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HomeMy WebLinkAboutAudit Reports - Public - Regional Wireless Cooperative (RWC) Radio Audit - 3/1/2018 Date: March 1, 2018 To: Kevin R. Phelps From: Candace MacLeod, City Auditor Subject: RWC Radio Audit At the request of the Police Department, the City Auditor’s Office conducted an internal audit of the City of Glendale’s (City) Regional Wireless Cooperative (RWC) radio inventory. I n FY17, the City reported that it had 1,284 active radios and expended $582,994 on associated costs including operations and maintenance and software upgrades. These costs are allocated to City departments based on their radio counts. Departments assigned radios include: Field Operations; Fire; Public Facilities, Recreation, and Special Events; Police; Transportation; and Water Services. The purpose of the audit was to determine whether controls over radio inventories were appropriate and RWC costs were properly allocated to City departments. The audit report includes four observations as summarized below: • Some departments were not monitoring the status of their radios, resulting in the City paying an estimated $39,890 in FY17 for 75 inactive radios. • The radio count used to allocate RWC costs to City departments was outdated, resulting in some departments being over or undercharged for their share of costs. • Some departments were not performing physical radio counts and audit testing identified radios that were missing, lost, or sold with auctioned vehicles. • RWC invoices were paid by the City without confirming radio counts, subscriber rates, and other charges. Management concurred will all the audit recommendations and expects to address the reported risks by June 30, 2018. Attachment cc: Michael D. Bailey, City Attorney Jim Burke, Interim Director of Public Facilities, Recreation, and Special Events Lisette Camacho, Assistant Director of Budget and Finance Tom Duensing, Assistant City Manager Trevor Ebersole, Director of Transportation Terry Garrison, Fire Chief Jack Friedline, Assistant City Manager Craig Johnson, Director of Water Services Vicki Rios, Director of Budget and Finance Rick St. John, Police Chief Michelle Woytenko, Director of Field Operations ______________________________________________________________________________ _____________________________________________________________________________________ City Auditor’s Office 1 RWC Radio Audit Introduction At the request of the Police Department (PD), the City Auditor’s Office conducted an internal audit of the City of Glendale’s (City) Regional Wireless Cooperative (RWC) radio inventory and associated costs. The RWC was formed in 2008 under an Intergovernmental Agreement to address the expanding needs of public safety and its support functions across the Phoenix metropolitan region. RWC membership is open to all local, county, state, federal, and tribal governmental entities. Membership includes 20 cities, towns, and fire districts. It is governed by a board of directors comprised of one executive representative from each member entity. The board directs the operation, maintenance, planning, design, implementation, and financing of the RWC. The City of Phoenix serves as the RWC’s administrative managing member, responsible for administration and financial management. The system provides over 11,000 square miles of coverage across the Phoenix metropolitan region and beyond. In FY17, the City reported that it had 1,284 active radios and expended $582,994 on associated costs including operations and maintenance (O&M) and software upgrades, inclusive of credit adjustments. City radios are utilized by: Field Operations; Fire; Public Facilities, Recreation, and Special Events; PD; Transportation; and Water Services. PD is responsible for paying RWC invoices out of the PD Communications division budget in the general fund. A portion of these costs are allocated to other City departments based on radio counts. Purpose and Objectives The purpose of the audit was to determine whether controls over radio inventories were appropriate and RWC costs were properly allocated to City departments. Scope and Methodology The scope of the audit was July 1, 2016 to November 30, 2017. To gain an understanding of the processes, policies, and procedures, we interviewed staff from Budget and Finance, Field Operations, Fire, Parks Maintenance, PD, Transportation, and Water Services. We also sampled radio inventories and reviewed various documents including: • Budgets and financial reports • City contracts, policies, and procedures • RWC spreadsheets and invoices Observations, Recommendations, and Management Responses Our testing identified the following observations: ______________________________________________________________________________ _____________________________________________________________________________________ City Auditor’s Office 2 RWC Radio Audit 1) The City paid the RWC an estimated $39,890 in FY17 for 75 inactive radios The auditors performed a review of the number of active City radios reported by the RWC to inventory records provided by departments. The review identified 75 radios on the RWC active list that were designated as inactive by the City with an annual estimated cost of $39,890 as summarized in Table 1. Table 1 – Summary of FY17 Inactive Radios Department Total No. Radios No. Inactive Radios on Active List Annual O&M Costs ($32.03 per radio per month) Annual Software Upgrade Costs ($147.51 per radio per year) Total Annual Cost of Inactive Radios Field Operations 101 18 $6,918 $2,655 $9,573 Fire 232 3 $1,153 $443 $1,596 PD 886 26 $9,993 $3,835 $13,828 Transportation 6 0 0 0 0 Water Services 58 27 $10,378 $3,983 $14,361 Unknown* 1 1 $384 $148 $532 Total 1,284 75 $28,826 $11,064 $39,890 *Unable to locate radio during the audit. Radio was designated as inactive. Other than Fire and PD, City departments had not designated staff to monitor radio inventories and assess whether radios are in use or still needed for business operations. Additionally, departments do not receive spreadsheets that report the active and inactive radios that the City is billed for by the RWC. The City can request that radios be activated or deactivated on a quarterly basis by submitting an online request to the RWC. Although PD currently performs this function, several departments interviewed during the audit were unclear of this process. According to staff, requests to delete some of the inactive radios listed in Table 1 had already been sent in. However, the City did not always have this documentation on file, nor did they receive the RWC reports to verify that the radios were correctly deactivated. According to staff, most of the inactive radios were deactivated during the audit. Additionally, non-public safety staff reported that they had not been trained in the use and functionality of the radios. Potential Risk: High – Inaccurate inventory records reduce accountability, increase the risk of loss or theft, and can lead to increased costs to the City. Lack of training increases the risk that staff are unaware of the full functionality of the radios or are unable to properly use them during emergency situations. Recommendation: Field Operations, Fire, PD, Transportation, and Water Services assign responsibility for the control and monitoring of radios within their department. This includes obtaining quarterly RWC reports to verify the accuracy and status of radios assigned to their department. Documentation to activate, deactivate, transfer, and ______________________________________________________________________________ _____________________________________________________________________________________ City Auditor’s Office 3 RWC Radio Audit delete radios should be retained in accordance with record retention policies and reconciled to RWC radio reports. PD should train City staff from Field Operations, Transportation, and Water Services on the use and functionality of the radios, as appropriate. Management’s Response: Field Operations: Concur. Field Operations will assign responsibility to one employee in each division for the control and monitoring of radios within that division Fire: Concur. We have updated our records and reporting process to be consistent with the investigation findings. PD: Concur. The Police Department Technical Services will be responsible to control all Police Department radios on the RWC system. • Technical Services will obtain quarterly reports from RWC to reconcile status of radios. Technical Services will forward the reports to Fire, Transportation, Field Operations, and Water Services Departments. • Technical Services will document activations, deactivations, deletions and additions. Records will be kept per City retention rules. • Technical Services will document needed changes to radio count and reconcile with RWC. Once the radio counts are reconciled, a copy of this report will be sent to the Finance and Budget Office for the City of Glendale. • Technical Services will provide radio training to departments on radio usage and function. User training will be updated as needed and sent to Field Operations, Transportation, and Water Services on an annual basis. Transportation: Concur. Transportation will assign responsibility for the control and monitoring of radios to one employee in the department. Water Services: Concur. Water Services has designated the Support Services Supervisor assigned to Security to be responsible for controlling and monitoring radios within the Water Services Department. Under review by the department is the total number of radios needed. In addition, processes are being put in place for periodic inventories, and documentation for appropriate retention per City policy and reconciliation with RWC reports. Anticipated completion date is February 28, 2018. 2) The radio count used to allocate RWC costs to City departments was outdated The Budget Office prepared the calculation to allocate participating departments’ percentage share of the annual budgeted RWC costs. The percentages were based on radio counts that are used to charge City departments for their respective share of actual RWC costs. As indicated earlier, PD pays for the entire RWC invoice, and then a portion of the costs are allocated out to other City departments with radios. A review of the FY17 journal entries prepared by Finance to allocate actual RWC costs to City departments indicated that allocation percentages were inaccurate as they were ______________________________________________________________________________ _____________________________________________________________________________________ City Auditor’s Office 4 RWC Radio Audit based on department radio counts that were last updated in FY15. Additionally, the allocation percentages for two divisions were switched in error and did not agree with the FY15 radio count. Furthermore, a written procedure for the allocation of RWC radios costs to City departments has not been developed. Potential Risk: High – Inaccurate radio counts reduce the accuracy of the calculation used to allocate costs, resulting in departments being over or under charged for their portion of the annual RWC costs. Recommendation: Budget and Finance develop a written procedure for the allocation of RWC radio costs and communicate it to City staff. The procedure should include the requirement for departments to provide accurate radio inventory counts to Budget and Finance annually, prior to development of the allocation of radio costs. Management’s Response: Concur. Budget and Finance will work with PD to develop written procedures for the allocation of RWC radio costs by June 30, 2018. 3) Testing identified radios that were missing, lost, or sold with auctioned vehicles In accordance the City’s Risk Management Procedures, departments are responsible for reporting lost or stolen City property to the appropriate agencies using the “Lost or Stolen City Owned Property” form. Notifications include PD, supervisors, department heads, Materials Control, Finance (for fixed assets), and Risk Management. Auditors performed inventory counts for a sample of radios from City departments. The testing identified radios that were missing, lost, in storage, or sold with vehicles that went to auction as summarized in Table 2. Table 2 – Summary of Stolen, Lost, Sold, or Stored Radios Department No. Radios Stolen No. Radios Missing or Lost Lost or Stolen City Owned Property Form Completed Prior to the Audit No. Radios Sold with an Auctioned Vehicle No. Radios in Storage Field Operations 0 1 No 0 23 Fire 1 0 Yes 0 0 PD 1 1 No 0 0 Water Services 0 3 No 2 35 Transportation 1 5 No 0 58 Total 3 10 2 116 Testing identified department radio assignments, locations, and inventories that were inaccurate. The “Lost or Stolen City Owned Property” form was not completed prior to the audit for all but one of the stolen or lost radios. Additionally, physical inventory counts of radios were not conducted annually, if at all. Although some of the radios were capital assets, they were not always tagged with capital asset tags. Only radios from two departments, PD and Water Services, had capital asset tags. Water Services reported two radios that were sold with vehicles when they went to auction, without ______________________________________________________________________________ _____________________________________________________________________________________ City Auditor’s Office 5 RWC Radio Audit deactivating or deleting the radio from the RWC list. Several departments stored disabled radios in boxes at Spring City. Radios were also sent to auction without logging the serial numbers for tracking purposes. Non-public safety departments were unaware of how to dispose of radios or what reports to complete if a radio was lost, missing, or stolen. A citywide policy and procedures have not been developed regarding the safeguarding, assignment, transfer, and disposal of radios, or the requirement to physically count radios. Procedures for reporting lost or stolen radios to PD have also not been developed. Potential Risk: High - There is increased risk of theft or loss if controls are not in place to monitor and safeguard radios. Lost, stolen, or missing radios can pose safety and security concerns if they are not properly deactivated in a timely manner. Recommendation: Budget and Finance should work with City departments to develop a policy and procedures to assign, safeguard, monitor, physically count, and control radios. The procedures should include the requirement for departments to notify PD for all stolen, lost or missing radios. Unused radios should be returned to the vendor or sold in accordance with City policy in a timely manner. Additionally, staff should be trained on these policies and procedures. Management’s Response: Concur. Budget and Finance will review capital asset physical inventory and disposal procedures to determine if they need to be updated to include RWC radios by June 30, 2018. 4) RWC invoices are paid without confirming radio counts, subscriber rates, and other charges The RWC charges the City for operation and maintenance (O&M) costs, which are based on subscriber radio counts, software upgrades, and narrow banding. Credits are also applied to the City by the RWC, as appropriate. An employee in PD is responsible for paying the RWC invoices. However, this employee is not provided with supporting documentation to verify the accuracy of RWC invoices, including City radio counts, O&M rates, and other associated costs or credits. Potential Risk: High – Lack of access to supporting documentation increases the risk that billing errors go undetected. Recommendation: PD develop controls to ensure supporting documentation is provided to employee(s) that pay RWC radio invoices to verify the accuracy of billings. Management’s Response: Concur. The Police Department will verify radio counts and forward to the PD Management Analyst to compare with the RWC radio invoices. This information will be sent to the Field Operations, Water Services, and Transportation departments so they can verify the radio count they are responsible for. Additionally, ______________________________________________________________________________ _____________________________________________________________________________________ City Auditor’s Office 6 RWC Radio Audit copies will be sent to both the Finance and Budget offices. Any discrepancies can be addressed at this time.