actual
complaint
was
filed,
then
there
would
be
a
much
more
thorough
investigation
and
it
wouldn't
be
just
a
superficial
glance
at
the
activities
with
the
response
that
oh,
it
might
be.
Okay,
but
no
one
actually
asked
for
an
investigation
on
these
behaviors.
D
Mr
chairman,
that's
what
I
do
believe
an
investigation
should
have
been
requested
just
asking
the
ethics
commission
for
just
an
opinion
on
something
without
them.
Having
all
the
data
and
going
in
and
really
investigating,
might
not
be
giving
us
the
answer
that
we
we
really
need,
so
that
that's
my
concern
is
no
actual.
Real
investigation
was
had.
Thank
you,
mr
chairman.
A
Thank
you,
senate
assemblywoman
carlton.
I
share
your
concerns.
Are
there
further
questions
of
miss
rich
from
members
of
the
committee.
A
Okay
at
this
this
time,
I'm
not
seeing
any.
I
guess
I
guess
I
should.
I
share
the
same
concern
that
assemblywoman
carlton
had
and,
as
I
was
reading
the
report,
I
couldn't
help
but
ask
myself
repeatedly
whether
or
not
these
activities
rise
to
the
level
of
a
fraudulent
activity,
and
I
I
concur
with
senator
assemblywoman
carlton
that
maybe
we
should
have
looked
further
further
on
that.
I.
A
Yes,
senator
chair,
please
thank
you.
E
F
For
the
record,
laura
rich,
yes,
that
all
of
these
contracts
were
approved
not
only
by
the
board
but
through
the
purchasing
division,
the
governor's
finance
office
and
board
of
examiners.
F
The
the
one
thing
I
do
want
to
add-
and
it
is
a
suggestion
that
I
will
likely
make
to
the
board-
is
pebb
undergoes
a
compliance
check
every
two
years.
This
is
where
we
have
an
outside
team,
look
at
all
of
our
processes
and
practices
to
ensure
that
we
are
meeting
all
federal
and
state
rules,
regulations,
laws,
and
I
believe
that
we
can
probably
add
contracts
to
this
compliance
review
as
well,
just
to
ensure
that
we
have
just
another
layer
of
oversight
in
the
future.
K
Mr
chairman,
for
the
record,
thank
you,
mr
chairman,
may
I
comment
this
is
laura
freed
for
the
record
I
serve
as
the
director
of
the
department
of
administration
and
I
also
serve
as
the
pub
board
chair.
I
was
appointed
in
january,
and
so
I
came.
K
First
off.
Yes,
both
executive
officer,
rich
and
your
staff
are
absolutely
correct.
A
contract
amendment
has
to
if
it's
beyond
a
four-year
term.
K
The
agency
has
to
fill
out
a
a
request
to
extend
the
contract
and
convince
the
purchasing
administrator
that
this
is
a
good
idea,
rather
than
going
back
up
to
bid
then
that
contract
amendment
depending
on
the
dollar
value
it
well,
it
always
goes
to
the
gfo
and
it
could
be
either
a
clerk
of
the
board
signed
by
the
gfo
analyst
or
it
could
go
to
the
full
board
of
examiners.
K
In
some
cases
there
were
concerns
raised
by
by
staff
at
the
gfo
about
the
substance
and
the
scope
changes
in
some
of
contract
amendments.
They
were
ultimately
approved
so
in
listening
to
some
of
the
earlier
testimony.
What
caught
my
ear
was?
Does
the
board
take
this
seriously?
Well,
given
my
background.
Yes,
as
the
board
chair,
I
take
this
very
seriously.
K
K
We
are
not
going
to
do
this
in
the
future
as
the
board
chair,
if,
if
it
would
have
to
be
a
very
compelling
reason
to
extend
a
contract
past
four
years
without
rebidding
it-
and
I
will
certainly,
as
the
chair
be
mindful
of
scope-
changes
that
substantially
change
the
purpose
of
the
original
contract,
and
the
only
other
thing
I
would
say
is
that,
first
of
all
to
to
ms
rich's
comment
from
a
moment
ago
about
adding
contracts
to
compliance
training,
we
will
be
doing
that
if
you
are
an
employee
in
the
executive
branch
who
handles
contracts,
you
have
to
go
through
a
certified
contract
manager
class
provided
by
the
purchasing
division.
K
The
folks
on
the
board
aren't
all
people
like
me:
they
aren't
all
fiscal
types,
there's
only
one
who's
really
fiscally
oriented
the
rest
are
they're
pharmacists,
they're,
hearing
officers,
folks
like
that,
and
so
they
don't
necessarily
swim
in
those
waters.
So
I
think
it's
a
good
thing
to
to
do.
K
Also.
Yes,
there
will
be
tweaks
to
the
board's
policies
and
procedures
to
limit
the
flexibility
of
the
executive
officer
to
amend
contracts
sort
of
administratively,
but
I
did
anyway.
So
all
of
that
all
that
said,
I
just
wanted
to
reassure
this
body
that
the
peb
board
understands
its
fiduciary
duty,
its
duty
to
its
participants,
and
we
will
do
better
in
the
future,
and
certainly
I,
as
the
chair
will
be
officially
skeptical
of
staff
coming
to
tell
me
when
they
think
a
contract
needs
to
be
amended.
A
Thank
you,
miss
freed.
I
appreciate
those
comments.
I'd
like
to
circle
back
to
senator
gokuchi,
to
find
out
if
his
questions
were
satisfactorily
answered.
Yes,.
A
And
to
miss
rich
did
you
wish
to
make
any
further
comments?
I
think
we,
I
think
we
sort
of
cut
you
off.
F
No,
the
the
only
thing
I
did
want
to
add
for
the
record.
Lord
rich.
There
was
a
question
regarding
the
stevie
awards
and
the
urac
accreditation,
the
yurak
accreditation
it
does.
I
do
want
to
say
that
it
does
expire
in
2021
and
that
will
not
be
renewed
at
the
cv
awards.
F
That
was
again
the
previous
executive
officer
there
was,
there
was
a,
I
guess,
a
desire
to
maybe
go
up
against
the
private
sector
to
see
you
know
how
well
our
agency
is
doing
compared
to
you
know
some
of
the
these
other
agents
or
these
other
organizations
in
the
private
sector,
and
so
it
was
just
a.
It
was
a
a.
F
I
guess
a
chance
to
illustrate
how
well
our
agency
was
doing
and
to
and
to
compete
against
the
private
sector,
to
you
know
to
show
the
innovation
that
our
agency
was,
you
know
was
really
taking
on.
We
will
not
be
doing
that
in
the
future,
but
that
was
that
was
just
a
question
that
I
know
came
up.
So
I
just
wanted
to
add
that
in
there.
A
Thank
you,
miss
rich
for
that
clarification
once
again
back
to
the
members
of
the
committee.
Any
further
questions
from
the
members
of
the
committee.
A
Okay,
I'm
not
seeing
any
so
what
like
to
do
is
once
again
thank
the
mr,
mr
thorne,
mr
peterson,
miss
rich
and
miss
freed
for
commenting
on
this
report
and
if
there
are
no
further
questions
I'll
go
ahead
and
accept
a
motion
to
approve
the.
A
H
A
Okay,
second
from
vice
chair,
benitez
thompson.
Thank
you,
mr
crossman.
Would
you
kindly
do
roll
call.
D
Senator
brooks,
mr
chairman,
before
you
do
roll
call.
Yes,
thank
you.
I'm
sorry,
I
was
muted.
Thank
you,
mr
chairman,
just
under
the
motion,
I'm
going
to
make
sure
it's
perfectly
clear
because
we
had
brought
up
time
frames
earlier
that
this
all
began
in
2015
and
went
all
the
way
through
2019.
D
A
Thank
you,
assemblywoman
carlton.
Yes,
I
appreciate
that
comment.
Thank
you.
So,
once
again,
I'll
turn
it
over
to
mr
crossman
to
do
a
roll
call.
B
Mr
senator
brooks
yes
senator
guy
cochia,
yes,
chair
parks,.
A
D
G
A
A
I
believe
we
have
presentations
by
miss
humlik
and
mr
peterson.
L
Good
morning,
chair
parks
and
members
of
the
audit
subcommittee
for
the
record,
my
name
is
katrina,
humlik,
deputy
legislative
auditor
and
I'm
here
today
to
present
our
audit
of
the
real
estate
division,
beginning
at
page
1
and
continuing
through
page
3.
We
provide
background
information
on
the
real
estate
division,
including
the
agency's
admission,
staffing
levels
and
financial
information
at
the
bottom
of
page
3.
L
These
limitations
included
a
lack
of
adequate
records
for
voided
transactions
and
an
inability
of
the
database
vendor
to
provide
a
report
showing
transfers
of
funds
between
licensee's
accounts.
However,
we
do
not
believe
these
limitations
impacted
our
audit
objectives
or
affected
our
conclusions
because
of
other
procedures
performed.
L
Our
findings
begin
on
page
six.
The
division's
financial
and
administrative
controls
of
our
revenues
are
inadequate,
as
stated
at
the
bottom
of
page,
six.
Controls
of
avoiding
cash
receipts
and
for
making
other
adjustments
to
real
estate
licenses
accounts
within
the
divisions
database
are
not
adequate.
Specifically,
there
is
no
segregation
of
duties
within
the
database,
thereby
allowing
employees
to
add
or
delete
revenues
from
an
account
without
any
record
of
the
edits
to
the
account.
L
These
weaknesses
leave
the
division
susceptible
to
fraud
and
other
errors.
In
fiscal
year
2019
there
were
over
3
000
voted
transactions
totaling
over
1.62
million
dollars
exhibit
3
on
page
7
shows
the
total
number
of
voted
transactions
over
the
last
three
fiscal
years
and
the
total
dollar
amount
voided.
L
Additionally,
we
observed
the
division's
written
procedures
that
includes
a
control
to
help
detect
fraudulently
voided
transactions
is
not
being
followed.
Weighted
receipts
must
be
printed
out
with
a
reason
for
the
void
documented
on
the
receipt
which
should
be
reviewed
by
a
supervisor.
However,
in
our
testing
of
25
front
counter
voided
transactions,
only
one
of
the
voted
receipts
was
printed
out,
but
a
supervisor's
review
was
not
noted.
L
The
average
number
of
days
between
a
refund
check
being
issued
from
the
state
accounting
system
and
the
refund
being
entered
into
the
divisions
database
was
140
days.
The
longest
refund
examined
took
nearly
seven
years
to
be
posted
in
the
database
after
the
check
was
already
issued.
We
also
observed
some
refunds.
Posted
in
the
database
were
invalid,
as
amounts
were
never
refunded
in
the
state
accounting
system.
L
In
addition
to
inadequate
controls
over
both
voids
and
refunds,
the
division
does
not
perform
an
effective
reconciliation
of
revenues
received,
deposited
and
recorded
in
its
database.
A
reconciliation
is
only
performed
at
the
time
of
the
deposit.
Thus
any
voids
are
transfers
between
budget
accounts
in
the
database
after
the
deposit
are
not
reconciled
to
what
is
in
the
state
accounting
system.
L
Page
10
contains
six
recommendations
to
improve
oversight
and
controls
over
cash
receipts.
Continuing
on
page
11,
our
audit
found
the
divisions,
monitoring
of
broker
trust
accounts
to
be
ineffective.
Specifically,
the
division's
current
practice
only
holds
brokers
that
hold
a
property
manager
permit
accountable
for
submitting
trust
account
information
annually.
Even
though
regulation
requires
all
brokers
to
report,
trust
account
information
or
attest
that
they
do
not
manage
trust
accounts
brokers,
who
are
property.
L
None
of
these
25
brokers
were
fined
by
the
division
for
non-compliance.
In
contrast,
we
tested
25
brokers
with
active
property
manager
permits
in
fiscal
year
2019
and
observed.
Seven
were
fined
because
they
did
not
file
the
appropriate
trust
account
report
according
to
the
division.
It
focuses
on
monitoring
brokers,
that
are
property
managers,
because
they
are
most
likely
to
have
trust
accounts,
but
our
survey
found
there
are
brokers
without
a
property
manager
permit
who
have
trust
accounts
and
they
are
not
being
monitored
or
held
accountable.
L
L
The
division
reviews
trust
account
documents
for
several
requirements
in
an
attempt
to
discover
any
commingling
of
funds
or
embezzlement
by
brokers.
However,
for
13
of
19
or
68
percent
of
broker's
trust
account
reconciliations
tested.
We
observed
the
information
reported
to
the
division,
was
incomplete
or
contained
unallowed
accounting
entries.
These
included
questionable
questionable
items
such
as
gift
card
purchases
that
were
charged
by
brokers
to
their
trust
accounts,
which
were
not
addressed
by
the
division.
L
On
one
example,
a
broker
submitted
a
trust
account
reconciliation
with
over
175
thousand
dollars
in
unknown
account
holder
balances
that
the
division
did
not
question
without
proper
monitoring
of
trust
accounts.
Individuals
may
be
at
risk
from
broker
misconduct
at
the
bottom
of
page
14
and
continuing
to
page
16.
We
found
the
division
does
not
have
an
effective
process
to
track
broker
trust
accounts
for
nevada,
revised
statute.
L
645.310.6
a
broker
must
notify
the
division
of
the
names
of
the
banks
and
accounts
for
their
trust
accounts.
On
a
form
provided
by
the
division,
however,
the
division
relies
on
brokers
to
self-report
their
bank
account
information
on
the
annual
trust
reconciliations,
and
this
information
is
not
compared
from
year
to
year.
Consequently,
the
division
is
unaware
of
how
many
trust
accounts
each
broker
has
increasing.
The
risk
accounts
will
go
unreported
and
unmonitored
leaving
individuals
money
vulnerable
to
fraud.
Page
16
contains
six
recommendations
to
strengthen
the
division's
regulation
of
broker
trust
accounts,
beginning
on
page
17.
L
We
found
the
division,
does
not
actively
pursue
collections
of
past
two
accounts
and
continues
to
have
difficulty
monitoring
and
submitting
that
timely
to
the
state
controller.
As
similar
problems
were
reported
in
our
prior
two
audits,
we
tested
76
commission
fines
selected
from
the
division's
accounts,
receivable
tracking
spreadsheets,
and
found
that
none
of
the
debt
holders
received
a
past
due
notice
at
30,
60
or
90
days.
L
Although
the
department
of
business
and
industry
has
taken
over
reporting
the
division's
debt
to
the
state
controller,
the
division
should
ensure
timely
reporting
of
its
past.
Two
accounts
by
the
department
exhibit
4
on
page
19
shows
the
number
of
fines
issued
by
the
three
commissions
over
the
last
five
fiscal
years
exhibit
5
on
page
20
shows
the
division's
collection
rate
on
these
same
fines
issued
by
fiscal
year.
L
Continuing
to
the
middle
of
page
20.
We
found
that
the
accounts,
receivable
amounts
reported.
The
state
controller
are
not
accurate,
for
example,
for
76
commission
fines
selected,
we
found
8
or
11
percent,
contained
errors
when
we
compared
the
amounts
on
the
spreadsheet
to
the
commission's
order
for
the
debt
for
one
finding
amount
on
the
tracking
spreadsheet
was
thirty
thousand
dollars.
When
the
commission's
order
showed
the
fine
was
actually
three
hundred
thousand
dollars.
Similarly,
we
we
compared
the
122
commission.
L
L
L
A
Thank
you
miss
for
that
presentation.
I'd
like
to
at
this
time
open
it
up
for
committee
members
to
if
they
have
any
questions
for
miss
hamlet.
A
Let
me
also
say
that
I
guess
out
of
disclosure.
I
should
disclose
that
I
do
have
a.
I
am
a
real
estate
licensee
through
the
department
of
the
real
estate
division.
However,
I'm
only
a
sales
licensee,
so
none
of
the
requirements
related
to
trust
funds
would
apply
to
me.
Okay,
questions
from
the
committee.
A
Yes,
vice
chair,
benitez
thompson,
please.
H
Thank
you
so
much.
I
had
a
question
on
the
recommendation
number
13,
where
it
talks
that
the
department
is
coming
up
with
a
better
process
for
debt
collection
and
coordinating
with
the
controller's
office.
I
guess,
could
you
tell
us
a
little
bit
more
about
what
that
about
what
that
looks
like
and
what
we
might
see
coming
from
the
division?
H
L
I
believe
a
lot
of
the
problems
stemmed
from
confusion
and
disconnect
between
the
department
and
the
division,
and
they
are
currently
working
on
a
joint
policy
and
procedure
on
how
to
go
about
submitting
debts
to
the
controller's
office,
as
well
as
who
is
going
to
be
responsible
for
submitting
the
30
60
90
day
past.
Due.
G
M
A
I
thank
you
vice
chair
anita
thompson.
Further
questions
from
the
committee.
A
At
this
time,
I
want
to
thank
miss
humlik
for
the
presentation,
as
well
as
mr
peterson
and
I'd
like
to
at
this
point
open
it
up
for
the
staff
of
the
administrator
at
the
real
estate
division
and
the
other.
Many
other
individuals
would
like
to
speak
on
behalf
of
the
agency.
N
Good
morning,
chair
parks,
members
of
the
committee,
this
is
shirat
chandra
administrator
for
the
real
estate
division.
Again,
just
to
start
off.
I
want
to
thank
katrina
todd.
I
think
chris
was
also
a
big
part
of
the
audit
team
and
mr
crossman
again
they
did
an
exceptional
job,
very
professional.
We
tried
to
be
as
accommodating
as
possible
to
ensure
again
bottom
line.
Is
we
want
to
get
better
from
this?
It
wasn't
in.
It
was
never
going
to
be
something
that
we
would
hide
from.
N
We
just
wanted
to
cooperate
with
them
fully,
so
we
appreciate
the
feedback
and
I
think
the
auditors
went
through
a
lot
of
these
things
without
kind
of
belaboring.
The
point
some
of
these
things
are
definitely
concerning
for
us
and
again
senator
parks.
You
know
the
history
of
the
division
and
folks
on
this
panel
probably
already
know
the
history
of
the
division.
We
are
general
funded,
and
so
the
challenge
has
always
been
trying
to
improve.
N
I
just
want
to
point
out
it's
a
14
year
old
system
that
has
kind
of
been
patched
together
over
time,
so
there
is
a
need
for
an
enhancement,
as
the
auditors
pointed
out,
even
to
get
a
report
from
the
third
party
vendor
they
have
to
do
a
customization,
so
the
challenge
has
always
been
for
us
is
how
do
we
pull
the
data
that
we
want
and
make
sure
that
we're
kind
of
putting
all
these
internal
controls
in
place?
N
What
we've
done
is
we've
done
a
mapping
of
what
everyone's
controls,
our
internal
controls,
are
and
then
we'll
start
working
towards
limiting
certain
transactions
to
the
licensing
section,
their
supervisor
and
the
manager,
thereby
enhancing
those
those
constraints,
so
that
people
are
not
voiding
and
moving
transactions
without
certain
verifications
again,
the
big
issue
was
the
refunds
and
we've
already
put
put
in
place
a
policy
right
around
the
time
the
audit
was
happening.
This
was
something
that
we've
done
about
the
refund
policy.
N
I
think
it's
an
issue
of
the
system
and
the
campaign
of
these
refunds,
and
then
how
do
we
reconcile
this?
So
we
have
a
comprehensive
policy
in
place
and
I
believe
it
addresses
a
lot
of
those.
The
trust
accounts
has
always
always
been
a
challenge
again.
The
division
has
limited
resources,
and
so
what
we've
tried
to
do
is
focus
on
those
trust
account
reconciliations
that
are
part
of
those
brokers
that
do
property
management.
I
think
that
has
been
always
a
big
issue
with
the
commission
senator
parks.
N
You
probably
can
also
see
this
in
in
the
industry,
so
that
has
been
the
focus
not
necessarily
because
everyone
may
or
may
not
have
a
trust
account,
but
that
is
where
the
maximum
amount
of
transactions
happen
and
that's
where
we've
tried
to
focus
and
again,
we
will
hone
in
on
certain
recommendations
and
try
to
create
a
better
structure,
but
at
the
end
of
the
day,
there's
40
000,
licensees,
32
000
of
them
are
real
estate
licensees
and
so
in
order
to
maximize
our
impact.
That
is
what
we've
decided
to
do.
N
I
know
there
are
questions
about.
Well,
everyone
has
trusted
pounds,
and
you
know
I
don't
have
a
very
good
answer
for
it
right
now,
but
I
will
definitely
put
my
mind
to
it
and
try
to
improve
that
process,
but
at
the
end
of
the
day,
that
is
where
we
see
the
problem
and
that's
where
we're
going
to
focus
on
all
right.
First,
I
think
that's
all
I
have
again,
I
and
and
with
the
assemblywoman
breeded
thompson's
question
about
working
with
business
and
industry
and
the
division.
We
are
definitely
there.
N
Deputy
administrator,
buddy
milazzo
is
also
on
there
just
to
lend
a
support.
We
will
work
as
a
department
at
a
division
to
clean
up
those
lines
of
communication,
also
work
with
the
comptroller's
office,
because
he
has
some
history
there.
So
we'll
try
to
bring
all
parties
together
and
try
to
ensure
that
all
those
things
happen
seamlessly
there
has
definitely
been
cracks
and
things
have
fallen
through
the
cracks
and
we
we
will
fix
that.
Thank
you.
A
Thank
you,
mr
chandra.
I
appreciate
that
presentation.
I
guess
I
know
that
community
members
will
probably
have
questions,
but
I
I
think
one
of
the
questions
that
comes
to
mind
for
me
is
you
have
14
recommendations
to
implement
and
I
don't
know
how
your
staffing
compliment
is
and
whether
or
not
this
is
something
given
the
pandemic,
we're
in
the
midst
of
and
how
that
is
going
to
impact
your
ability
to
correct
these
recommendations.
N
Thank
you,
senator
parks.
Thank
you
for
bringing
that
up
again.
The
recommendations
are
all
valid
as
I
look
through
them.
What
I
did
in
my
response
is
tried
to
combine
some
of
those
recommendations,
because
I
think
the
auditors
felt
it
was
important
to
highlight
them
section
by
section,
but
in
my
understanding
and
looking
at
it
a
little
globally.
N
The
trust
account
reconciliations
is
one
pot
though
it
might
be.
You
know
auditing
it
receiving
it
documenting
it
all.
Those
things
for
me
fall
into
one
big
pot
and
I'm
going
to
address
it
as
a
as
a
as
a
whole.
But
again
the
point
that
I
made
earlier
and
to
your
points
there
too,
is
it's
a
balance
between
what
I
have.
How
much?
N
How
much
more
can
I
stretch
my
already
start
staff
and
also
make
sure
that
we
are
not
creating
unnecessary
hurdles
for
the
real
estate
industry,
but
also
making
sure
that
we
definitely
protect
the
public
and
the
focus
has
always
been
trust
accounts,
because
that
the
property
managers
are
where
there
is
seems
to
be
the
weakest
link
and
we
have
increased
our
property
management
courses.
We
have
increased
the
education
and
you,
I
believe
you
you
know
this.
From
the
last
session,
we
increased
continuing
education,
so
that
increases
the
education
level
of
the
property
managers.
N
There
has
been
some
discussions
about
actually
having
them
bonded,
so
there's
more
protection,
but
again
those
are
still
discussions.
So
those
are
the
things
that
we
are
doing
outside
of
just
the
audit,
but
the
rest
of
pizza
are
essentially
things
that
we
can
definitely
work
on.
There
is
no
a
reason
why
we
can't
work
on
this.
N
In
spite
of
you
know
the
staff,
the
looming
budget
cuts
of
some
of
the
vacancies
that
we
currently
have,
and
the
fact
that
you
know
we
are
resource
constrained
and
a
very
antiquated
and
aging
database,
but
those
those
are
not
excuses,
they're
just
facts.
Thank
you.
A
E
Yes,
my
name
is
buddy
malazzo
hello
good
morning.
Thank
you.
Thank
you.
Thank
you.
Auditors,
you're.
Welcome.
We
appreciate
all
the
work
they
do
you
know.
Auditing
to
me
is
just
you
know,
a
function
of
your
job.
I
think
audits
are
good
because
they
show
things
sometimes
where
they
get
locks.
It's
not
a
lot
of
times.
You
know
people
are
doing
things
just
negligently.
It's
that
you
know
slowly
things
start
to
slip
between
the
cracks.
So
we
definitely
appreciate
the
audit.
E
You
know
with
the
department
of
business
and
industry
with
the
divisions,
you
know
the
fiscal
is
centralized
and
not
within
the
units.
The
divisions
themselves,
so
one
thing
we've
committed
to
to
you
know
shirat
is
to
have
better
lines
of
communication
between
the
department
and
the
the
division.
You
know
the
division
has
their.
E
You
know
accounting
system
that
they
use,
which
a
lot
of
times
and
in
many
divisions
doesn't
tie
into.
You
know
the
state
system.
You
know
from
a
fiscal
standpoint,
basic
your
state
fiscal
person.
You
know
we're
concerned
about
the
state's
accounting
system
and
how
those
transactions
apply,
and
sometimes
people
miss
the
correlation
between
like
a
division's
accounting
system
and
record
keeping
and
united
states
and
departments.
So
we've
absolutely
committed
to
shirath
to
have
a
better
lines
of
communication
with
him
and
his
staff
and
our
fiscal
staff.
E
We've
had
discussions
with
the
controller's
office
about
better
lines
of
communication.
We
did
sign
a
memorandum
of
agreement,
you
know,
so
we
will
work
better
with
them.
We
have
deadlines
in
that
memorandum,
when
stuff
from
our
offices
need
to
be
turned
over
to
them
to
give
them
the
proper
time
you
know
to
vet
and
do
their
job,
so
it
is
definitely
our
intent
from
a
department.
Standpoint
to
you
know,
work
with
giraffe
and
his
team
to
accomplish
his.
A
I'm
sorry
I
am
muted.
Thank
you.
I
liked
it
this
time
to.
Thank
you,
mr
malazzo,
I'd
like
to
ask
if
committee
members
have
any
questions.
A
Okay,
I'm
not
seeing
any
so
we
want
to
thank
mr
chandra
and
mr
malazzo
for
their
comments
and
responses,
as
well
as
to
thank
miss
humlik
and
mr
peterson
for
their
work
on
this
audit.
At
this
time,
I'd
like
to.
A
Thank
you.
Thank
you.
Senator
brooks.
I
believe
we
have
a
a
second
from
vice
chair,
benitez
thompson.
Okay,.
D
A
Discussion
on
the
motion,
mr
crossman,
would
you
please
do
roll
call.
A
A
You
thank
you,
mr
crossman.
That
motion
passes
okay.
That
concludes
our
item.
Number
4c
real
estate
division
and
we'll
move
on
to
item
number
4d,
which
is
the
office
of
the
state,
treasurer
unclaimed
property
program.
A
And
with
that,
I
believe
that
we
have
a
presentation
by
eugena
eugene,
I'm
sorry
eugene,
alara
and
tammy
goetz.
O
O
O
Funds
in
the
property
are
held
in
perpetuity
until
such
time
as
they
are
claimed.
Any
person
or
entity
in
possession
of
property
belonging
to
a
nevada
resident
is
considered
a
holder.
A
holder
who
delivers
the
property
to
the
state
is
relieved
of
all.
Liability
arising
thereafter
exhibit
one
on
page
two
summarizes
the
unclaimed
property
reporting
process.
O
O
All
unclaimed,
abandoned
property
is
recorded
in
the
state's
abandoned
property.
Trust
account
money
in
the
account
is
used
to
pay
claims
and
fund
the
program
remaining
balances
are
distributed
to
various
state
funds
in
accordance
with
statute
continuing
on
page
five,
our
audit
objective
was
to
evaluate
the
program's
processes
for
collecting
administering
and
returning
on
claimed
property.
O
Page
six
begins
the
first
chapter
discussing
our
findings
on
the
bottom
of
page
six.
We
note
that
the
program
did
not
investigate
unprocessed
reports
in
a
timely
manner
and
some
deleted
reports
reappeared
in
the
unclaimed
property
system.
Due
to
a
computer
error,
we
identified
a
backlog
of
397
unclaimed
property
reports
received
between
fiscal
years
2016
and
19.
for
16
of
the
37
reports
tested.
Timely
follow-up
was
not
performed
to
identify
the
why
the
report
was
not
processed.
O
Additionally,
seven
of
37
reports
appeared
in
the
system
after
being
deleted.
Timely
processing
of
reports
is
important
because
property
listed
on
them
is
not
visible
to
the
public
on
the
program's
website.
Until
the
reports
are
processed
on
the
middle
of
page
7,
we
discuss
controls
for
deleting
unclaimed
property
reports.
O
O
Adequate
segregation
of
duties
reduces
the
risk
of
error,
misuse
and
fraud.
Moving
to
page
eight,
we
note
that
the
program
did
not
timely
process
unclaimed
property.
The
program
did
not
post
358
payments,
totaling
374
000
in
property,
dividends
and
unclaimed
securities
collected
in
fiscal
years
16
through
19..
O
In
the
middle
of
page
9,
we
begin
our
discussion
regarding
the
program's
automated
claims
payment
system
known
as
fast
track.
The
program
did
not
adequately
review
fast-track
claims
to
ensure
they
were
appropriately
paid.
As
a
result,
weaknesses
identified
after
more
a
more
thorough
process
was
established,
may
have
existed
for
up
to
two
and
a
half
years.
O
O
On
page
11,
we
note
after
our
inquiry
the
program
strengthened
its
review
process.
The
revised
process
identified
one
instance
when
the
system
inappropriately
released
a
claim
and
stopped
the
claim
before
payment
was
made.
Two
other
instances
were
identified
where
criteria
used
by
the
fast
track
system
was
inappropriate.
O
Due
to
the
uniqueness
of
these
issues
identified,
it
is
not
likely.
A
large
number
of
claims
were
inappropriately
paid
in
the
middle
of
page
11.
We
state
that
the
program
was
not
reviewing
reports
to
monitor
fast-track
claims,
as
recommended
by
our
prior
audit
page
12,
contains
three
recommendations
for
strengthening
the
program's
property
reporting
and
claims
process.
O
O
After
our
request,
the
fiscal
year
19
reports
were
reviewed.
However,
for
three
reports,
the
reviewing
employee
also
verified
their
own
edits
on
the
reports.
Edits
are
reviewed
to
verify.
Inappropriate
changes
are
not
being
made
to
system
data
in
the
middle
of
page
14,
we
discuss
improvements
needed
to
system
access
controls.
O
The
program
did
not
perform
routine
reviews
of
system
access
and
maintain
a
current
list
of
authorized
users.
The
program
also
has
not
developed
effective
controls
when
changing
user
access
privileges,
we
determined
one
individual
made
27
changes
to
their
own
access
privileges,
with
no
documentation
to
support
these
changes.
O
I
t
systems
must
have
sufficient
access
controls
to
provide
protection
from
unauthorized
access
alteration
and
disclosure
of
data.
Page
15
begins
our
discussion
regarding
inventory
control
weaknesses.
The
program
did
not
maintain
accurate,
accurate
and
complete
inventory
records
for
the
contents
of
unclaimed,
safe
deposit
boxes.
O
O
O
We
found
all
the
cash
deposits
associated
with
these
safe
deposit
boxes
were
made
between
28
and
132
days
late.
Additionally,
the
program
did
not
record
tangible
items
contained
in
safe
deposit
boxes
into
the
unclaimed
property
system
in
a
timely
manner.
It
took
the
program
between
27
and
163
days
to
record
the
contents
of
safe
deposit
boxes.
O
Our
seven
recommendations
for
improving
programs,
property
system
and
inventory
controls
begin
on
page
six
teen
and
continue
on
page
seventeen.
Our
audit
methodology
is
located
in
appendix
a
beginning
on
page
18.,
the
state
treasurer's
response
to
our
recommendations
is
located
in
appendix
b
on
page
22..
This
concludes
my
presentation.
I'd
be
happy
to
answer
questions
at
this
time.
A
A
A
Okay,
I'll
go
ahead
and
lead
off
on
page
11.
You
talk
about
the
fast
track
review
process
and
that
an
instance
of
the
system
inappropriately
releasing
a
claim
to
the
wrong
person.
Does
that
appear
to
be
something
that
the
payment,
the
payment
could
be
easily
recovered,
or
does
that
present
a
problem
for
unclaimed
properties.
O
Chairman
parks
for
the
record
eugene
o'leary,
the
state
agency
under
the
process
actually
caught
that
before
the
payment
was
released
to
the
inappropriate
person
and
stopped
it
in
time.
So
it
did
not
actually
get
paid
to
the
person.
A
O
For
the
record
again,
chairman
parks,
eugene
o'leary,
the
current
process
seems
to
be
working
the
process
that
was
in
place
when
we
started
our
audit
had
some
issues
and
was
not
necessarily
thorough
enough.
But
under
the
new
process
the
agency
was
able
to
discover
some
flaws
in
the
system
and
correct
those.
A
A
In
some
cases,
numbers
of
days
as
far
away
as
processing
and
recording
the
like
the
contents
of
safe
deposit
boxes
and
that
so
committee
members
questions
for
mr
elower.
A
A
Okay-
okay,
I'm
not
seeing
anything
so
I'd
like
to
at
this
time
ask
the
members
from
the
treasurer's
office
to
provide
comment.
I
believe
we
have
linda
tobin
and
tara
hagan.
M
Yes,
good
morning,
chairman
parks
and
members
of
the
committee,
this
is
linda
tobin.
I'm
the
deputy
treasurer
of
the
state
of
nevada,
unclaimed
property
program,
I'd
like
to
thank
mr
crossman
and
lcb,
and
specifically
gene
and
tammy
for
their
professionalism
and
their
thoroughness
and
their
help
in
the
performance
of
this
audit.
Fresh
set
of
eyes
is
always
a
positive
thing
and
we
very
much
appreciate
the
feedback
and
the
suggestions
provided
as
a
result
of
this
audit.
M
As
we
know,
there's
always
room
for
improvement
and
even
stronger
controls
that
we
can
put
in
place
and
looking
forward
to
having
an
even
stronger
program
coming
forward.
I'd
just
like
to
take
a
second
also
and
acknowledge
our
team
at
unclaimed
property.
We
are
pretty
small
staff.
Besides
myself,
there
are
only
11
of
us
in
our
team
members
and
just
a
touch
of
scope
and
scale
of
what
our
team
does
for
the
fiscal
year,
2020
that
just
ended.
M
We
processed
over
8
300
holder
reports
that
had
receipts
that
exceed
71
million
dollars
for
total
division
receipts
of
over
87
million.
We
processed
over
38
000
claims
that
we
approved
last
year.
We
have
returned
46
million
dollars
to
nevadans
and
former
nevada
and
of
those
38
000
claims.
While
we
did
have
26
000
plus
go
through
our
fast
track
process,
we
had
an
additional
10
000
that
were
manually,
reviewed
and
approved
by
staff.
M
We
have
a
nice
transfer
to
the
general
fund
this
year
and
we
continue
to
look
forward
into
improving
our
processes
on
serving
the
state
so
a
little
bit
just
to
touch
back
on
for
senator
park.
As
you
asked
about
the
fast
track
process,
it
was
very
helpful
for
the
audit
findings
that
we
were
able
to
develop
a
very
robust,
weekly
audit
of
all
of
those
approvals
that
go
through.
We
did
go
through
a
very
slow
review
of
the
automated
roles
and
business
rules
that
improve
those.
M
As
a
result
of
the
one
instance
of
a
missed
payment,
we
were
able
to
add
an
additional
business
role
through
our
automated
process,
and
that
has
helped
in
the
case
of
our
safe
keeping
processing
for
intakes.
We
have
been
able
to
make
several
changes
already
that
have
improved
some
of
those.
It's
an
inherently
challenging
task
where
we
receive
boxes
as
the
banks
deliver
them.
We
have
a
very
small
claims
team
that
has
several
different
competing
job
duties
so
to
assist
in
the
timeliness
and
of
the
processing
intake
and
also
for
the
cash
deposits.
M
M
We've
also
accept
all
of
the
recommendations
and
appreciate
those
several
of
them
have
to
do
with
internal
auditing
processes.
Those
have
all
been
implemented.
We've
also
have
draft
policies
and
procedures
that
collectively
address.
I
think
that
covers
four
of
those
we
have
implemented
additional
policies
and
procedures
regarding
our
folder
reporting
and
processing
of
payments.
I
am
very
pleased
to
report
that,
after
several
years
of
the
backlog,
we
are
entirely
caught
up.
M
In
the
last
fiscal
year
we
have
had
all
of
our
reports
processed
or
followed
up
on
with
adequate
review
being
documented
in
our
system
within
30
days.
We
currently
do
not
have
any
outstanding
reports
that
span
back
a
decade,
so
we
have
made
significant
strides
in
improving
those
processes
and
cleaning
up
that
reporting
and
having
those
properties
available
back
to
nevadans
in
a
very
timely
manner.
A
A
M
So
that
is
yep.
Yes,
thank
you.
Chair
park.
We
do
accept
gift
cards
in
ordinary
course
of
folder
reporting.
This
is
the
same
process
that
a
business
would
report
any
other
unclaimed
property
that
we
have.
So
it
does
not
generate
any
additional
workloads
for
us
when
we
get
those
we
still
process,
those,
in
course,
and
any
gift
cards
that
remain
unclaimed,
do
get
transferred
to
the
educational
reimbursement
account
specifically.
A
A
Okay,
thank
you
very
much
appreciate
that
committee
members.
A
Any
final
questions
for
miss
tobin-
okay,
I'm
not
seeing
any
so
I'd
like
to
once
again
thank
miss
tobin
for
your
comments
as
well
as
mr
and
miss
getz,
for
the
audit
presentation
and
at
this
point
I'll,
take
a
a
motion
to
accept
and
approve
the
report.
A
Okay,
we
have
a
motion
by
senator
gokuchiya
second
by
vice
chair
benitez
thompson
discussion.
I'm
sorry!
A
B
A
P
L
P
P
P
An
addendum
to
report
la
1812
was
necessary
because
security
vulnerabilities
existed
in
certain
information
systems
within
the
records,
communications
and
compliance
division,
providing
details
regarding
those
vulnerabilities.
At
the
time
we
published
the
original
report
would
have
unnecessarily
exposed
those
information
security
weaknesses.
P
A
letter
pursuant
to
sb
302
was
issued
to
the
governor
chair
of
the
legislative
commission,
chair
of
the
audit
subcommittee
and
head
of
the
agency
affected
upon
identifying
our
findings
related
to
the
vulnerable
systems,
since
the
division
has
performed
sufficient
corrective
actions.
We
are
issuing
this
addendum.
As
a
supplement
to
our
original
report,
readers
are
encouraged
to
refer
to
report
1812
and
this
report
addendum
to
gain
a
complete
and
comprehensive
understanding
of
the
audit's
scope,
objective
findings,
recommendations
and
methodology.
P
P
The
findings
of
the
audit
relate
to
server
software
lacking
critical
security
updates.
Many
of
the
division
servers
had
critical
security
vulnerabilities
due
to
outdated
and
unsupported
software.
The
division
did
not
ensure
the
operating
systems
and
database
application.
Software
were
upgraded
to
supported
versions
in
a
timely
manner.
P
A
You
thank
you,
ms
gaspara,
for
the
presentation
I'd
like
to
ask
committee
members.
If
they
have
any
questions
for
ms
gaspara.
A
M
Good
morning,
members
of
the
committee,
my
name,
is
mindy
mckay,
I'm
the
division
administrator
with
the
records,
communications
and
compliance
division
within
the
department
of
public
safety.
I
have
on
the
line
with
me
today:
susie
block
with
enterprise,
it
services
and
tom
dorsey
within
my
division,
to
assist
with
answering
any
questions
you
may
have
after
my
comments.
M
First,
I
would
like
to
express
my
gratitude
to
lcd
audit
staff
for
their
professionalism,
patience
and
assistance
throughout
this
effort.
I
also
greatly
appreciate
enterpriseit
services
and
my
staff
for
their
hard
work
and
diligence
in
addressing
all
of
the
audit
recommendations.
We
will
continue
to
strive
for
improvement,
compliance
and
efficiencies.
M
As
you
know,
I.t
efforts
are
never
ending,
costly
and
lengthy,
so
we
continue
to
address
issues,
work
on
enhancements
and
upgrades
and
look
for
efficiencies,
our
service
level,
agreement
policies
and
procedures,
constant
monitoring,
various
duties,
we've
implemented
and
collaborative
partnership
with
our
it
service
providers
are
important
resources
to
ensure
that
we
remain
compliant
with
that.
I
thank
you
for
your
time
and
we
are
happy
to
answer
any
questions
you
may.
A
Have
thank
you,
miss
mckay
for
that
presentation.
I'd
like
to
ask
committee
members
if
they
have
any
questions
for
miss.
A
Mckay,
okay,
I
don't
beli,
I
don't
believe
there
are
any
questions
so
once
again,
thank
you,
miss
mckay
and
thank
you,
miss
gaspora
for
your
presentation.
A
A
I'm
second
chair.
Okay,
thank
you.
We
have
senator
brooks
seconds
the
motion.
Mr
crossman,
would
you
be
kind
enough
to
do
a
roll
call.
H
D
A
Thank
you,
mr
crossman.
The
motion
passes.
Thank
you.
That
concludes
item
four
4e
on
our
agenda
and
that
concludes
the
work
for
our
agenda
today.
So
I'd
like
to
move
on
to
agenda
number
item
number
five
and
item
five
is
public
comment.
This
is
the
final
period
of
public
comment:
we're
going
to
allow
our
technical
staff
a
couple
minutes
to
switch
over
so
that
their
system
can
provide
opportunity
for
members
of
the
public
a
chance
to
call
in.
A
Okay,
according
hello,
according
to
my
timing,
that's
two
minutes:
do
we
have
anybody
at
bps
who
can
tell
us
if
we
have
any
public
comment
in
the
queue.
H
Yes,
chair
the
public.
D
A
Okay,
thank
you
very
much
for
that
assistance.
Okay,
we'll
go
ahead
and
conclude
public
comment
and
I'd
like
to
before.
We
adjourn
I'd
like
to
just
comment
that
I'm
being
advised
by
mr
crossman
that
we
will
probably
need
to
have
one
more
meeting
before
the
2021
legislative
session
begins,
and
so
we
will
be
contacting
you
to
find
out.
When
is
a
a
good
time,
it
will
probably
be
somewhere
early
december
or
early
january.
So
we'll
follow
up
on
that.
A
Okay,
with
that,
I
don't
believe,
there's
anything
else
to
come
before
us
today,
so
we'll
be
adjourned.
Okay,
thank
you.
Thank.
D
A
Chairman
okay
have
a
great
day
and
thanks
again
appreciate
it.
Thank
you
see.