was passed makes it clear that one of the main objectives is to report on the level of effectiveness of public services and actually create benchmarks for how those services are provided. what i am trying to understand is maybe if we can create a mechanism that further insurers the very good work you do is, the usefulness is maximized. my experience is at times, depending on which agency were dealing with and depending on who was involved, you may have an agency that fully implements or even goes beyond what is identified in the report. but there may be some not doing everything we want them to do. if there is a way we can come back and monitor where an

agency's response or implementation and recommendations are with respect to the studies and reviews that you have done, i think that would be a good way of ensuring accountability. i am interested in figuring out a process by which you could report to us where the implementation of these recommendations is with respect -- you talked about 37 studies at some point. where are we? you don't have the ability to force an agency to do something. your role under the charter is to identify what is happening and report on what is happening. i think that is where this committee can play a role in at least airing out what is going on are not going on so that the public knows that. i would like to maybe work with

the controller's office to figure out how that looks on a periodic basis. you can report on a number of reports to see where that implementation is as a way of making sure we maximize the use of the work you have done. supervisor chiu: i have a specific question on exactly where we are on the mta. what i continue to hear is there is so much of the tdp that has not been implemented. maybe for the public, just a 32nd on what the tep is. >> that was a joint project initiated with the mta problem about four years ago. it was the first comprehensive

review of the punctuality of mass transit in san francisco since the 1970's, a line by line review, ways to speed the system, a comprehensive look at the transit side of the mta. the initial report was completed a couple of years ago. you will recall the board of supervisors heard it at that time and adopted many of the key findings. at that point, it moved into implementation, having adopted the concept. we have just completed the implementation plan which is in final draft form and pending review at the mta. i believe the board c operations and services has actually called for and is hearing an update on but an implementation plan for early april. the next steps from there are frankly going to be -- is sequa.

a lot of the reports here are on the main routes that carry the majority of passengers. many of them have been implemented, but the largest ones are capital intensive and require environmental review. we have been working with the mta and urges beginning this process of getting out the bid for the environmental review process. that will take some time. the hope is that, in parallel, with the bar mental review and the initial project as i happening in parallel -- with the environmental review and the initial project as -- is happening in parallel and you can move in conjunction. that's a quick wrap up of four things are at.

supervisor chiu: thank you. i know it has been a number of years and will probably be a number of more years but i know you have the support of the folks here. supervisor campos: we also want to point out that some of the items that are here are also items that supervisor avalos' committee is working on and we want to make sure there is no duplication of effort. it is important to look at that. another big issue that i know many of us in the past have been interested in and was recently reported on, and as i am understand it, it is an issue that will be a general presentation at the budget and finance committee is the issue of overtime. that it's appropriate for this committee not so much to focus on the amount of money being spent in overtime -- that's

important to know and the budget and finance committee will look into that, but i would like for us to hear more about what are the efforts, the steps being taken to reduce overtime in the city. with something like that, how does this function address that issue? how do you monitor what is happening? how does that trickled down to what happens on the ground in some of these departments as you do these reports on an ongoing basis? >> we have a number of regular reports we issue on overtime use in city departments. we have a report we issued twice a year that has a high level review on how spending looks versus the prior years and we report that to the mayor and board of supervisors both. the board has typically called, and i know this will likely be heard in two places which is ok.

the board has heard that report and asked for an update from city department of what they're doing to control over time use. i think that tended helps the issue. we also have the biannual report and we also issue reports to the mayor, the board, and apartments on individual high earners of overtimes so the board put in place a cap saying they cannot earn this much overtime without seeking an exemption. this was passed by the board. we have a reporting on department's compliance with that effort which was intended to curb the high use of overtime by some individuals. often when we are touching a department with an audit or review, we are commenting on and -- on a management practice and how affects over tight use. you will often hear of specific

topics, suggestions of maximizing staffing levels or the like which would have impact on overtime. i know we will be during the fire department payroll audit in this committee. we just released a couple of weeks ago that there is some overtime conversation in that audit. supervisor campos: thank you very much. colleagues, any other questions? thank you very much again for the work you do. why don't we opened up to public comment? is there any member of the public would like to speak on this item? you each have three minutes. we have some people who have signed up -- any other member of the public to like to speak on this item, please come forward. >> good morning. i worked at laguna honda for

four years before resigning in protest. supervisor campos: is this on the first item? >> it absolutely is and i will be speaking on the gift item as well. i want to bring to your attention what they called the laguna honda transition assistance project. that was a $250,000 contract and a subcontractor was barbary coast consultants, a public- relations firm. one could ask what they're doing contracting public relations firm for eight safety net hospitals already has a public relations department. furthermore, if you look at the report that is posted on the controllers website, it is 53 pages of mom and apple pie, not a single statistic, not a single word about the morale issues,

the treatment of the dissidents at laguna honda. frankly, as a taxpayer for decades in san francisco, i object to the use of my money in this way. the managers should know what they're doing before they are

-- if what had gone on had occurred, they should bought it to other city departments. finally, i would like to draw your attention to the comments about charter section f, which is about the legal text and it clearly said the comptroller's office could hire external independent auditors which -- what should have been done with the laguna honda gift fund with potential conflicts of interest in that case. to the extent the $11.5 million budgeted for 10-11 is not

spent, some thought should be given by this committee and the board of supervisors into hiring some external auditors to complete other work. thank you. supervisor campos: thank you very much. next speaker. and the other member of the public who would like to speak on this item? seeing none, public comment is closed. seeing this point about figuring out a process by which we can monitor where the city agencies that have been the subject of an audit for technical successes -- for technical assistance and where they are -- any suggestions for how we can move forward with that? >> i hear what you are asking for -- it is something more

comprehensive in nature that speaks to universe of audits. why don't we work something up and we can talk to you, mr. chair, and provide a meaningful report to the committee going forward. >supervisor campos: that's great and maybe your office could come in and report on a more regular basis. the purpose of this is to let the public know what is happening with some of these reports with some of this very important work. it also allows an opportunity for the departments to let the public note those remedial steps that have been taken because what we want is to create some confidence that we are doing everything we are supposed to be giving and, where we are not, make sure people know that as well. >> we welcome that and the interest of this committee holding hearings on audits is

helpful because not surprisingly, there will be times when departments are not necessarily in the agreement with our recommendations. it will provide the committee to hear arguments and provide directions as the board of supervisors is helpful in the implementation as well. supervisor campos: my experiences these hearings are helpful to everyone involved. they're hopeful for the department and the public but it also sends a message that even though there may not be an individual hearing on a specific study or audit, that it will be genital -- general monitoring of every single study or review. to make sure there is as much implementation as possible and i think that's a good thing in terms of maintaining the accountability of every department. colleagues, and the other questions? thank you very much and thank you again to the comptroller's

office for their excellent work and presentation and thank you members of the public to a spoken on this. can we continue this item to the call of the chair? we could take that without objection. madame clerk, could please call item no. 2? >> item #2, hearing on the city's services auditor on the laguna honda gift fund. supervisor campos: thank you very much. before i turn this over to the comptroller's office, i just want to provide a little bit of context in terms of why this item is here. this is really about making sure when it comes to an audit or review of any agency, whether it is the health department or any other department that there is a closing of the loop. we understand some work has already been done by the department, by the health commission, and we simply think

with this kind of report, it's important to have a hearing at the board of supervisors level as we will with all of the audits that have been done. that's the purpose of this -- to make sure we hear from the comptroller's office. but we also hear from the department about what they have done and i know that we have the health commission here and we will hear from them and to give the public an opportunity to provide comment. the last point i would make before i turn it over is that there is litigation involved, so we have to be very careful to make sure we focus on the general findings of the audit. we are not going to delve into any personnel issue or any issue that could in any way compromise the city's position as far as

litigation. the focus is a general discussion about the findings. with that, i will turn over to the comptroller's office. >> good morning, tonia lediju, comptroller's office. government auditing standards require independence of audit staff and the audit organization and objectivity of auditors performing the work, competent staff, including continuing professional education and quality control procedures to provide reasonable assurance of the compliance of auditing standards. this is also the basis for the transparency and accountability of the use of public services, resources key to the city's governing process.

a compliance audit is an engagement designed to retain sufficient evidence to conclude whether a government agency complied to regulatory guidance. this includes the determination of whether the purpose of the program is administration and its outcome incurred propose costs and revenues received are in compliance with applicable laws, regulations, contracts or agreements. on august 90, the office of the comptroller requested an audit of the laguna honda fund. work commenced on september 1st and our report was issued to and half months later. the overall purpose of the audit was to determine whether laguna honda administered the gift fund in accordance with the san francisco of administrative code. the audit was from november 1st, 2004 through june 30th, 2010. to conduct the audit, the oddity

review policies, procedures, administrative code, and donations and expenditures. with regards to the audit universe, the look good on the gift fund was made up of 20 to seven counts, including patient accounts costs for staff related accounts, at one earned interest holding account. the patient accounts vary in title and are maintained for various purposes, including patient outings, hospice care, activities, therapies and particular hospital words -- particular hospital wards. this included geriatric education administration accounts. the audit team used a sample selection process to test revenue, collected and expenditures made from these gift fund sub accounts during the six-year audit. the statistical sampling model was applied with a 95% confidence level to the

population as a result of the methodology applied, our sample yielded 324 items for testing. all donations to the gift fund staff development account during the period under audit were selected to determine whether the nation's intended or patients were incorrectly reported to staff development some accounts. however, donations to a pigeon- related account for not collected at the risk of error in recording non-patient related donations to pigeon- related accounts was considered to be low. as you can see from the slide, the audit covered six fiscal years from 2005 to 2010. over this time, the gift fund increased $430,000, from $2.51 million, as noted at the beginning fund balance for 2004,

2005, to -- this translates into a decline of approximately $72,000 per year. during the period under audit, annual donation remained consistent from year to year and averaged 115,000 over the six- year audit period. however, contributions to kind significantly by approximately 75,000 in fiscal year 2008 and 2009. we contribute this to the economic climate and income and adjustments, which is comprised of dividend and interest income, and the annual accounting entry to report unrealized gains and losses average approximately $110,000 from year to year. this amount is subject to market trends, it may fluctuate from year to year, as seen by the low of approximately $20,000 in fiscal year 2005, and a high of

$164,000 in 08. excluding 2010, a non adjustment was posted. this is further detailed here and in the upcoming slides. annual expenditures increase through fiscal year 2009, however the increases were not drafted with the exception of fiscal year 2007. this amount includes a journal entry of approximately $176,000, which represents a transfer of patient funds to clear a cash deficit in a capital projects fund held by laguna honda. during the course of the audit, these funds were returned to the patient account and are included in fiscal year 10 income and adjustment total of 207,000. this item was discussed in finding 1.2 of the report and will be representative -- explained in our discussion of findings. net income deficit. while the spanish did not appear to be drastic, it was noted that apple you are out of the

six fiscal years under audit, lebanon on the gift fund incurred net losses averaging a profit $130,000. well it does not acute -- appear that the gift fund is that immediate risk of depletion, we recommend management of the fund balance. this will be discussed in the coming slides. as it relates to corrective action by liberal on the hospital, -- laguna honda hospital, in may 2010, the comptroller's office accounting operations section perform the limited review specifically examining the accounting processes used to deposit donations into the fund, to allocate in addition to various accounts, and to record expenditures from the fund. in order to determine if the department's process is consistent with city accounting practices and at here is to administer code section 10.100 through 201 that created the

gift fund, the review found the record a transaction to be consistent the general purpose of the fund and in line with city accounting practices. however, the comptroller recommended the department held separate employee development from the gift fund. in addition to laguna honda removing staff developments of accounts, from within the gift fund, it was noted that prior to the onset of the audit build work, that laguna honda accounting session performed an internal review of donations and expenditures for both patients and staff related sub accounts in the gift fund. the laguna honda accounting section staff identified incorrect postings and corrected its record. paris included two checks designated to reimburse patient related activities and amounts from the staff related accounts that were not specifically designated at a staff related, and accumulated interest, misallocated to staffs of accounts. the total amount for this

transaction was $127,700. with regard to revenue findings, for revenue for donations, and the audit team reviewed all 50 transactions and -- in staff related accounts during the audit period, totaling $192,000. the audit found at laguna honda reported donations in 10 different donation not specifically intended for staff and operating income generated from facility rentals into staff development account. laguna honda also recorded divisions to staff accounts which left documentation supporting intent and purpose, or the restriction of the donation to the fall was led will provide a depiction of the findings by type. for the 50 transactions a selected which represents all revenue recorded into the staff

account, such as those for training, education, and administrative items during the audit period, the audit team tested a total of $192,483, which is represented in the total column on the table of the slide. the audit found in this period that laguna honda correctly recorded $37,319, or 90% of the nation's intended for staff and to staff related accounts, and incorrectly recorded what under $51,739, 79% of the nation's. interest and operating income in to staff related sub accounts of with 127 727,000 has been corrected, as a priest in mentioned and return by laguna honda to patient related sub accounts as previously discussed. supervisor campos: could i