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HomeMy WebLinkAboutAudit - Other Publications - Public - Ethics Hotline - Community Action Team (CAT) Donation Accounty - 5/12/2017 _____________________________________________________________________________________ 1 CAT Donation Account Date: May 12, 2017 To: Kevin R. Phelps From: Candace MacLeod, City Auditor Subject: City Auditor’s Ethics Hotline – CAT Donation Account The City Auditor’s Office administers Glendale’s Ethics Hotline program. The primary objective of the Ethics Hotline is to provide a means for city employee s to report any activity or conduct related to city personnel, resources or operations for which they suspect instances of ethical violations, fraud, waste or abuse. Background On March 2, 2017, an employee (complainant) requesting to remain anonymous contacted the City Auditor’s Office regarding potential issues with the Glendale Police Department’s (GPD) Community Action Team (CAT) donation account. The goal of CAT is to utilize the Community Oriented Policing philosophy by providing the necessary tools to eliminate or reduce crime through educational programs and enforcement. Donations are made by organizations and citizens in support of CAT initiatives. The donation funds are utilized by GPD to pay for costs associated with CAT’s GAIN night and other community events. CAT donations and expenditures are recorded in the CAT donation account (1840-33014). The complainant alleged the following r egarding the CAT donation account:  Lack of reporting of CAT donation account revenues, expenditures, budgets and fund balance s to GPD staff  I mproper use of CAT donations to purchase picture frames for the Foothills Patrol Bureau After receipt of the complaint, the auditor interviewed staff from GPD and Budget and Finance to discuss City donation procedures and CAT budgets and financial reports. In FY15/16 and FY16/17, CAT received monetary donations of $7,781 and expended $8,471, with a reported fund balance of $5,599 as April 12, 2017. The City has a reported 31 donation accounts with a combined fund balance of $202,200 as of April 12, 2017. O bservations After review of documentation for the period July 1, 2015 to April 12, 2017 and discussion with City staff, the following observations were noted relating to the CAT donation account: _____________________________________________________________________________________ 2 CAT Donation Account 1. Lack of Citywide Donation Policies and Procedures Policies and procedures have not been established by the City for the acceptance, review, monitoring and documentation of monetary, equipment and other in-kind donations. Furthermore, donation reports are not generated and distributed to stakeholders to enhance accountability and transparency. Comprehensive donation policies and procedures assist with maintaining an environment whereby residents and businesses want to contribute to the City’s programs and facilities. They also ensure that donations ar e acknowledged, properly accounted for, reported and reviewed for impact on City resources. Furthermore, this enhances the City’s stewardship over funds, and helps ensure they are spent in accordance with donor terms. Lack of adequate controls over donations could increase the risk of theft, loss or fraud. 2. Non CAT-Related Donation Check and Associated Expenditures Recorded in the CAT Donation Account According to GPD staff, a $1,000 donation check was received by an employee in December 2016 for the Foothills Patrol Bureau, not specifically the CAT team. The employee initially wanted to deposit the check into the Foothills line item, but was told this was not possible to do. A suggestion was made to deposit the check into the CAT donation account because the funds could then be expended via procurement card. The check was deposited into the CAT donation account in December 2016. In December 2016 and January 2017, approximately $643 in costs for pictures , photo paper and picture frames for the Foothills Patrol Bureau were charged to the CAT donation account. Staff reported that the $1,000 donation check received in December 2016 was the funding source for the pictures and frames . As of April 12, 2017, $357 of the $1,000 Foothills Patrol Bureau donation remains in the CAT donation account. The commingling of donation funds reduces transparency and increases the risk that designated funds are not used for their intended purpose or properly accounted for in the financial records. 3. Signature Authority for the CAT Donation Account included Three Terminated Employees The signature authority for the CAT donation account included three employees that no longer work ed for the City. _____________________________________________________________________________________ 3 CAT Donation Account In accordance with the City’s procurement policies and procedures, departments are required to update the City’s financial system immediately if there are changes in signature authority due to changes in personnel. 4. CAT Donation Checks Were Deposited Betwe en 5 and 36 Business Days After the Check Date Eight CAT donation checks were received during the period under review and deposited with the City anywhere between 5 and 36 business days after the check date. The checks were made out to the City, GPD, GPD 100-Club and GPD CAT. Logs are not retained by GPD to indicate the date a check was received by the City. The City’s cash handling procedures state that checks should be deposited no later than the next business day after receipt. The procedures also state that checks should be made payable to the City. 5. CAT Donation Account Procurement Card Charges Were Not Always Adequately Explained A review of CAT donation account procurement card charges indicated that they did not always detail the nature of the purchase or date of an event if food was purchased. City procurement card procedures state that cardholders are required to provide a detailed description of every procurement card transaction on the monthly statement. Food expenses should be supported by the date and location of the event and the attendees’ names. Recommendations City Manager’s Office 1. Coordinate the development and communication of citywide donation policies and procedures in conjunction with the City Attorney’s Office. GPD 2. Ensure GPD donations are properly recorded. 3. Update and monitor department signature authority. 4. Ensure City checks are logged and deposited in a timely manner. 5. Ensure procurement card charges are adequately explained. _____________________________________________________________________________________ 4 CAT Donation Account Management Response s 1. Concur . The City Manager’s Office will coordinate the development and communication of citywide donation policies and procedures in conjunction with the City Attor ney’s Office by August 31, 2017. 2. Concur. Finance has set up a miscellaneous Police grant account (33259) as of 5/4/17. The remaining balance of $357 from the directed donation for the Foothills substation will be placed in this account and tracked as it is spent. Action plan date: 7/1/17. 3. Concur. Police budget staff was not aware that employees that have separated from the City are not automatically removed from PeopleSoft signature authorization when their other access is closed out by IT and HR. On 5/1/17, the three employees noted in the audit were reduced to $0 authority, as PeopleSoft does not allow for the complete removal of an employee record. Action plan date: Completed. 4. Concur. The “checks received” log has been updated with a column to indicate the date a check is received. Action plan date: Completed. 5. Concur. Police staff will attach “flyers” for large scale events that better explain/address the nature of the expenditure. Action plan date: Completed . cc: Michael D. Bailey, City Attorney Vicki Rios, Director Budget and Finance Rick St. John, Police Chief