Grand Jury: Contra Costa County Internal Audit Division Failing To Meet State Standards

A Contra Costa County Civil Grand Jury report has found significant shortcomings within the county’s Internal Audit Division, concluding that the department does not comply with professional auditing standards required under California law and has not undergone an external quality assessment in more than 25 years.

The report, titled “Contra Costa County’s Internal Audit Division: Time for a Transformation,” examines the county office responsible for reviewing financial controls, auditing county departments, and identifying risks within government operations. According to the Grand Jury, the Internal Audit Division’s current structure, oversight practices, and procedures fall short of standards established by the Institute of Internal Auditors and the U.S. Government Accountability Office.

Among the report’s most significant findings is that the Internal Audit Division is housed within the Auditor-Controller’s Office while also auditing functions overseen by that same office. The Grand Jury said this arrangement creates a potential conflict of interest and raises questions about the division’s independence. The report also notes that audit staff spend approximately 40% of their time helping prepare the county’s Annual Comprehensive Financial Report, which they may later audit.

The Grand Jury further criticized the level of oversight provided by the Board of Supervisors. The Internal Operations Committee, which oversees the Internal Audit Division, reportedly meets with auditors only once a year. The report states that such limited interaction does not meet professional standards for ongoing communication, audit plan approval, and review of audit findings.

Investigators also found that the division lacks a formal audit charter, does not maintain a documented risk-based audit planning process, and has no established quality assurance program. Perhaps most notably, the division has not received an external peer review or quality assessment in more than 25 years, despite professional standards calling for reviews every three to five years.

The report additionally found that completed audit reports are not routinely distributed to the Board’s oversight committee and are not publicly posted online. The division’s public webpage currently contains only a brief description of its responsibilities.

To address the concerns, the Grand Jury recommended a series of reforms, including creating a dedicated audit committee with financial expertise and public representation, developing a formal audit charter, implementing a documented risk-based planning process, improving transparency, and requiring the Internal Audit Division to undergo an external quality assessment.

The report requests formal responses from both the Contra Costa County Board of Supervisors and the Auditor-Controller regarding the findings and recommendations. County officials have until later this year and early 2027 to address the issues identified by the Grand Jury.