FINANCE &
AUDIT
COMMITTEE
MEETING
JANUARY 25, 2024
Overview
Wireless Communications Audit
Credit Card and Reimbursement Audit
Internal Control Review
Update on Existing Audits
2 FINANCE & AUDIT COMMITTEE MEETING
JANUARY 25, 2024
WIRELESS
COMMUNICATIONS
AUDIT
(October 1, 2018 - June 30, 2021)
Wireless Communication: Scope Period - October 1, 2018 - June 30, 2021 Purpose: Assess adequacy of controls regarding wireless device assignment, oversight, and use
Total amount of wireless expenses audited : ~$988,000 Wireless Communications Audit4
FINANCE & AUDIT COMMITTEE MEETING
JANUARY 25, 2024
Audit Findings
Policies and procedures lack clarity
10C forms are not completed uniformly
Inconsistent monitoring of cellular devices
Ineffective use of service provider plans
Calls made outside of normal business hours
Mobile cellular devices are not terminated promptly
Additional charges incurred in addition to the service plan 5 FINANCE & AUDIT COMMITTEE MEETING
Wireless Communications Audit
JANUARY 25, 2024
Recommendations
1. Establishing adequate procedures in AO to assign:
Roles and responsibilities of departments obtaining devices Issuance and monitoring of City cellular devices
2. Update “User Guide to 10C /10X/ AT Purchasing System” Include detailed instructions regarding data entry
Implement data validation checks to reduce errors and ensure consistent data
6 FINANCE & AUDIT COMMITTEE MEETING
Wireless Communications Audit
JANUARY 25, 2024
Recommendations
3. Assign an employee from each department to work with ISD to Review the usage and charges (90-day reports)
Cancel services for devices not being utilized in a timely manner Reassign devices to other employees that need a device to complete job duties
7 FINANCE & AUDIT COMMITTEE MEETING
Wireless Communications Audit
JANUARY 25, 2024
Recommended Modifications
Modify database to maintain historical data pertaining the devices in 'Account 4’
Data archiving system that includes device user history, maintenance record: repairs/upgrades
8 FINANCE & AUDIT COMMITTEE MEETING
Wireless Communications Audit
JANUARY 25, 2024
CITY OF FRESNO
CREDIT CARD AND
REIMBURSEMENT
AUDIT
(March 2, 2017 - March 31, 2022)
10 OVERVIEW
Introduction
Credit Card Transactions
Employee Reimbursement Transactions
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Introduction11
Macias Gini & O’Connell LLP (MGO) assessed compliance by City employees and elected/appointed officials with the City’s Administrative Orders (AOs) for credit card and employee/official reimbursement Objectives
• Credit card transactions for all City employees and elected/appointment officials who have been issued City credit card for compliance with AO 1-4 (Expenses on City Business) and AO 1-9 (Credit Card Use Policy)
• Reimbursement requests and payments (non-credit card) for all City employees who have requested reimbursement for expenses more than $100 through the normal reimbursement policies of AO 1-4 • Reimbursement requests and payouts (non-credit card) for all elected/appointed officials who have requested reimbursement for expenses through the normal reimbursement policies of AO 1-4 Scope Period: March 2nd, 2017 - March 31st, 2022
• Credit Card: 17,859 transactions ($3,961,812)
• Employee Reimbursement Payouts: 5,395 transactions ($1,811,174) FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Credit Card Transactions 12
Observations
Observation 1 - Supporting documentation was not always provided • Missing receipts/invoices for 92 credit card transactions ($15,338) • AO 1-9 requires all authorized users of City credit cards to submit documentation detailing the goods/services purchased, the cost of goods/services, the date of purchase, and official business for which it was purchased
Observation 2 - Supporting documentation was not always sufficient • Nonsufficient supporting documentation for 367 credit card transactions ($76,352) • Examples: missing backup related to meal purchases (required by AO 1-4), purchase of gift cards, charges to Venmo/Square, Amazon purchases, charges for travel missing purpose of travel and how relates to City business
Observation 3 - Regular department meetings at restaurants or with food ordered • Missing receipts/invoices/supporting documentation for 1,067 credit card transactions ($92,645)
• Transactions occurred; however, business purpose of meeting not documented FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Credit Card Transactions 13
Recommendations
Require City credit card holders to complete and submit a form similar to the Form 57 or implement a transaction log detailing the expenditures with bank statements, receipts, invoices
Strengthen review and reconciliation procedures to verify receipts, invoices, or missing receipt form for all credit card transactions
Consider revising AO 1-9 to address meals within City of Fresno and align with AO 1-4 FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Employee Reimbursement Transactions 14
Observations
Observation 1 - Form 57 submitted for travel-related reimbursements • 98% of the reimbursement items tested were itemized on a Form 57 as required by AO 1-4; however, there were 53 reimbursement transactions ($33,777) that did not have a completed Form 57
Observation 2 - Supporting documentation was not always provided for non-travel related expenses
• Documentation for receipts/invoices were not being consistently submitted as required by AO 1-4 for 44 reimbursement transactions ($6,737)
• AO 1-4 requires documentation for all single expenditures that exceed $25 Observation 3 - No Form 57 for non-travel related reimbursements • 94% of reimbursement requests for non-travel items, totaling 2,609 reimbursement transactions ($725,780) were not itemized on Form 57 as required by AO 1-4 • However, 923 reimbursement transactions ($222,062) that did not utilize a Form 57 had an alternative form used to document the reimbursement transaction.
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Employee Reimbursement Transactions 15
Recommendations
Only pay reimbursement requests that are adequately detailed on a Form 57 and signed by the Department Director or other authorized person(s) or update AO to allow for an alternative form for non-travel related reimbursement requests to be submitted to Finance Strengthen review and reconciliation procedures to verify receipts, invoices, or missing receipt forms are submitted for all applicable expenses that exceed $25 in a reimbursement request
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
INTERNAL CONTROL
REVIEW
Accounts Payable and Collections
(Utilities, Billing, and Collections and
Business Tax and License)
17 OVERVIEW
Accounts Payable & Disbursements
Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL)
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Accounts Payable & Disbursements 18
Item 1 - Policy and Procedures Recommendation
• Refine written documentation, defining policies and procedures for all functions within the Accounts Payable section to ensure alignment with current processes Item 2 - Additional Training Resources Recommendation • Staff should receive more frequent and regular training after initial onboarding Item 3 - Whistleblower Hotline Recommendation
• Create a central line of communication for all stakeholders to report fraudulent activity General Reporting & Operations
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Accounts Payable & Disbursements 19
Item 1 - In-Person Check Pick-ups Recommendation
• Refine policy for when departments are allowed to pickup checks to reduce risk of check mishandling Item 2 - Vendor Creation Recommendation
• Segregation of duties is needed for vendor creation; thus, recommending vendor management transition to Purchasing Department
Item 3 - User Access Controls and Workflow Roles In Tyler Munis Recommendation • Develop a formally documented process for authorizing and maintaining user access in the financial system Item 4 - Duplicate Payment Check Recommendation
• Implement internal check to identify duplicate payments prior to each payable run Item 5 - Timeliness and Communication Between Departments Recommendation • Create deadlines for invoice submittal and create process for rush invoices and send regular reminders to departments regarding pending deadlines
Control Activities
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Accounts Payable & Disbursements 20
Item 1 - Workflow Logic Recommendation
• Ensure originator of document cannot approve their own input in the financial system in certain workflow scenarios if certain processes occur in-between Item 2 - Workflow Approval Thresholds Recommendation
• Consider lowering approval threshold for directors for large disbursements so management can identify potential errors or other issues more effectively
Item 3 - Control Monitoring Recommendation
• Implement macro-level review of disbursement processes by creating various checks and balances, and strategic metric tracking
Item 4 - Internal Training & Process Resources Recommendation • City management should continue to prioritize the implementation of a City-wide repository of training resources that are available to staff to ensure easy access Other Comments
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL) 21
Item 1 - Policy and Procedures Recommendation
• Refine written documentation, defining policies and procedures for all functions within UBC and BTL to ensure alignment with current processes
Item 2 - Enhancement of Staff Training for UBC Recommendation • Provide continuous training that is timely, effective, and beneficial to an employee's role Item 3 - Central Square (Naviline) Software Recommendation • Create up-to-date instructions, incorporate cross training, and work with Information Services Department (ISD) to ensure the work is not key person dependent Item 4 - Identifying Customers who are Past Due on Billings Recommendation • Work with Naviline to incorporate “lookup” screen to make it more efficient for investigative work General Reporting & Operations
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Item 1 - Internal Control Monitoring Recommendation
• Review and evaluate internal controls for monitoring activity and key metrics Item 2 - Business Tax & License- Various Items Recommendation • Continue to review, question, and investigate variances that may result in deposits not being fully reconciled
• Have two employees involved in the mail-opening process and build control to mitigate potential for manipulation/misuse of payments received
• Ensure information on shared drive is backed up as this folder can be manipulated by multiple employees
• Create additional controls to ensure that changes to business accounts are appropriate Item 3 - Cash Handling and Collections Recommendation • Ensure dual custody and dual count of cash and implement formal policy for cash handling Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL) 22
Control Activities
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL) 23
Item 1 - Online Applications (UBC) Recommendation
• Update the online application to reduce additional follow-up with the customer to reduce amount of time needed to process new setup requests
Item 2 - Promotion of Electronic Payments for UBC Recommendation • Conduct a cost/benefit analysis for using e-payments and Paygo and continue to promote the online/remote payment methods
Item 3 - Automatic Meter Reading (AMR) Analysis Recommendation • Perform cost/benefit analysis over process of addressing faulty meter reads Item 4 - Call Tracking Review for Customer Service Clerks • Utilize call tracking system data to analyze call trends and formulate Key Performance Indicators (KPIs) in an effort to improve quality and efficiency
Other Comments
FINANCE & AUDIT COMMITTEE MEETINGJANUARY 25, 2024
UPDATES ON
EXISTING AUDITS
Parks & Airports Audits
Update on existing audits25
FINANCE & AUDIT COMMITTEE MEETING
PARCS Department: Scope Period - July 1, 2022 – June 30, 2023 Internal Audit conducted an initial review of the PARCS Department’s process through the interviewing of management and staff, examining policies and procedures
An audit entrance meeting was held on September 7, 2023 Internal Audit is currently identifying items to request to review and begin fieldwork Fieldwork will begin before the end of the fiscal year JANUARY 25, 2024
Update on existing audits26
FINANCE & AUDIT COMMITTEE MEETING
Airports Department: Scope Period - July 1, 2022 – June 30, 2023 Internal Audit is revisiting the Airports Department’s process through the interviewing of management and staff, examining policies and procedures, and reviewing expenditures and contracts see what changes have been made since the last FY The audit entrance meeting was conducted on September 22, 2023 The fieldwork phase is currently in progress
JANUARY 25, 2024
27 FINANCE & AUDIT COMMITTEE MEETING
Questions
JANUARY 25, 2024