Performance Review. Office of the County Auditor Evan A. Lukic, CPA County Auditor

Transcription

1 October 19, 2005 Report No Review of Work Order Process - Division of Water and Wastewater Services - Department of Public Works and Transportation Evan A. Lukic, CPA County Auditor

2 Executive Summary Our review disclosed deficiencies with the Water & Wastewater Division s work order process and the accuracy and sufficiency of the Division s information system that impedes managers ability to effectively monitor projects and supervise employees. These deficiencies are notable in light of historical and continuing problems with attaining an accurate inventory count. Division managers generally agreed with our assessment of internal control weaknesses and are taking steps to correct these deficiencies. These actions are needed to improve the work order process and to establish adequate safeguards to minimize employee error and the potential for theft. Purpose and Scope This report assesses the efficiency and effectiveness of the Water & Wastewater Services Division s work order process. We assessed the reliability and sufficiency of Maximo information to help Division managers effectively monitor projects, supervise employees and make sound business decisions. To accomplish our objectives, we: Interviewed appropriate Division staff and Maximo users in other counties, Reviewed Division documents, including standard operating procedures, Tested a selected sample of work order histories and, Reviewed general management and information technology literature Background The Water & Wastewater Services Division within the Public Works & Transportation Department is responsible for providing high quality potable water and sewer services. As shown in Exhibit 1 below, the Division provides potable water and wastewater services to approximately 15% and 40% of the County s residents, respectively. The Division operates and maintains a substantial portion of the County s water supply and sewer systems, two water treatment plants and one wastewater treatment facility. For Fiscal Year 2005, the Division employed 430 people and had an operating budget of $72.5 million and a capital budget of $84.4 million. Among the primary capital expenditures are installations and upgrades to water and sewer systems in unincorporated Broward County as part of the Division s Neighborhood Improvement Program. Exhibit 1. Facts about Broward County s Water & Wastewater Services Division Number of residents served 230,000 potable water Number of residents provided 660,000 wastewater services Total Operating Budget $72,553,490 Total Capital Budget $84,393,140 Number of employees 430 *Source: Broward County 2005 Operating Budget The Division employs operators, mechanics and electricians to repair and maintain the County s water and wastewater services infrastructure, such as pumps, lift stations and water and sewer lines. To track and document repair and maintenance work performed by Division employees, the Division uses an automated information management software known as Maximo. 1 This software, which is used by other major public utility operations, including Orange 1 The Maximo software, purchased in 1999 from MRO Software, Inc. for $150,000, consists of nine distinct modules. This report focuses on the module dealing with the work order process. 1

3 County, Florida, and Los Angeles County, California, automates the work order process, thus eliminating the need for manual, handwritten work orders. According to company literature, Maximo helps to improve efficiencies, reduce costs and optimize asset performance by automating core business activities, including: Documenting repair and maintenance work, Requesting parts from the central warehouse, Generating reports to manage operations and performance, and Scheduling employee assignments A major benefit of automating these key business activities and processes is that management gains additional security control. Maximo s security features allow Division managers to restrict employee access privileges to ensure that employees only perform those functions that are essential to their job. For example, management can block nonauthorized employees from approving work orders. Findings and s Finding 1 The Division lacks an effective work order review and approval process that is essential to prevent errors and potential theft According to the Institute of Internal Auditors, an individual employee should not be allowed to create and authorize the same work order. Without an independent work order review and approval process there is an increased risk for employee error and potential theft. To provide adequate safeguards against error and theft, each work order should be reviewed to verify the accuracy of information contained in it and to authorize the transaction. In its standard operating procedure, the Division requires two levels of independent review for each non-emergency work order involving parts and materials: An administrative coordinator reviews each work order to ensure it contains accurate and complete financial data, and A supervisor reviews and approves each work order to ensure requested parts and materials are appropriate and legitimate, thus authorizing the transaction. Despite this procedure, our review disclosed instances of work orders that had not undergone an independent administrative review and supervisory approval. In these instances, an individual employee had both created and approved the same work order. Unless an independent administrative and supervisory review and approval is conducted, management cannot ensure the accuracy and legitimacy of work orders. Division managers told us they agreed that some work orders had not received independent administrative and supervisory review. They told us that they were testing a new security configuration within Maximo that will ensure an independent administrative and supervisory review and approval for work orders. To ensure the Division implements its procedure requiring independent administrative and supervisory review, we recommend that the County Administrator direct the Division to take the necessary steps to reconfigure Maximo and to establish an effective work order review 2

4 and approval process. Six months after making the changes to Maximo, Division management should report to the County Administrator whether the change resulted in a more effective independent work order review and approval process. Finding 2 Maximo lacks the capacity to provide enough detailed work order history to help managers identify employee error and potential theft To effectively monitor projects and supervise employees, Division managers need accurate and complete information about project activities and employee performance. As the Division s primary information system, Maximo should provide managers with enough information about the work performed by each employee to help them determine whether the employee made errors or was involved in theft. Specifically, Maximo should track enough detailed history about each work order to help managers identify which employees made any work order modification. This is particularly important in light of the fact that several employees may be involved in making changes to any given work order. Without a detailed record of each work order modification, managers cannot effectively identify the specific employee who made an error. As presently configured, Maximo lacks the capacity to record each work order modification made by employees; it only records the identity of the most recent employee who accessed and modified the work order. The current configuration overwrites the record of the previous employee who accessed and modified the work order; and therefore, Division managers cannot definitively identify the specific employee that made an error or improperly ordered parts. Division managers agreed that Maximo lacks the capacity to provide a detailed work order history that they need to hold individual employees accountable for their performance. To correct this deficiency, Division managers are investigating a Maximo upgrade. According to Division managers, this upgrade will provide a more detailed work order history that will enable them to identify specific employees involved in making errors or committing theft. To obtain a more detailed work order history within Maximo that is essential to identify employee error and potential theft, we recommend that the County Administrator direct Division managers to determine whether the proposed Maximo upgrade will correct the deficiency or if they should pursue alternative methods of obtaining the needed detailed work order information. Finding 3 Managers lack information to base critical equipment replacement decisions due to missing Maximo data To make sound decisions on whether to repair or replace aging equipment, managers need complete and accurate information about the historical cost to operate and maintain equipment. Specifically, managers need to know how much was spent to repair and maintain each piece of equipment over time. By reviewing historical expenditure data for an older machine, managers can determine whether it would be more cost-effective to replace it with a new model or continue to make repairs. For example, it would be costeffective to replace an older machine that costs more to repair and maintain than to replace. Our review disclosed that Maximo expenditure reports do not contain complete and accurate 3

5 information about the historical cost to operate and maintain equipment. Expenditure reports are generated from data entered onto work orders by Division employees. Each piece of Division equipment is assigned a unique general ledger account code within Maximo. Division employees are required to input the complete general ledger account code for the corresponding equipment that is undergoing repair or maintenance on each work order. However, we found instances of missing and inaccurate general ledger account codes that raise doubts about the completeness and accuracy of the expenditure reports. Consequently, Division managers cannot rely on these reports to make cost-effective decisions about replacing or maintaining older equipment. Division managers told us that they agreed that there were problems with some work orders lacking complete and accurate general ledger account codes. To rectify this problem, managers will create a report within Maximo that will identify any completed work order that does not contain a complete general ledger account code. Once identified, these work orders will be corrected before equipment expenditure reports are generated. We recommend that the County Administrator direct Division managers to identify and correct work orders without complete general ledger account codes prior to generating equipment expenditure reports. 4