CONTRACTS MONITORING HUMAN RIGHTS DEPARTMENT

Transcription

1 CONTRACTS MONITORING HUMAN RIGHTS DEPARTMENT INTERNAL AUDITING NOVEMBER 1999

2 CONTRACTS MONITORING HUMAN RIGHTS DEPARTMENT CITY OF TULSA INTERNAL AUDITING RON MAXWELL, CIA, CFE CHIEF INTERNAL AUDITOR PHIL WOOD, CIA, CFA CITY AUDITOR

3 INTRODUCTION The contracts monitoring function of the Human Rights Department monitors City contracts and purchase orders for compliance with Tulsa Revised Ordinance Title 5 regulations regarding minority and female business enterprises, affirmative action, Davis Bacon, and any other human rights issues. There are three compliance monitors and one Contract Administrator. The mission of this function is taken from the Human Rights Department Mission. This mission is to promote and enforce the components of Title 5 of the Tulsa Revised Ordinances, the City s anti-discrimination ordinance. PROJECT DESCRIPTION A control assessment is a limited scope project that focuses on determining whether an entity has the right kind of internal control framework. Internal control is the process used by an organization to achieve its operating objectives. Control assessments evaluate the five components that make up the internal control framework described in the publication, Internal Control Integrated Framework as follows: Control Environment The control environment serves as the foundation for all other components of internal control. The control environment embodies a number of elements, including integrity and ethical values, commitment to competence, management s operating style, organizational structure, assignment of authority and responsibility, and human resource policies and procedures. Risk Assessment Management must establish objectives and assess the risks that threaten achievement of these objectives. Mechanisms must also exist to identify changes that have taken place or will occur shortly, so an organization can adjust for significant changes. Control Activities Control activities are the policies and procedures performed to ensure that management s directives are carried out. Information and Communication Information systems identify, capture, and process internally and externally generated information relevant to meeting objectives. Communication must take place up, down, and across the organization, and with external parties. Monitoring Internal control systems must be monitored to ensure they continue to operate effectively. Monitoring includes ongoing monitoring activities, periodic evaluations, or a combination of the two. 1

4 A control assessment is not an audit because only limited testing of control procedures is performed. Our consideration of the internal control framework would not necessarily disclose all its weaknesses. A control assessment is intended as a service to help management identify areas on which to focus their attention. Scope: Evaluate the internal control framework of the contract monitoring function of the Human Rights Department. Responsible Officers: Carol Ainsworth, Contract Administrator; Dyanne Mason, Director of Human Rights Department. Control Assessment Team: Maxwell Rosemary Schoemaker, Cathy Criswell and Ron Overall Risk Exposure: (Low, Moderate or High) Moderate Conclusion: (Satisfactory, Satisfactory-needs improvement or Unsatisfactory) Satisfactory 2

5 IMPROVEMENT OPPORTUNITY THE POPULATION OF CONTRACTORS SUBJECT TO COMPLIANCE REVIEWS PURSUANT TO TITLE 5 IS UNCLEAR SUMMARY Title 5, Section 103 A. 1., establishes a duty of the Human Rights Department to conduct compliance reviews of persons who contract with the City. Section 110 A. 3. defines the word contractor for purposes of Section 110. This definition states: Contractor shall mean any person, including a depository, who bids or supplies labor, materials, goods or services, including professional services, to the City of Tulsa or a subcontractor of a contractor. Section 110 B. sets forth Requirements of City Contractors. The word contract is not defined in Title 5. Different interpretations and information sources exist about the population of contracts and contractors subject to compliance reviews required by Title 5. The City Attorney advised in a memorandum dated June 16, 1999 the requirement of Title 5 Section 103 to perform compliance reviews of persons who contract with the City has reference only to actual and existing City contracts. Potential, informal, verbal, implied or expired City contracts are not within the scope of the ordinance. Initially, Human Rights management indicated a different understanding of the interpretation offered by the City Attorney. Information sources for the population of contracts and contractors have differences. The Contract Table from the Legal Department contract database shows a total of 414 contracts. The Human Rights database lists a total of 364 contractors. The Purchasing Department vendor list shows approximately 24,000 vendors. From reviewing reports from Accounts Payable, Human Rights staff stated that they continue to find contractors that do not appear on the other reports. Unless the population subject to compliance reviews is clearly defined, complete and understood, there is risk the monitoring requirements of Title 5 may not be effectively accomplished. RECOMMENDATIONS Human Rights and Legal should seek to reach common understanding of the definition of terms and population of contractors subject to contract compliance reviews required by Title 5. Revision of Title 5 may be necessary to clearly define the monitoring requirements. The Human Rights Department should continue to work with Information Services for development of a complete database of contractors. A city-wide procedure for ensuring complete contract information is obtained should be implemented. This effort may also require involvement of Legal, City Clerk, Purchasing and Accounts Payable. 3

6 RESPONSE The Department of Human Rights agree with the Recommendations as presented by the Department of Internal Auditing. We are pursuing the establishment of a city-wide procedure for tracking contract information with Legal, City Clerk, Purchasing and Accounts Payable. We will also continue working with Information Services for the development of a complete database. 4