FINANCE &
AUDIT
COMMITTEE
MEETING
MAY 13, 2024
Overview
Wireless Communications Audit
Credit Card and Reimbursement Audit
Internal Control Review
Update on Existing Audits
2 MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
WIRELESS
COMMUNICATIONS
AUDIT
(October 1, 2018 - June 30, 2021)
Wireless Communication: Scope Period - October 1, 2018 - June 30, 2021 Purpose: Assess adequacy of controls around wireless device assignment, oversight, and use
Total amount of wireless expenses audited : ~$988,000 Wireless Communications Audit4
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Audit Findings
Policies and procedures lack clarity
10C forms were not completed uniformly
Inconsistent monitoring of cellular devices
Ineffective use of service provider plans
Calls made outside of normal business hours
Mobile cellular devices were not terminated promptly
Additional charges incurred in addition to the service plan 5 MA Y 13 , 20 24
Wireless Communications Audit
F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
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” to:
Include detailed instructions regarding data entry
Implement data validation checks to reduce errors and ensure consistent data 6 Wireless Communications Audit
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG 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 MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Wireless Communications Audit
Recommendations
4. Modify database to maintain historical data pertaining to devices in 'Account 4’ Implement a data archiving system that includes device user history and maintenance record
8 MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Wireless Communications Audit
CITY OF FRESNO
CREDIT CARD AND
REIMBURSEMENT
AUDIT
(March 2, 2017 - March 31, 2022)
10 OVERVIEW
MA Y 13 , 20 24
Introduction
Credit Card Transactions
Employee Reimbursement Transactions
F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
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: 17,900 transactions ($3,961,812)
• Employee Reimbursement Payouts: 5,395 transactions ($1,811,174) MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Credit Card Transactions12
Observations
Observation 1 – Credit card transactions with no supporting documentation • Missing receipts/invoices for 253 credit card transactions ($39,750) • 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 – Credit card transactions without sufficient supporting documentation • Nonsufficient supporting documentation for 142 credit card transactions ($20,793) • 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 held at restaurants or with meals ordered • Missing receipts/invoices/supporting documentation for 1,067 credit card transactions ($92,645) • Transactions occurred; however, business purpose of meeting not documented MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Credit Card Transactions13
Recommendations
Evaluate and revise procedures for review of monthly credit card reconciliations and strengthen controls by rejecting reconciliations that are not complete and in compliance with City policies
Develop procedures to track open reconciliations for timely follow-up Specify and implement a card suspension date in AO 1-9 for monthly reconciliations that are not submitted within 14 days of the billing cycle end date or reconciliations that are not resolved within 5 business days
Update AO 1-9 to specify that cardholders must immediately report lost or stolen credit cards
Review AO 1-9 and revise to add reference for elected officials where appropriate to ensure consistency
Finalize and implement AO 1-9
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Employee Reimbursement Transactions14
Observations
Observation 1 – Submission of Form 57 for travel-related reimbursement payments • 98% of the reimbursement items tested for travel 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 – Non-travel reimbursement payments with no supporting documentation
• 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.
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Employee Reimbursement Transactions15
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
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
INTERNAL CONTROL
REVIEW
Accounts Payable and Collections
(Utilities, Billing, and Collections and
Business Tax and License)
17 OVERVIEW
MA Y 13 , 20 24
Accounts Payable & Disbursements
Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL)
F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
Accounts Payable & Disbursements18
General Reporting & Operations
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
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG 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
MA Y 13 , 20 24
Control Activities
F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
Accounts Payable & Disbursements20
Other Comments
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 MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL)21
General Reporting & Operations
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
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG 22 Control Activities
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 MA Y 13 , 20 24
Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL)
F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
23 Other Comments
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 MA Y 13 , 20 24
Collections: Utilities, Billing, & Collections (UBC) and Business Tax & License (BTL)
F I N A NCE & A U DI T C OMMI TTEE ME E TI NG
UPDATES ON
EXISTING AUDITS
PARCS & Airports
Audits
Update on existing audits25
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 MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG Update on existing audits26
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 complete and the report is currently in progress MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG 27 Questions
MA Y 13 , 20 24 F I N A NCE & A U DI T C OMMI TTEE ME E TI NG