Internal Audit Follow-Up Report

Transcription

1 Internal Audit Follow-Up Report Bulk Fuel Management and Reporting TxDOT Internal Audit Division

2 Objective To assess the status of corrective actions for high-risk Management Action Plans (MAPs) previously communicated in the Bulk Fuel Management and Reporting audit report issued August Summary Results Testing consisted of an evaluation of three MAPs to determine if corrective actions were implemented as agreed. An additional MAP with a future due date was not tested during this engagement and will be assessed during a future follow-up. MAP Status Comments 2 New Corrective actions that were newly identified and further actions are necessary to properly address the remaining risks. 1 Open Corrective actions were not yet due and were not evaluated during this engagement. 3 Closed Corrective actions have been completed. Scope The engagement was performed by Alma Alvarez and Cynthia Scheick (Engagement Lead). The engagement was conducted during the period from May 5, 2017 to June 2, Audit testing was completed on bulk fuel management and reporting for the period January 1, 2016 through March 31, Bulk fuel management was evaluated by reviewing bulk fuel usage transactions from the fleet management system and Enterprise Resource Planning (ERP) system for the following seven districts: Amarillo, Corpus Christi, Houston, Lubbock, Lufkin, Tyler, and Yoakum. Methodology The methodology used to complete the objectives of this engagement included: Selected a judgmental sample of seven districts based on bulk fuel usage from January 1, 2015 through December 31, 2016: o Reviewed and analyzed fuel usage reports from fleet management system and ERP and computed any variances Interviewed the Director of District Operations. Support Services Division (SSD) and Fleet Operations Division (FOD) management, as well as, district staff responsible for bulk fuel management Background This report is prepared for the Texas Transportation Commission and for the Administration and Management of TxDOT. The report presents the results of the Bulk Fuel Management and Reporting Follow-Up engagement which was conducted as part of the Fiscal Year (FY) 2017 Audit Plan. SSD is responsible for the management and reporting of bulk fuel used to transport employees in fleet vehicles and for equipment used in construction and maintenance projects throughout the state. SSD purchases dyed diesel fuel tax-free. This dyed diesel fuel contains a color additive, to assist in identification and segregation of the fuel. For any November

3 dyed diesel fuel used on Texas roads, which was initially purchased tax-free, the Texas Comptroller of Public Accounts requires a tax of $0.20 per gallon to be paid. TxDOT s districts are responsible for managing their fuel inventory usage and reporting up to SSD. The fleet management system captures bulk fuel usage in real-time and stores the information digitally. In addition, the fleet management system contains detailed information for fuel usage that allows SSD to track fuel deliveries (i.e., purchases of fuel for TxDOT), as well as, taxable and non-taxable usage of dyed diesel fuel. Bulk fuel is obtained at state gas pumps within the districts by using a key fob assigned to vehicles/equipment and allows fleet management system to automatically associate the fuel dispensed with the equipment. Districts utilize this process to track and maintain inventory balances within the fleet management system. Although fuel usage information is tracked automatically in the fleet management system, fuel purchase and usage information must be manually input into the ERP system by district employees. We conducted this follow-up engagement in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our conclusions based on our engagement objective. Recommendations to mitigate risks identified were previously provided to management during the original engagement to assist in the formulation of the management action plans referenced in this report. The Internal Audit Division uses the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework version November

4 Detailed MAP Follow-Up Status MAP Status: New Corrective actions that were newly identified and further actions are necessary to properly address remaining risks. Original Audit Finding No. 1: Management and Reporting of Bulk Fuel MAP Owners: Randy Hopmann, P.E., Director, District Operations Andrew Chavez, Director, Support Services Division FMAP 1.1: The Director of District Operations will discuss at a District Engineers meeting on June 7, 2017, the expectations for accurate tracking and reporting of bulk fuel by the districts and that staff follow the job aid provided by Support Services Division (SSD)* Districts will identify one point of contact (POC) that will be responsible for oversight of the bulk fuel process for the district, including inventory tracking and reconciliation between the fleet management system and Enterprise Resource Planning (ERP) system* The district POCs will be provided to the Director of SSD to ensure policy and procedure (Job Aid) updates are distributed to district staff SSD will provide training as requested for the POC and staff responsible for bulk fuel in the districts * Items were considered complete Completion Date: November 15, 2017 FMAP 1.2: The district point of contact (POCs) will implement and execute the Job Aid for Bulk Fuel to include enforcement of: Weekly measurements and adjustments in Enterprise Resource Planning (ERP) system Weekly reconciliations of fuel reject report in the fleet management system Process ERP receipts for fuel within two business days of physical receipt of fuel Issue fuel daily Report down time of fleet management system by submitting a work order in the Facility Management System or by sending an to the Business System Support Specialists in Field Facilities Coordination section of SSD within one working day Completion Date: November 15, 2017 November

5 MAP Status: Open Corrective actions were not yet due and were not evaluated during this engagement. Original Audit Finding No. 1: Management and Reporting of Bulk Fuel MAP Owner: Teri Augustine, Project Manager, Information Management Division MAP 1.5: Information Management Division (IMD) will consult with Support Services Division (SSD), Fleet Operations Division (FOD), and other stakeholders to determine whether integration of the fleet management system and Enterprise Resource Planning (ERP) system is a cost effective and efficient solution to daily operations and reporting. IMD and SSD will jointly develop a recommendation which provides for improved cost effectiveness and efficiencies in daily operations and reporting of the fleet management system and ERP data. SSD will present this recommendation to Executive Administration. If approved, IMD will work on the proposed solution with the SSD, FOD, and appropriate stakeholders. As an enterprise solution, establishing costs will be the responsibility of IMD and will be submitted to Executive Administration as part of the recommendation. The implementation date will be determined by IMD once the appropriate project planning has completed. It is anticipated the solution could take more than a year to implement after executive approval of the project. Completion Date: December 15, 2017 November

6 MAP Status: Closed Corrective actions have been completed. Original Audit Finding No. 1: Management and Reporting of Bulk Fuel MAP Owner: Randy Hopmann, P.E., Director, District Operations MAP 1.2*: The Director of District Operations will work with Support Services Division to host additional bulk fuel management training and explain the importance of bulk fuel accuracy for district personnel and complete this training by November 1, Additionally, a memo will be issued to districts stressing the expectation for accurate bulk fuel records and need to maintain these records on a frequent basis. This memo will be issued by August 15, 2016.** Original Completion Date: November 15, 2016 Actual Completion Date: August 31, 2016 *Portion of MAP replaced with FMAP 1.1 to show updated actions and additional MAP owner ** Items were considered complete MAP 1.3*: Create and implement a Bulk Fuel Management Program that will incorporate districts and divisions input on how to better manage, monitor, and report on bulk fuel across the state. This program should include performance measures and a training curriculum to assist in the strengthening of controls around inventory at TxDOT. Original Completion Date: March 15, 2017 *MAP replaced with FMAP 1.2 to show updated actions and additional MAP owner MAP Owner: Dalton Pratt, Director, Fleet Operations Division MAP 1.4: Fleet Operations Division will prepare and submit a white paper, outlining the business case for the integration between the fleet management system and Enterprise Resource Planning (ERP) system. This white paper will then be presented to Administration for review and approval to move forward with software updates. Original Completion Date: December 15, 2016 Actual Completion Date: June 6, 2016 Closing Comments The results of this MAP Follow-Up engagement were discussed with/provided to the Director of District Operations, Support Services Division Director, Fleet Operations Division Director, and District Engineers in Amarillo, Corpus Christi, Houston, Lubbock, Lufkin, Tyler, and Yoakum districts on July 31, The Internal Audit Division appreciates the cooperation and assistance received from those contacted during this engagement. November