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Accept the Department-Wide Conflict of Interest Review and recommendations
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The Auditor-Controller’s Office recommends the Board of Supervisors accept the Department-Wide Conflict of Interest Review and recommendations.
SUMMARY:
Pursuant to the Auditor-Controller’s Office (ACO) Internal Audit Division’s Fiscal Year 2024/25 Audit Plan, the ACO conducted a department-wide review of the County’s conflict of interest policies and procedures. The review evaluated whether the County has adequate policies and processes to identify, communicate, and manage potential conflicts of interest among County employees. The review was conducted in conformance with the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors.
Specifically, the review evaluated whether:
(1) The County has a conflict-of-interest policy;
(2) The policy is clearly communicated to all County employees;
(3) Employees disclose outside employment as required so potential conflicts can be evaluated; and
(4) The conflict-of-interest guidance addresses purchasing and contracting responsibilities, including contract oversight and invoice approval.
The review evaluated County practices as of October 22, 2024. The County successfully met the criteria for all four audit objectives. While no significant deficiencies were identified, the review identified three opportunities to strengthen the County’s existing policies and practices:
(1) The communication of County policy for conflicts of interest;
(2) The frequency of reviewing guidance for updates; and
(3) The process of determining whether conflicts of interest between County employment and second jobs exist when an employee’s duties change.
FINANCIAL IMPACT:
Acceptance of the report has no direct fiscal impact. Implementation of the recommendations is expected to be accomplished within existing departmental resources.
The costs associated with preparing the agenda item are nominal and absorbed by the department’s FY2026/27 Working Budget.
DISCUSSION:
Overall, the review found that the County satisfies State conflict of interest requirements through:
(1) Department-specific Conflict of Interest Codes maintained by the Registrar of Voters pursuant to the Political Reform Act;
(2) County policies governing employee conduct; and
(3) Provisions contained in the Personnel and Salary Resolution and applicable Memoranda of Understanding.
Collectively, these documents provide employees with guidance regarding ethical conduct, outside employment, and conflicts of interest.
As previously mentioned, the review identified three opportunities to strengthen the County’s existing policies and practices:
(1) Employee Communication
Finding
County employees receive the Code of Conduct during onboarding and acknowledge receipt. However, there is no recurring process to reinforce expectations after initial orientation.
Risk
Without periodic reminders, employees may become less familiar with conflict-of-interest expectations as policies evolve or job responsibilities change.
Recommendation
Develop periodic training or annual acknowledgement requirements to reinforce employee awareness of conflict-of-interest expectations.
(2) Periodic Review
Finding
The County’s Code of Conduct does not include a revision date, and there is no formal process to periodically review the Code of Conduct and related guidance to determine whether updates are needed.
Risk
Without a regular review process, County guidance may not reflect changes in laws, regulations, best practices, or emerging conflict of interest risks, increasing the potential for outdated or incomplete guidance.
Recommendation
Establish a process to periodically review the Code of Conduct and other conflict of interest guidance, including documenting the review and any updates. An annual review should be considered to help ensure County policies remain current.
(3) Outside Employment
Finding
The Personnel and Salary Resolution and most Memoranda of Understanding require employees to obtain department head approval before beginning outside employment. However, there is no formal process to reassess potential conflicts of interest if an employee’s County duties or responsibilities change after that approval has been granted.
Risk
Outside employment that did not present a conflict when initially approved may create an actual or perceived conflict of interest if an employee’s County responsibilities change and the outside employment is not reevaluated.
Recommendation
Update County policy to require departments to reassess approved outside employment when an employee’s duties or responsibilities materially change and establish a process for documenting that reassessment.
Overall, the review concluded that the County has established appropriate policies and processes to address conflicts of interest and met all four audit objectives. The recommendations are intended to strengthen existing practices by improving employee awareness, ensuring County guidance remains current, and enhancing oversight of outside employment as employee responsibilities evolve.
ALTERNATIVES:
The Board of Supervisors could elect not to accept the report; however, this alternative is not recommended because acceptance of the report acknowledges completion of the audit and allows the County to consider the recommended improvements.
OTHER AGENCY INVOLVEMENT:
The County Administrator’s Office reviewed the audit report and concurs with the recommendations.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION