City of West Palm Beach Internal Auditor s Office

Transcription

1 AUDIT OF PARKING ENFORCEMENT AND TICKET COLLECTIONS Audit No October 17, 2016 City of West Palm Beach Internal Auditor s Office Roger Strout, City Internal Auditor, CIA, CRMA, CFE, CICA Beverly Mahaso, Deputy Internal Auditor, JD, CFE Elena Georgiev, Sr. Internal Auditor, CPA, CGMA Ellen Misita, Sr. Internal Auditor

2 Internal Auditor s Office P.O. Box 3366 West Palm Beach, Florida Tel: 561/ Fax: 561/ October 17, 2016 Audit Committee City of West Palm Beach 401 Clematis Street West Palm Beach, Florida RE: Audit of Parking Enforcement and Ticket Collections, Audit No Dear Audit Committee Members: Attached is the City of West Palm Beach s Internal Auditor s Office report on Parking Enforcement and Ticket Collections. Although the Parking Administration Division has done a commendable job implementing controls, additional opportunities for improvement are presented in this report. We thank the management and staff of the Parking Administration Division for their time, information, and cooperation during this audit. Respectfully Submitted, /s/ Roger Strout City Internal Auditor cc: Jeri Muoio, Mayor Jeff Green, City Administrator Scott Kelly, Assistant City Administrator Daniel Giust, Interim Parking Administrator Mark Parks, Chief Financial Officer Jose-Luis Rodriguez, Director of Human Resources

3 Table of Contents BACKGROUND... 1 STATEMENT OF OBJECTIVES... 1 STATEMENT OF SCOPE... 3 STATEMENT OF METHODOLOGY... 3 STATEMENT OF AUDITING STANDARDS... 3 AUDIT CONCLUSIONS AND SUMMARY OF FINDINGS... 3 NOTEWORTHY ACCOMPLISHMENTS... 4 OPPORTUNITIES FOR IMPROVEMENT ) CONTRACTOR ACCESS CARDS ) SEQUENTIAL CITATIONS ) PARKING RATES STUDY ) SAFETY ) PENN CREDIT PERCENTAGES ) PENN CREDIT REMITTANCES ) ENTERPRISE FUND ACCOUNTING ) ACCOUNTS RECEIVABLE RECOGNITION ) PARKING SOFTWARE SYSTEMS ) POLICIES AND PROCEDURES ) EXIT INTERVIEWS ) CONTROL SELF-ASSESSMENT PROGRAM... 28

4 Background According to Sec (b) of the City Code, the Parking Administration Division (Parking) was created as part of the Support Services Department. Currently, Parking is structured as an independent division and as an enterprise fund reporting to the Assistant City Administrator. Parking operates 2,807 off-street and 1,629 metered on-street spaces. In FY 2015, Parking reported $6.04 million in operating revenue with charges for services and fines (citations) being its main revenue sources. Year Operating Revenues FY 2013 $5,356, FY 2014 $5,931, FY 2015 $6,044, Parking consistently introduces new technology into its operations in order to provide customers with more payment options and to safeguard its assets. In addition to the more traditional forms of payment such as cash and credit cards in the garages and Parkmobile in the streets, it also recently installed 1,000 smart parking meters which accept credit cards. These meters are also solar powered and help reduce the carbon footprint. Statement of Objectives The objectives of this audit were to determine: 1) Access to facilities was limited to authorized users; 2) The Parking Administration properly charged users; 3) The Parking Administration appropriately collected, recorded and deposited cash (currency, checks, credit card transactions, etc.); 4) The Parking Administration timely remitted delinquent accounts for collection; and 5) The Parking Administration adhered to the Generally Accepted Accounting Principles. 1

5 Organizational Chart (August 2016) Vacant Parking Administrator Parking Operation Coordinator Parking Operation Coordinator Accountant Maintenance Leader Senior Parking Account Representative Parking Facilities Supervisor Parking Security Supervisor Enforcement Supervisor Enforcement Officer Contracted Enforcement Officer Parking Meter Technician Parking Meter Technician Account Representative Contracted Enforcement Officer Contracted Enforcement Officer Contracted Enforcement Officer Parking Meter Technician Vacant Account Representative Contracted Enforcement Officer Contracted Enforcement Officer Contracted Enforcement Officer Pending Budget Approval Parking Meter Technician Enforcement Officer 2

6 Statement of Scope The audit period was October 1, 2013 through September 30, However, based on the work performed during the preliminary survey and the assessments of risk, the audit period varied depending on the audit objective. The audit included examinations of procedures, controls, transactions and records associated with the Parking Administration s activities. Statement of Methodology We utilized several audit methodologies to achieve the objectives. These evidencegathering techniques included, but were not limited to: Reviewing applicable local, state and federal regulatory requirements; Interviewing Parking employees; Performing walk-throughs, and observing processes; Examining the internal control systems and identifying any material weaknesses; and Other audit procedures determined necessary. Statement of Auditing Standards We conducted this audit in accordance with Generally Accepted Government Auditing Standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Audit Conclusions and Summary of Findings Based upon our interviews, analytics, and testing, we concluded that opportunities exist for the Parking Administration to improve its oversight of contractors, its administration of the Penn Credit Delinquent Accounts Recovery Contract and its accounting practices, among others. 3

7 Noteworthy Accomplishments It is important to recognize the significant accomplishments achieved by the Parking Administration. Below is a list of some of its notable achievements: - Consistently increased revenue; - Streamlined enforcement productivity; - Added a cashiering safe to secure and increase security levels for valuables and cash. - Supporting the upgrading of credit card processing to EMV chip technology. 4

8 1) Contractor Access Cards Opportunities for Improvement Condition Upon review of selected Access Card Usage Logs, we noted that documentation of transactions was either nonexistent or incomplete, lacked proof, such as invalid tickets, and evidence of management review. In addition, there were several instances when proof was attached, but was not appropriate for example, a No Chip Coin Validation ticket to be used by Ultima Fitness patrons early on Mondays before the gates are operating was accepted after 8 pm on a Wednesday and the gate was lifted for the customer. Criteria In an effort to provide the best services possible to its customers, Parking signed a contract with USA Parking, Inc., which staffs the parking garages with customer service staff. These customer service staff members are provided with access cards, eleven (11) in total, which can be used to open the gates for Parking customers in case a problem occurs. Per discussion with the former Parking Administrator, each customer service staff is required to document card usage on an Access Card Usage Log. Additionally, each staff is required to ask customers for receipts, invalid tickets or chip coins, etc., and include them with the log for review by Parking management. Cause According to management, the Access Card Usage Log design needs improvement. Furthermore, the volume of transactions does not allow for a thorough review of logs (and associated video footage). Effect Every time the gate is lifted in this manner, Parking is potentially loosing revenues. If contractors are aware that logs and video footage are not examined, the preventative nature of this control may be ineffective and may not prevent exploitation of this weakened control. Recommendation We recommend that Parking begin by identifying the reason for the large volume of transactions approximately 630 in the month of June. In addition, the form should be re-designed so that only essential information is collected and contractors must be trained in completing it. Finally, management should begin to examine the support, and document such examination. This should act as a deterrent to improper use. 5

9 Contractor Access Cards (continued) Management Response Parking Administration will work on the design of a new form that will allow for streamlined auditing of the contractor. Parking Administration will train the contractor in its use and when the access card may be used. In the short term, the audit of this form and card use will be undertaken by the Facility Supervisor position. A long term goal would be to have a new position Parking Auditor to oversee the contractor s card access. Target Implementation Date By April of 2017 the improvements to the form will be completed. This will also be the time frame for the training and audit procedures. It is a goal to add a Parking Auditor position in the first quarter of

10 2) Sequential Citations Condition As part of our audit, we noted that in addition to the Parking Enforcement Officers, Police Officers also issue parking citations. Upon inquiry, we were informed that officers are issued books with paper citations in sequential order, but these citations are not returned to Parking in sequential order. Furthermore, no records of issuance of these books is maintained by Parking or periodic reconciliations performed. Criteria Best practice requires that sequential citations are controlled and accounted for in a timely manner. Cause Parking Administration has not instituted a policy requiring its staff to perform citation inventory tracking or reconciliations. Effect Citation revenues are a major revenue source for Parking and any that are not accounted for could potentially result in decreased revenues. Recommendation We recommend that Parking create a log for citations and keep a record of which books are assigned to which officers. Periodically, with the assistance of the Police Support Services Captain, a reconciliation of unissued citations should be performed. In addition, returned citations should be reconciled to the log to ensure that no citations have been lost and that all issued citations are recorded in the Duncan/Integrator citation tracking system. Management Response We feel that this would increase workloads to our front counter staff dramatically. We also cannot rely on the Police department personnel to always provide this information. If we completed the log and found through the reconciliation two citations missing, we would not be able to realize the amount of a possible loss. With that said, we think it would be more beneficial to work on a software solution that would link to our systems and generate sequential numbers on demand of issuing a citation. 7

11 Sequential Citations (continued) Target Implementation Date We believe this could be completed by the first quarter of

12 3) Parking Rates Study Condition Based on our inquiry and discussion with the former Parking Administrator, Parking Administration has not performed a rates study since Further, Parking's rates are significantly lower than the rates of other comparative municipal and private operators. In order to confirm this, we contacted ten (10) operators, both municipal and private, and confirmed that our rates are lower. For example, Parking charges $1.00 for the first two (2) hours of parking in its garages and $1.00 for each additional hour, for a maximum of $10.00, while others charge anywhere from a $1.00 to $3.00 per hour. Criteria The National Parking Association (NPA), the leading trade association for the parking industry, performs a periodic rates study. NPA's annual review of parking rates measures monthly, daily and hourly rates in cities throughout the United States and Canada, including parking facilities in hospitals, hotels, educational institutions and airports. It also documents rate trends in downtown parking areas and among institutional parking owners and operators. This information is useful to parking professionals in planning for improving performance and preparing for the future. Cause Currently, the City Commission must approve any parking rates modifications. The Parking Administration feels that even if a study is performed and it shows that an increase is justified, it may not be approved. Effect The sustainability of an enterprise fund depends on the development and maintenance of fees that endeavor to recover all operational costs and provide for the long term capital needs of the system. Thus, it is important that Parking Administration charges rates that promote its long-term sustainability. Additionally, by performing periodic rate studies and implementing small periodic adjustments, when necessary, large rate increases can be avoided. Recommendation We recommend that Parking Administration perform periodic rate studies. It is important to remember not to focus solely on financial metrics, but also on non-financial ones. Only then can a true comparison be made. When a study is completed and if it indicates that Parking's rates may be significantly lower than those of other parking facilities, the City Commission should be made aware of this. 9

13 Parking Rates Study (continued) If a request for a rate increase is necessary to cover Parking Division s operating expenses, Parking should ask that some flexibility is built into the rates. This could be achieved by asking the Commission to approve a range with a minimum and maximum rather than a set rate, thus allowing Parking to adjust the rates within this pre-approved range based on demand. Management Response The City is engaging the services of a consulting firm to provide a mobility study and fee recommendations for the Downtown and the City as a whole. As part of the scope, the consultant will be tasked with making recommendation on performance pricing for our Downtown parking including on street and garages. Designing a parking performance system will allow the City to not only meet revenue requirements but will also result in parking policies that promote a decrease in cruising, higher turnover rates in curbside spots to promote business for the merchants, and improve walkability in our Downtown. Parking plays a big role in improving walkability particularly in our Downtown. The results of the study should be available within the next 18 months in order to set new rates. Target Implementation Date At the completion of the transportation study approximately mid 2018 we will be able to make recommendations to the commission for approval. Any approved items will be implemented in the first quarter of

14 4) Safety Condition We have heard City staff talk about near misses with pedestrians while exiting the City Center and Clematis garages. Both garages, and the Police Department garage, have very limited visibility for the drivers exiting and crossing the active sidewalks as well as the pedestrians walking on them. Currently, there are no signs warning pedestrians of the danger of exiting vehicles. Criteria Our City encourages people to explore and enjoy its streets. One of the City of West Palm Beach's primary responsibilities is the safety of its citizens and guests. Cause The Risk Management Division has also brought this issue to the attention of Parking management. However, management has not followed up on the proposals to install safety signage. Effect A single accident may cause injury as well as significant reputational and financial loss for the City. Recommendation There are several alternative courses of action we would like to recommend to Parking Administration: Installation of Caution Car Coming electronic signage, which utilizing sensors alerts pedestrians on the sidewalk of a car exiting. Installation of Pedestrian Approaching electronic signage, which alerts drivers of pedestrians about to cross an exit lane. Installation of audible alarms (as a supplement to the Caution Car Coming electronic signage). Installation of convex mirrors (as a supplement to the devices noted above). Convex mirrors allow both vehicle drivers and pedestrians to see around sharp corners. Installation of transitional lighting in the garage entry exit areas where pedestrian activity occurs. 11

15 Safety (continued) We would like to emphasize the importance of proper positioning of any signage and mirrors. Management Response Parking has already installed fish eye mirrors in the City Center Garage which are very effective. The same mirrors will be installed in the Clematis Garage. We are currently set up to meet with a vendor who supplies visual and audible enunciators for pedestrians to know when a vehicle is exiting. With this put into place, the safety concerns will be eliminated. Target Implementation Date The mirrors in Clematis will be installed before December 15 of this year. As for the visual and audible signal system, this will be implemented by the middle of

16 5) Penn Credit Percentages Condition As part of the Parking Enforcement and Ticket Collections audit, we noted that Penn Credit charges the Parking Administration twenty (20%) percent for all collected citations, regardless of the date placed for collection. The contract terms state that the City will pay 15% for accounts collected, which are 365 days or less in age, and 19.5% for accounts 366 days or older. Criteria The agreement between the City of West Palm Beach and Penn Credit Corporation states that the City agrees to pay Penn Credit, as its sole compensation, a commission or percentage of the amount collected on a delinquent account assigned, in accordance with the following fee schedule: Delinquent Accounts - 0 to 365 days old - 15% Delinquent Accounts to 1825 days old % Cause This is a case of oversight on behalf of Parking staff. Effect Paying in excess of the contracted rate unnecessarily increases the Parking Administration expenses. We estimate that overpayments to Penn Credit approximate $21,000 over the past three years. Recommendation We recommend that Parking Administration recalculates the amount of overpayment for the past three (3) years, or longer, if the Legal Department opines for a longer period, and contacts Penn Credit to request a refund in accordance with the contract rate stipulations. Parking should ensure that all future payments are for the contracted amounts. 13

17 Penn Credit Percentages (continued) Management Response Parking had opted for an option with the vendor that was sold as a way to offset collection fees. This was done prior to the current contract. It was our understanding that the same terms were included in the new agreement which was an oversight on Parking Administration. We have been working with the vendor to align our percentages with the current contract rate. We then will work to recoup the overpayments from Penn Credit. Target Implementation Date All new accounts sent starting November 1, 2016 will be at the contract rate. The next timeline will be to calculate the overpayments and collect the revenue. This should be accomplished by the second quarter of

18 6) Penn Credit Remittances Condition As part of the Parking Enforcement and Ticket Collections audit we noted that the Parking Administration remits the information of delinquent ticket holders to Penn Credit on the 46th day after citations were issued. In some cases, the citations were remitted up to 53 days after they were issued. In addition, in the course of the audit, we noted that there were instances where citations due to be sent to Penn Credit were not sent. Criteria The agreement between the City of West Palm Beach and Penn Credit Corporation states that if a citation is not paid 35 days after issued date, the account will be sent to collections. Cause This is the result of an oversight on behalf of Parking staff. As it relates to unsent citations, the Parking staff primarily responsible for the remittances was out of the office and the backup personnel did not follow up on delinquent citations. Effect The success rate of collecting delinquent accounts is typically higher the closer to the issued date the collection agency is sent the accounts for processing. Thus, sending delinquent accounts later than agreed may result in lost opportunities for collection. Recommendation We recommend that Parking Administration remit delinquent citations on the 36th day after they are issued. Also, we recommend that a schedule is kept to track remittances to ensure that delinquent citations are remitted. Management Response This date was pushed back by a previous administrator to solve pressure from the public. The automated process will be changed back to 36 days after the citation was issued then sent to collections. Target Implementation Date The changes will be in place starting November 1,

19 7) Enterprise Fund Accounting Condition As part of the audit, it came to our attention that Parking Administration paid for the repainting and landscaping of the Police Headquarters building, which exceeded $300,000. In addition, Parking Administration gives free parking to some City Departments for special events, estimated to exceed $346,000 since October 2013, and for event vendors estimated at over $280,000 since October Furthermore, City resolution states that multi-day high demand special events that require meter rentals may opt to have payment of their meter rental fees deferred until a determination of incremental profit is calculated by the Mayor or his/her designee. Incremental profit will be shared on a 50/50 basis between the Parking System and the multi-day high demand special events. The multi-day high demand special event's profit sharing representing a credit against meter rental fees up to the total applicable amount of meter rental fees for said event. The total amount of incremental profit shared with a multi-day, high demand special event is capped at the total applicable amount of meter rental fees for said event. We were not provided evidence that profit sharing calculations were prepared and presented to Parking. Criteria An enterprise fund establishes a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. Furthermore, all enterprise revenues may only be used to support the expenditures of the enterprise fund. These funds should not be used to support ongoing municipal operations or subsidize the general fund. According to Sec of the City of West Palm Beach Code of Ordinances (last updated in 1979), the coins deposited in parking meters (in other words revenues, which now come from off-street parking as well in the form of coins, bills, credit card payments, etc.) shall be collected by the duly authorized agents of the City and shall be deposited in such fund (the enterprise fund) as may be provided by ordinance or resolution of the City Commission. The net proceeds of the operation of parking meters (and now off-street parking) in such special fund, after the payment of such costs and expenses, shall be used for parking studies and for the acquisition, establishment, improvement, maintenance and operation of public off-street parking facilities. Remaining portion of this page left blank intentionally 16

20 Enterprise Fund Accounting (continued) Cause There may be a misconception that Parking, being a revenue generating entity, should be required to lend a helping hand to other departments and the general fund. Effect One of Parking Administration s goals is to provide self-sustaining revenue, which supports operations and provides funding for renewal and replacement of parking facilities and equipment. If this enterprise fund is experiencing reduced revenues, because entities are requesting free parking, it could be challenging to accomplish their essential goals. Recommendation We recommend that, going forward, the Finance Department monitor payments closely and prohibit payments and/or subsidies as discussed above. Also, we encourage Finance to develop policies and procedures, which clarify appropriate and inappropriate transactions between enterprise and non-enterprise funds. In the case of the outside vendors, we recommend that the Legal Department clarify the agreements and support negotiations with the vendors. Additionally, profit sharing documents should be submitted when required. Parking Management Response Parking agrees with the findings and will comply with the findings of finance and the law department. Finance Department Management Response Management concurs with the recommendation and will implement measures which will result in greater scrutiny of these payments. Concerning subsidies, we have asked the Interim Parking Director to send an to all members of his staff with responsibility for special events alerting them to the provisions of Resolution and making it abundantly clear that adherence to this resolution is a prerequisite to accessing the City s parking facilities for all special events. The process we have recommended includes an agreement stipulating the methodology for computing the incremental share of profits which Parking Administration will receive for each event. The Interim Parking Director will also apprise the City Attorney of the Internal Auditor s observation and request the assistance recommended in negotiations with outside vendors. 17

21 Enterprise Fund Accounting (continued) As an interim measure the Director of Finance will issue a memo reminding all supervisory personnel who preside over enterprise funds activities that the revenues earned by these funds are to be used wholly and exclusively for the benefit of the enterprise fund. As time and resources permit, we will seek to develop the policies and procedures outlined in your recommendations. Target Implementation Date We would target compliance for October

22 8) Accounts Receivable Recognition Condition During the course of the audit, we noted that Parking Administration does not record citation receivables. Instead, revenues are only reported when a citation is collected, that is on a cash basis. Furthermore, a citation is deemed collectable for five years, but even after these five years are up, citations remain in Parking's citation system Duncan/Integrator As of September 30, 2016 there were 150,013 open, or unpaid citations, totaling $6,629,006. Of these, 111,518 citations were over five years old, totaling $4,427,577. It is important to note that many, if not most, of these citations, due to their age, are not collectable. Criteria Enterprise funds, including Parking, should recognize revenues using the full accrual basis of accounting. In other words, Parking should recognize a receivable when it has an enforceable legal claim. Cause A policy has not been instituted requiring the recognition of receivables and the subsequent appropriate removal of uncollectable accounts. Effect By not recording a receivable and writing off uncollectable accounts, if necessary, Parking is not in compliance with the Generally Accepted Accounting Principles (GAAP), which could affect the presentation of the financial position of the City. Recommendation We recommend that Parking establishes policies and procedures for the recognition and subsequent write-off, if necessary, of receivables. We also recommend that Parking Administration, with help from the Finance Department, record receivables and any related allowance for what is likely uncollectable in the Duncan/Integrator 2000 system. Parking Management Response Parking will work on creating a policy that will have all open citations over five years old converted to an un-collectable status. This status would take them out of the open and collectable citations, but would not prevent them from being paid. This would more accurately represent our outstanding citations amount but would not create a time period to avoid payment and just move the old citation out of our current receivables. 19

23 Accounts Receivable Recognition (continued) We will also work with finance and our vendor to create a procedure to record all citations as a receivable. Our concern is that we do not create a separate process to record the citations and overwhelm the front counter staff. Our goal is to work with our vendor to meet the requirements of Finance. Finance Department Management Response Management agrees that Public Enterprise funds should recognize revenues using the full accrual basis of accounting however given the observation that: a) Just over 74% (i.e. 111,518 out of 150,013) of citations issued valued at $4,427,577 were deemed uncollectable by virtue of being statute barred that is for every 100 citation booked as a receivable 74 are likely to be deemed uncollectable after 5 years or alternatively; b) For every $100 of citation issued $67 is likely to be deemed uncollectable after 5years (i.e. $4,427,577/$6,629,006) and; c) Our examination of payments made to Penn Credit Corporation (i.e. the City s collection agency) for the fiscal year ended 9/30/2016 totaled $27, This means that Penn Credit Corporation who received a commission of 20% of collected receivables, amounted to approximately $137,000 during the fiscal year The foregoing dismal receivables history is despite the following measures currently being utilized by Parking Administration to collect outstanding receivables. 1. A ticket notice is mailed 15 days after the citation is issued. 2. On the 31st day a late fee of $25.00 is added to the original fee. 3. On the 46th day the citation is turned over to the collection agent. 4. If a person has 3 unpaid citations over a week old totaling over $ we will immobilize the vehicle until the citations are paid. 5. If a vehicle has more than one unpaid citation over 45 days old a registration hold is placed with the state of Florida. Given the above statistics at a) and b) above, which spans a period of 20 years (1997 to present), and the current efforts employed by Parking Administration to minimize receivable balances. We would suggest that these receivables be booked at the end of each fiscal period. A report could be generated from the Duncan Integrated 2000 system at the end of each fiscal year and a receivable recorded based on the percentage of 20

24 Accounts Receivable Recognition (continued) receivables collected by the City s collection agency in the immediately preceding fiscal year. Target Implementation Date We believe we can have the non-collectable citations issue resolved in the first quarter of The receivables procedures should be adopted by the second quarter of Auditors Comment We encourage the Finance Department to explore creative techniques that could increase the collection of past due revenues. 21

25 9) Parking Software Systems Condition During our audit, we noted that Parking's software systems, including Parker Accounts Receivable Information System (PARIS), Duncan/Integrator 2000, Amano McGann, Scheidt & Bachmann (S&B), MacKay, Park Mobile, Elavon, etc., do not interface with the City s Oracle system. The accountant must print out reports from every system, every day, reconcile and post manual journal entries into the Oracle system. Criteria Best practices suggest that software systems should interface with each other to achieve efficiency and avoid human error. Cause Per discussion with the former Parking Administrator, no one has considered this since Parking has not experienced any issues in the past. Effect The lack of integration results in additional manual work and a duplication of effort, as well as creates opportunities for errors. Recommendation We understand that Parking's software is unique. However, discussing the possibility of creating an interface between essential systems and Oracle is worth considering since it could create efficiencies that otherwise cannot be achieved. We suggest that Parking involve the Finance and IT Departments in these talks since both are very familiar with Oracle and may offer valuable insights. Also, utilizing interfaces could free some time for staff to explore other areas where they could make meaningful contributions. Management Response Regarding interface with Parking software systems with Oracle, we concur that this should be our ultimate goal. Our only concern is to caution that this could take quite a bit a time since there are a number of priority projects in MS that we believe have higher priority. 22

26 Parking Software Systems (continued) Target Implementation Date This is a very extensive project and will most likely need to be budgeted for. We would not be able to put down a hard time frame due to the number of different groups involved in this project. We would set the goal to be the last quarter of 2018 to have this completed. 23

27 10) Policies and Procedures Condition As part of the Parking Enforcement and Ticket Collection audit, it came to our attention that Parking Administration does not have any documented policies and procedures. Criteria Best practices indicate, and many companies agree, that policies and procedures play an important role in the success of any organization. As the Pacific Crest Group, a management consultant group states, policies and procedures are the strategic link between an organization s vision and its day-to-day operations. On one hand, they allow management to guide operations without constant intervention. On the other, they empower employees to effectively carry out their responsibilities within predetermined limits. Cause Parking Administration s staff members have devoted their attention to everyday tasks. Effect In the absence of policies and procedures, employees may not be aware of the rules and when these rules apply. Thus, the consistency in day-to-day operations may be lost, not to mention the non-performance of critical tasks. This in turn may require intervention on behalf of management, which could result in increased operating expenses. In addition, as employees move up in an organization, or leave, institutional knowledge maybe lost. Recommendation We recommend that the Parking Administration develops written policies and procedures about all facets of its operation and make these available to all staff members. Furthermore, these policies and procedures should be periodically reviewed and updated to ensure that they reflect Parking s current practices. Management Response Parking Administration currently has limited policies and procedures in writing. We have procedures for specific programs and their operating instructions. Parking Administration will make the effort to put all of our procedures together. We will also assign staff to keep their sections updated on a quarterly basis. 24

28 Policies and Procedures (continued) Target Implementation Date The first stages of this will be underway the first quarter of The completed document should be finished prior to the end of

29 11) Exit Interviews Condition As part of the Parking Enforcement and Ticket Collections audit, we examined the employee files of fourteen (14) Parking Administration employees that had severed their employment with the City, or had moved to another department, over the last five (5) years. We were specifically interested in their Exit Interview forms; however, out of the fourteen (14) files we examined, only one (1) included an Exit Interview form. Unfortunately, it did not offer any insight into the departmental culture since it was written by a person who was employed for less than a month before moving to a full time position with a different organization. Criteria Exit Interviews are encouraged but not a requirement in the work place. However, the Society of Human Resource Management strongly encourages employers to use them. According to it, the information collected can not only give an organization a unique perspective on its performance and employee satisfaction, but it can also offer some useful insights on how the organization compares to others. Cause The Human Resource Department encourages but does not require departing employees to fill out Exit Interview forms. Effect The information gained from departing employees is unique and often valuable. It can help the City and its leaders learn more about the organization and as a result may be able to address the issues that can cause low employee morale and ultimately employee turnover. Recommendation We recognize that the Human Resources Department has recently taken the initiative and modified the form used. Additionally, it began using Survey Monkey, which also allows staff to analyze the results. However, we would like to suggest taking the process a step further. We recommend that the Human Resources Department requests that the Exit Interview forms are filled out. Keeping in mind the reluctance of some employees to leave a written record, and also as a useful compliment to the Exit Interview process, we also recommend that a face-to-face interview be set up between the employee and a skilled and experienced interviewer. 26

30 Exit Interviews (continued) Parking Management Response Parking Administration will work to ensure that this is done in the department or with the assistance of Human Resources. Target Implementation Date This will be done from this point forward. Human Resources Department Management Response The Human Resources Department (HR) offers exiting employees various ways to provide valuable feedback on both the reasons for their departure from city employment as well as to any suggestions they may have on how the City can improve. Specifically HR asks employees if they would be willing to do an exit interview with an employee relations specialist and also offers them the ability to take an anonymous on-line exit survey. If an employee resigns by going directly to HR our department representative will also ask them questions as to why they are leaving and in some cases when the employee has asked they have been referred to the Department Director or Assistant Director to provide their feedback directly to the management level anonymously. Unfortunately there is no mechanism by which voluntary participation can be guaranteed in this phase of the employment separation process but HR will continue to strive to gather this important information. Target Implementation Date Ongoing already in place/implemented. 27

31 12) Control Self-Assessment Program Condition At the beginning of the audit, the auditor discussed several internal control issues with the former Parking Administrator. One of these issues was whether or not Parking has a Controls Self-Assessment Program in place. We were told that this was not utilized. Criteria Many organizations often use the phrase It could not happen here or It could not happen to us when referring to fraud. Unfortunately, with the rapid developments in technology and extended periods of economic challenges, the risks of fraud increase. According to the Association of Certified Fraud Examiners (ACFE), which recently published a guide titled Managing the Business Risk of Fraud: A Practical Guide, management is responsible for the design and implementation of a controls selfassessment program. In other words, management should take a close look at its operation and assess its risks, and ensure that these are properly addressed through adequate internal controls. Cause Parking Administration s staff members have devoted their attention to everyday tasks. Effect As mentioned above, in today s ever changing business environment, employees and customers alike are faced with increasing organizational and personal pressures, and could be tempted to commit fraud. According to the 2016 Report to the Nations on Occupational Fraud and Abuse, a publication issued annually by the ACFE, a typical organization loses 5% of annual revenues to fraud. Recommendation The controls self-assessment program should be the responsibility of all. Thus, we recommend that Parking management and staff organize meetings to identify risks, map related controls, and identify gaps between how controls are working and how controls are expected to work. We want to emphasize the involvement of staff since no one knows the processes better than the people who perform them on a daily basis. Internal audit would be pleased to offer assistance, if needed, going forward. 28

32 Control Self-Assessment Program (continued) Management Response Parking administration will develop a group of staff to create this program. We will pull from all areas of parking to ensure that we do not miss any risk. Once we get this program up and running we will meet semiannually to address any changes. Target Implementation Date This program will start in early December and will have all recommendations and possible operational changes in place by the end of the year. 29

33 Source: Internal Auditor s Office 30