A REPORT FROM THE OFFICE OF INTERNAL AUDIT

Transcription

1 A REPORT FROM THE OFFICE OF INTERNAL AUDIT PRESENTED TO THE CITY COUNCIL CITY OF BOISE, IDAHO AUDIT / TASK: # , Status Report Previous Audit Findings AUDIT CLIENT: N/A REPORT DATE: March 1, 2018 AUDIT GRADE: N/A REPORT AUTHOR: Steven Rehn, CIA CFSA Director of Internal Audit AUTHORITY: Boise City Code,

2 REPORT OF AUDIT ACTIVITIES Task: # , Status Report Previous Audit Findings Introduction Annually, the Office of Internal Audit commits resources to a number of projects in an effort to provide assurances that resources are protected; that operations are conducted effectively and efficiently; and that the organization is compliant with relevant laws, rules, and regulations. These projects typically undergo a lifecycle that involves the establishment of objectives, and the performance of work that is sufficient to satisfy those objectives. As the projects are finalized, reports are issued that detail our observations and recommendations, as well as management s plans to address any areas in need of remediation. Periodically, we follow up to determine management s progress toward implementing their planned corrective actions. The purpose of this report is to present the current status of issues that were outstanding as of the last Status Report, #16-15; as well as findings that were noted in Audit Reports that have been issued since then. Scope and Methodologies Report # is an informational document only. Traditional scope periods and coverage statements normally associated with Internal Audit activities have not been established. The report covers all of the audits and engagements that have been completed by the Office to date where there continue to be outstanding, unresolved issues; or where corrective actions have been completed in the interim. All information is current as of January 30, We employed a number of methodologies during the follow-up contacts with management and staff that typically consisted of inquiry, observation, and / or the performance of more intensive audit work. The objective in each case was to gain a reasonable degree of assurance that corrective actions either had been completed, or were progressing in a satisfactory manner. 2

3 REPORT OF AUDIT ACTIVITIES Evaluation and Comments Internal Audit believes that when management s pursuit of corrective actions has been active and on-going, then they have demonstrated a satisfactory level of responsiveness to the concerns voiced by Audit. This appears to hold true for the cross-section of departments and divisions that were contacted during the current year s follow-up activities. Members of the City s management team continue to display a willingness to entertain, and to act on Audit s recommendations by pursuing corrective actions. As a result, areas of concern continue to be addressed and weaknesses or gaps in controls, processes, and procedures corrected. Internal Audit will continue to monitor these issues periodically, and will report on their status as appropriate. The incorporated document that follows (beginning on page 4) presents a synopsis of the issues that were noted during previously completed engagements. Management s progress in correcting those issues, and those issues current status is also included. When corrective actions are considered complete, the items are designated as Closed. Otherwise, they will continue to be viewed as Open items that require some measure of remediation. Please note that the incorporated document contains only a summarized version of Internal Audit s observations. The reader is urged to review the Audit Reports themselves (all of which are available on the City s web site), in detail in order to achieve a fuller understanding of the issues, and of the associated responses received from management in relation to our recommendations. 3

4 OFFICE OF INTERNAL AUDIT STATUS OF PREVIOUS AUDIT FINDINGS #15-05, Friends of Zoo Agreement Contract Compliance Due to a lack of accounting detail, concession fees due to the City were not determinable. Contributions to capital improvement funds did not achieve compliance with the contract. Reports now provide a level of detail needed to support the payment of concession fees, and capital contributions. Management continues to pursue the development of a new contract model that will simplify and streamline the financial relationship between Zoo and the Friends organization. #15-06a, Police Armory Inventory Records Master listing of weapons was impaired due to an unknown corruption of records. Reports did not reflect recently acquired weapons. Other reporting issues resulted in incomplete reports. Management's intention to utilize a separate system for tracking weapons is not achievable. In order to compensate, record-creation processes have been improved, physical and system access controls have been enhanced, periodic record verifications are pursued, and an annual weapons inspection continues to occur. Weapons Inventories Current weapons-inventory processes do not provide for a segregation of vital record-keeping duties. A competent inventory procedure is not in place. Management has implemented an alternative, dual-control records-creation process. Electronic and hardcopy records are created contemporaneously, and cross-checked and confirmed by two individuals as weapons are received. Records are verified against the weapons periodically, on a sample basis, to ensure record integrity. 4

5 STATUS OF PREVIOUS AUDIT FINDINGS #16-07, Geothermal Fund Billing / Metering Errors Four billing and / or usage errors were noted. Also, system production records did not equal reinjection records. Management corrected billing discrepancies that were noted. Newly-installed flow metering equipment at the reinjection site resulted in a reduction in the originally identified variance from 11.8% (previously), to 1.3% (currently). Efforts to further reduce the rate of variance are on-going. #16-09, Construction Management Training Audit found a number of instances where relevant training had not been provided to those employees who would normally be involved in the oversight of construction activities. Automated tracking processes have been implemented to better track these trainings going forward. All employee training issues relevant to this observation have been successfully resolved by management. 5

6 STATUS OF PREVIOUS AUDIT FINDINGS #16-11, Sewer Operations Billing Records / Accuracy Billings to neighboring Sewer Districts were not always calculated correctly; re-billings weren't pursued, data used in billing calculations wasn't always accurate, and in one instance information that should have been included in the calculations was not. Management corrected the relevant billing records, and included the results in adjustments to final billings that were in process. Subsequent bills will be reviewed by finance managers in order to ensure accuracy. Training Records Employee training was not always up to date due to: (1) Job changes; (2) Failure to attach training requirements to specific jobs; and, (3) Training system failure to re-assign training for subsequent training cycle. Management distributes listings of "incomplete assignments" or "overdue assignments" monthly to Supervisors and Managers. Human Resources has implemented automated assignment of training to employees, both initially and on a recurring schedule. #17-01, Airport Leases Lease Compliance Current Certificates of Insurance were not on hand for nine tenants. Two other tenants did not appear to remit rent payments in a timely manner. Management will perform a monthly review of insurance documentation, and will pursue any expired certificates. Management will rely on their established system for addressing delinquent accounts, which includes effective follow up procedures, and the discretionary assessment of late fees as needed. 6

7 STATUS OF PREVIOUS AUDIT FINDINGS #17-03, Cost Allocation Plan System Allocation Rates Separate rates of allocation were established for Finance & Administration's personnel, and M & O costs. Only the rates established for personnel were being utilized in system-drive allocations. An under-allocation of costs occurred as a result. Management analyzed the allocated costs under both original and revised rates. Differences were not deemed to be material; no corrections were pursued. Rates will be re-considered as the plan is evaluated in future years. 7