Forensic Audit of The Treasurer-Tax Collector Property Tax Trust Refund Database

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EXECUTIVE SUMMARY
Highlights of the Kessler Report
on the Audit ofThe County of
San Diego Treasurer Tax Collector (TTC)
SCOPE
Kessler International ("Kessler") was retained by
the County of San Diego Auditor and Controller
to perform a forensic audit of the procedures in
place for the Treasurer-Tax Collector's Property
Tax Trust and Refund ("TrustRef") database. The
scope of the audit was to perform an assessment
of the system's exposure to (or evidence of)
fraud, make recommendations for corrective
actions to prevent fraud with respect to
weakness in internal controls; assess whether the
condition of the current, archived, and back up
data is sufficient to perform and complete a
cumulative reconciliation to general ledger;
complete the reconciliation to provide a starting
point for accurate reconciliations going forward,
based on the work performed above; and/or
recommend a procedure and criteria for
establishing a baseline by which the cumulative
reconciliation process can be restarted, if a
cumulative reconciliation cannot be performed.
CONCLUSION
Kessler uncovered many discrepancies, irregu-
larities and user errors during the audit including
the deletion of data which is an indicator that
fraud may have occurred.
Current and former TTC employees related
concerns that the failure to follow policies and
procedures and the lack of management
oversight could be attrbuted to the problems
affecting the TrustRef database.
Insufficient user security permissions and the
absence of logs enables users to change or
delete data without approval and account-
ability. Previous audits also made recommenda-
tions that logs be implemented yet they were
not until J u n e 0 r July 2008. Based on the
above, Kessler concludes that data integrity was
compromised and the potential for fraud exists.
Additionally, the TIC should make a stronger
effort to refund or escheat the funds remaining in
the va rio usTru stRef databases according to
policies and procedures currently implemented.
March 2009
The County of San Diego
Audit of the Treasurer Tax Collector (TTC)
TrustRef Database
FINDING 1
Kessler made numerous requests for the TrustRef database in Access ("ATR") format
prior to the conversion to SQL ("STR") format, but was told by TIC staff
and Northrop Grumman that the Access version of the TrustRef database no
longer exists. After continued persistence, Kessler found that a version of the ATR
did exist.
Kessler's audit disclosed that a vast array of problems plagued the STR,
including system crashes, numerous user errors, missing records, incorrect data
entry, instances in which records were found under incorrect names, a lack of
proper or updated documentation, a lack of proper security permissions and
parameters, and a lack of audit logs.
Users deleted records or deleted data within a record and replaced the data with
the word "dummy".
FINDING 2
An employee forged a warrant to their own name, but safeguards implemented
by the TIC and the County of San Diego prevented the theft.
FINDING 3
The practice of keeping logs pertaining to changes to the STR was not
implemented until 2008. Little or no security permissions were assigned to
users. Although policy indicates no record should be deleted users were still
able to delete entries.
FINDING 4
The TrustRef database suffered from instances of major data loss, data corruption,
record discrepancies and questionable data changes. The majority of the records in
the TrustRef database have no audit trail and many transactions have been discov-
ered either post-dated or without a posting date. Many of the changes remain
Many of the changes remain unexplained by staff at the TIC. There was little or no
security permissions assigned to users of the STR and TIC IT management was
negligent in revoking user access to the TrustRef database in a timely fashion for
users who were terminated or transferred to another Division.
FINDINGS
Changes were made to an automatically completed field, "depositdate" in the
STR. The only way these changes could have been made would have been by
a programmer improperly accessing the back-end of the database.
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EXECUTIVE SUMMARY
Highlights of the Kessler Report
on the Audit of The County of
San Diego Treasurer Tax Collector (lTC)
March 2009
Audit of the Treasurer Tax Collector (TTC)
TrustRef Database
FINDING 6
Kessler calculated that balances due exist in the Trust Ref of $7,992,667.31.
These funds should be refunded to taxpayers or escheated.
Kessler was unable to reconcile the TrustRef with the 2007-2008 Countywide
Escheatment List of the TIC listing on the Internet.
The Policies and Procedures guides of the TIC were not followed by staff.

Maintenance requests were made regarding the TrustRef database but were not
documented properly.
RECONCILIATION OF TRUSTREF AND ORACLE
Several issues could ultimately affect the balances calculated for the
TrustRef including TIC user input errors. Kessler found that many of the
transfers between funds were made because users entered an incorrect
fund number. Based upon Kessler's calculation $2,975,720.15 must be
transferred to the Oracle database to adequately cover the open balances noted
in the TrustRef database.
RECOMMENDATIONS
Only specific and trusted employees should be provided with access to maintain -
ing and updating database information. Session logs should be kept and
maintained to record user login activity. Keeping a record of user activity and logins
in database sessions will provide a useful resource as to the user's access to the
database.
Based upon interviews and the findings of the audit, it is readily apparent that
employees need to be issued an updated Policies and Procedures Guides, and
could benefit from re-training.
Any changes that need to be made to the database should reflect all previous data,
and should include notes as to when and why the change was made. There should
be no deletions occurring in the database; rather, it should be noted that there was
an error upon input of data.
Once a year thrTrustRef should be cleaned and removed of all possible overpay -
ments that can be escheated. Additionally, the responsibility of the Accounting
Division Manager to prepare a list of possible escheatments every year by August 1
as per the Escheatment Policies and Procedures should be enforced.
Kessler recommends that the use of additional databases be included in the search
parameters to locate the rightful reCipients of refunds. There are a wide variety of
public information databases available as resources for a nominal fee. By expand -
ing the database resources to locate the rightful owner of tax overpayments
when conducting searches.
---------------2 --------KESSLER INTERNATIONAL
45 Rockefeller Plaza, Suite 2000, New York, NY 10111-2000
Phone: (212) 286-9100 | Fax: (212) 730-2433 | www.investigation.com
Forensic Audit of the
Treasurer/Tax Collector
Property Tax Trust Refund
Database
Prepared For
Ms. Lisa Marie Harris
Chief Deputy Treasurer
Treasurer/Tax Collector
1600 Pacifc Highway, Room 102
San Diego, CA 92123
March 24, 2009
TABLE OF CONTENTS
LIST OF EXHIBITS .......................................................................................... 2
APPENDICES .................................................................................................... 3
SCOPE OF AUDIT ............................................................................................ 4
INTRODUCTION .............................................................................................. 5
INFORMATION RECEIVED .......................................................................... 7
BACKGROUND ................................................................................................ 11
OBSTACLES AND DELAyS ........................................................................... 13
INTERVIEWS .................................................................................................... 16
FINDING 1 - DATA INTEGRITY AND SECURITY
ACROSS THE OPERATION NEEDS IMPROVEMENT ........................... .18
FINDING 2 - TWO CASES OF POSSIBLE THEFT .................................... 25
FINDING 3 - LOGS OF USE, CHANGES, ADDITIONS, DELETIONS,
NOT MAINTAINED RESULTING IN LACK OF AUDIT TRAILS .......... 26
FINDING 4 - IMPROPER ACCESS TO DATABASE. ................................ .28
FINDING 5 - LEGITIMACY TO BACK-END
CHANGES QUESTIONABLE ......................................................................... 31
FINDING 6 - REQUIRED ESCHEATMENT NOT PERFORMED IN
ACCORDANCE WITH COUNTY POLICY ................................................ .32
RECONCILIATION OF TRUSTREF AND ORACLE. ................................ 35
POSSIBLE RISK ............................................................................................... 38
RECOMMENDATIONS ................................................................................... 41
CONCLUSION .................................................................................................. 45

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LIST OF EXHIBITS
Tax Refunds for Overpayment Policies and Procedures Guide ...... ..... .... ...... Exhibit 1
Escheatment of Unclaimed Property Tax Refunds Policies
and Procedures Guide ...... .... .. ....... .. .... ........ ....... .. .. .... ............. ......... ............. . Exhibit 2
Missing Field Analysis ................................. ................................................. Exhibit 3
Items not Transferred from Access to SQL ............ .... ............ ....................... Exhibit 4
No Deposit Date .... ...................................................... ................................... Exhibit 5
Negative "ORlGAMT" on SQL TrustRef Database ........... ... .... ... .............. .. Exhibit 6
No "ORIGAMT" ........................................................ ............. ...................... Exhibit 7
Records Containing "Dummy" Entries ..................... .................................... Exhibit 8
Fraudulent Warrants ..................................... ............ ............................ ......... Exhibit 9
Detailed Business Requirements .......................... ..................................... .... . Exhibit 10
Update TrustRefUsers ..... .......................................... .................................... Exhibit 11
Major Data Loss I Items not Transferred to SQL ..... .. .................. ........ ......... Exhibit 12
Property Tax Collection Refund Process ...... ........................... ...................... Exhibit 13
County of San Diego Countywide Escheatment List FY 2007-2008 ............ Exhibit 14
Comparison of Countywide Escheatment List and TrustRef Database ......... Exhibit 15
Refunds Granted Over 60 Days or Refunds Never Granted .... ...................... Exhibit 16
TC04 Process (Fund 507000 and 507003) ............... ...................................... Exhibit 17
Current Secured Automated Procedural Flow Chart ........................... .......... Exhibit 18
Projected Balances for TrustRefFunds ....... .......................... .. ...................... Exhibit 19
Refund Timeline .......................................... ......................................... ......... Exhibit 20
County of San Diego Agenda Item ......................................... ....................... Exhibit 21
Escheated Records with Outstanding Refunds ....................... ....................... Exhibit 22
Escheated Record .. ............. ............. ........................... .................................... Exhibit 23

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APPENDICES
Property Tax Collection and Refund Process Audit.. ... ... .... .. ..... ... .... .. ... ....... Appendix A
San Diego County Grand Jury Report, the Treasurer-Tax Collector Response
to Grand Jury Findings and the Grand Jury PowerPoint Presentation ... .. ...... Appendix B
County of San Diego Treasurer-Tax Collector Property Tax Refund for
Overpayment and Escheatment Protocols Validation .. ..... .. ... ......... ..... .......... Appendix C
3
SCOPE OF AUDIT
Kessler International ("Kessler") was retained by the County of San Diego
Auditor and Controller to perfonn a forensic audit of the procedures in place for
the Treasurer-Tax Collector's Property Tax Trust and Refund ("TrustRef')
database. The scope of the audit was to include the following tasks:
1. Perfonn an assessment of the system's exposure to (or evidence of) fraud
through forensic testing and analysis and testing of internal controls;
make recommendations for corrective actions to prevent fraud with
respect to weakness in internal controls;
2. Assess whether the condition of the current, archived, and back up data is
sufficient to perfonn and complete a cumulative reconciliation to general
ledger;
3. Complete the reconciliation to provide a starting point for accurate
reconciliations going forward, based on the work perfonned above; and/or
4. Recommend a procedure and criteria for establishing a baseline by which
the cumulative reconciliation process can be restarted, if a cumulative
reconciliation cannot be perfonned.
The following report contains Kessler's findings and recommendations.
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INTRODUCTION
In order to accomplish the goals of the County, Kessler reviewed and analyzed
digital files, paper files and documents, examined e-mails and conducted
interviews with individuals formerly and presently employed by the County of
San Diego TTC and related vendors who possessed knowledge of the TrustRef
system.
Kessler performed an examination of the internal controls in place applicable to
the TrustRef database to determine any weaknesses and make recommendations
for improvement.
Kessler performed a series of analytical studies and reconciliations between the
TrustRef database before and after conversion to Microsoft SQL in an attempt
to discover any issues, including data corruption, data integrity and fraud and
subsequently make recommendations based on our findings.
Types of analysis and studies conducted included:
Review of questionable records & entries not converted from Microsoft
Access to Microsoft SQL
Analysis of entries with notations of "Restored 7/12 Many Lost" & "From
6/21104 DB"
Analysis of the Countywide Escheatment List (September 15,2008)
Analysis of the December 2006 Escheatment
Analyzed duplicate and corrupt data imports
Performed the identification of all fields that have been changed between
the Access TrustRef database and SQL TrustRef database
Performed missing fields analysis
- Conducted multiple entries analysis
- Analyzed negative original balances
Performed a reconciliation from the SQL TrustRef database to Oracle
Determined instances of refunds greater than "ORIGAMT" paid
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Prepared listing of entries in historical databases with remaining balances
Kessler uncovered many irregularities, discrepancies, user errors and
questionable user interactions with the database during the audit. Also
discovered was the deletion of taxpayer names and addresses from the
database causing concerns that improper training of staff exists.
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INFORMATION RECEIVED
During the course of the audit Kessler was supplied with various documents
and digital files and had access to records including:
Version of Date database was Format of Date of Last
database Received by Kessler database Entry on
Received Received database
SQL August 1, 2008 Access June 2, 2008
Access September 16, 2008 Access April 22, 2005
SQL
1
September 16, 2008 Access April 22, 2005
SQL September 16, 2008 SQL August 5, 2008
Access October 20, 2008 Access April 22, 2005
SQL October 20, 2008 SQL August 5, 2008
All transfers from TrustRefto fund 61000 (FY 2005 - 2009; less than
$10.00)
Asset Allocation Build Procedures
Asset Allocation database Desktop Install Procedures
Balance for Fund 61000 (April 2005, June 2008)
California Tax Codes 29370 - 29390.1
California Revenue and Taxation Code Section 75.40-75.43
Copies of Sample TX's Applicable to TrustRef Transactions
COSD Paid Invoice Distributions Reports (April 2005, June 2008)
COSD MTN DT Transfer Summary Report (April 2005, June 2008)
Countywide Escheatment List (September 15, 2008)
Current Secured Automated Procedural Flow Chart
Defect Tracking Logs Application Run Book For PA2286 Treasurer Tax
Collector Financial Apps (January 4, 2007)
General Ledger Account Activity Reports (July 2004 - October 2008 [All
12 TrustRefFundsD
Interest Rate for Refund Calculations 2007/2008
I This database was labeled as the SQL TrustRef database on the CD. It was a duplicate of the Access
TrustRef database.
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Policies and Procedures (Financial Division)
Property Tax Collection and Refund Process
Property Tax Revenue Process Fiscal Year 2006/07
TrustRef Server Build Procedures
"Questions and Brain Dump for TrustRef BRD"
TC04 Build Procedure
TC04 Process
TC04 Server and Desktop Install Procedures
TR Reports for Auditor (September 2004, September 2005, May 2008)
TrustRef Procedures (Financial Division)
TrustRefUser Security Table
TrustRefUser Security Permissions (September 1,2008)
Various e-mails and worksheets pertaining to the duplicate data import
during the week of July 14,2008
Various e-mails pertaining to TrustRef
Various TrustRef Screen Shots
W02157 - Electronic Bill Payment for Treasurer-Tax Collector (February
15,2005)
Work Order 2157 Cutover Plan (April 18, 2005)
Previous Audits and Investigations:
County of San Diego Treasurer-Tax Collector Property Tax Refund for
Overpayment and Escheatment Protocols Validation (Macias Consulting
Group, Inc.)
Operational & Transition Audits of Treasurer-Tax Collector (February 18,
2003)
Property Tax Collection and Refund Process Audit conducted by Office of
Audits & Advisory Services (January 2008)
Report of attempted theft of a warrant relating to property taxes by a County
employee (December 28, 2006)
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San Diego County Grand Jury Report applicable to TrustRef (November 16,
2005)
Treasurer-Tax Collector Response to Grand Jury Findings (January 12,
2005)
Other documents received from the County:
Certification of US Invoice Requests
Certification of TX Invoice Requests
Correspondence with previous and current employees ofthe Treasurer-Tax
Collector
Correspondence with Northrop Grumman
County employee e-mails
Northrop Grumman Acceptance Test Plan
Northrop Grumman Application Run Book for P A2286 Treasurer Tax
Collector Financial Apps
Northrop Grumman Detailed Business Requirements (April 1, 2008)
Notes to Combined Summary Comparative Statement of Revenues and
Expenditures (December 31, 2002)
San Diego Treasury and Tax Collector "TrustRef' Application Progress &
Prognosis
Second Certification of TC Invoice Request
Treasurer-Tax Collector Application Inventory Matrix
Documents received from a former employee of the Treasurer-Tax
Collector:
Escheatment List 0205 (Excel File)
Escheatment Total (1996 - 2002)
Grand Jury PowerPoint Presentations
Tax Refund Claim Form
Treasurer-Tax Collector Tax Escheatment Timeline and Procedures
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Items that were requested by Kessler but not produced:
Last back-up of Access ("ATR") database before conversion
First back-up of SQL ("STR") database after conversion
Service requests for applicable to STR and ATR database
Quarterly status reports on Property Tax Collection and Refund Process as
called for in a previous audit.
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BACKGROUND
The San Diego Treasurer-Tax Collector's Office utilizes the TrustRef
application to manage refunds related to the overpayment of property taxes by
taxpayers.
What is TrustRefl
According to the Tax Refunds for Overpayment Policies and Procedures
Guide dated November 7,2005, TrustRefis the accounting application
through which tax overpayment refunds are initiated and monitored. Some of
the data that resides in TrustRef is imported and other information is data
entered by both Financial Division staff and Accounting staff.
The Tax Refunds for Overpayment Policies and Procedures Guide states, "On
a daily basis, the Accounting Manager shall identify property tax
overpayments from individuals and businesses in order to issue refunds. To
accomplish this goal, staff will conduct a daily review of overpayments. After
the legal recipients of refunds have been identified pursuant to Revenue and
Taxation Code guidelines, the Treasurer-Tax Collector will issue refund
checks."
Tax refunds that remain unclaimed for a period of four or more years are
available to be escheated to the San Diego County General Fund.
What is escheatment?
Generally, escheatment is a legal transfer to a government entity of property
that has not been claimed by the legal owners. In reference to this report,
escheatment is the legal transfer to the County of property tax refunds that
have remained unclaimed for four years or more and for which the
whereabouts of the legal owners of the money is unknown.
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The Statement of Policy within the Escheatment of Unclaimed Property Tax
Refunds Policies and Procedures Guide dated November 7, 2005, states, "On
August 1 of each year, the Treasurer-Tax Collector will identify a list of
monies that have remained unclaimed for more than four years for
escheatment and will conduct research following the Research Guideline as a
last attempt to locate the legal owners of these monies." The Policies and
Procedures Guide further elaborates on this, stating that it is the responsibility
of the Accounting Manager to identify the list of monies and provide the list
to the Financial Division, who then conducts the research.
The Tax Refunds for Overpayment Policies and Procedures Guide and the
Escheatment of Unclaimed Property Tax Refunds Policies and Procedures
Guide follow this report as Exhibit 1 and Exhibit 2 respectively.
Prior Audits
Prior to this audit, the County of San Diego TTC requested audits of the
property tax collection and refund processes. Many of the findings in these
audits correlate directly with those of Kessler. The audits are as follows:
The Property Tax Collection and Refund Process Audit conducted by the
Office of Audits & Advisory Services (January 2008) follows this report as
AppendixA.
The San Diego County Grand Jury Report (November 16,2005), the
Treasurer-Tax Collector Response to Grand Jury Findings (January 12,2005)
and the Grand Jury PowerPoint Presentation follow this report as Appendix
B.
The County of San Diego Treasurer-Tax Collector Property Tax Refund for
Overpayment and Escheatment Protocols Validation (Macias Consulting
Group, Inc.) (October 17, 2005) follows this report as Appendix C.
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OBSTACLES AND DELAYS
Kessler was assigned this project on May 1, 2008. At the onset ofthis audit,
Kessler received only limited documentation pertaining to TrustRef. In July
2008, a visit to the County of San Diego was made to begin interviews and
collect additional documents not previously supplied.
Database Requests
Kessler made numerous requests for the TrustRef database in Access ("ATR")
format prior to the conversion to Microsoft SQL ("STR") format, but was told
by staff at the TTC Accounting Division and Northrop Grumman that the
Microsoft Access version of the TrustRef database no longer exists. After
continued investigation and during an interview of a Northrop Grumman
employee, Kessler learned that the Access version of the TrustRef database
did in fact exist.
During the audit Kessler received several versions of the TrustRef database as
seen below:
Version of Date database was Format of Date of Last
database Received by Kessler database Entry on
received Received database
SQL August 1, 2008 Access June 2,2008
Access September 16, 2008 Access April 22, 2005
SQe September 16, 2008 Access April 22, 2005
SQL September 16, 2008 SQL August 5, 2008
Access October 20, 2008 Access April 22, 2005
SQL October 20, 2008 SQL August 5, 2008
Kessler received a version of the STR on August 1,2008, with the last record
of entry entered as June 2, 2008. Kessler received CDs with three additional
versions of the TrustRef database on September 16, 2008. Two of the versions
of the TrustRef database on these CDs were duplicates, but mislabeled. A
2 This database was labeled as the SQL TrustRef database on the CD. It was a duplicate of the Access
TrustRef database.
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third version of the database received on September 16,2008 was the STR
with the last record of entry dated August 5, 2008.
On October 20,2008, Kessler received two more versions ofthe TrustRef
database: one with the last record of entry dated April 22, 2005 (this was
found to be another duplicate database in Access format) and the SQL
formatted database with the last record of entry entered as June 2, 2008.
Interview Attempts
Kessler attempted to interview two former employees of the County of San
Diego TTC who were in key management positions and whose statements
would have been deemed valuable to this audit. Kessler made several attempts
to contact one individual via mail, e-mail, FedEx and telephone but the
individual never responded. The second individual ignored Kessler's requests
and/or refused to speak with Kessler before accompanying another individual
interviewee to his interview at an offsite location.
Timeline
Kessler was unable to begin any audit work regarding the TrustRef databases
until September 2008, when Kessler received copies of both the ATR and the
STR.
The timeline to conclude the audit was originally established to be during
November 2008. Kessler, however, did not receive all ofthe information
necessary to complete reconciliation to Oracle until January 2009.
Northrop Grumman
Kessler was originally informed by the County and by Northrop Grumman
that the Access version of TrustRef database was not available because no
information was transferred from Computer Science Corporation ("CSC -
Pennant Alliance") to Northrop Grumman when they took over the County IT
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contract during 2007. During the audit, Kessler spoke with a Northrop
Grumman employee who challenged the facts previously provided by the
County of San Diego and Northrop Grumman and said that he knew exactly
where the A TR was and that he would provide it. According to others at
Northrop Grumman, he was responsible for bringing the ATR from CSC to
Northrop Grumman.
During the audit, Kessler encountered resistance when requesting documents
from Northrop Grumman. During the interview process of the audit, Kessler
was advised by the Northrop Grumman employee that he was told not to
cooperate with the audit and was given instruction not to provide any
documents to Kessler. Shortly after our conversation with this individual, he
was terminated by Northrop Grumman.
Kessler was only able to obtain the requested Access database from Northrop
Grumman after continued persistence and assistance from the staff of the TTC
and other employees at the County of San Diego.
E-Mail Retention Policy
Kessler encountered problems when requesting e-mail correspondence from
the time period of the conversion of the TrustRef database. Kessler was told
by an employee of the TTC IT Department that the data retention policy for e-
mails countywide is to keep them archived for only 60 days. Kessler was able
to obtain a limited amount of e-mails regarding the conversion of databases
since certain TTC staff kept copies of e-mails within their own work directory
folder. Documentation in these e-mails was scarce and provided little insight
into the logistics of the conversion.
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INTERVIEWS
Kessler conducted interviews with a variety of current and former employees
of the County and Northrop Grumman in order to obtain a better
understanding of the circumstances surrounding the conversion of the
TrustRef database and the history of the databases.
It became apparent during these interviews that employees were inconsistent
in their understanding of the proper usage and administration guidelines
applicable to the TrustRef. The lack of documentation and protocol available
regarding the TrustRef system was addressed by many ofthe interviewed
employees as was the lack of security parameters in place to properly secure
the data.
According to a former programmer of the ATR database, a former employee
was found to be fraudulently releasing warrants to herself, prompting security
parameters to be built into the database.
This programmer indicated that following the conversion to SQL, the security
parameters were removed and no logs of activity in the system were
maintained.
Another employee Kessler interviewed who was responsible for handling
clerical duties indicated that TTC IT Management believed that the ATR was
an inadequate data platform due to problems incurred by end users, the
accumulation of data, network connectivity and the fact that the department
had a high employee turnover rate.
An employee disclosed that she observed an IT Manager and a Northrop
Grumman employee working together to remove a penalty associated with a
tax bill for a taxpayer that did not want to come into the office but rather pay
the bill on-line. The employee asserted that an IT Manager had this Northrop
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Grumman employee remove a penalty from the tax roll so that a taxpayer
could pay their current tax bill online, since bills with penalties must be paid
in full at the office.
A CSC-Pennant Alliance employee who was later employed by Northrop
Grumman disclosed that the IT Manager would request emergency
maintenance but would not want it documented. He claimed this was a cost
containment practice of the IT Manager. He also referenced constraints
placed by the IT Manager on the conversion process, and cited user
dissatisfaction with the new interface on the SQL database. The individual
also indicated that the A TR had problems with corrupted files and that the
database was not reconciled after a hard drive crash. The individual also
claimed that he was instructed to remove "crap data" from the database to
facilitate moving forward with deployment following the conversion without
regard to what was deleted or what the taxpayers were owed in tax refunds.
Additionally, this individual stated that changes could easily be made to the
"back-end" of the database with no record ofthe changes being noted or
documented claiming it was a ripe area for fraud.
Another County employee indicated that the database lacked documentation
for users and was concerned about the lack of security parameters built into
the database. This employee also indicated that the conversion was rushed by
the IT Manager and that proper security parameters were lacking.
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FINDING 1- DATA INTEGRITY AND SECURITY
ACROSS THE OPERATION NEEDS
IMPROVEMENT
After numerous requests and considerable delays, Kessler received CDs
containing the A TR with a last recorded entry of April 22, 2005 and the STR
with a last recorded entry of June 2, 2008. The County of San Diego was
unable to provide a final ATR and a beginning STR. A reconciliation of the
ATR and STR was performed comparing TrustRef RecID numbers between
these two databases. The TrustRef RecID number is a unique number to each
record in the database.
Kessler conducted an analysis of the 76,523 records with matching TrustRef
RecID numbers in the ATR and the STR which revealed numerous
discrepancies. The analysis disclosed that the STR contains 193,041
completed fields, an increase of 116,462 over the ATR. This finding reveals
that users made manual changes to the records after the conversion.
Kessler conducted an analysis of changes between the A TR and the STR and
found changes such as adding "et al" to the end of the person's name, or the
change of names from individual homeowners to those of mortgage
companies. Kessler was told by TTC staff that these changes were acceptable.
However, Kessler also found changes that do not appear to have an acceptable
explanation.
Field Changes on Records One Week Prior to Conversion
During the audit, Kessler found 441 entries in the ATR that are missing
identification information, such as names and addresses (the fields are blank).
These entries total $1,716,118. According to TTC personnel these entries
were not manually inputted but rather were imported to the database from the
mainframe. It is unknown why after the conversion to the STR, 35% ofthe
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entries created a week before the conversion were found to contain
information in the fields that were previously blank.
In order to determine a reference to the magnitude of the problem, the number
of blank fields in each column was divided by the total number of records
(76,523) and an "error rate" was developed disclosing a significant variance
between the two databases (Exhibit 3).
Kessler further analyzed the fields that have been changed on correlating
records between the ATR and the STR. The percentages of changes are noted
in Figure 1.
Fig. 1
Percent of Fiel d Changes between Access & SQL
9.00% ,------------------------,
8. 00% -t-----------
7.00% -t-----------
6.00% +-------
5.00% .j--------
4.00% -1-------
3.00% .j-----
2.00% +----
1.00% .j-----
0.00% +---...,-
Because no clear explanation was available from TTC staff, Kessler suspects
that the discrepancies might be attributed to a number of factors. This includes
data loss during conversion, unexplained differences in balances in archived
and current records, missing data, data entered incorrectly or data altered by
system users. These concerns are outlined below:
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KESSLER
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"ORIGAMT" Changes
An analysis of the two databases revealed that in the ATR, a total of 197
records had $0 amounts entered in the "ORIGAMT" field, whereas in the
STR, the same records now contain positive dollar amounts in the
"ORIGAMT" field. This discrepancy totals $428.00. Although this is a rather
insignificant dollar amount, what remains questionable is why the dollar
amounts of 197 records were changed after the conversion. No one at the
TTC could offer an explanation.
Data Corruption
During analysis of the ATR and the STR, Kessler uncovered that the ATR
contained 56 more records than the STR. Kessler also uncovered significant
gaps in the RecID numbers. The 56 records total $10,410,313.33. Only 23 of
the 56 records indicated an "ORIGAMT" (Original Amount) deposited and
many of the records are absent of critical information, such as a name or
address. The "ORIGAMT" indicated for these records range from as little as
$11 to as much as over $7 million. It is the majority of the records with large
numbers in the "ORIGAMT" filed that do not contain any name and address
data in the fields for those records.
After extensive analysis and research, Kessler determined that the majority of
the money ($10,395,975.58) correlating to the 56 records can be accounted for
as being a corrupt "mini data import" that occurred on April 13,2005, which
was rectified by TTC staff who were notated on these entries. The remaining
dollar amount of$14,337.75 could not be accounted for by any of the
employees at the TTC.
A detailed spreadsheet of the 56 records that did not transfer to the STR and
their pertinent information is attached herein as Exhibit 4.
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Created Dates and Deposit Dates
Within the STR, records with a "created date" on or after June 9, 2005, have a
matching "deposit date". However, for records created before June 9, 2005,
the "deposit date" does not match the "created date". Kessler found that
records with a deposit date prior to June 9, 2005 have a created date of
January 3, 2008. This appears to reveal that these particular records were not
included in the TrustRef database until January 3, 2008 when they were
imported as a single batch process. Kessler asked a number of TTC employees
for an explanation but no one Kessler interviewed had an explanation for this
discrepancy.
Conversion Dates
Kessler's interviews with numerous employees of the TTC disclosed that the
conversion ofthe TrustRef database from Access to SQL occurred sometime
during the months of July 2005 through October 2005. Yet upon examination
of the A TR, Kessler noted that the last entry into the ATR occurred on April
22,2005, despite the DVDs containing the databases being labeled with a date
of July 25,2006. This causes concerns as data crucial to a successful
reconciliation could be missing and taxpayers who are owed refunds could
have been deleted from the data supplied to Kessler.
Refunds with Missing Dates
Many tax refunds that were issued shortly after the conversion do not have
any "deposit date". The deposit date of the database indicates when money is
deposited into the Oracle database. In total, 681 entries have no deposit date
(Exhibit 5) and 570 of these entries have transactions that occur within 1
month after the conversion, totaling $2,977,867.64. As the "deposit date" field
is automatically generated by the TrustRef system, there should be no reason
why these records appear without a deposit date. No one at the TTC could
explain this discrepancy.
21

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Refunding Taxpayers that Owe Taxes
A negative "ORIGAMT" field occurs when taxpayers owe money to the
County. The analysis disclosed that the TrustRef database contains negative
values in the "ORIGAMT" field totaling $73,874.57. A sample examination
of these entries disclosed that despite the fact that a taxpayer owes money to
the County, Kessler found instances where refunds for subsequent years were
made to the taxpayers none the less. For example, Balboa Genesee LLC owes
the County of San Diego $4,046.44, since 2000. In 2004 the TTC issued two
refunds to Balboa Genesee LLC totaling $751.37. The County should have
applied these refunds to the amount still owed to the County of San Diego
(Exhibit 6).
Missing "ORIGAMT"
Kessler found that 211 transactions were entered into the TrustRef database
by user "emucho", between the dates of September 19, 2005 and September
21,2005, without an amount in the "ORIGAMT" field. All of these
transactions were recorded into the fund labeled with the number 508000
(Recorder's Fee) and each entry includes a check number (Exhibit 7). Based
upon the fund that these transactions were recorded into, Kessler believes that
each of these records had an "ORIGAMT" of at least $11.00 each, as this is
the minimum charge for a Recorder's Fee. The lack of data in the
"ORIGAMT" filed in these instances could not be explained by any county
employee and indicates a lack of supervision and oversight by management.
Additionally it is unexplainable how this missing data allowed a proper
reconciliation ofthe database to Oracle to take place.
"Dummy" Entries
Kessler found 385 entries totaling $193,004.98 (Exhibit 8) had been made to
the STR during 2006 with the word "Dummy" entered as the street address
and city. An additional 19 entries were recorded in 2007 and 2 in 2008 with
the word "Dummy"entered in the street address and city. Ofthese entries
22

KESSLER
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97.80% were made by a single user. Kessler's audit findings disclosed that
only 4 records in the ATR had been created with the word "Dummy" entered
into fields from 1990 through 1994.
Based upon interviews with numerous employees of the TTC, Kessler has
received numerous explanations for this finding. An employee stated that the
entries could be stale-dated warrants where the original data was removed
because the check was returned and the correct address was unknown.
Another employee stated that they could simply be test entries, while another
employee stated that the records could be older records where the checks were
processed without proper documentation.
The employee who entered almost 98% of the "dummy" entries claimed that
the original address information was simply incorrect and she just didn' t have
time to look up or research correct information so she deleted the original
information and entered the word "Dummy" in the field. She indicated that it
would be impossible for her to reconstruct this information.
Since this employee entered the majority of these questionable entries we
believe her story is the most credible and therefore these funds are still due to
taxpayers and should be promptly refunded.
Historical Database
While reviewing the three historical TrustRef databases (Figure 2), Kessler
uncovered that they contained balances allegedly due taxpayers that when
combined totaled $2,414,386.41. No one at the TIC could explain why
refunds were never made to the taxpayers listed or why the funds were not
properly escheated.
This raises serious concerns about the adherence to the Policies and
Procedures in effect and the possibility that some sort of fraud took place. In
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KESSLER
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order to properly research and eliminate certain concerns, Kessler suggests
that the cancelled refund checks applicable to the period included be matched
with the entries.
Fig. 2
Balances of Historical Databases
B
$2,000,000.00
a
$1,500,000.00
a
$1,000,000.00
$"S13.678.43
n
c
$500,000.00
e
$0.00
TrustHis TrustHis (94- TrustHis (93
96) and Older)
Database
24

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FINDING 2 - TWO CASES OF POSSIBLE THEFT
Fraudulent Warrants
Kessler's audit findings revealed records that contained notes under the field
labeled "TrustReC Com", in which warrants are indicated as being fraudulent
because they were fraudulently cashed. There are no additional details given
and no one could provide any documentation applicable to these warrants.
Exhibit 9 shows the entries containing these notes.
Theft Report
During the process of the audit, TTC employees made repeated references to
the former Assistant Manager of the Financial Division of the TTC who was
caught attempting to fraudulently cash a warrant. A report dated December
28, 2006 provided to Kessler by the TTC discloses that the individual forged a
warrant to her own name, but that safeguards implemented by the TTC and
the County prevented the theft.
Although the theft was prevented it took the TTC over 7 months to void out
the fraudulent warrant.
25

KESSLER
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FINDING 3 - LOGS OF USE, CHANGES,
ADDITIONS, DELETIONS, NOT MAINTAINED
RESULTING IN LACK OF AUDIT TRAILS
The practice of keeping logs pertaining to any changes or additions to data in
the STR was not implemented until June or July 2008. The majority of the
records in the TrustRef database have no audit trail and many transactions
have been discovered either post-dated or without a posting date, raising
concerns about data integrity.
According to individuals interviewed by Kessler and documentation received
and examined it was determined that there was little or no security
permissions assigned to users of the STR. Additionally Kessler found that
TTC IT Management was negligent in revoking access to the TrustRef
database in a timely fashion for users who were terminated or transferred to
another Division. The lack of efficient user security enables a user to change
or delete data without approval and no accountability.
In support of Kessler's observations, Kessler located a document issued by
Northrop Grumman entitled Detailed Business Requirements, dated April 1,
2008, which states, "Currently, the security model employed by the TrustRef
application falls short" (Exhibit 10).
Additionally, Kessler found that the TTC IT Department failed to implement
and maintain the necessary changes to prevent unauthorized access to the
TrustRef database.
During the audit, Kessler located an e-mail that requests that a total of 14
users have their status changed from "active" to "inactive", indicating a failure
to adhere to policies and procedures established to the termination of staff
(Exhibit 11).
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KESSLER
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Notations to Delete Records
On August 19,2004, a user entered seven payments into the TrustRef
database. All seven of these records included a comment in the
"TrustRef Com" field that states "PLS DELETE THIS RECORD". The
records are absent of name and address information, and "ORIGAMT" data.
According to the information gathered during interviews conducted by
Kessler, the TTC stopped the practice of deletion of records in late 2007. The
current policy is to "zero" out any entry that needs to be deleted, but
according to individuals Kessler interviewed, the ability to delete records still
exists.
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KESSLER
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FINDING 4 - IMPROPER ACCESS TO DATABASE
Major Data Loss
A total of 8,630 records in the STR are marked as "Restored 7112 many lost",
without any additional information in the "Restore Source" field of the entry.
The note could not be explained by anyone interviewed and it is uncertain
whether the records were restored manually or from a previous backup of the
database. Additionally, 35,925 records in the STR are marked "From 6/21/04
DB". These records can be associated with the hard-drive crash in 2004,
referencing statements made by an employee that all records were restored
from a backup approximately two weeks prior to the crash. However, other
interviewees stated that the records might not have been completely restored.
In comparison, an analysis of the ATR also reveals that a total of 8,640
records contain the same note "Restored 7/12 many lost" (a variance of 10
records that did not transfer to the STR). Although insignificant in dollars
($7,418.50) the discrepancy of 10 records and their corresponding dollar
amounts have simply disappeared. This discrepancy was also unexplained by
the TTC staff Kessler interviewed. As there has been no reasonable
explanation forthcoming, Kessler is left with numerous questions regarding
the integrity of the restored data, procedures regarding the prevention of data
loss, database backup implementation and TTC's IT Management supervision.
The details regarding the 10 records follow this report (Exhibit 12).
Kessler also conducted a statistical analysis of the field changes that occurred
between the Access and SQL versions of the database regarding the records
which included the notation "Restored 7/12 many lost" (Figure 3).
28

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W
Fig. 3

"7/12 Many Lost" Fields Changed &1- ___ "7/12 Many lost" Comparison
of Access & Sal Changed
Access and SQL Fields Changed I Fields
Comparison of Access &

Sal Fields Changed
45.00% -.,----------.
40.00%
35.00% /' \ -------- -l
30.00% +-- --- --- - /--- --' .......- - -
25.00% ----- - - ---
20.00% --- -
15.00% / \
10.00%
5.00% I--- ,.,/' \ -
0.00% ---....
It is clear that the Namel , SAddress and City fields all have a higher
percentage change rate as compared to changes made to all the records in the
databases as a whole. It is evident that these records had exponentially more
deviations than all the records in the database as a whole. Kessler received no
feasible explanation from TTC staff regarding the changes, thus the potential
for fraud exists.
Findings Regarding TrustRef History and Controls
A document provided to Kessler, entitled Property Tax Collection and Refund
Process A08-002, dated September 3, 2007, contains statements referencing
data validation during the transition of the TrustRef database from Access to
SQL (Exhibit 13). The document states that:
"Larry was not aware of any crashes of the current system related to data
loss. He indicated that there was a problem with the integration of Crystal
Reports, but that did not affect records, only report output."
29

KESSLER
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The document further states:
"Larry indicated that there were records in the Access database that were
not included in the web based system due to corrupted and missing data.
TTC directed the transition to proceed without the records", and that it
was unknown, "if recovery of any previous instance of the Access
database was feasible".
Furthermore, the document references a security breach of the TrustRef
security policies, stating, "That [ a user] was listed as INACTIVE despite
having full administrator access to the system". These revelations cause great
concerns regarding the controls TTC implemented on the data, and if anyone
from the TTC attempted to curtail some of these weaknesses.
30
FINDING 5 - LEGITIMACY TO BACK-END
CHANGES QUESTIONABLE
An analysis of the records on the ATR and the STR revealed that changes
were made to the "depositdate" field on 681 records on the STR. This field is
automatically generated by the system into the TrustRef database. During
interviews, Kessler was advised that the only feasible way to make changes to
this field would be to go into the back-end of the TrustRef database and
manually change or delete it, implicating that a programmer had to change the
dates. These changes are highly questionable and employees at the TTC were
unable to provide an explanation as to why the changes might have been
made.
31

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FINDING 6 - REQUIRED ESCHEATMENT NOT
PERFORMED IN ACCORDANCE WITH COUNTY
POLICY
Kessler obtained a listing labeled Countywide Escheatment List FY 2007-
2008, dated September 15, 2008 (Exhibit 14), which delineates funds slated
to be escheated, from the San Diego County Treasurer-Tax Collector website
at http://www.co.san-diego.ca.us/ttc/ninew.html. Kessler tested a 15% sample
and was unable to correlate the majority ofthe names and amounts on the
Countywide Escheatment List to any records in the TrustRef database (current
or historical data) supplied to Kessler. Although some of the names on the
records in the TrustRefmatched (Exhibit 15) the amounts on the escheatment
list don't match the correlating dollar amounts in the TrustRef. Kessler noted
that the website has been changed since Kessler's audit examined this matter.
Failure to Follow Policies and Procedures
Tax Refunds
The Tax Refunds for Overpayment Policies and Procedures Guide issued by
the TTC, effective November 7,2005, indicates that "Refunds for
overpayment from the current tax year must be issued to the rightful recipient
within 60 days." (See Exhibit 1, Pg. 2). Kessler's audit found that this policy
is not followed by the TTC. Interviewees stated that they are too busy and
understaffed to follow these policies. Kessler sampled approximately 200
records still open in the database and found that some refunds were issued to
individuals long after the 60-day period and others still must be issued
(Exhibit 16). No explanation other than TTC staff is overworked, could be
provided.
Escheatment
The Escheatment of Unclaimed Property Tax Refunds Policies and
Procedures Guide's Statement of Policy says, "On August 1 of each year, the
32

KESSLfR
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Treasurer-Tax Collector will identify a list of monies that have remained
unclaimed for more than four years for escheatment and will conduct research
following the Research Guideline as a last attempt to locate the legal owners
of these monies. The Treasurer-Tax Collector will complete this research and
present a list of monies to escheat to the County Board of Supervisors by
February 1 of each year." (See Exhibit 2, Pg. 2).
During interviews, it was disclosed that these policies and procedures were
not followed simply because employees claim they were "too busy" or
unaware of their responsibilities. The amount calculated during this audit
owed to taxpayers is $7,992,667.31.
Warrant Data Imports
The TC04 Process document provided to Kessler by the TTC states that
warrant data must be imported to the TrustRef database every Tuesday
(Exhibit 17). A related Refund Procedural Flow Chart further expands the
procedures that must be followed by the TTC for processing refund data and
issuing refunds (Exhibit 18). Kessler's audit found that the TC04 Process and
the Refund Procedural Flow Chart is either not being diligently followed or is
outdated.
Findings Regarding the TrustRefUser Manual
The TrustRef Policies and Procedures for Tax Refunds for Overpayment has
been found to be outdated and inconsistent in some areas with the processes
and internal controls utilized today in the County of San Diego. Some of the
interviewees expressed concern over the lack of documentation provided to
them regarding the operation of the TrustRef system. It was also evident
during the audit that inadequate user training contributed to the confusion
regarding the specific responsibilities of employees and their roles regarding
entering data into the TrustRef database.
33

KESSLER
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Findings Regarding Maintenance Requests to IT Staff
A lack of documentation applicable to changes made to the TrustRef database
likely caused concerns to staff regarding the data loss during the time CSC-
Pennant Alliance was under contract for the IT outsourcing. Based upon
interviews with employees, Kessler was consistently told the programmer was
at times unresponsive to end-user concerns and that TTC IT Managers
allegedly did not want to perform routine maintenance to maintain the
database due to cost issues.
34
RECONCILIATION OF TRUSTREF AND ORACLE
Kessler has analyzed the documents pertaining to the Oracle database that
have been provided to reconcile the twelve funds that make up TrustRef
database.
The audit steps Kessler utilized to determine the balance of the funds within
TrustRefbegan with identifying and separating the various funds that make up
TrustRef. It was determined that a total of eighteen records were not affiliated
with any fund.
Once the 193,041 records were organized by fund number, the sum of all
transaction amounts and "ORIGAMT" numbers were computed to determine
what is identified as either a credit or debit in the Oracle database. Over
240,000 credits and over 190,000 debits were examined and totaled to arrive
at the estimated balance for each fund.
Kessler made adjustments to each individual fund applicable to a statistically
significant sample of intra-TrustRef fund transfers, taken from the Request for
Transfers of Funds document. Kessler identified thirty-four transfers that
occurred within the sample.
The thirty-four transfers were run against the TrustRef database to determine
if they were correctly documented within TrustRef. Eight of these transactions
were not correctly documented within TrustRef and Kessler made adjustments
to the balances of TrustRef based upon these eight transfers.
The percent of each transaction that was not correctly documented within
TrustRefwas applied to the fund balance (as per the general ledger reports) to
arrive at an estimated error rate percentage for each fund that was affected by
the transfers. The error rate percentages were applied to the fund balances
from TrustRef to arrive at an estimated balance per fund. The largest
35

KESSLER
INl'E.RNATlONAL.
adjustment that occurred to any particular fund from the result of the sample
occurred to fund number 507000 in the amount of $2,956.00.
Several issues could ultimately affect the balances calculated for the TrustRef
including TTC user input errors. Kessler found that many of the transfers
between funds were made because users entered an incorrect fund number.
Additional user errors include entering an incorrect reference to a transfer. As
an example, C20-8446 had a transfer from fund 509900 to fund 507004 in the
amount of $2,372.14. On the correlating Request for Transfer of Funds
document, the request number is DT04-609, while in the TrustRef the request
number is DT04-509, again calling into question the accuracy ofthe TTC
staff, and the lack of supervision to catch and correct these errors.
Another variable that could affect the balances is funds still remaining as
owed on records that were escheated. Kessler found that a total of twelve
records from the December 2006 escheatment still have balances that remain
in the fund. Furthermore Kessler found instances of amounts being escheated
while they still had unclaimed warrants that were not stale dated. This creates
a situation in which the record was escheated but the warrant could still be
cashed.
Kessler has been informed a comparison is performed by TTC staff
periodically between TrustRef and Oracle. According to the TTC staff the
purpose of this comparison is simply to ensure that monies in the Oracle
database will be able to cover any warrants being generated by the TrustRef
system. At the completion of the comparison Kessler was told the balances of
the database are adjusted to reflect the results of the comparison. Kessler
therefore has recognized these adjustments in its reconciliation to prevent
duplicative counting of any monies in the database.
36

KESSLER
[NTERNATKlNAe
The calculated reconciliation to the Oracle database is shown as Exhibit 19
and Figure 4 below details the balances Kessler indentified in the Historical,
STR and Oracle databases.
Fig. 4
Balances of Databases
$6,000,000.00
B
a
I
a
n
$2,000,000.
c
e
Historical SQL Oracle
Database
Based upon Kessler's calculation $2,975,720.15 must be transferred to the
Oracle database to adequately cover the open balances noted in the TrustRef
databases.
37

KESSLER
INTERNATKlHAL."
POSSIBLE RISK
Kessler considered using the Escheatment of2006 initially as a starting point
for the reconciliation of the TrustRef database to Oracle since according to a
Refund Timeline issued in December 2006 by the TTC (Exhibit 20), a
County of San Diego Agenda Item dated December 5, 2006 and a document
entitled "Minute Order No. 22", dated December 5, 2006 (Exhibit 21) the
TrustRef database for the tax years 1996-2002 was properly zeroed out.
Kessler's review of the documents indicated that the three documents
contradict each other. The document labeled "Agenda Item" (Exhibit 21)
identifies a total of $2.4 million in unclaimed property tax refunds for the tax
years 1996-2002. The document further states that the TTC has been able to
refund $2.005 million to 6,073 taxpayers and $223,840.61 remains unclaimed
and available for escheatment. Based upon a simple calculation this document
leaves a discrepancy of approximately $200,000 which is unexplained.
The Refund Timeline document (Exhibit 20) shows a total of $2.169 million
in property tax refunds refunded to 7,172 taxpayers and 1,737 records, totaling
$223,840.61, which was to be escheated to the County General Fund, totaling
$2.4 million dollars. No explanation was given to TTC stating the two
documents differ.
Kessler analyzed the refund and escheatment transactions to assess a starting
point to prepare the reconciliation between the TrustRef and the Oracle
database to determine if any instances of fraud existed. In the refund process
Kessler uncovered that a balance of $303,663.82 is still allegedly due to
taxpayers and still remains to be refunded or escheated for the period 1996-
2002.
Because of the vast number of discrepancies in the information provided,
Kessler could not rely on any of these documents as a base to perform the
38
reconciliation of the TrustRef database to Oracle. These calculations also raise
considerable concerns about the potential of fraud in the refund process that
could only be determined with a complete review of cancelled warrants
applicable to the refunds made.
Kessler also found that due diligence was lacking as defined in the
Escheatment of Unclaimed Property Tax Refunds Policies and Procedures
Guide which states, "On August 1 of each year, the Accounting Manager
generates from the Trust Refund System and provides to the Financial
Division Manager a report of unclaimed tax refunds that remain unclaimed for
four or more years." The Financial Division Manager and Financial Division
staff then conduct research to attempt to locate the refund recipient,
documenting each research attempt and using a research guideline and
escheatment checklist.
Based upon the documents supplied to Kessler, 1,521 overpayments
($188,948.39) of the 1,737 overpayments ($223,840.61) that were escheated
in December 2006 failed to have any attempt made to refund the
overpayments. Figure 5 below shows the overpayments that were escheated
again those that did not have any attempt made to refund the overpayments.
Fig.S
$200,000.00
$150,000.00
$100,000.00
$50,000.00
Escheatment December 2006 ,.- No Refun-
d
1

39

KESSLER
INTERNATIOHAe
Kessler further found that 5 of the escheated overpayments still had refunds
listed as unclaimed in the TrustRef database. The refunds on these specific
overpayments were sent out during the month of November 2006 and the
following month they were escheated. There is a possibility that these refunds
have been both cashed and escheated creating a negative balance in Oracle
and TrustRef (Exhibit 22).
Finally, Kessler uncovered that one overpayment which was escheated had a
deposit date of July 2006. This overpayment (TrustRef RecID number
822317689) did not meet the requirements of a minimum of four years in the
TrustRef database to be escheated. This record should not have been
escheated (Exhibit 23).
40

KESSLfR
INnRNATIONAe
RECOMMENDATIONS
Finding 1
Field Changes on Records One Week Prior to Conversion
Kessler recommends that all the warrant checks attributable to these records
be reviewed to determine ifthey were properly issued and received by the
rightful recipients.
"ORIGAMT" Changes
Kessler recommends that logs be maintained and reviewed, as this will help
create an audit trail and show user accountability for any changes that might
be made. Kessler also recommends that management ensures that sufficient
user security permissions are in place so that users will only be able to make
changes to fields applicable to their roles and responsibilities within the TTC.
Data Corruption
Kessler recommends that data corruption and other unusual variances should
be investigated and reconciled immediately with the mainframe and that
routine reconciliations be performed in order to identify and correct any
errors.
Date Discrepancies
Kessler recommends that records and transactions in the TrustRef database be
periodically reconciled and checked against the mainframe database to ensure
the integrity of the data.
Negative "ORIGAMT"
Kessler recommends that the database be programmed to alert the issuer of
any monies due to the County before issuing refunds to the taxpayer.
41

KESSLER
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No "ORIGAMT"
These discrepancies demonstrate a lack of oversight on the part of
Management. Kessler recommends that these transactions be reconciled in
order to enhance the integrity of the database.
"DUMMY" Entries
The various explanations given for the "Dummy" records indicate a lack of
understanding of the policies and procedures in effect and compromises data
integrity. This practice also creates the potential for fraud. Kessler
recommends that no records ever be deleted from the database, especially key
information such as names and addresses. This practice indicates that
management is not efficiently overseeing staff and is condoning this practice.
Existing records with incomplete or incorrect data should be flagged by
management and further examined to ensure the integrity of the data to
determine why the data is either incomplete or incorrect.
Historical Data
Kessler recommends that attempts be made to find the rightful owners of the
overpayments and if they cannot be located that the funds be escheated to the
County.
Finding 2
Fraudulent Warrants
Kessler recommends that users be required to be more descriptive in the
comment field to maintain an audit trail.
Adjustments should be made to entries that may have been paid out twice due
to a fraudulently cashed warrant to properly reflect them in the database.
42

KESSLER
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Theft Report - Findings Concerning Theft from TrustRef
Kessler recommends that Management void fraudulent transactions as soon as
they are identified.
Finding 3
Logs were not Implemented
Kessler recommends that audit logs involving changes to the database be
maintained and reviewed regularly in order to ensure accountability. Previous
audits made recommendations that logs be implemented, yet these
recommendations were not heeded until recently. The absence oflogs is a
significant security flaw which would prevent the identification of a
fraudulent transaction.
Inadequate Security Permissions
Kessler recommends that management react immediately to update the status
of users who should no longer have access to the TrustRef database. Security
parameters should be in place to allow immediate user permission changes
and prevent unauthorized access and/or changes to data in the TrustRef
database. Additional security maintenance and audits must be performed on a
periodic basis.
Notations to Delete Records
Kessler recommends that no records ever be deleted. Records should be
archived in another database so as to maintain a complete audit trail and not
compromise the historical information of any taxpayer in San Diego County.
Additionally, user permissions to delete records should be user restricted and
logs should be kept of any records deleted and the reasons why. Kessler
further recommends that entries with the notations to delete in Figure 3 of the
report should be reconciled with the mainframe to determine if any
inappropriate activity took place.
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KESSLfR
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Finding 4
Major Data Loss
Kessler recommends that a detailed reconciliation should be conducted
between the STR and the mainframe on all records that contain the notation of
"Restored 7/12 many lost" to determine the accuracy of the data and ascertain
that fraud does not exist.
Findings Regarding the TrustRefUser Manual
Kessler recommends that any future changes in policy and procedure be
amended to the manual as they occur and subsequently issued to all TTC
employees. Employees should be issued updated Policies and Procedures
Guides and User Manuals and management should take steps to ensure that
employees are fully compliant with all the policies and procedures outlined by
those documents.
Finding 5
Changes to the Back-End
Kessler again recommends that security parameters and user permissions be
implemented, with diligent control over who has access to both the entry and
approver transactions. Proper and periodic security maintenance must be
conducted so as to better ensure the integrity of the data and decrease the risk
of fraud.
Possible Risk
All property tax refund checks issued from August 15,2005 - September 12,
2006 should be checked against the TrustRef database, cancelled checks and
the mainframe to identify if fraudulent checks were issued and cashed.
44

KESSLER
INTERNATIONAl'
CONCLUSION
Kessler uncovered many discrepancies, irregularities and user errors during
the audit including the deletion of data which is an indicator that fraud may
have occurred.
Current and former TTC employees related concerns that the failure to follow
policies and procedures and the lack of management oversight could attribute
to the problems affecting the TrustRef database.
Inefficient user security permissions and the absence of logs enables user to
change or delete data without approval and accountability. Previous audits
also made recommendations that logs be implemented yet they were not until
June or July 2008. It was apparent that data integrity was comprised and the
potential for fraud exists since there were no audit trails to follow.
45

KESSLER
INTERNATIONAL"
INDEX
A
Access TrustRef 7
accountability 26, 43, 45
accounting application 11
Accounting Manager 11-12, 39
Accounting staff 11
amounts 20, 22, 32-3, 36
limited 15
transaction 35
amounts being escheated 36
Analysis of entries 5
APPENDICES 1, 3
Appendix 3, 12
Assistant Manager 25
ATR 10, 13-21, 23, 28, 31
ATR database 16
Attempted Refunds 39
AUDIT 4, 6, 10, 1 2 ~ 1 5 18, 25-6, 33, 43, 45
forensic 4
requested 12
audit Kessler 7, 13
audit logs 43
audit steps Kessler 35
AUDIT TRAILS 1, 26,41-2,45
complete 43
audit work 14
Auditor 8
Audits & Advisory Services 8, 12
audits correlate 12
Audits of Treasurer-Tax Collector 8
B
back-up 10
backup 28
Balances 5-7, 19,23,35-6,38
estimated 35
negative 40
open 37
balances Kessler 37
Balances of Databases 37
Balances of Historical Databases 24
Balboa Genesee 22
being fraudulent 25
c
Calculations 38-9
CDs 13, 18
changes 1, 17-20,26,29, 31, 34,41,43-5
city 22, 29
comparison 28-9, 36
comparison Kessler 36
Comparison of Countywide Escheatment List
and TrustRef Database 2
completed fields 18
Concerning Theft 43
conducted interviews 5, 16
Conducted multiple entries analysis 5
conversion 5, 10, 13, 15-21, 41
conversion process 17
Correspondence 9
COSD MTN DT Transfer Summary Report 7
county 2-5,8-9, 12-15, 18, 22, 25, 33, 38,
41-2
County and Northrop Grumman 16
County Board of Supervisors 33
County employee 8, 17, 22
County employee e-mails 9
County General Fund 38
County of property tax refunds 11
COUNTY POLICY 1, 32
Countywide Escheatment List 2, 5, 7, 32
credits 35
CSC-Pennant Alliance employee 17
CSC to Northrop Grumman 15
cumulative reconciliation 4
cumulative reconciliation process 4
D
data corruption 5, 20, 41
Data Loss 2, 19, 28-9, 34, 44
DATABASE 1,4,6-7, 10, 13-22,24,28-30,
32, 34, 36-7,41-3
duplicate 14
formatted 14
mainframe 41
database backup implementation 28
databases being 21
date, created 21
Date database 7, 13
Date Discrepancies 41
debits 35
Defect Tracking Logs Application Run Book
7
DELETIONS 1,6, 26-7,45
Department 15-16, 26
Deposit Date 2, 21, 40
deposit date field 21
depositdate field 31
Determined instances of refunds 5
discrepancies 6, 18-19, 21, 28, 38,42,45
documentation 15-17, 23, 25-6, 33-4
limited 13
documented claiming 17
documents 5, 7, 9, 13, 15, 26, 29-30, 35,
38-9,44
dollar amounts 20, 28
correlating 32
insignificant 20
positive 20
DT04 36
Dummy 22-3, 42
Dummy Entries 2, 23
duplicates 7, 13
duplicative counting 36
E
e-mail correspondence 15
E-Mail Retention Policy 15
e-mails 8, 14-15,26
examined 5
e-mails countywide 15
employee Kessler 16
employee turnover rate, high 16
employees 9, 14-17,20-1,23,28,31, 33-
4, 44
employees claim 33
encountered problems 15
encountered resistance 15
Entries 5, 13-14, 18-25, 27-8, 42-4
recorded 18
test 23
Escheated 11, 23, 32, 36, 38-40, 42
escheated overpayments 40
Escheated Records 2
Escheatment 5, 11-12, 32-3, 36, 38-9
escheatment checklist 39
Escheatment List 9, 32
Escheatment of Unclaimed Property Tax
Refunds Policies 2, 12, 32, 39
Escheatment Total 9
escheatment transactions 38
F
Failure to Follow Policies and Procedures 32
Field Changes 18-19,28,41
fields 5, 18-20, 22-3, 25, 27, 31, 41-2
fields analysis, missing 5
Fields Changed & Access 29
Financial Division 8, 11-12, 25
Financial Division Manager 39
Financial Division Manager and Financial
Division 39
Follow Policies 32
Format 7, 13-14
fraud 4-5, 17, 23, 29, 38-9, 42, 44-5
Fraudulent 2, 25, 42, 44
fraudulent transaction 43
fraudulent warrant 25
fund balances 35
fund number, incorrect 36
Funds 2, 7, 22-3, 35-6, 42
delineates 32
FY, labeled Countywide Escheatment List 32
G
General Ledger Account Activity Reports 7
Grand Jury PowerPoint Presentations 3, 9,
12
Grumman employee 17
H
historical databases 6, 23-4
I
individuals Kessler 27
Interest Rate for Refund Calculations 7
interview process 15
interviewed employees 16
interviewees 14, 28, 32-3
INTERVIEWS 1, 13-14, 16,23,27, 31, 33-4
intra-TrustRef fund transfers 35
K
Kessler 4-7, 10, 12-16, 18-29,31-6, 38-45
Kessler determined 20
Kessler International 4
Kessler performed 5
Kessler's audit 23, 25, 32-3
Kessler's calculation 37
Kessler's interviews 21
Kessler's observations 26
Kessler's review 38
key management positions 14
L
LACK of AUDIT TRAILS 1, 26
Larry 29-30
legal transfer 11
LEGITIMACY to BACK-END CHANGES 31
LOGS 1, 16, 26, 41, 43, 45
M
Macias Consulting Group 8, 12
mainframe 18, 41, 43-4
management 16, 22, 26, 41-4
Management supervision 28
Manager 16-17, 34
Microsoft Access version 13
Microsoft SQL 5, 13
Missing Field AnalYSis 2
money 11, 20-2
monies 12, 33, 36, 41
list of 12, 33
N
names 18, 20, 25, 27, 29, 32, 42
person's 18
Northrop Grumman 9, 13-17, 26
Northrop Grumman Acceptance Test Plan 9
Northrop Grumman Application Run Book 9
Northrop Grumman Detailed Business
Requirements 9
notations 5, 28, 43-4
number 19, 21-2, 35, 38
large 20
total 19
unique 18
o
Office 16-17
Office of Audits 8, 12
Operational & Transition Audits 8
Oracle database 21, 35-8
ORIGA 29
ORIGAMT 2, 5, 20, 22, 27, 35,41-2
Original Amount 20
Outstanding Refunds 2
overpayments 3, 8, 11-12, 32-3, 39-40,42
property tax 11
owners, legal 11-12, 33
p
PA2286 Treasurer Tax Collector Financial
Apps 7, 9
penalties 16-17
PERFORMED 1, 4-5, 18, 32, 36, 41, 43
policies 8, 12, 23, 26-7, 32-3, 42, 44-5
data retention 15
issued updated 44
Policies and Procedures Guide 12
Prepared listing of entries 6
Previous Audits and Investigations 8
Prior Audits 12
processing refund data 33
programmer 16, 31, 34
Projected Balances for TrustRef Funds 2
8, 10
Audit 3, 8, 12
Property Tax Collection Refund Process 2
Property Tax Refund for Overpayment and
Escheatment Protocols Validation 3, 8,
12
property tax refunds 11, 38, 44
property taxes 8, 11
R
RecID numbers 20
matching TrustRef 18
Recommendations 1, 4-5, 41, 43, 45
Reconciliation 4-5, 18, 21-2, 36, 38-9, 44
calculated 37
complete 14
routine 41
RECONCILIATION OF TRUSTREF and ORACLE
1, 35
Recorder's Fee 22
Refund Procedural Flow Chart 33
Refund Process 12, 39
Refund Process A08-002 29
refund process Kessler 38
refund recipient 39
Refund Timeline 2, 38
Refund Timeline document 38
Refunding Taxpayers 22
Refunds 2-4, 8, 11-12, 21-3, 32-3, 38-41
cancelled 24
owed 21
tax overpayment 11
Refunds Granted 2
Regarding TrustRef History and Controls 29
Request for Transfers of Funds document 35
request number 36
REQUIRED ESCHEATMENT 1, 32
responsibilities 12, 33, 41
Restore Source field 28
Restored 28
RISK 1, 38, 44
S
SAddress and City fields 29
Sample 32, 35-6
San Diego 5, 12-15, 18,22,33
San Diego Agenda Item 2, 38
San Diego Auditor 4
San Diego County 43
San Diego County General Fund 11
San Diego County Grand Jury Report 3, 9,
12
San Diego County Treasurer-Tax Collector
32
San Diego Countywide Escheatment List 2
San Diego Treasurer-Tax Collector Property
Tax 3, 8, 12
San Diego Treasurer-Tax Collector's Office
11
San Diego Treasury 9
SCOPE of AUDIT 1, 4
security parameters 16-17,43-4
prompting 16
SQL 2, 7, 10, 13-14, 16, 19, 21, 29
SQL Changed Fields Comparison 29
SQL database 17
SQL Fields Changed 29
SQL TrustRef Database 2, 7, 13
SQL TrustRef database to Oracle 5
SQL versions 28
staff 6, 11, 13, 15, 26, 34, 42
states 12, 26-7, 30, 39
STR 10, 13-14, 18-22,26,28,31,44
STR and ATR database 10
STR and Oracle databases 37
street address 22
T
Tax Refund Claim Form 9
Tax Refunds 11, 17, 21, 32
unclaimed property 38
Tax Refunds for Overpayment 33
Tax Refunds for Overpayment Policies and
Procedures Guide 2, 11-12, 32
Tax Refunds for Overpayment Policies and
Procedures Guide states 11
taxpayer names 6
taxpayers 11, 16-17, 21-3, 33, 38, 41, 43
TC04 Process document 33
THEFT 1, 25, 43
attempted 8
Timeline 14
Transactions 21-2,26,35,41-2
approver 44
void fraudulent 43
Transfer of Funds document 36
Transferred 2, 14, 26, 37
transfers 7, 20, 28, 35-6
Transition 29-30
Treasurer-Tax Collector 8-9, 11-12, 33
Treasurer-Tax Collector Application Inventory
Matrix 9
Treasurer-Tax Collector Response to Grand
Jury 3, 9, 12
Treasurer-Tax Collector Tax Escheatment
Timeline and Procedures 9
Treasurer-Tax Collector's Property Tax Trust
4
Trust Refund System 39
TRUSTREF 4, 7-9, 11, 13, 16, 32, 35-6, 38,
40, 43
TrustRef application 11, 26
TrustRef Application Progress & Prognosis 9
TrustRef BRD 8
TrustRef Database 5, 13-16, 21-2, 26-7, 29,
31-5,37-8,40-1,43-5
historical 23
TrustRef database and SQL TrustRef database
5
TrustRef database to Oracle 38-9
TrustRef Funds 7
TrustRef Policies and Procedures for Tax
Refunds 33
TrustRef Procedures 8
TrustRef RecIO numbers 18, 40
TrustRef security policies 30
TrustRef Server Build Procedures 8
TrustRef system 5, 16, 21, 33, 36
TrustRef Transactions 7
TrustRef User Manual 33, 44
TrustRef User Security Permissions 8
TrustRef User Security Table 8
TIC 15-16,20-3,25-8,30-4,38,41
TIC Accounting Division and Northrop
Grumman 13
TIC employees 21, 25, 44-5
TIC staff 15, 18-20, 29, 32, 36
TIC staff Kessler 28
u
Unclaimed 11, 36, 38-40
remained 11-12, 33
Unclaimed Property Tax Refunds Policies and
Procedures Guide 2, 12, 32, 39
unclaimed tax refunds 39
Update TrustRef Users 2
user accountability 41
user permission changes 43
user permissions 43-4
Users 16-18, 22, 26-7, 30, 36, 41-3, 45
single 23
system 19
v
Various TrustRef Screen Shots 8
versions 7, 13-14
w
warrant 8, 25, 36, 41
weaknesses 4-5, 30
word 22-3
work performed 4
EXHIBIT 1
SAN DIEGO COUNTY TREASURER-TAX
COLLECTOR
Tax Refunds for Overpayment
POLICIES
AND
PROCEDURES
GUIDE
PolicylProcedure
Effective Date: November 7, 2005
Supersedes Policy: Not Applicable
Treasurer-Tax Collector Policy Owner:
TO: Treasurer-Tax Collector Management and Staff
FROM: DATE: November 7, 2005
Dan McAllister
San Diego Treasurer-Tax Collector
1.0 SUBJECT: TAX REFUNDS FOR OVERPAYMENT
2.0 PURPOSE: To establish a policy and related procedures for identifying and issuing tax
refunds for overpaymenl
3.0 STATEMENT OF POLICY: On a daily basis, the Treasurer-Tax Collector shall
identify property tax overpayments from individuals and businesses in order to issue
refunds. To accomplish this goal, staff will conduct a daily review of overpayments.
After the legal recipients of refunds have been identified pursuant to Revenue and
Taxation Code guidelines, the Treasurer-Tax Collector will issue refund checks. Refunds
for overpayment from the current tax year must be issued to the rightful recipient within
60 days.
4.0 AUTHORITYIREFERENCE:
California Government Code Sections 29320 and 24000 list position titles of
elected or appointed office", of the County and defme their responsibilities.
California Government Code Section 29375.1 defines an "overpayment" as an
amount received in excess ofSl0 over the amount owed for any account.
California Government Code Section 29802 authorizes the organization to void
checks not cashed after six months.
California Revenue and Taxation Code Section 40 I requires the Assessor to
assess all property at its full value.
California Revenue and Taxation Code Section 619 defines Assessor notification
to the Assessee of property value and corresponding tax changes.
California Revenue and Taxation Code Section 2635 requires the Tax Collector
to send a notice of overpayment to the taxpayer if the amount paid exceeds the
amount due by more than ten dollars.
2
Policy/Procedure
California Revenue and Taxation Code Section 2780 - 2783 requires the tax
collector to pay interest on overpayments if not refunded within 60 days of
receipt of the payment.
California Revenue and Taxation Code Sections 5096 - 5107 defines when a tax
refund for overpayment is due and the requirements to claim the refund.
For complete text go to http://www.lcginfo.ca.goy/ and click on "California Law", select
the appropriate code and enter the code number to search for that document.
5.0 DEFINITIONS:
5.1 Tax Refund: The term "tax refund" generally means "money back from the
government when too much tax has been paid or withheld from a salary"'. There
are two types of tax refunds - refunds that occur from tax roll corrections, and
refunds resulting from overpayment.
A property tax refund for overpayment is due to the taxpayer if the tax payment
remitted is in excess of the tax actually due. If the check is an overpayment
greater than $9.99, the Treasurer deposits the check and refunds the difference.
No refunds occur for payment amounts less than $10.00 - they are by definition
(Government Code S29375.1 et. seq.) not overpayments and are deposited in the
County Cash Overage Trust Fund (account 510100).
Double payment occurs when two payments are received for the same
installment of a tax bill. Frequently, it is the homeowner and their mortgage
company paying the same tax bill. Over payment may also result from the
property owner's receipt of a delinquent tax bill that does not reflect receipt of a
previously applied amount that was not sufficient to pay the bill in full.
Overpayment can also occur when a cbange in assessed value reduces the tax
amount due, after payment has already been remitted. Tax refunds may also
result from data entry errors, such as incorrect transaction coding.
5.2 Trust Fund: A trust fund holds assets for individuals, private organizations, or
other governmental units. This policy applies to trust fund accounts:
514600 - a refundable trust fund account for current year secured tax
payments, used to refund duplicate payments, cancellation of penalties and
interest, and any overpayments for property taxes that occurred in the current
year; and
514900 - a refund trust fund account for prior year (defaulted) secured tax
payments, used to refund duplicate payments, cancellation of penalties and
interest, and any overpayments for property taxes that occurred in the prior
year.
5.3 Trust Refund System (Trustref): An accounting application through which
overpayment refunds are initiated and monitored. Some of the data that resides
in Trustref is imported and other information is data entered by both Financial
Division staff and Accounting staff.
I Definition from the Free Dictionary by Farley, hUp:/Ifinancjal-
dictionary lhefrcedictionary corntTax+refund,
3
Policy/Procedure
5.4 Officer: "Officer of the County," as defined in Government Code Section
29320, includes any elective or appointive officer of a county, superior court, or
judicial district, and any person in charge of any office, department, service, or
institution of the county, or a division or branch, as enumerated in Section 24000
of the Government Code.
5.5 Refund Recipient: The apparent legal owner of the tax refund for overpayment
money (see 6.1.4).
5.6 Manual Trust Transactions: Manual Trust transactions result from payments
that have been manually reconciled by a tax collector staff member who
determines that an overpayment exists prior to the payment being processed
througb the remittsnce processing system. A trust document (TC I 0) is processed
with the payment. The trust document will contain the amount overpaid, name
and address of the person or organization making the payment and the fund
number to which the overpayment is to be deposited. All trust and payment data
is available online as entered data in the Trust Refund System or imaged
documents.
A manual trust is also created when overpayments are removed from a bill by
coding. Payments are coded off of a bill using a mainframe application. A
Financial Division Staff will log on to the mainframe application and remove the
overpayment. When a payment is coded off of a tax roll, a fund transfer
document must accompany the coding in order to document how the funds are
being moved. A copy of the coding sheet and fund transfer are forwarded to
Accounting staff in order to adjust the appropriate funds. The trust document
associated with this type oflransaction is known as a C20.
5.7 Automated Trust Transactions: Automated Trust Transactions result from
overpayments captured at the time a payment is processed through the Wausau
Remittsnce Processing System. The Wausau system is programmed to identify
certain types of overpayment transactions and to automatically generate a trust
document to deposit the overpayment to trust. The Wausau system creates an
image of a trust document which is retrieved and printed by the Financial
Division Staff as part of the transaction record. Unlike the manual trust in 5.6
above, the trust information including the name and address of the person or
organization making the payment is completed by the Financial Division Staff.
6.0 STATEMENT OF PROCEDURE: The goals ofthis procedure are to consistently and
on a timely basis identify tax refunds due and issue refund checks within 30 working
days from the date the original payment is processed. Procedural steps follow.
6.1 Identify property tax overpayment transactions: Financial Division Staff
identify transactions with overpayment of property tax through several activities
noted below.
6.1.1 R..,ondle remittance proc:eaing trust reports: Financial Division
Staff receive daily remittance processing system reports of monies
deposited to trust. The remittance processing reports identiry each bill
paid, how much was applied, each bill overpaid and the amount
overpaid. The Financial Division Staff perform a reconciliation of the
4
Policy/Procedure
transaction to ensure that all monies are correctly accounted for. If
available, listings provided by the remitter are compared to the
remittance processing reports. If an unidentified variance exists,
Financial Staff contact the company or individual to determine if the
remitter made an error in calculating the amount due or whether the
money should be applied to a bill that was nol included in the listing
provided or for which a payment stub was not included. The remitter is
given 15 business days to respond before Financial Staff initiate a refund
of the overpayment.
6.1.2 Roncile tax servicolmortgage company (CORT AC) pllyments:
Mortgage company payments, aka CORT AC payments, are payments
made by mortgage companies on behalf of their customers with impound
accounts. Some mortgage companies employ a tax service agent to
compile the account information that is submitted to the tax collector.
Other mortgage companies serve as their own tax-servicing agent. The
tax service agent or mortgage company sends a magnetic tape or
cartridge containing the parcel numbers and the amount due for each
item. A payment check is included with the tape or cartridge. When
received, the checks are deposited to a temporary account pending
processing of the tape or cartridge. When the tape or cartridge is
processed, a batch file is created that is then processed against the master
tax file. Reports are generated with the results of the batch file
processing that include a listing of each parcel and its current status. All
exceptions are listed on a separate report and are deposited to trust.
Payment processing staff performs the reconciliation of the CORTAC
payments. After the reconciliation has been completed, Pavment
Processing Staff generate a fund transfer request to transfer funds from
the temporary CORTAC fund to the respective tax roll and trust fund.
The trust form and backup documentation is forwarded to the Financial
Division Staff for further analysis or adjustment. If an unidentified
variance exists, Financial Staff contact the company or individual to
determine if the remitter made an error in calculating the amount due or
whether an intended parcel or bill was not included on the tape or
cartridge. The remitter is given 15 business days to respond before a
refund of the overpayment is initiated. When completed, Financial
Division Staff request the refund.
6.1.3 Anlllyze Suspeose Report (TRSTP047-70A): Financial Diyision Staff
perform regular weekly analysis of monies in suspense. Suspense refers
to monies applied to a bill (reflected on the roll under "suspense") that is
either not sufficient to pay the amount due (short) or is an amount in
excess of the amount due (over). In the case of a shortage, a collection
letter must be mailed to the person or agency that submitted the payment
informing them of the amount needed to pay the bill in full. In the case
of an overage, the overpayment is to be transferred from the bill to a trust
account to be refunded. Financial Division Staff initiate an online
collection adjustment (ST45 adjustment) to remove the overage and
create a C20 trust document, which specifies the fund to which the
overage is to be deposited.
s
PolicylProcedure
6.1.4 Complete the transaction record: Financial Division Staff review the
transaction record to ensure that all required documentation has been
attached to the trust document and entered in to Trustref.
TCIO Trusts: Documentation is to include the TC 1 0 trust
document, remittance processing report, copy of check, CORTAC
Log or EFT Log showing who paid, any listings provided by the
remitter and if available the envelope in which the payment was
received.
C20 Document: Documentation is to include a copy of the coding
sheet, screen print of thc bill on which overpayment was made, copy
of the check, CORTAC Log or EFT Log showing who paid.
After all documentation has been compiled and the trust documents
filled in with the appropriate data, Financial Staff complete/create
Ihe record in Truslref. ForTCIO trusts, a portion of the information
will be automatically imported to Truslref when Ihe payment is
processed. The automatically imported data includes the TC 10
number and amount deposited to trust. To complete the Trustref
record, Financial Division Staff retrieve the partially completed
record by entering the TCIO document number in the appropriate
field. When the record is displayed, staff veritY the amount imported
to see if it matches the amount that has been written on the trust
form. If they match, staff enter the name and address of the refund
recipient and place the completed packet in the appropriate bin to be
reviewed and refunded. For C20 trusts, the Financial Division Staff
create the Trustref record by entering the C20 number, name and
address of the refund recipient and the bill number on which the
overpayment was made. AccoWlting Staff will enter the amount
once the coded transaction has been processed (usually overnight).
Each trust packet is placed in a basket to be reviewed for
completeness and accuracy. Ifall is okay, then the refund process
may be initiated.
Identify Ihe refund recipient: All overpayments are to be refunded
to the person or agency that paid the original tax. If paid by check, a
copy of the check is retrieved from the Legato Image Application. If
paid electronically by wire a copy of the log enlly indicating the
name of the agency that made the wire payment should be attached.
If paid by CORTAC agency, a copy of the CORTAC log identifYing
the agency who submitted the payment should be attached.
6.2 Initiate refund request 10 Identified recipient: After the reconciliation process
has been completed and the required information from procedure 6.1.4 has been
entered in to Truslref, Financial Division Staff initiate the process to generate a
refund check.
6.2.1 VerifY documentation: Financial Division Staff review tax payment
records to determine that all required information from procedure 6.1.4 is
attached and that the refund amount is correct.
6
Policy/Procedure
6.2.2 Interest on Trust Refunds: If an overpayment is not refunded within 60
days from receipt of the then the refund shall be eligible
for interest if the interest is $10 or greater. The interest shall be
computed for the period beginning 60 days after the county receives the
overpayment to the date the overpayment is returned to the taxpayer.
6.2.3 Create workflow for refund request, review and approval: Using the
completed trust documents, Financial Division Staff login to the Trustref
application and select the "Create TX" button. Staff selects a fund from
which the refund is to be issued. Only trusts refunds with the same fund
number can be added to the TX. The fund number selected should
correspond to the fund that appears on the trust document. After a fund
is selected, the TX enlly fonn appears. A TX number is assigned by the
system. Each TX can contain a maximum of eleven refund records.
Staff adds records to the TX document by entering the TCIO or C20
number to display all refuods under that number. Staff selects the
desired record Bnd press the "add" button. The item is then added to the
TX. After the desired records have been added to the TX, click the
submit button which will send the TX to the Lead Approver's queue for
review and approval. When finished, Staff then prints two copies of the
TX. If there are multiple trust packets for which refunds are being
created, staff place each trust packet in the order tbat it was added to the
TX; staff I) place one copy of the TX on top or the packet, bind it and
forward the bundle to the Lead Clerk for approval; and 2) place one
copy of the TX in the pending TX folder to await receipt of the refund
checks.
Financial lead approval: The Lead Clerk will login to the Trustref
lead approver screen and retrieve the TX for review. The Lead Clerk
compares the trust packets to the online TX form checking for
accuracy of names and amounts. When completed, the Lead Clerk
clicks the approve and submit buttons which forward the TX to the
Supervisor approval queue. The Lead Clerk initials the bottom of
the TX form and forwards the TX bundle to the supervisor for final
approval.
Financial supervisor approval: The Financial Supervisor receives the
hard copy trust documents and logs in to the Trus\ref Supervisor
Approval screen to conduct a second approval. The Supervisor will
scan and compare both the TX bardcopy as well as the online form
for accuracy. The Supervisor will review the backup for large
refunds over $10,000 for accuracy and search for familiar names
listed. When the Supervisor review is completed, the supervisor will
press the approve and submit buttons which then sends tbe TX to the
Tax Accounting queue for funds verification and approval. The
Financial Supervisor returns the TX bundle to the person that
initialed the refund request.
6.2.4 Log refund transaction and bold pending receipt of cheek clearing:
Financial Division Staff place the TX bundles in a file awaiting receipt of
the refund checks. The bundles are labeled with a date 30 days from the
date on the TX. The refunds are requested but the checks are held for a
period of 30 days to allow for the original payment checks to clear the
7
PolicylProcedure
bank. In addition, StatT enter the refund transaction into a refund
logbook located on the "G" drive. Financial Division Staff maintain this
manual transaction control log and a manual tickler log for checks
awaiting clearance for issuance.
6.2.5 Review refunds before mailing checks: After 30 days has elapsed,
Financial Division Staff check the Trustref file to see if any adjustments
have been posted due to return of the original payment check. If no
adjustments have been posted, Financial staff record the check number
and date of mailing next to the refund record on the hard copy TX
document. The TX document is filed in the TX book for future
reference. The check is matched with the appropriate trust detail and
mailed to the recipient.
6.2.6 If a debit memo adjustment has been posted to the original Trustref
record, then the refund check is to be canceled and the funds placed back
in to the Trustref record to offset the negative amount caused by the
returned check.
6.2.7 Accounting staffverifi .. funds and approves TX for posting:_ Once
Financial Supervisors approve a TX, the document can no longer be
altered by Financial Staff. The TX becomes visible to the Accounting
staff for verification of funds and approval. Accounting Staff logon to
Trustref and select the review function to locate TX's awaiting review.
The Accounting Staff verifY whether sufficient funds are available to pay
the refunds by comparing the amount of the TX to the amount available
in the General Ledger (GL) for the fund on which the TX is drawn. At
the completion of this verification, Accounting Staff approve the TX by
clicking the submit button. When the submit button is selected, the TX
is posted to the Trustref history record reducing the record by the amount
being refunded. If the TX amount is under $10,000, a second approval is
not required. If the TX amount is greater than $10,000, then the TX will
move to the Senior Accountant and or Treasury Manager's queue for
authorization. The TX file will be interfaced to the Oracle System
overnight. When the approved files are interfaced to the Oracle
Financial System, a refund account is established for each refund record.
The Oracle System also creates a batch file of all Tax Collector refunds
posted each night.
6.2.8 Submit request for check to accounts payable: Accounting statT
logon to the Oracle Financials to retrieve the refund batches
created by Oracle. The batches are copied from Oracle and saved
as a text file which must be sent via email to the Auditor and
Controller's Accounts Payable Division. The email must be sent
by an authorized staff person that includes the Treasury Manager
or the Senior Accountant. The email with attachments is sent to
the email address: "FGG, AP Interface" and the Treasury Manager,
Treasury Assistant Manager, Financial Division Manager and
Treasury Senior Accountant are copied on the email. Auditor and
Controller Accounts Payable Division receive the email, verifies
that the email was sent by an authorized person and processes the
request. The checks are generated then next day. The checks are
8
Policy/Procedure
picked up by Accounting Staff who verifies that all checks are
received before forwarding to the Financial Division Staff for
mailing (see 6.2.6).
9
EXHIBIT 2
SAN DIEGO COUNTY TREASURER-TAX COLLECTOR
Escheatment of Unclaimed Property Tax Refunds
POLICIES
AND
PROCEDURES
GUIDE
Policy/Procedure
Escbeatment of Unclaimed Property Tax Refunds
Escheatment of Unclaimed Money
Effective Date: November 7, 200S
Supersedes Policy: Not Applicable
Treasurer-Tax Collector Policy Owner:
TO: Treasurer-Tax Collector Management and Staff
FROM: DATE: November 7, 200S
Dan McAllister
San Diego Treasurer-Tax Collector
1.0 SUBJECT: ESCHEATMENT OF UNCLAIMED PROPERTY TAX REFUNDS
2.0 PURPOSE: To establish a policy and related procedures for reporting property tax refunds held
in the Treasurer-Tax Collector trust funds, which have been unclaimed for four or more years,
for identifYing which of these monies can be escheated to the County, and for transferring these
escheated monies to the County General Fund.
3.0 STATEMENT OF POLICY: This policy establishes the requirement that the Treasurer-Tax
Collector annually identifY and escheat unclaimed property tax refunds to the County General
Fund. On August I of each year, the Treasurer-Tax Collector will identifY a list of monies that
have remained unclaimed for more than four years for escheatment, and will conduct research
following the Research Guideline as a last attempt to locate the legal owners of these monies.
The Treasurer-Tax Collector will complete this research and present a list of monies to escheat
to the County Board of Supervisors by February I of each year.
4.0 AUTHORITYIREFERENCE:
o California Government Code Sections 29320 and 24000 list position titles considered
officers of the County and define the responsibilities of the Officer of the County.
o California Government Code Sections 50052-50057 that define how a party may file a
claim for unclaimed monies from the Treasurer.
California Revenue and Taxation Code Section 5097 defines the time period for filing a
claim for refund.
o California Revenue and Taxation Code Section 5102 Authorizes the Treasurer-Tax
Collector to transfer unclaimed monies to the County General Fund.
For complete text go to httD:/Iwww.leginfo.ca.gov/ and click on "California Law", select the
appropriate code and enter the code number to search for that document.
2
Policy/Procedure
Escbeatment of Unclaimed Property Tn Refunds
5.0 DEFINITIONS:
5.1 Escbeatment: The term "escheatment" (is-chef) generally means the legal transfer to a
government entity of property that has not been claimed by the legal owners.
Escheatment is the legal transfer to the County of property tax refunds that have
remained unclaimed as defined in this policy Section 5.2 for four years and for which the
whereabouts of the legal owners of the moncy is unknown.
5.1 Unclaimed Money: Unclaimed money consists of property tax refunds which are not
the property of the County but remain in the County treasury or in the custody of a
County officer for four or more years without a claim being filed by the legal owner(s),
except in the following situations:
The apparent legal owners of the money and their address, phone number, or other
evidence of their whereabouts are known.
The money is held in deposit pending decision in a court case.
The money is covered by 8 special restriction of law, or is subject to a claim by
another governmental agency. The money is to be retained beyond four years
because of the provisions of Probate Code Section 7663.
The amount ofan individual item is under $15 or Ihe depositor's name is unknown.
5.3 Trust Fund: A trust fund is a fund used to hold assets for individuals, private
organizations, or other governmental units. This policy applies to trust fund
accounts:
514600 - a refundable trust fund account for current year secured tax payments,
used to refund duplicate payments, cancellation of penalties and interest, and any
overpayments for property taxes that occurred in the current year: and
514800 - a refundable trust fund account for mobile home tax payments, used to
refund overpayments made on estimated property taxes.
514900 - a refund trust fund account for prior year (defaulted) secured tax
payments, used to refund duplicate payments, cancellation of penalties and interest,
and any overpayments for property taxes that occurred in the prior year.
507000 - a refundable trust for current year r01l correction refunds.
507001 - a refundable trust for current year unsecured roll correction
refunds.
507002 - a refundable trust for negative supplemental refunds.
507003 - a refundable trust for prior year refunds.
507004 - a refundable trust for prior year SB813 refunds.
507005 - a refundable trust for prior year unsecured refunds.
5.4 Officer: "Officer of the County," as defined in Government Code Section 29320,
includes any elective or appointive officer of a county, superior court, or judicial i s t r i ~
and any person in charge ohny offICe, department, service, or institution of the county,
or a division or branch and as enumerated in Section 24000 of the Government Code.
5.5 Refund Recipient: The apparent legal owner of the unclaimed property tax refund.
J
Policy/Procedure
Escheatment of Unclaimed Property Tax Refunds
6.0 STATEMENT OF PROCEDURE: Beginning October 2005, a new procedure for escheating
unclaimed property tax refunds is in effect. The goals of this procedure are to consistently and on
a timely basis investigate monies that are eligible for escheatrnent and to annually present a list
of recommended items for escheatment to the County Board of Supervisors. Procedural steps
follow.
6.1 Identify open items to escheat:
Accounting Manager: On August I of each year, the Accounting Manager generates
from the Trust Refund System and provides to the Financial Division Manager a report
of unclaimed tax refunds that remain unclaimed for four or more years. The report is
generated in fund number order and includes the tax bill number, trust document
number, deposit date, amount of refund, and name and address of the refund recipient.
Unclaimed property tax refunds less than $15 or any amounts where the depositors'
names are unknown are automatically added to list of items recommended for
escheatment; due to the monetary value and per Section 50055, no research is conducted
to identify a refund recipient for these open items.
6.2 Conduct research to locate the refund recipient:
Financial Division Manager: The Financial Division Manager instructs staff to conduct
and document researeh according to the Researeh Guideline to attempt to locate the
refund recipient. The Guideline details what research sourees to use and in what
sequence. Research sources include the Treasurer-Tax Collector Property Tax System,
the Assessor database, the California Department of Motor Vehicles (DMV) database,
Secretary of State database, and the Internet.
Financial Division Staff: Staff conducts and documents research attempts, using an
escheatment checklist. Generally, this is the third attempt to locate the refund recipient.
Staff maintains a package of documentation for each trust fund, which includes
individual record detail and a log of research contacts.
Financial Division Manager: The Financial Division Manager reviews staff
documentation of research to assure due diligence was performed and to determine if a
refund recipient was located. If a refund recipient is located, tbe Manager directs staff to
request a refund check.
6.3 Compile list of items recommended for escbeatment:
Financial Division Manager: The Financial Division Manager finalizes the list of open
items for escheatment. The list of items recommended for escheatment includes
unclaimed property tax refund items less than S15.00 or any amounts where the
depositors' names are unknown, and items of greater dollar value for which research was
conducted and the refund recipient could not be located. The Financial Division
Manager finalizes and forwards this list to the Accounting Manager.
6.4 Verify funds exi.t:
Accounting Manager: The Accounting Manager instructs staff to verify that the funds
still exist using the Trust Refund system. This verification initiates an Oracle General
Ledger update.
6.5 Notice funds to be _beated:
Accounting Manager: Upon verification of funds, the Accounting Manager prepares a
written notice listing all escheated money amounts of $15 or more, 10 be published once
4
PolicylProcedure
Escbeatment of Unclaimed Property Tax Refunds
a week for two successive weeks in a local newspaper with a countywide cin:ulation and
distribution. Escheatment items with dollar values less than $15 ore not noticed. The
notice shall state the amount of money, the name of the depositor, the fund in which it is
held, and thot the money will become property of the County of San Diego on a
designated date not less than forty-five days nor more than sixty days after the first
publication of the notice.
6.6 Process Claims for Unclaimed Monies:
Treasurer-Tax Collector: Upon or prior to publication, a party of interest may file a
claim with the Treasurer-Tax Collector which must include the claimant's name,
address, amount of claim, the grounds on which the claim is founded, and any other
information that may be required by the Treasurer-Tax Collector. The claim must be
filed before the date the unclaimed money becomes the property ofthe County as
provided under Section 50051 and must be submitted to the Financial Division Manager
for review.
The Financial Division Manager can accept or reject that claim. If accepted and
notwithstanding the provisions of Section 50052, the department/agency/district may
release, to the depositor of the unclaimed money or their heir, beneficiary, or duly
appointed representative, unclaimed money if claimed prior to the date the money
becomes the property of the County and upon submitting satisfactory proof. The
Treasurer-Tax Collector can issue a check for the amount of the accepted claim (see SO
CO Treasurer-Tax Collector Policy re Tax Refund For Overpayment Process). The
Financial Division Manager notifies the Accounting Manager that the amount of the
claim should be removed from the monies to be escheated.
If the claim is rejected, the party who submitted the claim may file a verified complaint
seeking to recover all, or a designated part, of the money through the County courts.
Within 30 days of receiving notice that the claim was rejected, the party must serve a
copy ofthe complaint and the summons to the Treasurer-Tax Collector. The Treasurer-
Tax Collector withholds the release of the portion of unclaimed money for which a court
action was filed until a decision is rendered.
6.7 Calendar eseheatment agenda item aDd prepare letter for Board of Supervisor
approval:
Accounting Manager: 15 days following public notice, the Accounting Manager
prepares a letter to the Board of Supervisors transmitting the escheatment list for
approval and requesting the Board of Supervisors to issue a Resolution escheating tbe
money as listed and directing the Auditor-Controller to transfer monies to the County
General Fund. Within this letter, the Manager signs as the "Trust Officer" certifying that
proper notice has been given to all known and apparent legal owners of unclaimed
money to be escheated whose whereabouts are known. The Board letter along with the
list of items to be escheated is forwarded to the Treasurer-Tax Collector for final review.
Upon Treasurer-Tax Collector approval, the Accounting Manager will calendar the
escheatment listing for the Board of Supervisors' meeting that immediately follows the
date designated in the public notice.
6.8 Board of Supervisor Approval:
Board of Suoervisors: The Board of Supervisors review and issues a Resolution
escheating the money as listed and directing the Auditor and Controller 10 transfer
monies from the Tax Collector Trust funds to the County General Fund.
5
EXHIBIT 3
County of San Diego
8,715 Fields were deleted after conversion from the SOL database
Missing Field Analysis
1 of 1
Source: Access TrustRef Database (4/22/05)
SOL TrustRef Database (6/2/08)
EXHIBIT 4
County of San Diego Items Not Transferred from Access to SOL Source: Access TrustRef Database (4/22/05)
ReciO TRANSNUM NAME1 NAME2 SAOORESS CITY PROPID FUNDNUM
2418
3306

7301
12050
12275
12495

13886
15656
17053
17066
17970
18483
196
51
?nQR'
2134!
22041
3561'
34619
35715

40156
45165
I.>U''''-,
51630
822241 1829
12276
1 52199
)f'>" 13263
1822251386
;1
105
I R?:
I R??? IIU,
182226145'
t),
)f .>.>u
331
)f '>'>L.
04/24/1
00
" "lOCK GLEN I EST()F
01/06/1 IT' FRI L
Q'"07l1 I rH AlBERT E&EI I H
I UN DEL MAR 1\::,::,UI.
u, ROAD AUTO CTR PROP
06/30/1 QQR 1(11\Ir, HARRIET
UO/I INK OF
Jj/l
ll/C R DAVID M
06/30/1997 FUDOR MERLON
nR/0I)1200 1
UOIU NAVY IAI . UNION
U\jIlIlL.UU' RUIZ ; &
l1/n?/?001 10/\ T INC
01, I(;;H I' B W OR EVA L
U'>IL.IlL.UUL.
UOIU
06/1' nRr,AI\I J W

Q1/11
01/?d/?OO'
t
t
12/C

01,
01/2

Qd.
05/21/?0 Title Co
0'1,

?OOd
1
1 L.IU"UUUq
-.1 !/l:
1!I17/2004
t

01P 1 ulVlcuLESI
First A, Title
MORTGAGE
S & INEZ
' L &
0?lOd/2005 FIRST SOu HVVc::' :1'''' TITLE
op ADE WII lAM & ALICE
C:"')rge Ann Fitzek
04/1:

04/12/2005
0.1/1:
I NELLY
'Corrupt "mini data import" ($10,395,975.58)
STALE DATED IT
:/0 WARMINGTON HOMES 13090 PIli I MAt-! ST
591 u DE LA ,STE 1100
.1928 STREET
100 VVU\ AWI\I AVE #109
2821 ST
POBOX 3304
KEL .EY CARLOS C DR_
2224 PLACE Mnl\lAr.n
719 N ChUlvt LANE
LEROUT TJR P.O, BOX
11455 razee Rd Ste 408
04/05 111', l.>U.> 14960 ARMIN WAY
KATHERINE A 132024 DEL CII:r.I 0 OESTE #6
[124 St., 5,lJit,e 120
ESCROW P63367-0041088 1790 E r.Ol nRAno BLVD #400
I I ST#C3
141 North 3202 E.
1350 G ST#F4
1 of 2
"U;:: 11\ MESA
San Diego
roo
3112005114 21631
San Diego 8linR
:HULA VISTA 1109
San Diego 427: 01361
8010001200 rouo
IVIt 37605
San Die9Q. ,'L.bOU .>, 0"0
DEL MAR VARIOUS 87494
351153010011
San Diego I 877(j2
San Diego 139200
,an DiefIQ. 18171001046 @.8917
,an Diego 188701
,an Diego 188703
San Diego 188704
San Diego 188706
San DieQo
San Diego 188707
San Diego 188708
San Diego 188709
I San Diego 188709
San DieQo 188711
San Diego 188741
San Die9Q. 00 I ou
San Diego ooo'lIL.L.200 159817
San Diego 141607
ISan Diego 142570
ISan Diego
ISAN
ISan DieQo
I
Cajon
'A!':'
70813
65569
72176
71303
I.>.>UO
73485
, ILO'>, UIUUt
7.1317
1144 42881
JLU 1.l.0.l.I U.l.OU I '+.l.OI
Iidaho Falls 111400 75728
:HULA VISTA 5684103926 43196.
I\jOOI
90184
90186
90187
)UI UU.l.
OUIUU,
OU/UU.l.
5
51460C
OUIUU':
514600
OU/UUO
OUfUU,
50800C
OUfUUU
507000
OU/UUU
51480C
507003
507005
507002
OUIUUU
507005
OU/UUO
507005
507005
OUIUUO
OUIUUO
507005
507005
OUIUUO
OU/UUO

OU/UUU
51460C
Ol'lOUL
"
50lUUL
51490C
51461)C
51461)0
51460C
514600
51460C
51460C
$332.22
$0.00
nR
$6,775.91
$254.61
<l"l
S11.00
$4,583.17

S31 .31
$1111 .61

$8(38484
$198,427.01
_$1,055.79

County of San Diego Items Not Transferred from Access to SOL
ReciO TRANSNUM OepositOate NAME1 NAME2 SAOORESS
822264068 37334 04/12/2005
822264069 37335 04112/2005
822264070 37336 04/1212005
822264071 37337 0411212005
822265424 04/2012<105 CHAPMAN WAYNE G 4301 HIGHLAND DR
Total
'Corrupt "mini data import" ($10,395,975.58) 20f2
CITY PROPIO
C ~ L S B D 84910201144
Source: Access TrustRef Database (4/22/05)
CONTNUM FUNDNUM ORIGAMT
90188 514600 $7,479,178.41

90189 514600 $647,643.17

90190 514600 $9, 742,49
90191 514600 $1,968,978.43

43256 507000
$10,410,313.33
EXHIBITS
County of San otego No Deposit Date Source Sal T r u ~ R e Database (612106)
1of9
County of San Diego

II
II
Ii
LIVINGm"A"
' T'
. BEACH
,
IC W'STA
Oi.L
No Oep<l!td Dale
g ""- Kl :A III

D700
51460
5(
507
'.68

;H'

, 100 , :A i4
i ' :: :A 183941
51460
II

00
:

II
14L
j! ltOKLN
TR
5"
=Ir''"
LLE 51 "00 U: "' "l"
III""',y.
E' "- ... i,,::
Kl
514600
TX2944: 12' ',y. .
"'!!.LAV'!A :A 91' '"
m :A l'm97
:A ifHl g 19"
Y!S, FiidYj :A i4600
iNUvi " . 1638021 26:
514'00
',y $37.

'0
;07000
142483
;--
"y.

2019
,
,
, 04"109
Source SOL TrusiRef Oatabase (612108)
lEACH
County or San Diego No Deposit Dale Source SOl TruSlRe( Dalabase (6J2f08)
30(9
County of San OlegO
II:
53821
"I
"I

I ""
,
Ie ,
:'1l

GIL
I
,
,
,
,
I
I
,
,

. RC
HC

TAX o Be
No OepoSit Dale
IHU'

ICC
'ACH 1.264;
cos
.US ST
:AVE
,
l14
,
02
02
,
Iii
I
I
42926
1051
. "y05
121
51460 ,Ap'
'-"ARK OR STUQa
I
"LLE I i

(31Jeo
rns TX 01 Juo'
". TX; 01 Ju,"
01 'eo
52.766
01: =dm
s .

463;.,"
=-- OA iij:
'M'y-C
01\ or g
Soorce Sal TruslRe( Dalabase (6/2108)
131
County of San DIego
KASoA'
tN,
I
KIN"
KRAI N :K .
KR(

KR'
167'
, AN--'L LN
lAVE

I BOX
'BOX
No DepoSit Date
:-
:- 043620
:-
C-
CA.
I
"

'051
loALE
Ie \ VlSTA
1
DAHIlL"-
1,,,--O_-,,,,,-_JillII::::::
50f9
loy
I1- M'y-
ayO
".M,y
I
66
11.
S1
19' .

1734.
" $3415
r X30B78
,*I
(29924
0 0889
'"
I
I

I
"
1326.
,.JI
'-M'y (

-'
'0' _ .
'M",-O
- '
f-
f-
f-
Source. SQL TrustRer Database (612108)
.-
County 01 San Diego No DepoSit Date Source SOl TrustRet Oatahase (612/08)
Ii
60rg
county of San Diego No Deposit Dale Source SOl TruslRef Database (612108)
70f9
County of San Diego No Deposit Dale Source SQL TruslRef Database (6J2IOB)
80f9
Counly of San Diego No Oeposil Date Source. SOL TrustRef Dalabase (612f06)
90rg
EXHIBIT 6
County of San Diego
ReciD "
1765
1l'
219
I
117FI IVIVt< I '" CO.
IMOLINA MANUEL
377 uV""l:::u I U
2125 27-0ct-89 "1r.1 II=RnA Rnl\JAI n
,rALS
380 08-n"r.-8Q IRGC CORPORATE Ut
2129 1 .I"n. J&SU"AN A
488 C 11 DAVID & KIM
581 10 JOHN J
I-__ .. CANDACE A & RI
591 02-Dec-92 1 LOPEZ ...... " "'v'{-\
589 n?_n .. ,,_Q? 1 BURTON IC
590 IVVI : I :N CI ARK &
ARTHU
64Jl ( FED TRU" 'I:::"V" HOSPI
650 FED TRU" 1/\ Jt< HOSPI
691 UI' ON MICHAI=I. S & Vlv' vRIA
2374 07 ISCHUI :I=Al\Jn BETH A
2375 14-Feb-95ITFFV OMV
IALONSO JE A
243', 1 ROCK GLEN EST OF
842 AL LAND
1007 t IL It1HTR
2829 1 SONG i7iF.c;
1064 S'I
1062 30-Jun-97 IAI 1VMC LOAN
106] 17 MTG CO
1102 11- :VI:t<LY HILLS INVI:;:' I MiNT
1103 11 NATIONAL MTG
1101 1
4188 "ISTATEST BANK & TRUST CO TR
4jIIfl JSGOOD NA !!:LANIEL J..!., MOLLY Ii
418', SAVII\Jr.S OF AMI:RICA
4262 1 171'" L W
4263 17-Dec-97 CAt< :K PAUL F.
1147" UvVVI:::N FED BANK
10679
10664
10699
lUlU"
10661
30-Jun-98 i Carl
30-Jun-98IBrehm
30-Jun-98 i Carl
QR 1 Lytle Leona E
30-Jun-98 , Fed Bank
tn_QR 1 Barker'
30-Jun-981 PrL Lenard
.I"n. . F Tr
30-Jun-98 IArvin Quentin & Karen
1 0694 I> tn. QR 1 Dunne Daniel
4264 30-Jun-98IAI JRi= CARLITO R FAM.
10667 30-Jun-98 IAF Invest LP
10710 30-Jun-98IPru Lenard
1069'
Negative "ORIGAMT" on SQL TrustRef Database
0 ..
ITR C20#13777 3/22/Qn
120 CORPORATE P A7A
11665 PLAM I BLVD #105
1 of 10
CITY
ISan Diego
ISan DieQo
SAN
ISan Diego
ISan Diego
. BEACH
ISan Diego
ISan Diego
ISan [)jego
'San Diego
ISan Diego
ISan Diego
ISan Diego
,SAIi
ISAN
ISAN
ISan Diego
San Diego
ISan Diego
ISan Diego
ISan Diego
San Diego
ISan Diego

'SAN DIEGO
SAIi
,SAN UII:l:>V
ISAN
'SAN nll=r.o
San Diego
:San Diego
ISAN UII:l:>V
San Djego
SAN nll=r.o
WEST PALM BEACH
ISan Diego
San Diego
San Diego
San Diego
'San Diego
San Diego
San Diego
San Diego
San Diego
San DieQo
San Diego
San Diego
San Diego
San Diego
San Diego
Source: SQL Database (6/2/08)

8288
10800 10418
13104
13243
1327L
13723
0""uou,,130 15903
II 1 11 16794
)( .>o.! I 16794
1190131Eill1 17<g1
8H,uu.!o471 17021
81901 17021
1949 17689
1939 17689
1900 18298
1391587153 168035
>13 1679Q
18343
201930
21303
22707

)( .!Ole
8693127776 ,,,,,:1,
136
10474 23730
,,, .. ,,10.g7 24381
IOf'" n07 24712
,uo124712
24745
0, "

24745

18793794527 24698
18794133847 ' .. 0:10
)
07
124745
'VI 24745
j{ :1,l:111197 ,lO, IU"
)f 24698
124782
1716124712
51460C
514000
514600
"U/UU.!

" I( uu.!
514600
51460C
514600
5.1460C
51460C
514600
51460C
51460C
:lUfUUL
"U(UU.!
"-U I uu"
507002
"UIUU.!
51460C
51460C
51460C
514600
514600
51460C
51460C
514600
-"-V I vv"
507002
"VIUV"
5UfUU.!
"V I VV,
51460C
51460C
514600
514600
51460C
51460C
514600

51460C
514600
514600
51460C
:lufu02
514600

51460C
($781.08 ($558.05
($130.91 ($130.91
$0.00
$34.24
(:,47M8
($73.60: ,0.00
($518.30: ($408,40
;50.94 ;0.00
.12.68 0.00
'n? 0.00
.51.18 0.00
( .11.34 ;0.00
($581.88 ($581 .88
($217.55 ($217.55
($7.77 (;7.77
($360.1C 0.00
($13,E> iO.OO
('I:?4 f;f;' ,0.00
($182.24: ,0.00
($40.36 ,0.00
($140.72 ,0.00
.47.18
(: 171 .02;
,0.00
,0.00
($111.02)
($179.88
($91.36
($37.18
,0.00
,0.00
($4,4 15.26)
;0.00
($ '8 26'
($138.00)
($221 .22:
($73.60)
($10990)
($5094'
($12.68)
($202.60:
($51.18:
($11.34)
>Q.OQ.
0,00
;000
($360 10)
($13.76)

($182.24
($40.36
($140.72:
($43.30:
($'17.18:
,0.00
;g,oo
0,00
iO.OO
(:.179.88
($91.36
.64.82
;37.18

($14.70:
($4,475.26:
($1 '5.58
i8.88
,0.00 ($
$0.00
($226.00:
($
0.00
'R\
($ 11.56
($2 ;1 .92
(:,310.96
.285.34
.267.36
.255.38
.254.50
.245.58
4R'
(:.210.40]
(:.128.32
(:.106.74
;89.96
;f;3.!'If;
($48.14:
(:,8.88
($1,041.56
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
,0.00
$0.00
$900.00
($:,661 .92:
$310,96:
'I:?R<;. '4.:
;267.36:
255.38:
(:.254.50:
(:.245.58:

;210.40]
.12832
($106.74
,8996
,qm
,49.40:
($48.14)
County of San Diego Negative "ORIGAMT" on SOL TrustRef Database Source: SOL Database (6/2/08)
2 of 10
County of San Diego Negative "ORIGAMT' on SOL TrustRef Database Source: SOL Database (6/2/08)
3 of 10
County of San Diego Negative "ORIGAMT" on Sal TrustRef Database Source: Sal Database (6/2/08)
4 of 10
County of San Diego Negative "ORIGAMT" on SQL TrustRef Database Source: SQL Database (6/2/08)
5 of 10
County of San Diego Negative "ORIGAMT" on SOL TrustRef Database Source: SOL Database (6/2/08)
6 of 10
7 of 10
8 of 10
9 of 10
10 of 10
EXHIBIT 7
County of San Diego No "ORIGAMT' Source: SOL TrustRef (6/2/08)
1 of 3
County of San Diego No "ORIGAMr' Source: SOL TrustRef (6/2/08)
2 of 3
County of San Diego No "ORIGAMT' Source: SOL TrustRef (6/2/08)
ReclD NAME1 NAME2 SADDRESS CITY PROPID CONifNUM, FUNQNUM ORIGAMT
622261330 21-Sep-05 FIDELITY NATIONAL TITLE COMPAN 2763 CAMINO DEL RIO SOUTH SAN DIEGO 6311203000 55106 508000
822281333 21-Sep-05 FIRST AMERICAN TITLE CO PO BOX 606 SAN DIEGO 4372503054 55103 508000
822281336 21-Sep-05 GLENN G. EUGENE 606 ARROYO SECO DR SAN DIEGO 5344122703 55102 508000
822261339 21-Sep-05 LOU RUIZ 44118 31ST ST. W LANCASTER 2032532821 55101 508000
822281340 21-Sep-05 NATIONAL CITY MORTGAGE 3232 NEWMARK DR MIAMISBURG 6291411400 52998 508000
822281342 21-Sep-05 NATIONAL CITY MORTGAGE 3232 NEWMARK DR MIAMISBURG 6290604500 52999 508000 $0.00
3 of 3
EXHIBIT 8
County of San Diego Records Containing "Dummy" Entries Source: SOL TrustRef (6/2/08)
1 of 9
County of San Diego Records Containing "Dummy" Entries
WENA
OU/UUL
JET D 82231/011 07 I IRIJlr.H IVIII IDUMMY nllMMY 2154401700 :'U/UUU
A??'l?nAQ7 nA_<::: .. n.nI;IRIIRI<I= \Nil lAM nllMMY nllMIIiIY OU/UUL <;'
.-06IBURKEWIlIIAM nlJMIIiIY nlJMIIiIY IOoo .... "u OUIUU $1,6n!'in4
822318050 1
0
_
111
1. IBUSH IDlJMMY M.W 1300140293 :'U/UUl
I"OU 10-Feb-06 r.AMAr.Hn 'I U R.I nM1=11 nl JMMY nl JMIIiIY """" .. " 1773140247 50luuu ,6,27
_822318:22"1 :NA SP .VI' "GAR 1Y nlJMMY 140295 :'UI"",
(ON JOHN A&SHIRLEY DUMMY nllMIIiIY 'L"LI"UL"L 14n?R'l OU/UU. $397.48
822318052 10-Jul-06 CAROfhcr(s LOREN&SYLVIA nlJMMY nlJMIIiIY 1132140293 OVIVV\ $9.35
822318156 1 AI '7 nl JMMY nl JMt..1Y n'll; 140293 507000 1;<
0397 '-06 l.A<> I ",0 JUVEN IDUMMY nliMMY '" ,,, 140257 OV/UVL .16.26
822318158 j ICATLOW oN E 1Y IY I/U 140293 :'U/UUl
822318054 Of; EOLJAlmnltnA (LENE V nl JMt..1Y nIIM'"1Y 18991067299140293 OU/UUU
822316055 1 I l.t:","ANTES ,0 L L G IDUMMY nI 1M '"1Y ,d16 :'U/UUU ;31.30
82231821? 1n-llll_nl; r.HnpRA HARISH K nl JMMY nl JMIIiIY 18491487035140295 OU/UUL $1 ,'l<;'l A,
822318213 Of; l.nU"''''A K nlJMIIiIY nliMMY 18491 .. 0 1 u .... 140295 OUIUU $291.58
lluM,,:;18 1 -I' CMF NCF NOR"H LLC 1<:;10 vvt:::>SFIELIDlJMMY 1=<::: 157617704419 :'UfUU, $28,3<11.06
,312
822317120
82231805'1
822318068
822318069

"u,,,3913
1l,:l;$l/OtlU
822318159
82231768'
)18
r.nlIN FELIX nlJMMY nlJMIIiIY IR: "" 140272 OUIUUU ,7.54
10-Feb-06 :ON , C JR IY nlJMMY 140247 ,3.15
COOK CHARLES H&TURKAN DUMMY IDUMMY 140283 OU/UU. $31.76
10-Jul-06 COOLEY GARY nllMMY nlJMMY 13197104100 OVIVV\ $31.1:l
1n_IIII. I=Y A, oW IIMMY nllMMY 140293 OUfUUl <;'
10-Jul-06 JS RICKY MR.I nllRnl=<::: M nllMMY DUMMY ,8292150302 OU/UUU S:7R 4<;
1 INA MARTHA H rR)1 IDUMMY IY l0""-V' :'UfUUl. $3..1
13-,J"n-nl; COSTA WAYNE R&MARY J nllMIIiIY nllMIIiIY 18491076804140249 50/UUL $7.96
07 I COUNTRYWIDE LOANS INC nlJMMY DUMMY 1500 OV/VVV ;19.62
1n-IIII COX ____ -+ ________ __ ____ ..
07,.JIII..fIn CRAIG STEPHEN MR.SHIRI F IDUMMY nlJMMY 11591016300140293 50'lvuu .29.72
J. ICRI LLEY G&JEAN A lY DUM_MY 50fUU, ,17.34
'ULO 17-Jan-O'l CROWN PACIFIC L P DUMMY ISD 18! 111515661987 50/UUL $107.18
.822317682 07 ,T ""'""" IDUMMY IY 1612..1 140293
822318244 10-Jul-06 DAVID JEFF C&KATHY B nl JMMY DUMMY ,8491581054140295
822318070
822318700
82231fg28
822318076
822318077
822318078
1: UA' C , AllRl1= DUMMY nllMMY 18491
1n_IIII. ON 0_ nllMMY 10202140293
25-Jul-06 DAVIS E EST OF DUMMY DUMMY ,839612374315649103
jO I IT :> RII ISA IY IY If Q<;
, IDUMMY nil .. '"1Y IR: 140255
10-Jul-06 'T OF vc r(ANS AFFAIR IY IDUMMY /lOV".
1n_h'l_nl; DEPT OF VI: 1 t Kf.NS AFFAIR nliMMY nliMMY 12158810808 14n?Q'l
10-Jul-06 DEPT UI' VI: I AFFAIR DUMMY IDUMMY l1 140293
J. fnRO BRYAN H&ALL ISON E [!:llJMMY_ InllMMY M'l140247
822317107 DEWEY LlNA E DUMMY IDUMMY 180
322318079
322318230
822318080
822318083
822318215
822318214
IDRAXLER IVIIL IFI &IRERI IDUMMY IY '''..''' 140295
10-Jul-06 DUNBAR MIr.HA!=1 S DUMMY nllMIIiIY I"""
l' I IDUNBAR <>, :N E nlJMMY [DUMMY 18891191636
1n-I .. nl ,-RAYI DUMMY nllMMY 18292177312140293
10-Jul-06 DUNN J DUMMY DUMMY 111
jO_ ("1 IEASTLAKE L L C IIMMy' 18491<;4R4'l414n?Q<;
10-Jul-06IEASTLAKE L L C DUMMY IDUMMY 18491""""10140295
IEATON SUSAN&K :, n G IDUMMY IY (1l23 [40274
822317686 MM.J I nllMMY [DUMMY 11283105200140293
2 of 9
50/uu.
50lvv.
50fUUL
OU/UUL
50fUU,
50/uuu
OU 1 UlJI
50/uu,
50'lvu\
50fUUl
OU/UUL
50fUU
50/UU\
50'1 UV.
OU/UUU
OU/UUU
50fUU,
OUIUUL
:'UfUU;
50/uuu
;<;0 <;4
$113.16
;31.56
;72.92
;31.90
$3.11
J44.76
$390.74
$57.40
$6.09
$1n4 n4
.58.70
m
;57.38
1nl\.16
$13, Inn R4
$14.01
Source: SOL TrustRef (6/2/08)
County of San Diego Records Containing "Dummy" Entries Source: SQL TrustRef (6/2/08)
3 of 9
4 of 9
50f9
6 of 9
7 of 9
County of San Diego Records Containing "Dummy" Entries
822318194
82231 Itl
10 .. IIII.OR JULIE nllMMY nllMMY
1 ISTEELE IFI r:&IAMIE S ntJMMY lUMMY
822318892 ? OR I::> I I::VI::N::> III nllMMY
OLL') ,0195

82231798
10-Jul-06 '" vRK SALL Y nl JMMY DUMMY
10 1ST' IRE WILLIAM L 1Y
10 . .II1I_OR CLETIS A "iNE nllMMY
1196 1 STUMPF MARK L&KIM ntJMMY
OLL.> I ,,,0'> 10 . 1111. OR SULLIVAN T
822318245

R??<>"
822318726

OLL.>,/111
oLL;n 1118
822311"00
822318198
1701
8223', I "o0
19!1l

ITABLAS , B&HIJINIA B DUMMY
10_1111. A
1Q:Feb-() TOMLIN ROBFRT 1Y
30-Jun-06,1 Vt ;HEVA" : R&TANIA
1-061IUt-' I CHEVA" :r<'" ,ANIA I1lJMMY
10-.I111.0RITORRES LYQIA
06" r<,r-vLI RICHARD ntlMMY
?" . .II1I. ITRlJPPI WILLIAM A
10-.IIII-ORITUCKER JRIE EST OF nliMMY
1, IVA WIFI FN JI::t-t-KI::Y J I1lJMMY
1: :INA J nllMMY
OLL,) " "oe 1 IVII I Fr.AS FERNAAuI nt JMMY
82231 '''0'' 10-Io'I-OR Y P nllMMY
OLL')II""V 10-.I",-ORIWALSH MA-IIMt:vvW&THERESAA nllMIvlY
515?' IWASHINGT IN IG CEN 1Y
822317991 10-.I111-0R I I lAM J M nllMIvlY
O"L,) """" 1 IWEBB DAVID C&BFRNAI1FTTE L ntJMIvlY
822297341 :IN ADAM nliMMY
OLL,) I OR [WELliK LISA K I1lJMIvlY
R??"\ ilL ?Q_.llln_ORffij: 'Anr:nRD D JR&HELEN MY
10-.I111-0R I VVt" I WI I IIAM ISA M nllMIvlY OLL
I ""':> 1 IWHFEI_ER FRANCIS&JUSTINE ntJMIvlY
822317121 30-Jun-vo IVVMI . OAK _LC nllMMY
IVVHIIING JOHN G&KATHLEEN M ntlMIvlY
822318201 10-.1" I_OR ' nA\I/n nllMMY
"LL')1/119 MTOM '" , AF IDUMMY
1?R1 1 I Ie; EDGER C&CHERYL 1Y
822317124 30-1" 'K nm "THY F TRUST DUMMY
1135 JAMP!': INA H ntJMIvlY
822318218 10- 111_ IVVINN... :K J nliMMY
822317125 IWOODLAND PARKWAY APTS LLC IDUMMY
R???( l' )nne; JERI:.AIAI I nllMMY
8223'''''''0 10-Jul-voIVV rc-rlOFF BRIAN B EST OF DUMMY
10-1 1Y
82231 '''''0 10-Jul-IlR 17AI AI AI\l&VAHIDI nllMIvlY
1: IZAICH I1ANIR A A&L1NDA L DUMMY
8 of 9
nllMMY
llJMMY
nllMMY
lUMMY
nllMMY
llJMMY
nllMMY
lUMMY

DUMMY
1Y
nllMMY
lUMMY

DUMMY
1Y
nllMIvlY
lUMMY
nllMIvlY
ntJMIvlY
1Y
nllMIvlY
nllMIvlY
ntJMIvlY
nllMIvlY
nt IMIvlY
nllMIvlY
ntJMIvlY
nllMIvlY
ntJMIvlY
nllMMV
I1IIMIvlY
1Y
nllMIvlY
ntlMIvlY
nllMMY
I1IIMIvlY
1Y
nt IMIvlY
1Y
nllMMV
ntJMIvlY
18990149629140293 507000
'''00 I VV'+VV
04515652919
18091993490,'tv",,')
140293
15001020900140293
101 i97
OILLIU2300140293
11000 ,,,v,,,,

10011 OL"

'>1'>:JLI2217 140293
1013140247
18591690815
OO"LI""OIO 140293
15631620500140293
140293
18491041094140249
111 Don 140: 93
12 00140293
15070120300140293
15671611
12702610500140293
11591
IR' "'<1140247
1859618009515653147
I <>.nROQO?OOO 140281
IR( 1300140293
1900 1Lln?Q1
I'tVL"J
18592315405 H
140293
13134140283

II ,,'t 140283
18491 In?R<\
044
1"""V"IOOL,,140?83
0'>"441.>033140247
ILIVVO"V"OO 140293
13882912606140293
13132011600,"VL""
18491119344
OVIVVU
507002
OVIVVV
:JU,uuu
507000
507000
OVIVVU
507002
OV,VV"
OUIUUL
507000
OVIVVU
507002
OVIVVV
507002
ov I V\J"
507000
OVIVVV
507002
507000
:JU,Uuu
507002
:JUIUUU
507000
OVIVVV
:JU,UUU
OVIVVV
:JU I lJlJU
507000
OVIVVL
:JU,UUv
OVIVVV
:JUIUUU
507002
OVIVVV
507000
507002
507002
:JUIUU
507002
:JU,VVU
OVIVVV
507000
507000
:JUI\JljL
'h?/i
$28.7L
$15.88
$R4 RR
LlQ
?R 90

'1:<1<1 ?Q
$7.25
QR
'::\R R,
LlR
$31.09
,3.15
,7.42
$12.73
$3.16
$301.26
$195.72
$127.33
'I:?<>' RR
,6.36
$:'96,

$6.63
$7.48
LlR

,8.24
$1Ii7.79
'h?? ?"

Source: SOL TrustRef (6/2/08)
ReclD DepositDate NAME1 NAME2 SADDRESS CITY PROPID CONTNUM FUNDNUM ORIGAMT
822318202 10-Jul-06 ZEPEDA GERARDO L DUMMY DUMMY 8991776089 40293 507000 $27.08
822318203 10-Jul-06 ZEPEDA GERARDO L DUMMY DUMMY 8091776070 40293 507000 $47.58
Total $193,004.98
9 of 9
EXHIBIT 9
1011
EXHIBIT 10
Security Database and Object Model for Trustref
1. Overview
The Treasury and Tax Collector of San Diego employ several groups of
workers that perform tax refund management utilizing the TICFlnancials
Application (A. K.A. Trustref) The Treasury and Tax Collector requires that the
various functions of managing and approving tax refunds be divided between
three main groups: Tax Financial Users, Tax Accountant Users, and a third
group which is comprised of Read Only Users and Security Administrators for
the aforementioned application. The objective here is to provide the TIC a
robust and efficient means of processing tax refunds without sacrificing
violating the business rules of the system; mainly the keeper of the till is not
allowed to access the books.
Currently, the security model employed by the Trustref application falls short
because:
The system isn't entirely data driven.
The system isn't object oriented, so code reuse and maintenance is
more difficult employing the current monolithic top down approach.
There are not enough granularities built into the system. The
system doesn't allow TIC to insure that the user is granted rights
and only those rights required for them to perform his/her job. For
example, there are cases written into the presentation layer that
allow security overrides and effectively blur the lines between Tax
Financial Users and Tax Accountant Users.
The User Administration piece currently has the ability to report
who and who is not active within the system, but provides no
means for a qualified user to add and modify individual user rights.
2. User Security Management and Administration Module.
2.1. Users and Groups
2.1 .1. TrustRef was developed as a custom web application using the Microsoft
.Net framework version 1.1 and Visual Basic.net.
2.1.2. Access to the TrustRef website is via the urI:
2. 1.2. l.Production: http://
2.1.2.2.Test: http://cosdaOlOtlttc2
2.1.3. The new security model allows for a more organized and granular view
and process of maintaining users and their group roles and effective rights.
2.1.4. The groups and roles are mutually exclusive. A user in the Financial Div
group cannot also be in the Tax Accounting group. The user will be in one
or the other and have a set of effective rights for that group.
2.1.5. The groups and roles are additive. If a user is an approver, they are not
necessarily also a requestor. They must explicitly be granted the requestor
rights.
2.1.6. The program flow of this system starts with the User Maintenance section
and progresses to the TrustRef section, and then the TC04 section.
EXHIBIT 11
Update TrustrefUsers
From:
To:
Subject:
Sent:
Priority: High
Cohen, DeJla
TICIT
Update Trus1refUsers
10118/20074:16:25 PM +00:00
Please change the status of the following users from "active" to "inactive" as they no longer work in the department or have changed
roles and no longer use Trustref to perform their duties.
agutie4
bbyers
dcheung
ecastro1
eschwartz
hparani
jpizarr'; .
mturk
Igonzal1
mraval1
nderosal
obagsic
nmarks
sangel
Please advise when this has been completed.
Thank you,
DeLl.a.
Manager, Financial Division
San Diego County Treasurer -Tax Collector
(619) 531-6412
Della.Cohen@sdoounty.ca.QOv
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Subject, Update Trustref Users
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EXHJ81T 12
County of San Diego MajOr Dala Lou 1 tlems nolTrans(erred to SOL Source- Access TrustRef Database (4/22105)
10(1
EXHIBIT 13
A08-002
Meeting Purpose: Discuss history and controls related to TrustRef system.
Date: 9/0312007 Time: 9:00 AM
Meeting Attendees: Larry Lawent, System Developer, NGT
Lynne Prizzia, IT Manager, OAAS
Tom Philipp, Senior Auditor
Notes
TrustRefDeveloper Conference Call
9/3/2007
1. Audit Scope/context
Discussed audit objectives and scope with regard to allegation related to the TruslRef System.
2. Developer Information
a. NG Employee? Or outsourced system support?
Larry is a NGT employee working on AcccssIW eb based systems
b. Time on the project?
Larry started working with TrustRef just prior to the conversion from Access to the current web
based system?
c. Creator of the Application?
Larry created the current web based system.
d. Involved in the evolution from DB3 to Access to Web-based? Dates of the cutovers?
Larry was not involved in the DB3 to Access conversion. The cutover to the web based system
was in 2005 (no specific date provided).
3. Specific Allegations
a. Have there been any specific database' crashes' resulting in data loss?
Larry was not aware of any crashes of the current system related to data loss. He indicated that
there was a problem with the integration of Crystal Reports, but that did not affect records, only
report output.
b. During the transition, to what extent was data validation conducted?
EX.S Exception: Formal data validation as part of change management was nol conducted.
Larry indicated that this was due to previous management practices of TTC IT coordinatore
(Dale) and practices of the Pennant Alliance (See email response) G.1.4
c. There are reports of missing records. Do you have any knowledge of data loss at the
time of the cutovers?
Exception: Larry indicated that there were records in the Access database thaI were not included
in the web based system due to corrupted and missing data. TTC direct the transition to proceed
without the records.
d. Was there any backup done that would allow for a comparison of records in the
system today and those prior to cutover?
Larry did not know if recovery of any previous instance of the access database was feasible
A08-002
4. General TrustRef Questions
a. Della indicated that the reporting would not yield all records. Is this true, and if so,
can the content of all records be extracted for comparison?
Larry indicated reporting of archived records was not a system requirement, only query
capability. Access to archived records would require a request from TTC data extract (request
sent to Paul Stryker 9/4/2007)
b. What other issues have been forwarded for resolution? Parent/Child records,
duplicate records, etc. that may be related to data integrity and content loss? Is there
a record of the tickets on TrustRef over the past 2-3 years? Is there method for
tracking changes to the code/application software reflecting the fixes applied?
Larry indicated that there were no break-fixes related to data loss. A record of all service
requests should be obtainable from Robert Quintisol.
5. Controls Questions
a. Is there a description of the various user roles and what the system will allow each
role to do or not do (business rules)?
Larry indicated that he will provide what he has available.
b. What segregation of duties is established within the system?
Same as above
c. I was added as a (super) user of the system. Why did I not show up on the security
list? Who is responsible for user security? Is there a security log, and who monitors
the log?
IQol EX.7 Exception: As Larry looked into the user security records he discovered that tphilipp
was listed as INACTIVE despite having fully administrator access to the system.
d. Is there any audit trail to indicate what user performed a specific activity? Is a history
file maintained?
IQol EX.9 Exception: Initially Larry indicated that there was, but upon further questioning he
concluded that the fund log had creators and approvers (workflow components) but the system
had not known way to identify other transaction or data entry by user other than the comment
field.
Yes
e. Is the product fully supported by NG? Does it fall under their disaster recovery plan
(backups)? Is this considered a mission critical system?
f. Physical location of the server? NG facility?
Part of the NG server fann
6. Do any of the following exist?
a. System development proceduresNo
b. System program change procedures No
c. Internal system security related procedures No
d. Application flow charts No
IQol EX.10 Exception: No procedural documentation available or maintained.
ExnmlT 14
County of San Diego
Countywide Escheatment List
FY 2007-2008
9/17/2008 2:46 PM
County of San Diego
FY 20072008
2 9/1712006 2:46 PM
County of San Diego
FY 2007-2008
3 9/17/2008 2:46 PM
County of San Diego
FY 20072008
4 9/17/2008 2:46 PM
County of San Diego
FY 20072008
5 9/1712008 2:46 PM
County of San Diego
FY 2007-2008
6 9/1712008 2:46 PM
County of San Diego
FY 20072008
7 9/1712006 2A6 PM
County of San Diego
FY 2007-2008
8 9/1712008 2:46 PM
County of San Diego
FY 2007-2008
9 9/17/2008 2:46 PM
County of San Diego
FY 2007-2008
10 9/17/2008 2:46 PM
County of San Diego
FY 2007-2008
11 9/1712008 2:46 PM
County of San Diego
FY 20072008
12 9/17/2008 2.46 PM
County of San Diego
FY 2007-2008
13 9/17/2006 2:46 PM
County of San Diego
FY 20072008
14 9/1712008 2:46 PM
County of San Diego
FY 20072008
15 9/17/2008 2.46 PM
County of San Diego
FY 2007-2008
16 9/1712008 2:46 PM
County of San Diego
FY 2007-2008
17 9/1712008 2:46 PM
County of San Diego
FY 20072008
Sheriffs
_. _ , 1 3 6 , 6 3 6 , 6 ~ _ -- -
18 9/1712008 2:46 PM
EXHIBIT 15
County of San Diego
Name (Countywide
Escheatment List)
Adams, Marie
Anderson, Niguel
Booker, Jason
Brooks, Jon Gordon
Branch, Marie
Bruce, John
Cassidy, Luke
Cobb, M.
Contreras, J.
Conway, S.
Cooke, Robert
Demorra, Denize-Poe
Dunn, Charles
Evans, M.
Folestromo, James
Freeman, W.P.
Galaaso, Michael
Gianossa, Anthony
Guddat, Horst
Hannibal, A.
Healton, D.
Hoffman, Rosenda
Hofstener, Deiter
Ingra, Emily Lynn
Jackson, K.
James, Sandra L
Johnson, John 0
Kinser, J.
Kirkland, R.
Klein, Tiffany
Landon, Lincoln
Landry, E.
Larson, Dale
Lee, Lone
Livingston, Regina
Lopez, Daniel
Mccoy, Grace
Mcgovern, Darly
Mckenchnie, Lisa
McKinnie, Sheila Denice
Medina, Mary Ann
Mill, John Robert
Miller, Jack R.
Miranda, Maria
Montoya, R.
Moore, J.
Mujica, R.
Navarro, J.M.
Newton, B.
and TrustRef Database
Source: Countywide
Escheatment List (9/15/08)
TrustRef (612108)
Amount Department
(Countywide (Countywide
Escheatment Escheatment
List) List)
$1 ,045.62 nc
$220.00 nc
$149.00 nc
$284.00 nc
$2,621 .76 nc
$44.00 nc
$510.40 nc
$222.50 nc
$165.93 nc
$143.17 nc
$1,886.71 nc
$62.00 nc
$1 ,065.56 nc
$312.50 nc
$38.00 nc
$188.00 nc
$58.00 nc
$84.27 nc
$494.59 nc
$327.00 nc
$97.60 nc
$180.00 nc
$148.00 nc
$964.60 nc
105.07 nc
$976.32 nc
$1,956.14 nc
$108.00 nc
$184.60 nc
$334.75 nc
$556.64 nc
$106.80 nc
$539.58 nc
$7,977.21 nc
$145.57 nc
$267.00 nc
$950.71 nc
$111 .19 nc
$202.20 nc
$210.00 nc
$222.42 nc
$63.00 nc
$1,270.68 nc
$108.60 nc
$56.40 nc
$343.00 nc
$136.50 nc
$87.50 nc
$488.80 nc
1 of 2
Comment
Records Exist in TrustRef; Amount Doesn't Match
No Records in TrustRef
County of San Diego
Name (Countywide
Escheatment List)
Nichole, Walter
Pascual , Magsood
Paulson, Robert
Perry, P.
Petterson, A.
Plourde, Jacquelyn Stacey
Reinhardt , W.
Reyes, A.
Rivas, Arturo
Royal, Jen
Ruggles, Robert
Russon, Barbara
Ryan, R.
Samuels, K.
Sanchez, Arnold
Saylor, Richard
Scott, Eloise
Senson Space 115
Seven, Stanley
Simpson, L.
Snyder, Penny
Stilt, Staci
Stubbs, Kenneth
Valle, M.
Valdez, Jesus
Wheeler, Albert
Whije, F.
Wison, William W
Wood Solutions
Total
and TrustRef Database
Source: Countywide
Escheatment List (9/15/08)
TrustRef (6/2/08)
Amount Department
(Countywide (Countywide
Escheatment Escheatment
List) List)
Comment
$499.83 nc No Records in TrustRef
$2,503.40 nc No Records in TrustRef
$921 .00 nc No Records in TrustRef
$1 ,082.93 nc No Records in TrustRef
$299.47 nc Records Exist in TrustRef; Amount Doesn't Match
$193.60 nc Records Exist in TrustRef; Amount Doesn't Match
$361 .50 nc No Records in TrustRef
$54,725.63
20f 2
EXHIBIT 16
County of San Diego
2299
1729
1768
2.111
2116
212:
1766
23097
07, I
16-C
'LARONB
HEY,

KING .&
10 l-U"U''':L ; A
08-Dec-8 HAMM LES LIE W DORIS A
TUVE
1 ROB MARLIT
10-Jul-89 CORRE :TI:D SUPW
ST 6LE [It-ED ' Yl'.""""
25-Jul-89 STALE 5AED WAR RAN'
LS

JNTHE
,TAL: DATE 0

STAL 'OAT 0 WARRANT
STAL : DATE 0 IT
OLD o 11116187
Refunds Granted Over 60 Days
Or Refunds Never Granted
Source: SQL TrustRef Database (6/2/0B)
-""""Sa=nl
514600
San Dieoo 131 507002
me $16B.64
ISan oou. ..
B6 B61309 )132 5071 01
19255 llA AV #98
1124 H, IE LN HAMILTON 1002 '735 5111 00 $21L
:an [ eoo B7 038063 11' 663 5071 01 $54. 9-:+-__ +--__ +--__ +--_ __+--__+_-----1
:an [ ego 11 104 514600
ALL STATE : LOCATO :an [ego 737 5141
290
37'
31g
363
1966 O.IFOA r.ARI GIL

: ADAM STALE DATED WITH ANT lsan D _.u B326 SO-.1l $109. '3
2189
218B
21gC1
370
2126
2124
2123

212B
381
1747
1748
5715
14225
15286

_0, MILDRED

27-( ,URNE'
27-0ct-8! EIGEN FL
27-( CV,IETKO
V( 1 ELISA ET AL
19-Dec-89 ZEe CA JOHN E
?O_r J3. PH I
06-C
1,
t
IILLA
IILLA

::>BIT.E HOME t:>, A'"
TITLE CO
1 MICHAEL J & MARY A
I RENE R

jIoJC
ITION
STALE DATED WARRANT
STALE DATED IT
STALE DATED IT
STALE DATED
STAJ,I:: DATE
STALE DATED
#200
CIOTARETS
IT
IT
BRADLEY AVE
I255BRADLEY AVE
14 12 . ST
864
441 GurHR : WAY
E 150 0 IRET.
993 , EI 0#101
San 12779 $147. '0
San mega 12779 1n ,96. i,6
San Dieao 2F9 ,35.16
1783 ut480u '68.!5

13243 UL
SO;
San [ego 1.811! 5141p,; 136.
CAJON 1$2 183.
SAN DIEGO '31.
'22259f02OO1500514 ,94.8, (ULtll, 11
ISAN CIEGO 581' '31 .161T762619 1.
,28.27
1 of 1
1$' ,10:!.83
>412.68 UT97-204
'31.12
194.82
131.16
$28.27 1?
'$1,001.60
,33 .54
.12
11.1E
!8.2:
EXHIBIT 17
TC04 PROCESS (FUND 507000 AND 507003)
Receive claim fonns Automated C20 list Main data Import on
from Financial received from Financial Friday
Division Division on Friday
1
l
Prepare MTB
Enter TC04 (Parcel
Transfer
numbers on claim
l fonn) in TR on
Thursday.
Compare automated C20 list
with Main data import.
Identify B authority/C20s
not imported
Ask Financial division to
create record for B
authority/C20 not imported
Post the dollar amount
manually in TrustRef system.
(Note: All B authority
amounts should be posted in
TrustRefbefore Tuesday, the
day warrants are generated
automatically. Or else,
warrants will not be
generated)
Warrant Data import on
Tuesday
Identify warrantslTC's that
did not interface with
TrustRef. Enter this data
manually in TrustRef.
EXHIBIT 18
i-------,
I FUND 50700 I
I REFUND REPORTS I
I AAB Authority Report I
I (B Authority Code) I
1&'
I Non AAB AulhO"'), I
I Reports
I (A, C, 11, M, r,S, I
: T. & :
1 ' 1
----..
.. -
Enter Data
into
TrustRef
System
Current Se'cured Procedural Flow Ctlart
Delete
Refund
TC04
REFUND PROCEDUR
IF Interest or
Penalties are owed, THEN
IF Interest is
>$10 or
Cancelled
Penalties are
owed THEN

ot$,o...!\I, I"P

I)'VOri
II Send I ... ----, - - - - - - i Request shortage or
... ----1" .. Tax Accl 'Do Tea,,'e, >e TX b,l,ooe"
Inputs l. Transfer il' (8T or R to request
Data on .. Coding Request) warrant
File, Log &
Mail
Warrants
(if any)
IF No
TrustRef :
._----
Refund Procedural Flow 4
I Refund Procedural Flow 3 I
i-we-wi
Tax Acct 'I TX Process I File, Log &
Inputs to Request -.. Mail
Data on, Warrant Warrants
TrustRef ,
'-------,
R'O"'"
' ...... nr

Refund Procedural Flow 2
I Refund Flo"; 1]

: :
, Ro'.,H. ", ,- --.----
_ . t
I lilg I I . II FiiIe. loI>
..... 'r> ....
."r';;:o", (:;j;t' ..... 1lId
EXHIBIT 19
County of San Diego Projected Balances for TrustRef Funds
Fund # TrustRef Adjustment Archived Total
507000 $1,505,499.79 $2,956.29 $86,759.62 $1,595,215.70
507001 $54,385.38 ($263274) ($492.54948) ($440.796.84)
507002 $626,063.80 ($1723) $35,452.99 $661.499.56
507003 $172,659.91 $2.66 $401,389.34 $574,051.91
507004 $61.450.36 ($29826) $50,294.04 $111,446.14
507005 $389,101.72 ($000) $170,888.22 $559,989.94
508000 $15,107.00 $0.00 $0.00 $15,107.00
514000 $15,966.32 ($6826) $40,425.44 $56,323.50
514400 $3,663.01 $0.00 $0.00 $3,663.01
514600 $1,597,822.16 $10.05 $28,692.92 $1,626,525.13
514800 $876,919.36 $0.00 ($788.587.44) $88,331.92
514900 $259,642.09 $47.50 $2,881,620.76 $3,141,310.35
Total $5,578,280.90 $0.00 $2,414,386.41 $7,992,667.31
1 of 1
Oracle
$1,418,776.56
$56,635.02
$576,811.05
$138,891.88
$80,737.05
$415,670.06
$8,768.30
$15,866.32
$18,349.05
$1,237,605.15
$883,664.54
$165,172.18
$5,016,947.16
Source:SQL TrustRef Database (6/2/08)
Oracle Reports
Difference
$176,439.14
($497.43186)
$84,688.51
$435,160.03
$30,709.09
$144,319.88
$6,338.70
$40,457.18
($14,686.04)
$388,919.98
($795,332.62)
$2,976,138.17
$2,975,720.15
EXHIBIT 20
10,000
9,000
m

8,000 ._ II)
c:: c::
.- 0
IV ._
7,000
E=
Q)::!:
a:: c::
6,000
11)-
"C-
c:: ....
:::l c::
5,000
... :::l
Q) 0
a:: E
4,000
...
o ...
... IV
3,000 Q)=
.0 0
EO
2,000
:::lo!l
Z
1,000
0
Date of Refunds
#of Refunds
REFUND TIMELINE
WHAT'S LEFT?
1,737 Refunds
$223,840.61
2 3 4 5
18
I 3/10/061 5116106 I 5I30I06 I 6I20I0617116/06 I I 9112106 I TOTALS
70 I 249 I 154 I 189 I 336 I 302 I 383 I 498 I 510 I 488 I 7.172
$187 1 $157 1 $70 1 $66 1 $57 1 $86 1 $59 1 $2161 $141 1 $89 1 $50 1 $2981 $51 1 $97 1 $188 1 $186 1 $79 1 $92 $2,169
Rounds of Refunds
Resources Used to Track Taxpayers:
Phone Books, Assessor Records, DMV Records, Internet Research
Media, Website, Treasurer-Tax Collector Staff. Community Outreach
EXHIBIT 21
COUNTY OF SAN DIEGO
AGENDA ITEM
DATE: December 5,2006
TO: Board of Supervisors
SUBJECT: ESCHEATMENT OF MONIES TO THE GENERAL FUND
(District: All)
SUMMARY:
Overview
BOARD OF SUPERVISORS
CiUGCOX
r_ DPItia
""""" """,.
Stc-SDi:aril:c
PAM Sl.ATIiR.
llIird 0Wrrid
J.ON IlOBUTS
FCNrIoh OWlrkl
DILLHOlH
fill) oaIricl
This is a request to approve the escheatment of unclaimed tax refunds from 1996 to
2002, pursuant to sections 5097.2 and 5102 of the State Revenue & Taxation Code.
Recommendation(s)
TREASURER-TAX COLLECTOR
Direct the Auditor and Controller to transfer $223,840.61 from the Refundable Tax
Trust Funds and deposit in the County General Fund.
Fiscal Impact
If approved this request will result in $223,840.61 of revenue to be realized by the
General Fund. Appropriation and use of these funds will require subsequent action by
the Board of Supervisors. The funding source is tax refunds. This request will result in
no current year cost, no annual cost and will require the addition of no staff years.
Business Impact Statement
N/A
AdviSOry Board Statement
N/A
BACKGROUND:
Escbeatment
In August 2005, the Treasurer-Tax Collector identified $2.4 million in unclaimed
property tax refunds for tax years 1996 through 2002 that were due for escheatment to the
General Fund. The Treasurer-Tax Collector established a deadline of June 30, 2006, to
identify taxpayers who were due refunds. The deadline was subsequently extended
through October 30, 2006, to allow for further due diligence to return funds to taxpayers.
22
SUBJECT: ESCHEA TMENT OF MONIES TO THE GENERAL FUND
1brough the extraordinary efforts of the Treasurer-Tax Collector staff, utilizing the
property tax database, the Department of Motor Vehicle database, telephone directories
and internet searches to locate the taxpayers to whom the refunds are owed, the office has
been able to refund $2,005,000 to 6,073 taxpayers. The current requested escheatment
amount represents the remaining funds for which taxpayers could not be located.
Pursuant to Section 5102 of the California Revenue and Taxation Code, if, after four
years the refunds remain unclaimed, the money may be transferred to the County General
Fund upon approval by the Board of Supervisors. All requirements have been complied
with, and the remaining unclaimed funds in the amount of $223,840.61 are now available
for transfer from County Trust Funds.
Linkage to the County of San Diego Strategic Plan
The timely transfer of unclaimed refunds to the County General Fund may provide
funding, at the discretion of the Board of Supervisors, for programs related to the
development and protection of children, the environment and safe and livable
communities.
RespeClfully,
w ALTER F. EKARD
Chief Adminislralive Officer
22
22
AGENDA ITEM INFORMATION SHEET
CONCURRENCE(S)
WJ1
COUNTY COUNSEL REVIEW [XjYes
Written Disclosure per County Charter Section [] Yes [] No
1000.1 Required
GROUP/AGENCY FINANCE DIRECTOR [j N/A
CHIEF FINANCIAL
[XjYes [] N/A
Requires Four Votes [] Yes [] No
GROUP/AGENCY INFORMATION
TECHNOLOGY DIRECTOR [] Yes [] N/A
COUNTY TECHNOLOGY OFFICE [] Yes [] N/A
DEPARTMENT OF HUMAN RESOURCES [] Yes [] N/A
Other Concurrence(s): N/A
ORIGINATING DEPARTMENT: Treasurer-Tax Collector
CONTACT PERSON(S}:
l\1aria Fuchs Della Cohen
Name t-iame
619) 531-5731 619) 531-6412
Phone Phone
619) 531-6056 619) 531-6056
Fax Fax

A-47
Mail Station Mail Station
maria.fuchsavsdcountv.ca.2ov
della.cohentc:ilsdcountv.ca.lOtov
E-mail E-mail
(' V
Mlj') JlJr-iJ AUTHORIZED REPRESENTATIVE:
'--
AGENDA ITEM INFORMATION SHEET
(continued)
I PREVIOUS RELEVANT BOARD ACTIONS:
N/A
I BOARD POLICIES APPLICABLE:
N/A
I BOARD POLICY STATEMENTS:
N/A
I CONTRACT NUMBER(S):
N/AN/A
22
SUBJECT: ESCHEATMENT OF MONTES TO THE GENERAL FUND
DEPARTMENT:
PROGRAM:
NSCAL IMPACT STATEMENT
Office of the Treasurer-Tax Collector
Treasury
22
PROPOSAL: OFFICE OF THE TREASURER-TAX COLLECTOR
ESCHEATMENT OF MONIES TO THE GENERAL FUND
TREASURY
Direct Cost
Revenue/Other Offset
NET GENERAL
FUND COST
Staff Yea"
(a)
Budgeted
Amount
For Proposal
0
0
0
0
(b) (c)
Proposed Proposed
Change Revised
in Budgeted CurtentYeat
Amount Budget (a+b)
0
0
0
0
Sounoes ofRevenueiOther Offset for Proposed Cbange and Subsequent Year.:
FUTURE YEARS ESTIMATED
BUDGET OF PROPOSAL
IF ADOPTED
(d) (e)
1st 2nd
Subsequent Subsequent
Year Year
0 0
0 0
0 0
0 0
Space-Related Impacts: Willlhi.s proposal result in any additional space requirements? 0 Ye. [Xl N/A
Support/Other Departmental Impacts: 0 Yes [X] N/A
Remark,,, 0 Yes [Xl N/A
0
0
0
0
12105106
COUNTY OF SAN DIEGO
BOARD OF SUPERVISORS
TUESDAY, DECEMBER 5, 2006
MINUTE ORDER NO. 22
(DISTRICTS: ALL)
OVERVIEW:
This is a request to approve the escheatment of unclaimed tax refunds from 1996 to 2002, .
pursuant to sections 5097.2 and 5102 of the State Revenue & Taxation Code.
FISCAL IMPACT:
If approved this request will result in $223,840.61 of revenue to be realized by the General
Fund. Appropriation and use of these funds will require subsequent action by the Board of
Supervisors. The funding source is tax refunds. This request will result in no current year
cost, no annual cost and will require the addition of no staff years.
RECOMMENDATION:
Direct the Auditor and Controller to transfer $223,840.61 from the Refundable Tax Trust
Funds and ~ p o s i t in the County General Fund.
ACTION:
ON MOTION of Supervisor Slater-Price, seconded by Supervisor Jacob, the Board took
action as reconunended, on Consent.
AYES: Cox, Jacob, Slater-Price, Roberts, Hom
State of California)
County of San Diego)
I hereby certify that the foregoing is a full, true and correct copy of the Original entered in
the Minutes of the Board of Supervisors.
THOMAS J. PASTUSZKA
Clerk of the Board of Supervisors
1
EXHIBIT 22
County of San Diego Escheated Records with Outstanding Refunds Source: Sal lrustRef (6/2/08)
1 of 1
EXHIBIT 23
County of San Diego Escheated Record Source: SOL TrustRef Database (6/2/08)
DUMMY
1 of 1
Appendix A
County of San Diego, California
Auditor and Controller
Property Tax Collection and
Refund Process
Office of Audiis & Advisory SerVices
January 2008
Report No. A08-002
COUNTY OF SAN DIEGO
INTE"R DF.PARTMFNT Al CORRESPONOFNCf
January 31. 2008
10. Daniel V McAllister
Treasurer-Tax Collector
Tracy M Sandoval
Asslst"nt Chief Financial Officer/Auditor and Coni roller
FROM Kenneth J Mory
Chief of Audits
FINAL REPORT PROPERTY TAX COLLECTION AND REFUND PROCESS
Enclosed IS OUI report on the Property Tax Collection and Refund Process Audit The report
includes various audit findings and recommendations
We have reviewed your responses and have attached them to the audit report The actions
taken and planned In general. are responsive to the findings and recommendations In the
report. As required under Board Policy 8-44. we respectfully request that you provide quarterly
status reports on the implementation progress of the recommendations.
If you have any immediate concerns about the report, pteasE contact me at (858) 495-5662
. /
I /. "-
I . j J........ /
"r .' ,. .... J'
I 1-;-: . " \
/
KENNETH J. MORY
Chief of Audits
AUDTP:aps
Enclosure
,
l
\
\
c Donald F Steuer. Chief Financial Officer. Finance and General Government Group
Ebony N Shelton. Group Finance Direclor, Finance and General Government Group
'PRDPERn'T#l:X1COLLCTfON 'AND January"200a
REF.UNO'f'-ROCESS Report No A0!1-002
_ 1
EXECUTIVE SUMMARY
At the request of the Chief Financial OffIcer, the Office of Audits & Advisory SelVices tOAAS)
completed an audIt of the property tax collection and refund process. ThIS audit was in
response to specific areas of concern related to the property tax collection and refund process,
including' reporting accuracy and completeness of reconciliations, negative account balances
(collections due). refunds on returned property tax payments (non-sufficient funds) . and data
integrity and completeness of subsidiary records in the Trust Refund (TrustRef) system
Additionally, we revIewed the procedures and processes used for preparing and reconciling the
T-TC Statement of Net Assets (SNA) and the Treasury Accountability Ledger (TAL).
While T-TC management and staff demonstrated a commitment to continuous improvement.
many of the specific concerns prompting Ihe request lor this audit related to the TrustRef
system were validated. The limited scope of this audit also does not allow us to provide an
opInion on the accuracy of fInancial statements. Audit findings include the following
Unable to Reconci/(> TrusrRcf Fund Balances to the General Ledge, - AudIt work revealed
that while extensive reconciliation work is regularly conducted, the Accounting Division has
been unable to successfully complete cumulative reconciliatIons between the TrustRef system
and the County general ledger system.
Negative Balances Without Recent Col/ection Activity - Audit work cClnfirmed that a number
of records in the TrustRel system have neg alive balances (collections due) with no evidence of
recent collection actiVIty. An analysis of the current (non-archived) account balances In the
TrustRef system as of August 3D, 2007 revealed a total of 563 records WIth negatIve balances
totaling approximately $351 K.
Refunds Sent on Returned Checks - Audit work confirmed that some refundS had been sent
to Taxpayers for overpayments which were returned by the bank for non-sufficient funds (NSF)
In a review of a judgmental sample of 26 records In the current TrustRef database where debit
memos had been posted, 13 warrants (50%) had been mailed to the payee. many of which
could have been prevented had knowledge or the NSF been made avaIlable to decIsion makers
(approvers and warrant mailers) earlier In the process,
Control Weaknesses Identified in the TrustRef Database - Audit work identified multiple
control weaknesses with the TrustRef database. Control weaknesses were identifIed In the
areas of segregation of dutIes, user security and maintenance, the inability to provide an audIt
trail of user transactions outside of specifIC workflow activities. and the Jack of a desk manual of
documented policies and procedures and roles and respcnsibilities .
Data Integrity Issues in the TrllstRef Database - Audit work revealed multiple data integrity
issues with the TrustRef database. Data Integrrty issues include: data loss dunng system
conversion, data entry errors, unexplained positive and negative balances In archived records.
and other data Integrity concerns from system users.
Procedural Documentation for Preparation of Financial Reports and Reconciliations Can
be Improved - While testIng revealed that the practices used 10 prepare the SNA and
County of San Diego FY 2007-08
P,ROPJ;RlJ"!(r;rro!:lcOI.:L'EC:rlON ,AND .January 2008
REFUNDPROCSS Report No, 0 8 O O ~
RNAlREPDRf . " ',2
accounting schedules were adequate, written policies and procedures reviewed were either in
development or had not yet been adequately documented,
School District Im'estment Trust Funds Balances Not Reconciled and Nor Properly
Reported - It was observed that specific school district investment trust fund balances were not
reported in the County Comprehensive Annual Financial Report (CAFR) and the amounts
recorded In Oracle could not be reconciled 10 the amounts reported in the T-TC CAFR, Action
IS currently being taken by the Auditor and Controller to resolve these discrepancies
Recommendations - OAAS recommends that T-TC take the following actions,
Complete a cumulative reconciliation of all trust funds in the TrustRef system, resulting
In the remediation of all unexplained vanances;
Develop, obtain management approval. and deploy a TrustRef desk reference manual to
establish documented policies and plocedures and roles and responsibilities for
database use and maintenance;
Develop a more effeclive and timely method for ensuring information on returned checks
is available to refund approvers and processors once received from the bank
Address specific TrustRef user sewnty issues and database functionality, including
restricting access to inactive users, implementatIOn of a user secunty policy, application
of administrator segregation of duties, and ensuring records can be retneved through
database searches of the archived records, and
Improve. and in specific cases develop, written procedures used for prepanng fmancial
reports and conducting reconciliations
INTRODUCTION AND BACKGROUND
The San Diego County Treasurer-Tax Colleclor's (T -TC) office, with a staff 01 123 employees
and a budget of approximately $16,6 million, manages approximately $4 billion m investment
funds bills and collects property taxes, establishes and mamtains all banking relations for the
County, administers the County's Deferred Compensation Plans, and serves as the paying and
fiscat agent for local agency bond issues, In FY 2006-07, T-TC sent out 964,321 secured tax
bills and 89 831 unsecured tax bills, resulting in tax collections of approximately $4 billion
T-TC financial results are reported in two separate Comprehensive Annual Financial Reports
(CAFRs). The T-TC CAFR is prepared from the Treasury Accountability Ledger (TAL), whilE'
Oracle is the primary data system supporting the County CAFR. To ensure reporting accuracy
and consistency. reconciliation activity must be performed between Oracle and the TAL, and
must also be performed between Oracle trust funds and the T-TC TrustRef system, a subsidiary
system utilized for managing property tax refunds,
The TrustRef system. developed primarily for managing refund activity related to overpayment
of property taxes. contains over 164,000 records in the current database as well as
approXimately 360,000 archived records, TrustRef maintains a subsidiary balance for 12 trust
funds related to refund activity (See Appendix I for a list of trust funds and descriptions)
DUring FY 2006-07, there were 43.870 secured and unsecured tax refund warrants generated,
with 1,289 (3%) subsequently cancelled. totaling approXimately $79.7 million In refund requests
being processed, The TrustRef system and all other systems supporting property tax collection
and refund processes are scheduled to be replaced by a new Integrated Property Tax System
. _., - " .. - ..... --- .. -._ .. .. _ . . __ .. _-_._--_.- .... . -- . ---_ ..
Office of Audits & Advisor), Sorviccc County of San Diego FY 2007-08
iPR'f'b 1 tt ....... - ( ............ i'Ctnr .=
/J,NO january 20'0.8
Report 'No AOB002
flItlIALREPClRT "'_,. .
(lPTS) Dunng audit fletd work. Modute II 01 the IPTS project, which includes property tax
refunds. was reported to be in the design review stage with implementation expected In
February 2009.
In the past 4 years. several audits and reviews have been conducted related to the property tax
refund process. Including OAAS operational and transition audits in 2003, a Grand Jury audit In
2005. and a Macias Consulting, Inc. review in 2005. Additionally, annual financial audits are
required for both the County CAFR and the T-TC CAFR White most of the recommendations
from those engagements were accepted and appropriate actions were taken by T -Te, severat
areas documented as discrepancies In those reports have remained unresolved and are
included as findings in this audit report.
T TC's management and staff have demonstrated a clear commitment \0 continuous
improvement through implementation of severat quality Improvement initiatives Initiatives over
the past several years Include the documentation and posting of refund processes and
plocedures on the internet. redesign of the exception process reducing payment rejections and
improving cash security, and a refund and escheatment initiative that resulted In approximately
$2 million of unclaimed refunds being refunded and S223,841 of unclaimed refunds from 1 996-
2002 being returned to the General Fund.
AUDIT SCOPE AND LIMITATIONS
At the request 01 the Chief Financiat Officer, the Office of Audits & Advisory Services (OAAS)
completed an audit 01 the property tax collection and refund process. ThiS audit was in
response to specifiC areas of concern related to the property tax collection and refund process
including
Negative balances in the subsidiary records,
Tax payers receiving refunded checks on returned checks;
Duplicate refunds sent with no attempt to recover,
Reconciliation between the Treasury Accountability Ledger (TAL). Oracle General
Ledger (GL) and subsidiary records;
Corrupted and unreliable records due to system issues; and
Unreliable accounting records.
DUring preliminary research. DAAS determined that the concerns with subSidiary records
referred primarily to the records maintained in the TrustRef system. It was also determined that
the concern with unreliable accounting records and the unreliable records due to system
crashes were likewise directly related to the integrity of the records maintained in the TrustRef
system. While the scope of audit work focused primarily In these areas, testing of reconciliation
activity and reporting processes was conducted between the TAL and Oracle (including the
preparation of the Statement of Net Assets). as well as the reconciliations of fund balances
between TrustRef and Oracle in order to assess both areas for the risk of matenal
misstatement Data and controls testing were generally limited to the areas where T-TC has
ownership or accountability of the data or systems.
Office of Audil& '" Sorvicos
County of San Dicgo
1. )
rv
I'RClI'ERW.AK POL!L'ECTION AND Jiinuiny:Z(l(lO
REFUND PROCESS 'Report No. AOS;OO '
RNALRI'DRT 4
Although Included in our initial audit scope, dunng the course of our fieldwork. T-TC staff were
not available to discuss processes and procedures regarding the Statement of Changes In Net
Assets therefore, OAAS was not able to perform a review of this area
This audit was conducted in accOidance with auditing standards prescribed by the Institute of
Internal Auditors Inc. as required by California Government Code, Section 1236
METHODOLOGY
OAAS Implemenled a multi-faceted methodology for the audit. including.
Conducted interviews with key personnel in T-TC, AudHor and Controller and Northrop
Grumman
Evaluated available reviews. studies, and audits related to the tax collection and refund
process;
Reviewed and E'valuated existing p,ocess maps and procedures and documented
processes as required:
Acquired a copy of the TrustRef database 1 hrough testing and Interviews. assessE'd
lhe date inlegrity and reliability of the database;
Performed a review of TrustRef database controls'
Performed an analysis of transactions with negative account balances. Reviewed and
tested a judgmental sample with T-TC Financial and Accounting personnet;
Performed an analysis of transactions involving Debit Memos. Reviewed and tested a
judgmental sample with T-TC Financial and Accounting personnel;
Performed an analysis of transactions involVing duplicates Reviewed and tested a
samplE' of transactions with T-TC Financial and Accounting personnel whele duplicate
refunds were known or suspected;
Reviewed TrustRef/GL trust fund reconciliation procedures and reconciliation activity
performed since July 2006 for completeness,
Reviewed the T-TC procedures related to the TAL, SNA, and TOR for clarity and
suffiCiency necessary to produce desired results:
Traced a judgmental sample of items in the TAL, SNA, and TOR to source documents
for eXistence and accuracy of amounts:
ReViewed the T-TC internal accounting records used to prepare the TAL. SNA, and TOR
for reliabilrty. and
ReViewed and re-performed a judgmental sample of T -TC's Internal verification
procedures for the TAL, SNA, and the TOR for accuracy of results
FINDINGS AND OBSERVATIONS
While T-TC management and staff demonstrated a commitment to continuous improvement.
many of the specific concerns prompting the request for this audit related to the TrustRef
system were validated Because the objectives of this audit were to address specifiC concerns.
we are unable to provide assurance with regard to overall T-TC financial reporting. but do make
a recommendation covering such assurance Audit findings include the following.
- - -- -- - - ---- - --- ------ ----- ------- -- --- ..
Office of Audit .. B. Advisory Services County of San Diego FY
';P. frS'T1t'b""Q'1f ,
PROPERTY TAXPGl'L'EC;rION 'A'ND .Jalluary'200B
REfUND ;PROCESS Report No A08' D02
FJNAl'REPORT ji
Finding I: Unable to Reconcile TrustRef Fund Balances to the General Ledger
Audit work revealed that while extensive reconciliation work is regularly conducted. the
Accounting Division has been unable to successfully perform cumulative fund balance
reconciliations between the 1 rustRef system and the general ledger system Periodic
reconciliations. which are used to ensure that all deposits and withdrawals posted in the GL are
also accurately posted in the TrustRef system (vetting). were found to be adequately performed
over the period reViewed However. 41 % of the cumulative reconciliations, which assess all
transactions in the current database and ensure the accuracy of reported fund balances. had
not been completed Of the reconciliations completed, 44% contained unexplained variances
between the fund balance posted in the Gt and the balance reported in TrustRef
t . u, ... "
---- .,---cc
TI uslRef.Gl Reconciliation
Unexplained
Fund 514600
f ,"',.: ,. - - -1i
:. --:- .. : -4 ':-:
. u, l'. I' --- " ' . -
''", c ... -;] [il": '1 -
_" _ .. _ :-. " _.D.1_ __.
Fund 514600' (See Chart 1) had the
greatest unexplained variance. averaging
$577K since July 2006. with a h,gh
variance of $1 1 M and a low vanance of
$96K. As of July 2007 . records Indicated
a variance of $676.658 47. with a
TrustRef reported ending balance of
$709,749.86 and a GL ending balance of
$15.776.84.
.... ," ..
L__ .,.' ,; .r ," _J' ,,' __ __ . __ T-TC management and staff stated that
..
.

':
.;
"10 .. , I reasons for the variances and Incomplete
reconCiliations Included staff turnover and resource limitations. TrustRef data Integrity issues.
and the inability to venfy older historical records.' Additionally, we observed that eXisting
procedures were outdated, did not include sufficient details specific to cumulative
reconciliations, and did not provide for supervisory approval and signoff of results Both periodic
and cumulative reconciliations should be performed regularly to ensure accounting entnes are
correct and reflected in both the TrustRef System and the General Ledger, Incomplete
reconciliations can In inaccuracies remaining undetected, unneeded collection or refund
actiVities, and refunds being authorized when sufficient funds are not available
Finding II: Negative Balances Without Recent Collection Activity
Audit work confirmed that a number of records In the TruslRef system have negative balances
(collections due) with no evidence of recent collection activity, An analysis of the current (non-
archived) account balances in the TrustRef system as of August 30, 2007 revealed a total of
563 records with negative balances totaling ($350,634)
Audit work also confirmed that there are specific instances where duplicate refunds were
identified but have yet to be collected While this was identified as a specifiC area of concern.
lesting revealed only six instances where duplicate refunds had been IdentifIed (documented),
I f-1411tlfl (Oral'll' j :unJ ..:Ib68:") i:!l tht' fund USc:J fl.IT tum:nI yr,\! s..:-..:-urcd 1,1" TI.'!Llnd" IIUt' In III
pn1p,:ny loJ\ III fruIH c:.m:cllal1on I.,fpenahies and 11III:fl.':-.1 .
. M.llnfr.ull," "prlie'lImn ... maintain hi!owrit:al fl't'Ohb, Itlf -I ll"lurJ .. th.utl
l'OPll!SI an: g\.nt .. J..l'pt un lor 1-2 ... rs placed .lfI-!o.ilC.' for up to :; pl"1 Iht' ,IUlIIIll\.'1lI rl'll'nllnll

... --.-_._------
Office of & Advioory Services County of San Diego FY 2007-08
. 3'1
PROPERTYTAA:QOLLeCifiON AND
REFUND PROOESS Reporl No. 1\08.1)02
FINAL Ra'ORT .
were still outstanding. and showed no evidence of recent collection activity These transactions
are considered a subset of the negative transaction records above.
The financial division has primary responsibility for the management and collection of amounts
due the County Staff is assigned by trust fund for collections, however. there is no evidence of
collection activity on accDunts older than 4 years. An analysis by year (See Chari 2 below)
showed that over 75% of the records and over 84% of the total value is lepresented by records
older than 4 years Negahve balances sorted by fund assignment revealed that nearly half of
the records (485%) were assigned to trust fund 514600 (Oracle account 46685). the primary
trust fund for overpayments, while approximately 19% were assigned to fund 507000 and 19%
to 507002. both utilized for auto refund for tax roll adjustments.
I n a review of a sample of 29
records with T-TC financial and
accounhng personnel. it was
determined that In all cases the
accounts should have been
previollsly collected or adjusted.
From the sample, there were 6
cases where data entry errors
were likely, 3 cases where data
conversion errors were suspected
and 25 cases where the file was
older than 4 years with no
evidence of colleclion aclivity.
As with the reconciliation issues.
T-TC management and staff stated
r - ------
I "
Number 01 Records with
Negative Ballll'lc., by Year
1i!. I
1111 - ----- ------ -\
., '., -. .. -----1
--- '-
,f, -----------{
-1 -'
" i

I
.. . :: =:: _ ... ....: .... : .... "
- _. - -- -_ .. ------- - .- -
t '1'.111
that the reasons for account balances remaining unresolved included resource limitations data
Integrity of the TrustRef system. and uncertainty in the ability to obtain historical records needed
to validate reported balances. The review performed by MaCias Consulting in 2005 called for
the Write-off of accounts as required; however, no write-off of uncollectible accounts has been
performed.
Negative balances that have remained uncollected and invalidated contribute to a misleading or
inaccurate report of available funds and might also be a factor in the inability to perform
cumulative reconciliations Pol icies and procedure should be in place to ensure that negative
(and positive) account balances are regularly managed and resolved in a timely manner .
resulting in either collection lien of the account. or write-off of uncollectible amounts as
prescribed In Revenue and Taxation Code 3
Finding III: Refund Sent Dn Returned Checks
Audit work confrrmed that some refunds had been sent to Taxpayers for overpayments which
were returned by the bank for non-sufficient lunds (NSF) . In a review of a judgmental sample of
26 records where refunds had been approved and debit memos had been posted in TrustRef.
_._. _-------
Office Df &. Advi,;ory Service. County 01 San Diego FY 200i08
.j. liB":: ., .
I"RbPERrY 'fAAOOatc'fIGN -A'ND January c200B
REFUND PROCESS Report No AOB-002
pmA1.AiEROR. ::;
13 (50%) warrants were cancelled and not mailed. 9 (31%) had been mailed to the payee but
collected or cancelled, and collections were still pending on 4 (15%)
T-TC policy requires that refund checks are processed, approved. printed, and held until 30
days after payment processing begins This provides a period for NSF checks to be Identified
white also providing time to mail the refund within 60 days of receipt to aVOid interest payments'
However Information received from the bank prior to the 30 day hold period IS not always
known or made available to transaction approvers and processors (who often are wailing on the
posting of a Debit Memo in TrustRef as their notification of an NSF payment) in a timely
manner. A process review revealed that there were at least 6 points of possible delays
(separate work activities) between the receipt of NSF documentation from the bank and the
posting of the debit memo in the TrustRef system." F or the sample reviewed, the time between
the payment date and the: date posted on the debit memo transactions in the TrustRef system
averaged 32 days with just 9 transactions beyond the 30 day hold period. While earlier posting
of the debit memo transaction in TrustRef is beneflciat, a more immediate, consistent, and
reliable syslem of notification and awareness of NSF payments from the bank is needed to
avoid the unnecessary cost of processing, printing. mailing. and at times collecting NSF-related
refunds.
rindinp. IV: Control Weaknesses Id&ntified ill the TrustRef Databast
Audit work identified multiple control weaknesses with the TrustRef database. Control
weaknesses were identified in the areas of segregation of duties security and
maintenance, and the Inability to provide an audit trail of user transactions outside of specific
workflow activities as follows'
Improper Segregation of Duties (SOD) -. A comparison of the TrustRef user securrty group
with a list of system administrators revealed that 2 employees have both system administrator
and approver rotes The users were not aware that this was a conflict, and there are no
dOCumented policies or procedures defining the expectation of the system administrators, user
security maintenance, or SOD requirements. Segregation of duties is a preventrve controt to
ensure that no Single indiVidual has control over two or more phases of a transaction or
operation. Administrators, who have the ability to modify record names. addresses. and amount
fields, should not be assigned to the approver function While there are some SOD controls
bUilt into the TrustRef system (i.e., work flow for refund request approval), this area of
segregation of duties is a security maintenance function that should be performed by personnel
approved by senior management through documented pohcy.
Weak User Security and Maintenance - An analYSis of user security and maintenance
revealed that user account maintenance had not been recently performed and that one
significant system control failure in user security exists. A review of the active user log found
that 6 users and 2 approvers listed as Active users were no longer T-TC employees
Additionally, an administrator recently added to the system but listed as Inactive had full access
and administrator rights in the system: a significant system controt breach. The TrustRef logon
function IS linked to an employee's County user 10 and password. therefore some risk is
Pur)o.tJilnl h11\\."\ .... nll ... and 1 Cnd.: :lncJ
, Al:l"(IUnllll1-' (!t""I..l,."If'1 1)1 Ohm I inalll:ial
i.d ALUhlllti l. !! I I - Finllilcial I :"1 iL infm11ll p05till!!) I I pl, \ 1 I .
Office of Audits & Services ,""'" .. S.a;;;n_DiiiieOoigiio _______ .... .. Y_20.0.7.' .. 0:;
1l.ND JlI)luary2008
REFUND lPROQESS flDpOM \No. 0408,002
FINAL RepORT 'l!
mitigated for employees leaving active County employment (providing system access is
removed) However. employees transferring to other departments and keeping their County
user ID's stili have access to TrustRef unless deactivated in the system User maintenance,
access log monitoring, and (fully functioning) user deactivation provide controls to prevent and
detect unauthorized access to the system and should be peJiormed periodically and upon
employee transfers in accordance with a documented and approved policy
Limited Audil Trail for User Transactions -. During record testing. it was revealed that the
TrustRef system has limited capability of providing an audit trail indicating who and when
specific transactions or commenls were entered Into the system In some lest cases. the
posting sequence made it clear that transactions were post-dated with no indication of the
actual posting date. In more recent records, user initials could be found in comment fields more
frequently but not consistently, User audit trails provide a means for ensuring accountability and
obtaining clarification on historical transactions Work flow components. such as refund requesl
creators and approvers and record creators (manual creation), are recorded, User audit trails
were not specified as a system requirement during development.
No Procedural Desk Manua/- Since the conversion to the current TrustRef database 1-TC
has not comprehensrvely identified and documented 1rustRef pOlicies and procedures, roles
and responSibilities. and other user gUidance for Inclusion in a TrustRef desk manual A manual
had been developed lor the previous access database, but the content is now obsolete In a
system that involves multiple. interdependent user interactions. the development and
deployment of a desk manual facilitates communication and expectation setting between
divisions and is a primary control for ensuring database Integrity and user efficiency The lack
of agreed upon procedures. combined with poor communications between divisions, has
resulted in unexplained data entries, poor record/accounl maintenance, and time consuming
reconCiliation processes,
Finding V; Other Data tntegrity in the TrustRef
In addition to the findings above, audit work revealed other concerns with TrustRef data
integrity Data integrity issues include data loss dunng system conversion, non-SO,OO balances
and access to archived records, uncorrected data entry errors, and other employee concerns as
described below.
Data Loss During System Conversion - InterViews with the TrustRef system developer
confirmed that thel e was an unspecified amount of data loss during the system conversion
peJiormed in April 2005. Additionally. In an Inspection 01 current (non-archived) records In the
TrustRel tables It was observed that 8,630 records contained a comment indicating' Restored
7/12 many lost" that could not be explained by the developer. This data loss occurred. in part.
due to a lack of proper IT change management procedures, Including incomplete data
validation IT change management during system conversions including data validation.
prOVides assurance of the completeness and reliability of data. The acknowledged data loss not
only brings into question the reliability and completeness of existing records, but may also be a
factor in the unexplained variances in peJiormlng cumulative reconciliations reported earlier,
Uncorrected Data Entry Errors - Audit work confirmed the presence 01 uncorrected data entry
errors. In the sample of negative account balances reviewed with T-TC personnel data entry
--- .--- -- - - -'-- ---- --- --- ---- --
Office of Audltt f;. Advisory Services County of San Diego FY 2007 -08
k Hre- ) t t' (
f'ROPERn'"T X ClCI.!"'Ec:ftON tlNO
REFUND PROCESS Report No MB;o02
.- :9
error was suspected in 6 of 29 records (21 %) Stated causes of the undiscovered or
uncorrected data entry errors included. reconciliations that are late or not conducted.
maintenance or follow up on net negative or positive balances not performed. turnover and
staffing limitations. and poor communications between the financial and accounting divisions
Unresolved data entry errors create false account balances resulting in unnecessary refund or
collection activity and misleading fund balances when assessing the adequacy of funds when
approving refund amounts. Timely reconciliations and an effective feedback/communications
system provide the means to identify and correct errors in a timely, efficient manner
Non-$O.OO Balances in Archived Records - An analysis of the archived tables in the TrustRef
system revealed a high number of non-$O.OO balances. A summation of three archived tables
resulted in Identification of 1 755 records across with positive balances totaling approximately
$5.4M. and a total of 332 records With negative balances totaling approximately $3.7M
Additionally. from a sample of 69 transactions Identified in the archived tables, 57% could not be
found when queried through the user interface, reinforcing the concerns with database Integrity
The cause of the positive and negative balances in the archived records was not determined,
although !;ome may be attributed to a system limitation in the number of accounting fields
retained or due to data loss during system conversion. Reconciliation procedures. however.
presume that the balances of ali archived or deleted records are $0.00 and this condition could
not be confirmed.
Other Data Integrity Concerns - In addition to the issues discussed previously, Interviews and
testing revealed other factors, both perceived and confirmed, contributing to concern With data
integrity In the 1 rustRe! system. These factors include the following '
Duplicate Records. Audit work confirmed the continued eXistence of duplicate records.
The issue of duplication of records had been previously identified and forwarded to
Northrop Grumman as a break-fix repair Our testing revealed that 2 types of duplicate
records still exist duplicate data entry and duplicates created by application errors. For
system generated duplicates, testing found that although the system had created
records with 2 or more exact duplicate pages. these duplicates were accounted for only
once in the TrustRef tables; thus did not impact reported fund balances. Records
reviewed where double entries were involved did produce 2 records; however. in each
case identrfied, the duplication was discovered and corrected with no net effect. T-TC
should continue to identify and correcl system generated duplrcates as lhey are
encountered
Report Inconsistencies. T-TC personnel indicated that TrustRef summary report totals
often do not equal the totals reported in detailed reports of the same data. This
condition. however. could nol be replrcated during audit testing. This discrepancy could
represent an issue with the completeness of data utilized for performing reconciliatIon
procedures
Unexpected Field Entries. Other areas observed during testing as Issues thaI could
contribute to concerns or perceptions regarding database integrrty involve unexpected
field entr ies or variations In how entries are made to various fields including:
Data entry variations affecting record retrieval (names. spelling, etc.):
Missing or blank fields (property ID, name. etc );
Office of Audits & Advisor\' Services County of San Diego FY 2007-08
Ott 1 m M'C'l:C .....
f'ROPER'fYTA nOIlLECilON A'ND 2il!lB
'RJEH.lI'iD PROCESS flcport iND. ;o.:oa,'{)02
FlNAL.iREBDRT JID
" Transaction references in wrong fields; and
$0.00 or blank origination amounts due
Finding VI: Procedural Documentation for Preparation of Financial Reportr. ilnd
Reconciliations Can be Improved
While testing revealed that the practices used to prepare the SNA and accounting schedules
were adequate, written policies and procedures reviewed were either in development or had not
yet been adequately documented, Procedures for Ihe preparation of the SNA and TAL were
available, but did not contain guidance for all key items While prior period working papers and
assistance from previous preparers were used to complete the SCNA. management stated that
they do not have written policies and procedures. The TOR procedure, In draft form, provided
the most detailed guidance, but could be improved to address all reconciliation line items The
Treasurer's Investmenl Manual requires the establishment of an Internal control structure to
ensure that the assets of the entity are protected from loss theft, or misuse. Including the
periodic review and update of poliCies and procedures.' The availability and use of
documented procedures demonstrate that management controls arE' sufficient to ensure timely
preparation of complete and accurate reports.
School Dislricllnv('stll1ent Trullt Funds Balance*,
Not RecDnciled and Not Properly Reported
It was observed that specific school district investment trust fund balances were not reported in
the County CAFR and the amounts recorded in Oracle could nol be reconciled to the amounts
reported In the TTC CAFR, These funds. which totaled over $850M as of .Iune 30, 2006.
include Investment agreements involving the San Diego Unified School Distnct (SDUSD). the
San Diego Community College Districl (SDCCD). and the GrossmontCuyamaca Community
College District (GCCCD) Action is currently being taken by the Auditor and Controller to
correct these issues The reporting discrepancy was recently identified and will result in a
restatement to the County CAFR' Activity IS also currently being conducted to resolve the
reconciliation variances Government Code 26905 specifies that each month the auditor shall
reconcile the cash and investment accounts between the auditors books and the treasurer'
books. While thIS area of reporting was not WIthin the scope of the audit, the: discrepancy came
to our attenliOn during the course of the audit and is reported here for information purposes and
for further review and aclion.
r hr l IU I"IndIlLr.! (tjl ()A I Ro.:'lUllllllt'ncJed Practice. })"1 //111< 1I1.111t1" of I, \ O/lI/l/1I\;
Po/,nt'.\ .lIIa rnh ..'dul'L" , ImJ 20rr) (( A U H,. (l iH)\) states that the \1/ poitl.:i..:,
ant..! Plth.: ..:Jur\:,:-. b .... effective c,mtrol (\\"t'r fina/wi:ll f":ptlrtlllg. Thi .. ',t..ill'llll'lll i ..... "illl tltro:
('111111i11I\o:o,:' 01 Or1:!aniL.'1lion5 (COSO) Imerna! ( t 1111nl\ lnh..'gralt'd Frame\\ ork. \\ hi\. h i .. th\.' llllll .... rJ) IIlg
f[ .11111.'\'01" lor ()\1B ( irruiar A 1 :3- Appcndi\ A [S()A ror (ill\ .... rrlllilntJ and Ih" rl!4uilcI111.'Ilh III Ihl: .11
AuditillL! .. (S \S I 104 III (Ihe AICPA Ri'lk 'uit!.!l.
- lunJ!-.. ,\luch <IlL" ouhidl.' of the investment pllOI. wt'n: hchl.'h'O III ...:uJL'LI Inllll
('ount) JiJur:l.Lr) lin,ulll:ll repol1il1l! respol1:-,ihiiil}
_. - ... ---------- ------ . -- -_.
Offie. of Audils ll. Advisory Services County of San Diego FY 2007
R eXF [
PROl'f.ERf'I'1J:A)( OL'l'ECTfDN 'A'NO jnnuar.y'2l)OB
REFUND 'PROOESS 'Repor1 No. A08'002
F.1NALlReP-P1U 'u
RECOMMENDATIONS
OMS recommends that the following actions be taken to strengthen mternal controls
1 T TC needs to complete a cumulative reconciliation of all trust funds m the TrustRef
system. resulting In the remediation of all unexplained variances OMS recommends
the following steps be taken:
a Conduct an assessment to determine whether archived records (with non-$O.OO
balances) have any Impact on the reported fund balance and unexplained
variances If the assessment results m reasonable assurance that archived
records do not affect the accuracy of the current reported fund balances, then a
record of the assessment should be retained for future reference If any non
$0.00 balance records withm the archive are found to be valid and contributing to
unexplained variances in the current reported fund balance. then a
comprehensive evaluation should be conducted and valid non$O.OO balances
restored to the current database for proper account maintenance and resolution.
b Develop a plan (collaboratively between TTC financial and accountmg divisions)
to assess validity of all non-SO 00 accounts for records in the current database
and take action on any account balances that cannot be validated. For older
accounts where. following a good faith effort, the validity cannot be determined
the records should be compiled and submitted to the Board for escheatment 01
wrlteoff as required;
( Make a fmal adjustment to true up each fund balance to the general ledger so
thai monthly cumulative reconciliations can be resumed as a prerequisite for the
transition to the new IPTS system, and
d. Update TrustRef reconciliation procedures. Updated procedures should include:
the detailed steps for both the periodic and cumulative reconciliations.
requirements for retaining the printed reports of beginning and ending fund
balances (to ensure an adequate audit trail is maintained). and use of a prlntea
summary report for management signoff and approval of reconciliation results
2. T-TC should develop, obtam management approval, and deploy a desk reference
manual for the TrustRef system. This desk manual should include. but not be limited to'
a Definitions of roles and responsibilities of system users, administrators, and
system maintenance, including a contact list for exception reporting.
b Policies and procedures related to record maintenance, trust fund reconciliations,
record creation, deletion. and archiving. user security. and expectations for
informalion sharing; and
c System overview and user trammg content
... ---. ._-_.- --. -
__ .... of San Diego
FY 200708
"
PROP-fRTYT OOL!L'ECnON AND J,!nu2TYZ!OB
REFUND PROCESS Rcport'No, A 8 ~
IiJNALru:PORlJ" '1,2
3 T-Te should develop a more effective method for ensuring NSF tnformation is available
to refund approvers and processors once identified by the bank. OMS recommends
that T-Te convene a process improvement team with the objective of determining the
most effective and timely method for accessing and posting this information to aVOid the
cost of unnecessary refund processing.
4 T-Te should address TrustRef user security and database functionality issues by'
a Submitting a service request to ensure the system restncts access to any user 01
administrator in a status other than active;
h. DefIning the roles and responsIbilitIes of the security administrator, including the
procedure for ensuring users are deactivated when access is no longer required'
c Develop and Implement a penodlc segregatIon of duties revIew
d ModifYIng lIser access rights to ensure proper segregatIon of dutJeE eXIsts
between the roles of system admInistrator, security administrator. and transactIon
approver roles: and
e Ensuring records can be retneved through database searches of the archived
records.
5 T-Te should develop a written procedure for the preparation of the Statement of
Changes in Net Assets and make improvements to existing procedures to plovlde more
detailed gUidance for the preparation of financial reports and performance of
reconciliations
COMMENDATION
The Office of Audits & Advisory Services commends and sincerely appreciates the courtesies
and cooperation extended by the Treasurer-Tax Collector throughout this audit
AUDIT TEAM
Tom Philipp, Semor Auditor (Project Lead)
Joseph Kelly. Jr , Senior Auditor
Perlita M. Sandejas. Auditor I
Count)' of Sen Diego
S"
FY 2007-08
AAOPERW'rAK'POLlL'EC!IlON 1 \ ~ l D ::January 2!lD8
RE:FlJND l'ROCSS Report 'No. AOB.l)Q2
liINALREPOR'f '13
Appendix 1
TrustRef Trust Fund Descriptions
.
COUnt)' of San Diego FY 2007-08 Office of Audits & Adviso.), Service.
.
nu
PROP - lVTA'XCOLLC'fION ,'"'NO :JaDuary:200B
REFUND 'PROCESS ReJiort 'N'o:,A08.'002..
f'tNALft ORr ' , ' . : " 14
DEPARTMENl RESPONSE
Olfice of Audits S. Advisor y Services
7
County 01 San Diego FV 2007 08
jj
X'O ll.'E'CTiON AND ' January
RE-FllNDf'ROOESS Rcport1No.
f,INAL fl.'EPOR'T ,IS
TREASURER T A.X COLLECTOR
COUNTY OF SAN DIEGO
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Office of IJ. Advisory County of San Diego
1
FY 200708
P,ROPERTY'-AX A'ND ,;janUary
REFUND PROOESS Reporl ,No, AIl6:.'()O
F41\1AL RSPORT 1
ManaUl:m(.l1t R(::.ptmH to Intl'nl<J1 J.;"c1ii l.j 1 aJi.
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Office of Audits 8. Advisory Services (;ounty of San Diego
.
F\' 20070r
C Iil!i;
RROPJ;H!fVTAX '.COL'L'ECT!ON A'ND
REFJJNO :PROCESS Report No. A08.J)0
f.lNALlREPOR' 17
f:l!- !,""S' to In1unal r.f P, 1 ;u: t:ollr CIIOI1
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Office of Auditf. & AdvisolV Servicet;
.. '"'t'
County 01 San Diego
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FY 2007-00
----.
OMS AUDIT AND MAS REPORT ROUTING SHEET
(The Project Lead is responsiblf' for mainfaining the report routing sheet al all times)
Repon No.: /lJ)'i - 0,= __ Start Date. 1..0 (pI 07 ____ . __ _
Type or Report. aAUdit 0 MAS
( ' / 10' /) .I): f) ,A l"" .uC .... .:,
Title' I , 'ed ... ' !.... ; L '" -_
Required Distribution Date' ________ _
Project Lead: '" /- A
outline meeting held and documented in Teammate (scheduled by Project. Lead)
(-----'---
Projed Leod Manager that exceptions supporting findings Bre signed off in Teammate
Manager reviews and signs off on excepC.ions liupporting findings in
Lead submits report pacl.age to Manager
re:i;;-o-r-d-rafl rt'port
----_. __ .-
Projecll.ead submits report to Admin Secretary for review nnd formaHing
Secretary reviews Clnd forward to Manager
reviews and approveE preliminary draft report and forward to Admin Secrel61ry

----. - - -.------ ------+---:::-7""-t-'-:.c;-::.':'-T,,'
submits repor1 and cover letter \0 Admin Secretary for review and formatting (5)
f---'-----
report based on COA' , review and provides to Projed Lead (6)
r final review, inrual6 the repor1, and provides to Manager
1-----'----'- - - - - ... ...
conducts final review and submits report package to eOA for final review (7)
retums to Admin Secretary for productjon
and 6ubmits to eOA tor approval and 'ign5lure
Admin Secretary distributes signed reports to distribution list, 8udi1 team, Menager and eOA
binder
1.
2
. . I
Admin package a-nd provides 10 Proj ect Lead . . 1 3
4
5.
Project Lead provlI;es Admin Secretary with flnat report covel Ie-tle-r . audit report , department I
response- and customer satisfaction cover leller and survey (9) (10)
Project Lead final review, the report 10 -- - --_ ... --- .. <?[7--
Manager co'nducts final revt;w. submits report package to AdmIn , 4
771
-- ""I(,L...-(iLJ..,-"'-: ..
Secrela,y I /t I " I O'{ .
---- ----_. - -- - _.
6
I
7
6
Admin Secretary j)t::rtorms report production, binding and !>ubmits to COt!. for approval and
signature
COA and signs final report and returns to Admin Secretary
Admin Secrl'lary dislnl,oules sogned reports to distribution lisl, audl1 team, Manager and COA
-MJJ . ;;.j.-d
1)
- j-. - '1 .-:r I
. - I - j JVJ -' ,
b,nde' -62# .- I ;J. ( '+ I 0 ;
9. Admin Secretary 01 the- survey letter and survey form j --- .
. _____ 1 .. '
Lead response in .... :-
P 1 Project LEtse maintains for preliminary draft verblon CD'ltrolln Teammsll" file.
(7) Extemcl Stalo.f:holdE:rs InClude Pepartmt.nt Head, Group FinDI1CC DI'I.:clor. Cruet Fm .. nclal Officer, AUDllol ard COnlll)UCI Co ... nt} Callns'! :, and
!elected personnel (I e rud t ... d manatlerr. "'ey personnel, ct .. ) to be de\(.nnined by COA 8'"1d PrOJ:tcl Ll- aCl
(3) Changes made: 10 !tIL repor: based on fetdback flOrn externtll stak.ehnldels Will be !Imhea to thoso f'xphcrlly SJJprO\'(:l l y 1')(. COA ancHor
MM8gei
(4) In addition to changes to IIll ILpon. thE. M3n&Qt"r may request Ih3\ additIonal :;upportlng wonting bF. crossn,..ft:J':I\t.ed to Ine draft to t:n!.Uff:'
thai a.1I statements atL fuU.,.
(Eo) Drah report cover lener templales can be l<>ented at S \AUD\New Shared\Report Templates
(Gl If 5lj1nmc:ml conlenl rc .vtSlOn5 ue reqUired LaSl.d on COA'I reviE:w, Admin S<lcretary will forward report Ie ProJed Lead 10 mak( thL 1(\IJ51On5
Undt' l thes!: arcumst.,nC(!s, tt\(. ProJed lead will r(; jnitiale the repon roullng prOGCs5 by !:tm1mg al s.tep 3 of the flncl otah report
[l) PrOject Lead maintains le:'{luIlSlbility lor fmiJl draft .and final version control in Teammate fill.
(8) tr neC(;5sar)" Project lead prepares a mbuttal to the response, which 10 bE: tevleY.'ed and apploved by lht' ManOlge.1 and eOA
Final report covel k'flllr lefllplates can be located al S:V\UDVoIew Shared\Repon Templates.
(10) ClJStomer satisfaction If't\(>r and survey ICmpli!.tes can be locoled at S\AUDWow Shared\Report Templates
(11) Perlita SandeJiJ:i. keeps \taCh of customer servia: &urvey response.
(12) Proled Lead m81f1tains responslblllt)' for fln .. 1 drsh and final report verSion conllolm Teammate file
ti121: All rtport templafes can be retrieved at S."\A.UDW"w ShantdlReport Templates.
AUD 10/15(07
/
PROPERTY TAX COLLECnON AND DlH:ember 20D7
REFUND PROCESS Report No. A08002
FINAL DRAFT REPORT 11
RECOMMENDATIONS
OMS recommends that the following actions be taken to strengthen internal controls.
I ~ 1. T-TC needs to complete a cumulative reconciliation of all trust funds in the TrustRef
10 ~ ,1 system, resulting in the remediation of all unexplained variances. OMS recommends
d.-(1I'I) P Jdj the following steps be taken:
~
Conduct an assessment to determine whether archived records (with non$O.OO
balances) have any impact on the reported fund balance and unexplained
variances. If the assessment results in reasonable assurance that archived
records do not affect the accuracy of the current reported fund balances, then a
record of the assessment should be retained for future reference. If any non-
$0.00 balance records within the archive are found to be valid and contributing to
unexplained variances in the current reported fund balance, then a
comprehensive evaluation should be conducted and valid non-$O.OO balances
restored to the current database for proper account maintenance and resolution;
b. Develop a plan (collaboratively between T-TC financial and accounting divisions)
to assess validity of all non-$O.OO accounts for records in the current database
and take action on any account balances that cannot be validated. This can be
achieved as part of required data cleansing in preparation for system conversion
to IPTS.' For older accounts where, following a good faith effort, the validity
cannot be determined, the records should be compiled and submitted to the
Board for escheatment or write-off as required;
c. Make a final adjustment to true up each fund balance to the general ledger so
that monthly cumulative reconciliations can be resumed as a prerequisite for the
transition to IPTS; and
d. Update TrustRef reconciliation procedures. Updated procedures should include:
the detailed steps for both the periodic and cumulative reconciliations,
requirements for retaining the printed reports of beginning and ending fund
balances (to ensure an adequate audit trail is maintained), and use of a printed
summary report for management signoff and approval of reconciliation results.
2. T -TC should develop, obtain management approval, and deploy a desk reference
manual for the TrustRef system. This desk manual should include, but not be limited to:
G Definitions of roles and responsibilities of system users, administrators, and
system maintenance, including a contact list for exception reporting;
fLtA.LhrnLu 'blocjL. ~ p ~ S
b. Policies and procedDles related to record maintenance, trust fund reconciliations,
record creation, deletion, and archiving, user security, and expectations for
information sharing; and
While not pan of the scope of this audit, OAAS beli eves that a data cleansing and data mapping initiati ve should
be conducted early enough to ensure that the IPTS data conversion results in reliable and relevant data.
Office of Audits & Advisory Services County of San Diego FY 2007-08
PROPERTY TAX 'COLLECTION AND December 2007
REFUND PROCESS Report No, AOB-002
c, System overview and user training content
n A LcJ1-"7, T-TC should develop a more effective method for ensuring NSF information is available
to refund approvers and processors once identified by the bank, OMS recommends
that T-TC convene a process improvement team with the objective of determining the
00 most effective and timely method for accessing and posting this information to avoid the
- U cost of unnecessary refund processing,
(3) T-TC should address TrustRef user security and database functionality issues by:
jJLfoJ, ffi a, Submitting a service request to ensure the system restricts access to any user or
't- administrator in a status other than active;
0f2-9
b, Defining the roles and responsibilities of the security administrator, including the
procedure for ensuring users are deactivated when access is no longer required;
c, Develop and implement a periodic segregation of duties review;
d, Modifying user access rights to ensure proper segregation of duties exists
between the roles of system administrator, security administrator, and transaction
approver roles; and
e, Ensuring records can be retrieved through database searches of the archived
records,
5, T-TC should develop a written procedure for the preparation of the Statement of
Changes in Net Assets and make improvements to eXisting procedures to provide more
detailed guidance for the preparation of financial reports and performance of
reconciliations,
COMMENDATION
The Office of Audits & Advisory Services commends and sincerely appreciates the courtesies
and cooperation extended by the Treasurer-Tax Collector throughout this audit
AUDIT TEAM
Tom Philipp, Senior Auditor (Project Lead)
Joseph Kelly, Jr., Senior Auditor
Perlita M, Sandejas, Auditor I
Office of Audits & Advisory Services
County of San Diego
FY 2007-{)8
,
PROPERTY TAX COLLECTION AND December 2007,
REFUND PROCESS Report No. AOB002
Appendix 1
TrustRef Trust Fund Descriptions
Fund Number Oracle Fund Fund Description __ _
Office of Audits & Advisory Services County of San Diego FY 2 7 ~ 8
AppendixB
THE SAN DIEGO COUNTY TREASURERIT AX
COLLECTOR TAX REFUND PROGRAM
SUMMARY
The 2005-2005 San Diego County Grand Jury reviewed the San Diego County
TreasurerlTax Collector's procedures for refunding overpaid property taxes. The review
revealed that as of August 2005 the Treasurer/Tax Collector had over 11,000 authorized
refunds, accumulated for the tax years 1996 through 2002, which have not been claimed
by or returned to taxpayers. The total value of these refunds exceeded $2.39 million.
Additionally, the TreasurerlTax Collector's office held $6.2 million in overpaid propel1y
taxes for tax years 2003 through 2005 that are refundable. The State Revenue and
Taxation Code! provides that unclaimed refunds may, after four years, be transferred to
the County General Fund. The last transfer of eligible funds to the County General Fund
was $49,542.49 in February, 1998.
The Grand Jury's investigation revealed that the TreasurerlTax Collector's department
does not have adequate written policies and procedures for processing refunds. This
problem was highlighted in an Internal County audit in 2003. The Grand Jury
recommends that the TreasurerlTax Collector complete the written policies and
procedures for refunding overpaid property taxes.
The Grand Jury commends the TreasurerlTax Collector's department for actions taken in
response to the Grand Jury investigation. The TreasurerlTax Collector subsequently
issued refunds to taxpayers of approximately $760,000 as of November 8, 2005. The
Grand Jury anticipates that the TreasurerlTax Collector will continue to show diligence
by accelerating refunding of overpaid property taxes.
PURPOSE
The Grand Jury focused on the following issues:
I. Refund procedures used by County TreasurerlTax Collector.
2. The most recent refunds distributed to taxpayers.
3. Minimum refund amount.
4. Procedures used to locate eligible taxpayers whose address of record may be
invalid.
5. Tax bill fonnat.
PROCEDURES
I. Interview the San Diego Assessor and staff.
2. Interview the San Diego TreasurerlTax Collector and staff.
I Chapter 5. Article I. Section 5102
SAN DIEGO COUNTY GRAND JURY 2005-2006 filed November 16, 2005
3. Review the Treasurer/Tax Collector written responses to Grand Jury written
questions.
4. Review the list of the pending property tax refund files from 1996 to 2005.
5. Review of the Treasurer/Tax Collector Intemal Audit Report dated March 19,
2003.
DISCUSSION
During the Grand Jury's anal ysis of the cun-ent process for refunding overpaid prope11y
taxes, the Treasurer/Tax Collector's staffinfonned the Grand Jury that over 11,000 tax
refunds from 1996 to 2002 had not been claimed or refunded. According to the
Treasurer/Tax Collector staff a total of almost $2.4 million had not been claimed or
refunded to eligible taxpayers. In addition, the Grand Jury was apprised of $6.2 million
of eligible refunds accumulated from tax years 2003 to 2005. The TreasurerlTax
Collector stated that his office is working to develop written policies and procedures for
processing property tax refunds.
The Treasurer/Tax Collector staff indicated that they process refunds over $6.00,
although the Revenue and Taxation Code
2
only requires refunds over $10.00. Data were
provided that indicates the number of refunds ofless than $10.00 is minimal. The Grand
Jury questions the cost effectiveness of the present system.
The TreasurerlTax Collector can recommend the transfer of property tax refunds to the
County General Fund if unclaimed for 4 years. The funds may be transfen-ed on order
from the San Diego County Board of Supervisors pursuant to the Revenue and Taxation
Code). The last transfer of unclaimed property tax refunds to the County General Fund
was 1998 in the amount of $49,542.49.
The TreasurerlTax Collector's department cun-ently sends refunds pursuant to the
Revenue and Taxation Code. The Treasurer/Tax Collector's office utilizes the property
tax database, the Department of Motor Vehicles, telephone directories and intemet
searches to find taxpayer addresses. TIle Grand Jury recommends that the Treasurer/Tax
Collector consider utilizing periodic newspaper notices to alert the taxpayers of potential
refunds.
In the course of the Grand Jury investigation it became apparent that a contributing factor
to undistributed refunds was the complexity and lack of clarity of the cun-ent
Supplemental Property Tax Bill. Taxpayers may not reco!,1J1ize that they are eligible for a
refund because the current supplemental tax bill document does not highlight in unique
type style, size, or color, the fact that a refund is due.
The Grand Jury determined that the interest rate on overpaid property tax funds held in
trust eam approximately 2.82%. The Grand Jury also detennined that a taxpayer may be
, Chapter 5, Article I. Section 5102
) Chapter 5, Article I. Section 5102
SAN DIEGO COUNTY GRAND JURY 2005-2006 filed November 16,2005
2
eligible for interest on their overpaid property taxes when the taxpayer makes application
for refund within 30 days, otherwise the interest reverts to the County.
FACTS/FINDINGS
1. Refund Procedures
Fact: The Treasurer/Tax Collector's department does not have adequate written policies
and procedures for refunding overpaid property taxes. The March 19,2003 Internal
Audit Report, prepared by the County Auditor & Controller's Office, identified issues
with the tax refund procedures:
The Treasurer/Tax Collector's department does not have adequate operating
policies and procedures to govern the refund process.
The TreasurerlTax Collector's department relies heavily on labor intensive
procedures to verify current addresses.
The Treasurer/Tax Collector's department procedures lack adequate tracking
tools to ensure that are processed in a timely and accurate manner in
order to provide optimal service to taxpayers alld comply with legal mandates.
Findings: The TreasurerlTax Collector's department was infonned 2Y, years ago that
they lacked adequate procedures for returning overpaid property taxes to taxpayers. The
Treasurer/Tax Collector stated that his staffis preparing, but has not completed, written
procedures for the Tax Refund Program.
2. Refunds to Taxpayers
Fact: The Treasurer/Tax Collector's department provided the Grand Jury with lists of
unclaimed tax refunds for the tax years from 1996 to 2005.
As of August 2005, the Treasurer/Tax Collector's department held $2.39 million in
overpaid property taxes for tax years 1996 through 2002. These monies should have
been refunded to taxpayers.
1996 $ 147,631.86
1997 $ 287,054.79
1998 $ 361,038.98
1999 $ 509,904.14
2000 $ 309,193.08
2001 $ 297,380.70
2002 $ 480.616.09
$2,392,819.64
SAN DIEGO COUNTY GRAND JURY 2005-2006 med November 16, 2005
3
As of August 2005, the Treasurer/Tax Collector's department held $6.2 million in
overpaid property taxes for tax years 2003 through 2005. These monies are available and
should be refunded to taxpayers.
2003 $ 592,361.04
2004 $ 59,127.29
2005 $5.544,988.15
$6,196,476.48
As of August 2005, the total of overpaid property taxes dating from 1996 through 2005
was $8,589,296.12. These monies are available for refund to the taxpayers.
Finding: The current Treasurer/Tax Collector has been in office since November 2002.
As of August 2005, there was a backlog of over 11,000 refunds that remain unclaimed for
tax years 1996 through 2002. The Treasurer/Tax Collector's department should have
been more diligent in responding to the 2003 Internal Audit that identified significant
deficiencies in the refund process. The Grand Jury agrees that the TreasurerlTax
Collector's department is now aggressively pursuing the refunding of payment to the
taxpayers for the years 1996 through 2002. If refunds are not claimed for the tax years
1996 through 2002 by June 30, 2006, the remaining funds may escheat to the County
General Fund by order of the San Diego County Board of Supervisors.
3. Minimum Refund
Fact: The California Revenue and Taxation Code
4
states:
When the amount of taxes paid exceeds the amount due by more tilan/en dollars
($10), the tax col/ector shall send notice of the ove/paymen/ to the taxpayer.
The TreasurerlTax Collector's department has elected to refund overpayments that
exceed six dollars.
Finding: The current policy of processing refunds that exceed six dollars adds
unnecessary expense to the administrative cost of making refunds.
4. Supplemental Tax Bill
Fact: The 2004 Supplemental Tax Bill sample reviewed by the Grand Jury includes a
section titled "Refund Pending". In another space, the overpayment amount is stated as a
negative dollar amount.
Findings: The fornlat of the Supplemental Tax Bill is not easily understood and may be
confusing to many people. A distinctive method is not used to indicate to the taxpayer
that they are entitled to a refund.
4 Part 5. Chapter 2. Section 2653
SAN DIEGO COUNTY GRAND JURY 2005-2006 filed November 16, 2005
4
RECOMMENDA TlONS
The Grand Jury recommends that the San Diego County Treasurer/Tax Collector:
06-01 :
06-02:
Expedite the completion of written policies and procedures for
processing refunds.
Issue refunds for all tax years prior to 2001 as soon as is practicable.
06-03: Evaluate the cost savings to the TreasurerlTax Collector's office if the
minimum refund amount is increased from $6.00 to $10.00 as
authorized by the Revenue and Taxation Code.
06-04: Revise the Supplemental Tax Bill format to highlight the taxpayer' s
eligibility and amount of the refund.
COMMENDATION
The Grand Jury commends the TreasurerfTax Collector's department for his response to
the Grand Jury investigation. The TreasurerfTax Collector subsequently issued refunds
to taxpayers of approximately $760,000 as no November 8, 2005. The Grand Jury
anticipates that the TreasurerfTax Collector will continue to show diligence in refunding
overpaid Property Taxes.
REQUIREMENTS AND INSTRUCTIONS
The California Penal Code 933(c) requires any public agency which the Grand Jury has
reviewed, and about which it has issued a final report, to comment to the Presiding Judge
of tlle Superior Court on the findings and recommendations pertaining to matters under
the control of the agency. Such comment shall be made 110 later thall 90 days after the
Grand Jury publishes its report (filed with the Clerk of the Court); except that in the case
of a report containing findings and recommendations pertaining to a department or
agency headed by an elected County official (e.g. District Attomey, Sheriff, etc.), such
comment shall be with ill 60 days to the Presiding Judge with an infonnation copy sent to
the Board of Supervisors.
Furthemlore, California Penal Code 933.05(a), (b), (c), details, as follows, the
manner in which such comment(s) are to be made:
(a) As to each grand jury finding, the responding person or entity shall
indicate one of the following:
(I ) The respondent agrees with the finding
(2) The respondent disagrees wholly or partially with the
finding, in which case the response shall specify the portion
of the finding that is disputed and shall include an
explanation of the reasons therefor.
(b) As to each l,'Tand jury recommendation, the responding person or entity
shall report one of the following actions:
SAN DIEGO COUNTY GRAND JURY 200S--2006 filed November 16, 2005
5
(I) The recommendation has been implemented, with a
summary regarding the implemented action.
(2) The recommendation has not yet been implemented, but
will be implemented in the future, with a time fi'ame for
implementation.
(3) The recommendation requires further analysis, with an
explanation and the scope and parameters of an analysis or
study, and a time frame for the matter to be prepared for
discussion by the officer or head of the agency or
department being investigated or reviewed, including the
governing body of the public agency when applicable. This
time frame shall not exceed six months from the date of
publication of the grand jury report.
(4) The recommendation will not be implemented because it is
not warranted or is not reasonable, with an explanation
therefor.
(cl If a finding or recommendation of the grand jury addresses budgetary or
personnel matters of a county agency or department headed by an elected
officer, both the agency or department head and the Board of Supervisors
shall respond if requested by the grand jury, but the response of the Board
of Supervisors shall address only those budgetary or personnel matters
over which it has some decision making authority. The response of the
elected agency or department head shall address all aspects of the findings
or recommendations affecting his or her agency or department.
Comments to the Presiding Judge of the Superior Court in compliance with the Penal
Code 933.05 are required by the date indicated from:
RESPONDING AGENCY
San Diego County Treasurerrrax
Collector
RECOMMENDATIONS
06-0] through 06-04
DATE
01116/06
SAN DIEGO COUNTY GRAND JURY November 16, 2005
6
'.
COUNTY ADMINISTRATlON CENTER .1600 PACIFIC HIGHWAY, ROOIII112
SAH DIEGO, CALIFORNIA 92101-2475 (619) 531-5125 FAX (619) 9 ~
web.ate: httpl/lwww.ldtrwaatax..com RECEIVED
c'
JAN 1 -: A.M. I
January 12,2005
VIA HAND DELIVERY
Honorable Janis Sammartino
Presiding Judge
Superior Court of California
County of San Diego
220 West Broadway, Dept. P
San Diego, CA 92101
" . I{e': San Diego County Treasurer-Tn Collector's Response to Grand Jury Report
Dear Judge Sammartino,
Pursuant to California Pena! Code Section 933.05, this letter is the response of the San Diego County
Treasurer-Tax Collector to the November 16,2005 Grand Jury Report entitled "The San Diego County
Treasurerrrax Collector Tax Refund Program."
The Treasurer-Tax Collector has worked cooperatively and has communicated openly with the Grand Jury
throughout its investigation and will continue to provide information to the Grand Jury on the progress of the
Grand Jury recommendations contained within the November 16, 2005 report.
TREASURER-TAX COLLECTOR RESPONSES TO GRAND JURY FINDINGS:
1. Refund Procedures
Findings:
Response:
The Treasurerrrax Collector's department was informed 2\1, years ago that they lacked
adequate procedures for returning overpaid property taxes to taxpayers. The Treasurerrrax
Collector stated that his staff is preparing, but has not completed, written procedures for the
Tax Refund Program.
The Treasurer-Tax Collector agrees with the Findings and provides the following
additional information: In December 2005, the Treasurer-Tax Collector completed and
implemented formal written policies and procedures for (I) Tax Refunds for Overpayment
and (2) Escheatrnent Process. These policies and procedures were completed with the
assistance of an outside independent auditing firm who conducted a comprehensive review
of the refund and escheatment processes within the Treasurer-Tax Collector's department.
Copies of the policies and procedures are attached.
2. Refunds to Taxpayers
Findings:
Response:
The current Treasurerffax Collector has been in office since November 2002. As of
August 2005, there was a backlog of over 11,000 refunds that remain unclaimed for tax
years 1996 through 2002. The Treasurerffax Collector's department should have been
more diligent in responding to the 2003 Internal Audit that identified significant
deficiencies in the refund process. The Grand Jury agrees that the Treasurerffax
Collector's department is now aggressively pursuing the refunding of payment to the
taxpayers for the years 1996 through 2002. If refunds are not claimed for the tax years
1996 through 2002 by June 30, 2006, the remaining funds may escheat to the County
General Fund by order of the San Diego County Board of Supervisors.
The Treasurer-Tax Collector agrees with the Findings and provides the following
additional information:
The current Treasurer-Tax Collector has been in office since December 2, 2002, not
November 2002.
In response to the 2003 Internal Audit, the Treasurer-Tax Collector addressed some
of the deficiencies in the refund process by making the following changes:
o Refund Request Time Reduced - In 2003, changes were made to the
automated refund system which reduced the refund check request cycle
from two weeks to one week.
o Exception Process Streamlined - In 2003, the Treasurer-Tax Collector
initiated a redesign of the exception process, and completed the redesign in
November 2005. This enhancement enables staff to reconcile exception
payments electronically without hard copies of rejected checks, and has
reduced processing time.
o Interest Calculation Worksheets Updates - The Treasurer-Tax Collector
updates its interest calculation worksheet annually to ensure compliance
with California Revenue & Taxation Code Sections 5150.5, 5151, 5152 and
5153.
o Duplicate Payments Minimized - In 2005, the Treasurer-Tax Collector
implemented a system that allows mortgage companies to submit electronic
payment files and send property tax payments via electronic funds transfer
(EFT) or fedwire. This process has significantly reduced the need for
manual reconciliation, and duplicate payment refunds are generated in less
than half the time previously required.
In addition, since August 2005, the Treasurer-Tax Collector has refunded $1.381 million
for overpayments made in tax years 1996 through 2002, with a remaining balance of
$1.012 million. The Treasurer-Tax Collector continues to issue refunds on a 2-week cycle
and will continue to work diligently to process all outstanding refunds.
3. Minimum Refund
Finding:
Response:
The current policy of processing refunds that exceed six dollars adds unnecessary expense
to the administrative cost of making refunds.
The Treasurer-Tax Collector agrees with the Findings. The Treasurer-Tax Collector has
determined that increasing the minimum refund from $6.00 to the statutorily allowed
amount of $1 0.00 will reduce the number of refunds to be processed and the related
2
administrative expenses. The new policy became effective on January I, 2006.
4. Supplemental Tax Bill
Findings:
Response:
The format of the Supplemental Tax Bill is not easily understood and may be confusing to
many people. A distinctive method is not used to indicate to the taxpayer that they are
entitled to a refund.
The Treasurer-Tax Collector agrees with the Findings. The Treasurer-Tax Collector has
redesigned the Supplemental Tax Bill to conform to the format established with the annual
secured property tax bill. In order to reduce confusion, the information on the back ofthe
bill and on the insert explains that a negative supplemental bill means that the taxpayer is
receiving a refund which is included in the mailing. Copies of the new Supplemental Tax
Bill and insert are enclosed.
TREASURER-TAX COLLECTOR RESPONSES TO GRAND JURY RECOMMENDATIONS:
Recommendation
06-01: Expedite the completion of written policies and procedures for processing refunds.
Response: The recommendation has been implemented. In December 2005, the Treasurer-Tax
Collector completed and implemented formal written policies and procedures for:
Recommendation
06-02:
Response:
Recommendation
06-03:
Response:
Recommendation
06-04:
Escheatrnent Process
The Treasurer-Tax Collector will continue to update all department policies and
procedures.
Issue refunds for all tax years prior to 200 I as soon as is practicable.
The recommendation has been implemented. Since August 2005, the Treasurer-
Tax Collector has refunded $1.381 million for overpayments made in tax years
1996 through 2002, with a remaining balance of$1.012 million. The Treasurer-
Tax Collector continues to issue refunds on a 2-week cycle and will continue to
work diligently to process all outstanding refunds.
Evaluate the cost savings to the Treasurerrrax Collector's office if the minimum
refund amount is increased from $6.00 to $10.00 as authorized by the California
Revenue and Taxation Code.
The recommendation has been implemented. The Treasurer-Tax Collector initiated
a change in its property tax system to increase the minimum refund amount from
$6.00 to $ 10.00 effective January 1, 2006.
Revise the Supplemental Tax Bill format to highlight the taxpayer's eligibility and
amount of the refund.
3
Response: The recommendation has been implemented. The Treasurer-Tax Collector has
redesigned the Supplemental Tax Bill to conform to the format established with the
annual secured property tax bill . The information on the back of the bill and on the
insert explains that a negative supplemental bill means that the taxpayer is receiving
a refund which is included in the mailing.
Jfthere are any questions regarding this response, please feel free to contact me at (619) 531-5225.
ty Treasurer-Tax Collector
Enclosures
4
Appendixc
Macias Consulting Group, Inc.
County of San Diego Treasurer-Tax
Collector Property Tax Refund for
Overpayment and Eschea1ment
Protocols Validation
FINAL REPORT
October 17, 2005
Contents
Study Results and Appendices
MCG Highlights ........................................................................................................................................ 2
Background ........................ ....................................................................................................................... 3
Objectives .................................................................................................................................................. 5
Scope .......................................................................................................................................................... 5
Methodology .............................................................................................................................................. 6
Principal Results ..................................................................................................................................... 10
Tax Refund for Overpayment Process Could Benefit from Increased Efficiency and Effectiveness ...... .... .............. .......... 10
TIC is Successfully Identifying Tax Refund Recipients for Unclaimed Monies Targeted for Escheatment.. .............. .. .... 15
Account Reconciliation Regularly Occurs .................................................................................................. ......................... 18
Conclusions ............................................................................................................................................. 20
Recommendations ................................................................................................................................... 21
Agency Comments .................................................................................................................................. 23
MCG Contact ..................................................... ..................................................................................... 23
Contributors ............................................................................................................................................ 23
Appendix I: California Law Governing Tax Refund and Escheatment Processes .......................... 24
Appendix IT: Sources to Research Payee Data .................................................................................... 25
Appendix ill: TIC Processes Suggested Improvements .................................................................... 26
Macias Consulting Group, Inc. 1 County of San Diego
Treasurer-Tax Collector Office
MeG Highlights
'''h)' I\ICG Conducled the Re\ ir\\
In FY 2004, San Diego County Treasurer-
Tax Collector's Office (TIC) issued
921,409 property tax bills. Ofl,842,818
property tax payments received, the
County issued 39,972 refunds and 21
percent, or 8,304, were refunds stemming
from overpayments of property taxes due
by individuals or organizations.
Overpayment on property tax bills could
result from changes in assessed valuation,
tax record discrepancies, and taxpayer
error reg uiring the TIC to refund these
tax monies to the appropriate party. The
tax refund for overpayment process
includes due diligence activities to
identify the name and address for the
payee to ensure that the refund is sent to
the correct location. We include detail on
these activities in the body of this report.
When the TIC exhausts their research
protocol and cannot find a recipient for a
particular refund after four years, the
refund is considered for escheatment
reporting. Escheatment reporting is the
transfer of unclaimed monies or assets to
a government entity. Unclaimed property
tax refunds are escheated to the San
Diego County's general fund.
To ensure that the County implemented
the best practices possible on property tax
overpayment and escheatrnent processes,
the Treasurer-Tax Collector requested
that we: (1) determine the reasonableness
of County policies and methods for
issuing funds owed to property owners,
(2) validate escheatment reporting carried
out, and (3) develop or upgrade property
tax refund and escheatment protocols.
County of San Diego Treasurer-Tax
Collector Tax Refund for
Overpayment and Escheatment
Validation
"'hal i\ICG Found
Our review of property lax overpayment and escheatment
processes implemented by the San Diego County Treasurer-Tax
Collector's Office covered the time period from 1996 to the
present.
We determined that the TTC Office process to issue refunds to
individuals and organizations that overpaid their property tax is
in compliance with County and state requirements. Nonetheless,
the job processes implemented are not as efficient and effective
as they could be. While the TIC is successfully issuing refunds
for tax overpayments to the correct refund recipient when a
recipient can be located, this process may be imprOVed through:
New system enhancements to provide better audit trails
and tracking mechanisms;
hnproved screen display and enhanced user reports;
Increased data capture and system processing of this data
(e.g., recognition of partial payments); and
Development of and training on system user manuals.
Process improvements would expedite tax refunds to the
customer and reduce management and staff current manual
workload.
Escheatment is an action oflast resort when recipients of
unclaimed monies cannot be found. We detennined that while
escheatment processes were implemented since 1998, prior
management opted against the formal transfer of unclaimed
money because of concerns over the adequacy of the process to
identify recipients of property tax refunds. The current TIC has
since initiated better efforts to identify recipients owed refunds
from the list ofunclaimed monies targeted for escheatment. As a
result, the Treasurer-Tax Collector has successfully returned
money owed to an estimated 3,237 homeowners and
organizations. These efforts continue.
Finally, we noted that TIC Office regularly and adequately
performs an account reconciliation process to ensure that TIC
and official County financial records match. These two financial
records show the amount of property lax overpayments awaiting
refund or escheatment match.
2 County of San Diego
Treasurer- Tax Colleclor's Office
"
Background
How refunds for property tax
overpayment can occur
I The San Diego County Treasurer-Tax Collector's (TTC)
Office, with 123 employees and an annual budget of about
$14 million, is responsible for collecting more than $3 billion
in property taxes each year and managing $3 to $5 billion in
investments and cash belonging to the County, various
school and other government agencies. A portion of the TTC
staff is dedicated to resolving tax overpayment through the
transmittal of refund checks to the confirmed name and
address of each applicable payee.
In FY 2004, San Diego County Treasurer-Tax Collector sent
out 921,409 tax bills. Of the 1,842,818 payments processed,
I the COWlty identified 8,304 transactions requiring a tax
I
refund because an individual or organization overpaid their
property tax bill. Most of the refunds due from
overpayments resulted from double payment. Other refunds
were issued because of other activities, such as assessor roll
correction refunds and negative supplemental tax bills.
There are two types of tax refunds - refunds that occur
automatically from tax roll corrections, and refunds resulting
I
from overpayment. Tax refunds resulting from roll
corrections were not included in the scope of our review,
except as they relate to the escheatrnent process.
A property tax refund for overpayment is due to the taxpayer
if the tax payment remitted is in excess of the tax actually
due. This double payment occurs as a result of the taxpayer
and the mortgage company paying the same tax bill. Double
payment may also result from the property owner's receipt of
a delinquent tax bill that does not reflect receipt of full
payments. Tax refunds for overpayment can also occur when
a change in property ownership or assessed value occurs and
reduces the tax amount due, and these changes occur after the
tax payment has been remitted. Tax refunds may also result
from TTC staff data entry errors, such as incorrect
transaction coding.
TTC staff verify that overpayment on property tax bills
occurred by comparing mortgage company property listings
and the County's Property Tax System data. In compliance
with Revenue and Taxation Codes Section 2635, San Diego
County processes refunds for overpayment totaling $6 or
more.
I Overpayments are held within two trust accounts:
3
County of San Diego
Treasurer- Tax Collector Office
How escheatment occurs
Mac;as Consulting Group, Inc.
(I) 514600 - a refundable trust fund account for current
year secured tax payments, used to refund duplicate
payments, cancellation of penalties and interest, and any
overpayments for property taxes that occurred in the
current year; and
(2) 514900 - a refund trust fund account for prior year
(defaulted) secured tax payments, used to refund duplicate
payments, cancellation of penalties and interest, and any
overpayments for property taxes that occurred in the prior
year.
Upon verifying a refund is due, TIC staff request and
transmit a check to the applicable payee.
The term "escheatment" (is-che!') generally means the legal
transfer to a government entity of property that has not been
claimed by the legal owners). If property tax refunds from
overpayment remain unclaimed for four years and for which
the whereabouts of the legal owners of the money is
unknown, the TIC Office retains unclaimed property tax
refunds for San Diego County. Escheatment reporting occurs
when the Treasurer-Tax Collector recommends the legal
transfer of unclaimed monies to the County's General Fund,
which is subject to approval by the County Board of
Supervisors.
Before escheatment can occur, the TIC undertakes a research
process to find the owner of unclaimed property tax refunds
issued. Refund checks issued to individuals or organizations
that remain uncashed or are returned to the TIC, become
stale dated at six months. These refund amounts become
eligible for escheatment after four years ifthe TIC is unable
to find the owner of these unclaimed monies. Eligible items
are identified through TIC Financial Division staff review of
reports of overpayments held in trust by the County until
current addresses for the recipients could be validated. For
this activity, TIC Financial Division staff research imaged
payment documents, the County's Property Tax System data,
the Department of Motor Vehicles (DMV) database,
telephone directories, and the Internet. Over a four-year
period, staff may conduct research mUltiple times to locate
recipients of overpayment refunds. If none could be found,
then the monies continue to be held in trust pending
Treasurer- Tax Collector's Office
Which TIC and Auditor &
Controller Divisions administer
Tax Refund and Escheatment
processes
Why was there was a need to
conduct this review
Objectives
Scope
escheatment reporting. In the fifth year, TIC staff conducts
one final attempt to locate the recipient, and for those that
could not be found, TIC staff forward a recommendation to
the County Board of Supervisors to escheat those monies.
The TIC Financial and Accounting Divisions and the
Auditor & Controller Accounts Payable Division carry out
the tax refund and escheatment processes.
The TIC is committed to identify business process
improvements and to draft formal written policies and
procedures to implement these improvements. To facilitate
these goals, the TIC determined the need first to conduct a
brief process review and second to draft policies and
procedures to reflect current practice and incorporating other
agency best practices. The review and documentation of
current business practices positions the TIC to conduct a
comprehensive organization analysis.
This effort is part of a larger effort to build better service
delivery within the TIC Office. Currently, the new
Treasurer-Tax Collector, with assistance of newly hired
managers, is working to revamp the execution of electronic
funds transfers. Other leadership efforts include business
planning to address treasury investments, treasury
accounting, tax collection, deferred compensation, and
overall TIC administration.
MCG objectives were to: (1) determine the reasonableness of
County policies and methods for issuing funds owed to
property owners, (2) validate escheatment reporting carried
out, and (3) develop or upgrade property tax refund and
escheatment protocols.
MCG's review focused on the evaluation and validation of
policies, procedures, controls, and reconciliation performed
for two processes - Tax Refunds due to Overpayment and
Escheatment. We compared County procedural activities to
other jurisdictions to identify opportunities for improvement.
Our efforts did not examine job processes for property tax
receiRts, exception payment processing, public acquisitions,
debit memo processing, branch operations, and erroneous
payment procedures.
5
County of San Diego
Treasurer Tax Collector's Office
Methodology
To accomplish our objectives, we conducted interviews of all
applicable staff, reviewed procedural and process
documentation, and analyzed data. Specific activities
included:
Validation of Property Tax Refund Protocols
Review of County policies and procedures for issuing
tax refunds owed;
Assessment of internal controls for verifying property
tax recipients (e.g., procedures used for sending
checks to the correct recipient and address), including
reviewing an audit sample of transaction (e.g., 15) of
refunds issued;
Determination of the extent of efforts that the County
should take in ensuring the check is issued and sent to
the correct recipient;
Assessment of system programming for identifying
potential tax refunds in the Trust Account;
Identification of areas for improvement;
Assessment of the reasonableness of County
protocols; and
Assessment of the accuracy of reconciliation
processes for Trust accounts.
Validation of Escheatment Process
Identification and documentation of the current
process for escheatrnent;
Assessment of efforts made to identify recipients of
unclaimed property tax refunds;
Review of audit trails that should be maintained;
Review of compliance of County dormancy period;
Assessment ofIT system protocols for identifying
dormant funds;
Review of transactions shown on the unclaimed
property refund reports against original source
documentation; and
Assessment of the reasonableness ofescheatment
reporting process.
Development of Protocols
Assessment of the strengths and weaknesses
identified in the tax refund and escheatment process;
Identification of best practices used in other Counties;
and
npvp.lnnmpnt nfnpw/nnrhl.tp,n nnlit"lPC: ~ n nT{)('PilllTPC:
Treasurer- Tax Col/ector's Office
Tax Refund For Overpayment
Process - How County compliance
with laws and regulations was
examined
Tax Refund For Overpayment
Process - How refunds issued
were examined for completeness
Tax Refund Overpayment
Process - How information
sharing was examined
Tax Refund Overpayment
Process - How controls and
quality assurance activities were
assessed
manual for property tax refunds including fund
protection and fraud prevention.
Detail on our methodology follows.
MCG obtained from TIC management law and regulations
governing the current TTC Tax Refund for Overpayment
Process. MCG reviewed this documentation to determine
TTC's level of compliance with outlined requirements.
MCG next reviewed policies and procedures from other
agencies to identify and report on additional laws or
regulations not presented by the TTC and the TIC
compliance with these additional requirements, as applicable.
MCG conducted a review of2,641 refunded items, pertaining
to stale-dated transactions, to determine whether refunds
issued were warranted and identified the correct recipient.
To accomplish our review, MCG selected a standard audit
sample of29 completed refund transactions. For these
transactions, we compared data from the refund transaction
against original source documentation demonstrating that
either a refund was warranted or efforts to identify the correct
property owners had not succeeded. The data we reviewed
for accuracy included control number, fund number, parcel
number, property owner name, trust name, address, original
arnount awaiting claim, changes to the original amount
recorded as transaction amount, current amount (i.e., the sum
ofthe original and transaction amount), and the date
transferred funds were deposited to offset check remittance.
MCG assessed whether workflow information and tracking
mechanisms were in existence and how these tools meet
management and staff needs. MCG also assessed the level of
control garnered from these tools. This assessment includes
how transactions are tracked between Financial Division,
Accounting and the Auditor & Controller Accounts Payable
functions and how information technology supports these
activities.
To identify whether proper internal controls were
implemented, we assessed efforts implemented by TIC staff
to ensure that refunds issued were accurate. We reviewed IT
systems functionality to provide control and accurately
identifY monies to refund.
7 county 01 San Diego
Treasurer-Tax Collector's Office
Escheatment - How County
compliance with laws and
regulations was examined
Escheatment Process - How
research conducted to locate
refund recipients prior to
escheatment was assessed
Escheatment Process - How
process audit trails and tracking
mechanisms were examined and
controls and quality assurance
activities were assessed
How Trust Account reconciliation
was examined
How other agency procedures
were assessed
Macias Gonsulting Group, Inc.
MCG conducted a review of TIC's compliance with laws
and regulations governing escheatment of unclaimed tax
refund monies. A list of the requirements is shown in
Appendix II.
For our review of escheatment activities, we selected a
standard audit sample of31 unclaimed refund records from
the estimated universe of 11,000 records with monies
awaiting refund or escheatment between the period 1996 to
the present to determine the number of attempts made to
identify the refund recipient, the depth of research activities,
and the age of sampled transactions. Also, we assessed
whether the correct refund recipient was ultimately
identified. These transactions were compared against
original source documentation.
Finally, MCG conducted a review of escheatment process
audit trails, tracking mechanisms, and quality assurance
activities by reviewing sampled transactions for
documentation requirements, supervisory review, and
completeness of efforts.
MCG conducted a review of TIC Accounting reconciliation
of General Ledger reported transaction data against Trust
Refund system reported transaction data for two funds -
Trust Fund 514600 - a refundable trust fund account for
current year secured tax payments, and Trust Fund 514900-
a refundable trust fund account for prior year (defaulted)
secured tax payments. Our review compared reports for
Fiscal Year 2004-2005 Period 12 from the two systems to
determine whether the TTC Office accurately identified
differences between the two sets of financial records and
documented the rationale or history causing each variance.
Our firm assessed other governmental practices for the Tax
Refunds for Overpayment Process and Escheatment Process.
MCG next contacted selected agencies to obtain and analyze
comparable procedural documentation. In particular, we
questioned other County Tax Collection Office management
on what procedural activities they have implemented to
protect against fraud.
Finally, MCG obtained TIC Office input on process
strengths and weaknesses to further validate our results.
8 Counly of San Diego
Treasurer- Tax CO/leclor's Office
Our review was performed between September and October
2005 according to generally accepted government auditing
standards promulgated by the U.S. Comptroller General of
the United States.
A draft copy of this report was provided to the Treasurer-Tax
Collector's Office and comments were incorporated as
appropriate.
9
County of San Diego
Principal Results
Overpayment refund activities
comply with California laws and
regulations
Research to locate tax refund
recipient adequate
Tax Refund for Overpayment Process
Could Benefit from Increased
Efficiency and Effectiveness
The TIC does not have an internal set of formal policies and
procedures governing the Tax Refund for Overpayment
process. The TIC accomplishes this process through
institutional knowledge and some guidelines for specific
portions of the procedures (e.g., trust processing procedure
reconciliation oftransactions, stale dated checks, processing of
automated request for check), as well as by referring to
Revenue and Taxation Code and the advice of County
Counsel.
Despite the absence of formal policies and procedures, MCG
review of current business practices for this process
determined that the TIC complies with Revenue and Taxation,
Civil Procedure, and Government code sections applicable to
County tax refund for overpayment actual practices. See
Appendix I for additional information on applicable codes and
a brief description of code content.
Refunds for property tax overpayments are issued to the
person or agency that paid the tax. If the check is unredeemed
after six months, TIC staff performs a second effort to find the
most recent address on record for the recipient, using County
databases, the Internet, and other sources to include DMV and
Secretary of State systems. To validate that a refund is
warranted, the overpayments are compared against individual
property data maintained by the County and property listings
transmitted by mortgage companies on behalf of property
owners. Up to three attempts to validate a recipient's address
may occur for each refund issued because of an overpayment.
Upon completion of this validation, TIC Financial Division
staffforward a request for a check and j oumal entry to TTC
Accounting staffto ensure funds are available for the refund.
TIC Accounting staff enter journal adjustments and forward
the request for check to the Auditor & Controller Accounts
Payable (AP) staff. AP staff generates and returns the refund
check and supporting documentation to Financial Division
staff to mail to the recipient. Contra Costa County reported
that refunds are generally issued to the name and address on
10 County o( San Diego
Research sources used for the
validation of refund recipients
could be more consistent
the overpayment check. If further research is required, Contra
Costa County utilizes a third party software application as their
primary source to locate refund recipients - this program
searches utilizing credit bureau information and cross-
references multiple user identification items such as social
security number.
We examined the efforts by TIC staff to identify accurate
addresses for refund recipients and our review of a stratified
sample of transactions found that nearly all lhe 23 transactions
contained the correct recipients and addresses. For 21
records, we were able to validate that the source
documentation for name, address, parcel number, and refund
amount matched the system reported data. For the remaining
two refund transactions, sufficient backup documentation was
not available to make this comparison. According to the State
of California Accounting StandardsIProcedures for Counties,
alJ financial transactions are subject to audit. Therefore, there
should be complete documentation on alJ these matters and the
records retained as required by the laws and regulations.
Financial Division management noted that for one of these two
transactions, the supporting documents had been misfiled I.
The depth of research performed for each unredeemed refund
transaction to identify a better mailing address for the refund
recipient varied. We determined that the TTC Financial
Division staff utilize up to 16 sources of data, but staff
frequently rely on the County Assessor's system, TIC
mainframe system, and the Department of Motor Vehicle
databases. Appendix II lists and defines research sources
utilized and the frequency of use for the sampled transactions.
TIC management explained that the Revenue and Taxation
Code and TIC procedure require that tax refunds for
overpayments be mailed to the last known address for the
refund recipient. TIC staff research steps and sources used
are dependent upon the transaction type and data available and
there are no guidelines that identify minimum research
requirements. TIC management also noted that generally
Financial Division staff make three attempts to validate a
recipient's address and will not issue a check unless they are
confident that they have identified a valid address.
lOUT stratified random sample contained 29 transactions; however, since six transactions were incomplete records that did not mclude
enough information to issue a refund, no verification was needed or could be performed.
Segregation of duties
appropriately established
System limitations for tracking
transaction history impedes
information sharing
The tax refund for overpayment process requires the
coordination and handoff oftransaction processing activities
among Accounting Division, Financial Division, Auditor &
Controller Accounts Payable and Property Tax Services, and
Assessor functions.
Controls have been implemented to assure segregation of
duties and appropriate review and authorization of
transactions. Entry of fmancial data is limited to TTC
Accounting staff. Financial Division staff research records
and prepare journal vouchers to adjust financial data, which
are forwarded to Accounting staff for review and entry. In
addition, electronic workflow supports supervisory review.
MCG reviewed TIC maintenance and update of individual
transactions and determined that individual property tax
accounts are appropriately separated. Online transactions
record a single parcel against a single amount due and a single
payment amount. The TTC has developed manual procedures
and files to adequately track transactions that include multiple
parcel numbers and/or payments. Although labor intensive,
these manual procedures appear to track and provide access to
the information as required.
In addition, transaction processing is supported by four
primary systems - Wausau Financial system, Trust Refund
subsidiary system, Legato Imaging system, and the Oracle
general ledger. Payment information, posted in the Wausau
system upon receipt and processing, is imported daily into the
Trust Refund system. Imported data includes batch number,
sequence number, dollar amount of payment, trust fund
number, and trust document number.
Staff access these systems to identify and research the status
and history of transactions. Staff noted that both screen
display of data and system reports are limited. The Trust
Refund system does not display transaction detail and lacks
some summary data available in prior systems, such as check
requisition totals. Staff must print reports to view complete
transaction information. However, we observed that available
system reports are limited and staff do not have a complete
understanding on their generation.
These limitations are partially due to two conversions to the
Trust Refund system, from DBase3 to Access to in 1998 and
the later upgrade in 2005 to a web-based application. IT
12 County 01 San Diego
Macias Consulting Group, fnc.
services were outsourced and development contracts did not
include funding for report enhancement, production of user
manuals, and user training. It was apparent during our review
that staff had not garnered this knowledge on their own.
The system conversions also resulted in the deletion andlor
inability to find transaction records. The TIC IT Manager
noted that the 1998 conversion from DBase3 to Access
resulted in missed transactions that may still be outstanding
, today. TIC management noted that the department intends to
I
address all of these limitations as part of a system replacement
. project scheduled for completion in 2008.
The Trust Refund system does provide workflow functionality.
To create a refund record, which is called a TX, Financial
Division staff access the Trust Refund system, enter applicable
data, and create an electronic workflow for approval. Several
layers of supervisory level review are noted electronically in
the system and Accounting approval of checks triggers a
notification to the Auditor & Controller Accounts Payable
function to process the check request. The workflow does
provide notification to supervisory level staff that a review is
required.
Financial Division staff noted that the status oftbe check
request is not available online or communicated by the Auditor
& Controller Accounts Payable staff. To bridge this
information gap, Financial Division staff use manual logs to
track transaction status. Financial Division staff maintains a
manual transaction control log and a manual tickler log for
checks awaiting clearance for issuance. The County requires a
30-day waiting period before checks are issued to ensure funds
are transferred and to allow adequate time for the check to
clear the bank.
, The County's Property Tax System limitations do not allow
staff to view whether duplicate or triplicate payments were
made for a single record because the payments are instead
deposited to a trust account. Other County office functions,
Cashiering and Exception Payments, experience similar
problems. Due to this limitation, TIC staff must perform
manual research to find payment data to respond to public
inquiries. Many inquiries are from mortgage companies that
transfer customer calls regarding individual tax payments to
Financial Division staff to resolve.
13 county of San Diego
Treasurer- Tax Co//ector"s Office
Key system controls appear to be
in place, but other system
improvements are needed
Similar manual research efforts are required when property
owners make a partial tax payment. The TIC Office currently
abides by policies to accept partial payments that are valued at
$2,000 or more. Although the County deposits these
payments, the amount received is not officially posted on the
County's Property Tax System and instead, is recorded in a
trust account.
We examined system administration and access controls,
which are governed primarily by countywide procedures. Our
review of account access identified controls in place for the
administration of user access rights. The Oracle Financials
system provides read-only access for all staff. The Oracle
Financials system data updates nightly with Trust Refund
system adjustments. The TIC maintains a Trust Refund
system security table that defines each staffs account access
and edit rights. Our review of this table determined that access
rights were appropriately defined in order to provide
segregation of duties and to control record changes. However,
other Financial Division staff were able to delete several
records in the Trust Refund system and we could not
determine, based on the available data, how this occurred.
MeG identified several areas for which controls may be
improved. Staff reported that system conversions did not
include procedures for controlling system changes. During the
1998 Trust Refund system conversion from DBase3 to Access
and a later 2005 upgrade to a web-based platform, Accounting
and Financial Division staff noted that system testing prior to
these system implementations occurred on an informal basis,
with functional staff developing their own test scripts and
performing the testing. It remains unclear whether testing
occurred within a separate test environment or whether it
actually occurred in the new system, which is referred to as the
production environment. Testing controls assure that (I)
program development is effectively managed to ensure the
integrity of the program and data; (2) program changes are
effectively managed to ensure the integrity of the program and
data; and (3) program testing is effectively managed to ensure
the accuracy and integrity of the program and data.
TIC staff noted that transaction level control issues remain
following a recent system conversion. System imports from
the Wausau system (payments processing) to the Trust Refund
system (overpayment processing) have created duplicate
records. Accounting staff cited an example of 31 duplicate
Original documentation stored
offsite hamper efforts to issue
refunds on aged property tax
overpayments
Escheatment activities comply
with California laws and
regulations
Macias Consulting Group. Inc.
records created during an August 8,2005 import. TIC staff
also described the system's inability to record and recognize
partial payments or an attempt to make a payment. The
current system requires payment amounts entered to match the
payment due amount recorded in the system.
Original transaction documentation is needed to issue refunds
for property tax overpayment. Financial Division staff noted
that it is difficult to do research on property tax overpayments
older than five years because after two years, transaction
documentation is stored off-site. Staff noted that recent system
enhancements better facilitate research on new records;
however, research challenges remain to retrieve data for more
aged records.
Finally, we determined that communication protocols between
the TIC Financial Division and TIC Accounting were
primarily informal in that no systematic communication
occurred between the two offices to share information, such as
the results of reconciliations, and to discuss recurring or
isolated problems encountered by staff. This is directly
attributed to new management inheriting work functions and
activities where roles and responsibilities were never formally
documented. Moreover, historically, no clear communication
protocols were developed for staff to handle customer service
activity. Financial Division staff reported that customer
inquiries from individuals and organizations, including
mortgage companies, could be passed from staff member to
another because the TIC does not have dedicated customer
service or outreach staff. A documented communication
protocol within process policies and procedures would
strengthen overall process controls.
TTC is Successfully Identifying Tax
Refund Recipients for Unclaimed
Monies Targeted for Escheatment
Similar to the Tax Refund for Overpayment Process, the TIC
Office does not have formal escheatment policies and
procedures. However, MCG obtained applicable laws and
regulations that govern the escheatment of unclaimed tax
refunds for overpayments, and determined that TIC process
activities comply with California Jaws and regulations.
Escheatment had not been
regularly occurring for various
reasons
San Diego County TIC last escheated tax refund monies in
February 1998 in the amount of$49,542. In 1998, the TIC
under the direction of another Treasurer-Tax Collector
implemented a reorganization, which created new division
management and corresponding functions. The Division
Manager responsible, at the time, for overseeing escheatment
activities opted to cease reporting of unclaimed tax refunds
overpayment during the period 1999 to 2002 over uncertainties
about the quality of research performed on identifying valid
addresses.
In 2003, Financial Division staff identified and validated 617
records recommended for escheatment and totaling $99,298.
These funds were not formally reported to the Board of
Supervisors for escheatment to the County's general fund
because another change in division management occurred, and
new management were unaware of their role related to
escheatment reporting. The absence of escheatment policies
and procedures prevented information sharing to new division
management.
Research sources could be more MCG sampled transactions identified by Financial Division
consistent and documentation of staff and waiting escheatment to determine staff effectiveness
research efforts more rigorous in their attempts to identify recipients for unclaimed property
tax refunds due because of overpayment. MCG randomly
pulled TIC files for 31 open items awaiting escheatment. The
approximate age of sampled transactions ranged from 1991 to
1997.
Inadequate audit trails and
tracking mechanisms existed to
support the escheatment process
Twelve ofthe 31 sampled records documentation noted that a
prior refund has been issued or a letter was sent to the recipient
requesting validation of their eligibility for the refund. The
extent of the research performed on the remaining 19 records
appeared to vary. Nine records reported one attempt to locate
the refund recipient, one record reported two attempts, and two
records reported three attempts. The remaining seven records
noted the inability to identify and locate the correct refund
recipient.
Based on 31 escheatment records that we reviewed, file
documentation showed an unclear audit trail of reissued checks
or the dates that letters were sent to verify recipient eligibility
of the refund. Similarly, although documentation generally
included a checklist to indicate research sources used, it did
not provide a comprehensive audit trail of the sequence and
In 2005, the Treasurer-Tax
Collector implemented better
efforts to refund rather than
escheat unclaimed monies
timing of research performed.
In 2005, under the direction of a new Treasurer-Tax Collector,
TTC staff initiated another and better escheatment effort.
Customized system reports identified approximately 11,000
records that are over four years old and eligible for
escheatrnent. These records are valued at $2.4 million. The
oldest open item awaiting escheatment dates back to July
1983. Based on our review of sampled transactions, the
reporting parameters successfully sorted overpayment
transactions from other types of transactions, such as partial
payments and transactions from parcel splits.
Past research efforts required TTC staff to mail claims forms
to the best address identified for a refund recipient. Upon
return of a signed claim form by the recipient, the TTC would
then issue a refund check. On the advice of County Counsel,
claim forms are no longer mailed to recipients of general
refund checks. Similarly, Contra Costa County does not issue
a claim form to further validate that the correct recipient has
been located. According to TTC management, this has
streamlined the process.
TTC information systems staff are researching the 11,000
records by first matching last known address data to County
Assessor database address information. The Assessor' s
database has the most current address known for property
owners. Using the Assessor's database as the TTC's first
source of address matching for aged records is in contrast to
steps noted by TTC Financial Division staff, who first use the
TTC Property Tax System to look for known addresses. To
date, TIC staff have successfully identified the correct refund
recipients for unclaimed monies targeted for escheatrnent for
3,237 refund transactions.
To address concerns about whether checks issued are
fraudulently cashed, San Diego County as weB as Contra
Costa County use a software application to notify the bank
when the refund checks were issued, to whom, and the
amount. Thus, when that bank processes the refund checks,
the bank can identify and notify the County whether any type
of fraud has occurred, such as when the customer attempts to
change the name or amount on the check. The County of
Placer requires Auditor-Controller's Office approval prior to
refund check issuance, as a second layer of review to ensure
the correct refund recipient has been identified.
Treasuref-Tax Collector's Office
If TTC staff cannot find an electronic match of the recipient
and addresses using the Assessor's database, the eligible
escheatment transaction is placed on a list for further research
while the TTC staff continue to electronically match the
remaining eligible escheatment items with the Assessor's
database.
Although not a requirement, the new Treasurer-Tax Collector
plans to take additional steps to find potential recipients by
notifying the general public of unclaimed property tax refunds
through publishing notices in local area publications and
posting a detailed listing of unclaimed property taxes on the
Treasurer-Tax Collector website.
Finally, we noted that the procedures for conducting research
on those transactions where the recipient and their addresses
could be not electronically matched to the Assessor's database
have not yet been developed. While Revenue and Taxation
Code does not require these procedures, the procedures would
provide guidance on the number of attempts and other data
sources to be utilized before the transactions are prepared for
formal escheatment reporting. These procedures, when
developed, should be reviewed by an independent third party
to ensure completeness of escheatment efforts. During their
development, the TTC should consider using third party
databases that can show an extensive history of homeowner
location to supplement verification efforts.
When additional research venues are exhausted and it is
determined that due diligence in research was performed, the
remaining items will be escheated. TTC staff continues these
research efforts.
Principal Results reported for the tax refund [or overpayment
process on pages 10 to 15 of this report also apply to the
escheatrnent process.
Account Reconciliation Regularly
Occurs
Account reconciliation is
performed regularly
MCG reviewed TTC Accounting Office reconciliation of
General Ledger reported transaction data against Trust Refund
______________ ..1 system reported transaction data for two funds - Trust Funds
Treasurer-Tax Colleclor's Office
~
514600 - a refundable trust fund account for cnrrent year
secured tax payments and Trust Fund 514900 - a refund trust
fund account for prior year (defaulted) secured tax payments.
We determined that reconciliation between the Trust Refund
accounts and the General Ledger is performed on a monthly
and annual basis for the two applicable trust funds 514600 and
514900. There are two levels of review for each reconciliation
- the first level is a peer review of reconciliation results
against backup documentation, and the second level of review
is at the supervisory level. Variances identified and noted
during reconciliation include pending data entry, information
not displayed due to system posting problems, data entry
errors, delays in system posting, payments or transfers posted
to a single account when amounts should be distributed
between multiple accounts.
Both TIC Accounting Office and Financial Division staff have
made data entry errors requiring correction. TIC Accounting
currently is short staffed due to turnover, causing a one to two
month delay in transaction posting. TIC Accounting and
Financial Division staff turnover was estimated at 16 percent
in FY 2004. TIC management noted that the combination of
the lack of consistent policies and procedures and the turnover
of staff in key positions was a contributing factor to data entry
backlog and errors.
Annual reconciliation of the Trust Accounts show an
unexplained differences of $40, 152 between General Ledger
and Trust Account financial records. TTC staff said that this
amount may be 'directly attributed to two system conversions
that took place over time. A 1998 conversion, which occurred
under prior TIC management, resulted in an unknown number
of lost property tax overpayment records that led to a
difference of $34,520 between the General Ledger and TIC
financial records. This amount needs to be adjusted on the
TIC financial records. A recent April 2005 conversion
resulted in an additional variance 0[$5,632.
TreBsurer- Tax Col/ector's Office
Conclusions
The current County of San Diego Tax-Treasurer Collector
faces many challenges to efficiently and effectively process
refunds for property tax overpayments. While TIC staff work
very hard and diligently, the tax refund for overpayment
process needs enhanced development to consistently ensure
that refunds for overpayments reach the rightful owner. While
process controls regarding segregation of duties, account
segregation, and user access are adequate, other process
limitations remain related to information sharing, user
documentation, and training. In other areas, system
enhancements limitations need to be addressed for effective
functioning of the TIC Office. These needs include, among
other things, better workflow transparency, the ability to
record partial payments, and the ability to record payments
against individual parcel numbers. Meeting these needs,
however, requires the assistance of other County Departments,
such as the Assessor's Office and the Auditor & Controller's
Office. The County should take steps to ensure this
coordination takes place, especially during the current
development of a new County Property Tax system.
The Treasurer-Tax Collector is successfully returning
unclaimed money from property tax payments to their rightful
owner. While these funds were eligible for escheatment, the
Treasurer-Tax Collector opted to implement other methods
that helped identify property owners who failed to return
original claim forms and others that previously could not be
found. This action allowed the County to avoid the last course
of action of escheatment reporting and returned money that
had been long overdue to individuals and organizations.
Nevertheless, even escheatrnent processes administered by the
TIC Office could benefit from uniform and consistent
research on eligible escheatment items.
Examining how processes fit into the overall organizational
functioning of the TIC is critical to strengthening operations.
The new Treasurer-Tax Collector has business planning efforts
underway and will need other strategic planning and
organizational analysis to help revamp how services delivery is
provided, and to ensure that lower level changes complement
any new overall mission functioning. Many TIC
improvements will require coordination between the Auditor
& Controller and the Assessor functions and greater teamwork
in providing exceptional customer service.
20 Counly of San Diego
Treasurer-Tax Colleclor's Office
Recomn1endati ons
As a result of our analysis, we recommend the County of San
Diego Treasurer-Tax Collector implement the
recommendations that follow within the next twelve months:
1. Conduct a review of the Treasurer-Tax Collector
organization's long-term strategies and supporting
structure to identify innovations to improve customer
service and the timely and effective processing of tax-
related transactions (e.g. , mortgage company point of
contact, public education team, cross-training between
functions).
2. Determine total processes cycle time and address
problems contributing to any process delays (e.g., hire
Accounting staff to permanently address accounting
processes backlog, train staffto reduce data entry
errors and to better provide customer service, expedite
Property Tax Services processing).
3. Fill Accounting vacant positions to address current
backlog.
4. Draft and adopt policies and procedures for the Tax
Refund for Overpayment and Escheatrnent processes to
include:
o Requirements for transactions supporting
documentation and retention;
o Protocol for research attempts to identify a
refund recipient; and
o Communication protocols.
5. Draft a Research Guideline for Financial Division staff
that identifies a sequence for use of source data, due
diligence, and documentation of research efforts.
6. Develop procedures for carrying out research efforts
for the 2005 list of items pending escheatrnent to
include third party review to assure these procedures
have been followed.
7. Draft a Trust Refund system user manual that includes
instruction on data entry, research capabilities to
identify the best and most recent address for the
recipient, and report generation functionality.
8. Require staff to read and sign off on the policies and
procedures, research guideline, and user manual to
Tax Collector's Office
,
acknowledge receipt and understanding.
9. Provide training to all staff on the policies and
procedures, guideline, and user manual and post this
documentation on the Treasurer-Tax Collector' s
Intranet.
10. Record appropriate account adjustments to write-off
unidentifiable account variances.
Conduct a review of Trust Refund system reports to
determine whether repOlis meet user needs and to identifY
formatting enhancements to better their usefulness and to
best identify the refund recipient.
II. Fonnalize policy and procedures for IT project
management and oversight prior to initiation of new
Treasurer database project planned for implementation
in 2008. This policy and procedures should include:
o Change Control
o Cost Control
o Risk Management
o Budget Control
o Schedule Control
Conduct a review of the State of California and other
jurisdiction practices, and of pertinent law and regulations to
determine the feasibility of San Diego County's retention
and processing of all checks received regardless of check
dollar values, and to accept an overpayment of tax and hold
that amount as a credit toward the next year's amount due.
San Diego County
I. In addition to the recommendations listed above, we
recommend that applicable County agencies,
management and staff work in concert with the TIC to
ensure that TIC required functionality is included
within the scope of the County's planned 2008 system
replacement project.
Functionality needs include:
o Audit trail of transactions for each record;
o Recording of a single refund against mUltiple
parcel numbers and multiple refunds against a
single parcel number;
o Record imaging;
o Recording partial payments;
o Recognition of duplicate or triplicate payments;
o Read only access to banking institution data to
Treasurer- Tax CoileclDr'S OffICe
Agency
Comments
MCG Contact
Contributors
verify account balances;
o Bar code technology;
o Screen display enhancements and display of
summary data;
o Expanded workflow functionality;
o Adoption of a single and consistent lransaction-
numbering scheme;
o Tax bill enhancement; and
o Access to the mainframe transaction-coding
sheet.
We received comments on a draft ofthis report from the
Treasurer-Tax Collector's Office. The TIC Office concurred
with our findings. Where appropriate, technical comments
provided by the TTC were incorporated in this report.
Denise D. Callahan, Director, 916.779.3520
In addition to the person named above, Carolyn Borden was
the lead manager for trus review. Other contributors were
Greta Bernard, Greg Matayoshi, and Aaron Renfro.
MCG would like to thank TIC management and staff for their
assistance, cooperation, and coordination efforts undertaken to
complete trus review within agreed upon timeframes.
Appendix I: California Law Governing Tax Refund and
Escheatment Processes
A list of California Law, which governs the tax refund for overpayment and escheatment processes,
follows. The list presents applicable code and a brief description of code content.
Revenue and
''''''"Ull Code 2635
on Code 5096 - 5 I 07
Revenue and Taxation Code 6902.3
Government
Government Code 50052-5057
Code of Civil Procedure 1311
Government Code 29320
Code 24000
Macias Consulling Group, Inc.
Requires Assessor to assess all property at its full
value.
nOLlll'Ca[lon to assessee of
property value and corresponding tax changes.
the tax collector send a notice of
overpayment to the taxpayer if the amount paid
exceeds the amount due by more than ten dollars.
Defines when a tax refund for overpayment is due
and the requirements to claim the refund.
for a tax refund for overpayment if a claim
is filed within three years of the overpayment date.
not
Defines how a party may file a claim for unclaimed
monies from the Treasurer.
Details requirement to provide Treasurer notice
when unclaimed monies are transmitted for deposit
in the County general fund.
Defines the responsibilities of the Officer of the
County.
Lists position titles considered officers of a county.
24 County 01 San Diego
Treasurer Tax Collector's Office
Appendix II: Sources to Research Payee Data
Table A.I below presents research sources utilized (0 identify the correct addresses and individuals to
whom to issue tax refunds for overpayment. The table also notes the frequency for which that source
was referenced within the 31 sampled records awaiting escheatment. As the results show, TTC
primarily relies on the Assessor's system, Department of Motor Vehicle databases, and TTC mainframe
systems.
Table A.I: Frequency of nata Systems Used by the TTC Financial Division to lind Recipients o[Property Tax
Ov nt Refunds
Datn Source Description Frequency
of Use
ASOI A ssessor secure I prope y 00 JP d Ii I ku 2
AS08 Assessor parcel search ' 5
PA02/04 Assessor parcel search' 5
ST09 TIC Mainframe, Secured Tax 17
STlN Assessor name search' 21
STIS Assessor address search' 1
TRDS TIC Mainframe, Defaulted Subsystem 2
TRTH TIC Mainframe, Transaction History 17
TRUS TTC Mainframe, Unsecured Subsystem 2
US01 TIC Mainframe, Unsecured Subsystem 1
DMV Department of Motor Vehicles Online name lookup 20
Internet Google Search, Yahoo Directory
Payment Check Check images from Legato
Real estate TO II County of San Diego Tax Roll
Sec of State Secretary of State California Business Portal
Telephone Directory_ Current SD County White Pages
-
1 Use of data source does not involve direct access to the County Assessor database.
Macias Consulting Group, Inc. 25
3
2
4
2
4
County of San Diego
Appendix III: TTC Processes Suggested Improvements
TTC management and staff identified improvement to the tax refund for overpayment and escheatment
processes. We present staff suggestions below and provide our analysis of the feasibility of each
suggestion.
Organization Strategic Planning
Conduct a review of the Treasurer-Tax Collector organization long-term strategies and
supporting structure to identify innovations to improve customer service and the timely and
effective processing of tax-related transactions (e.g., mortgage company point of contact, public
education team, cross-training between functions).
MeG Analysis: Concur.
Policies/Procedures, User Manuals, and Training
Have Managers or Assistant Managers identify staff making data entry and other transaction
errors and what errors are occuning, and provide training.
MeG Analysis: Concur. Training using draft process policies and procedures as well as system
user manuals should occur. This training should help reduce error rates.
Provide Information Division staff with training to improve call monitoring and the correct
redirection of phone calls.
user manuals should occur. This training should help improve Information Division processes.
Cross-train TIe employees so employees are not in a single task job and working in silo teams.
user manuals should occur. Cross training should be evaluated in the context of an
organizational review.
Staffing
Hire Accounting staff to reduce Accounting data entry backlog.
MeG Analysis: Concur. The TIC Accounting office has several positions that remain unfilled.
Macias Consulting Group. Inc. 26 County of San Diego
Treasurer- Tax CO/lector's Office
Policy
Conduct an analysis of the State ofCalifomia and other jurisdiction laws and regulations to
determine the feasibility of San Diego County's retention and processing of all property tax
payments received regardless of their dollar value, and to accept an overpayment of tax and hold
that amount as a credit toward the next year's amount due.
MeG Analysis: Concur. The County's current practice to accept as a partial payment or return
checks to the property owner, which is dependent upon the check's dollar value, creates
exception processing for TTC, which is labor intensive. Recognition of the partial payment
within the system would alleviate much of this workload. TTC should include this functionality
in the planned 2008 system replacement project. In addition, the TTC should consider
purchasing a database that maintains a ten-year history of residency.
System Enhancements
Implement system functionality that would provide for the recording of a single refund against
multiple parcel numbers and mUltiple refunds against a single parcel number.
MeG Analysis: Concur. TTC should include this functionality in the planned 2008 system
Image hard copy files to facilitate transaction research efforts.
MeG Analysis: Concur. After two years, current transaction documentation is maintained in
offsite storage per County retention policies, but the TTC office needs immediate access to this
documentation for at least five years for escheatment research purposes. TTC should include
this functionality in the planned 2008 system replacement project.
Add a system flag noting that the taxpayer made an attempt to pay the amount due (e.g., partial
payment was received and rejected).
MeG Analysis: Concur. At a minimum, the system should indicate that a partial payment was
received so that TTC staff is alerted that a payment may have been deposited. TTC should
include this functionality in the planned 2008 system replacement project.
Improve system reports to assist in the identification of records.
MeG Analysis: Concur. System reports lack standard formatting allowing the user to easily
recognize report content and identify records. TTC should include this functionality in the
planned 2008 system replacement project.
Provide an audit trail of transactions for each record.
MCG Analysis: Concur. TTC should include this functionality in the planned 2008 system
Provide Financial Division staff with automated workflow and transaction tracking capability
(e.g., automate a manual tickler file used to determine when the 30 day deposit hold has expired
and a refund may be issued). Provide automatic notifications when an online approval is
required.
MCG Analysis: Concur. TIC should include this functionality in the planned 2008 system
Change the format for the tax bill to more clearly identify what amount is due and the timing
and calculation of penalties for late payments (e.g., credit card statement format).
MCG Analysis: Concur. TIC Financial Division staff reported that many payment errors could
be attributed to the current format and presentation of the tax bills. TTC should include this
functionality in the planned 2008 system replacement project.
Provide staff with read only access to the mainframe transaction-coding sheet.
MCG Analysis: Concur. Staff utilizes manual processes to research transactions; access to
online transaction information would facilitate more expeditious transaction processing. TIC
should include this functionality in the planned 2008 system replacement project.
Provide read only access to Bank of America financial systems to provide more immediate
information on whether a debit memo has cleared, allowing check issue. Staff noted that current
practice is to wait 30 days for the bank to process a debit memo prior to issuing the
corresponding refund check and customers are unhappy with the refund delay.
MCG Analysis: Concur. TIC should review this functionality for possible inclusion in the
Provide bar code technology to facilitate Accounting batch processing (e.g., the ability to scan
check remittance stub bar coded information for the purpose of locating a record).
MCG Analysis: Concur. TIC should review this functionality for possible inclusion in the
Customer Service
Dedicate one individual in the Financial Division to work with mortgage companies to help the
companies update their procedures to include communication protocols with the County.
MCG Analysis: Special staff assigrunents should be evaluated in the context of an
organizational review.
Dedicate a team of employees to provide education, enhance communication, and improve
customer service to title companies and other process stakeholders.
Macias ConsuJ(jng GrouP. Inc. 2B county of San Diego
MeG Analysis: Creation of special teams should be evaluated in the context of an
organizational review. Subsequent implementation methods should be considered upon possible
future reorganization of customer service activities.
Identify solution and related improvements to address current practice of mortgage companies
of referring customer inquiries on property tax questions to TIC Financial Division staff.
MeG Analysis: Concur. This issue should be examined if the TTC opts to revamp its customer
service activities.
Other Improvements
Provide Financial Division staff with a monthly reconciliation of Trust Accounts for their use in
reviewing account balances prior to record closure.
MeG Analysis: Concur.
Institute a cost recovery program to charge mortgage companies for special services provided
such as research.
MeG Analysis: This issue should be examined by evaluating costs and benefits if the TIC opts
to revamp its customer service activities.
Investigate whether the County is successfully collecting returned check fees for records that
remain open for an extended period. It is not clear to Financial Division staff that these amounts
are being collected.
MCG Analysis: Concur. A review is warranted to validate this issue.
Color code correspondence and return envelopes for transmittal oftrust account notification
letters.
MeG Analysis: Concur. Property tax overpayment refunds are sent using the same white
colored envelopes used for the receipt of all property tax payments. TIC staff explained that
returned checks could be more quickly identified and forwarded to the correct staff for
processing if different color envelopes could be used.
Treasurer-Tax Col/ector's Office

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