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HomeMy WebLinkAboutAudit Reports - Public - Materials Recovery Facility - Audit Follow-up - 2/21/2019 Date: February 21, 2019 To: Kevin R. Phelps, City Manager From: Candace MacLeod, City Auditor Subject: Audit Follow-up: Materials Recovery Facility An audit of the Materials Recovery Facility (MRF) was conducted by the City Auditor’s Office in May 2017. In November 2018, a follow-up was conducted to ensure actions were taken by management to reduce internal control risks. Out of the 20 recommendations from the 2017 report, three remain open as follows: Budget and Finance • Formalizing procedures for managing vendor insurance certificates. • Developing procedures for the sale of goods and services. Field Operations • Establishing policies for vehicle assignment and annual mileage requirements. An additional follow-up will be performed in FY20 to ensure action has been taken to address the outstanding audit recommendations. Please contact me if you have any questions. Attachment cc: Chris Anaradian, Assistant City Manager Michael D. Bailey, City Attorney Lisette Camacho, Assistant Director of Budget and Finance Vicki Rios, Director of Budget and Finance Rob Sweeney, Interim Assistant City Manager Michelle Woytenko, Director of Field Operations _____________________________________________________________________________________ City Auditor’s Office 1 MRF Follow-up Recommendation Management Response May 2017 Management Response October 2018 Status 1.1 Field Operations present the results of the internal MRF operations analysis, once completed, and the external consultants’ reports to City Management and seek guidance on how to proceed. Concur. The Field Operations Department will finalize the assessment of the MRF and present findings through the City Manager’s office for guidance in October 2017. Findings were presented to City Management on November 6, 2017, and direction was received to issue an RFP and evaluate responses. Closed 1.2 Budget and Finance review the indirect cost allocation model and make any adjustments to ensure equitability. Concur. Budget and Finance reviewed the updated model, in consultation with the City Manager’s office, and made some adjustments to the allocation in the FY2017-18 budget. The Budget and Finance Department will update the model and consider updating the allocations as part of the FY2018-19 budget process. Concur. Budget and Finance reviews the indirect cost allocation annually during the budget process. The indirect cost allocation model is expected to be reviewed by an external consultant in FY20. Closed 2.1 Budget and Finance train staff and document procedures to ensure third party legal claims are provided timely to the City Attorney’s Office for review and further guidance. Concur. In February 2017, the Budget and Finance Department management team discussed the proper handling procedures for all legal notifications, even those that may appear to be fraudulent. All staff were subsequently notified of these procedures in writing and trained accordingly. Budget and Finance is sending all legal documents to the City Attorney’s Office. On an annual basis, Budget and Finance sends a reminder to its staff to send all legal notices to the City Attorney’s Office. The most recent reminder was sent on October 17, 2018. Closed 3.1 Field Operations ensure invoices and timesheets are adequately reviewed prior to Concur. The Field Operations Department, MRF Division has implemented a three- With the implementation of Simplicity, the invoices are now reviewed by the MRF Supervisor and Account Specialist prior Closed _____________________________________________________________________________________ City Auditor’s Office 2 MRF Follow-up Recommendation Management Response May 2017 Management Response October 2018 Status payment, and all relevant supporting documentation is retained. tier review of timesheets and invoices as of August 15, 2017, and documentation will be retained per the Division’s retention policy of three (3) years. to being approved by the Landfill Engineer. These invoices are saved in Simplicity in a folder for processed invoices created by the Solid Waste Administration Account Specialist and will be purged according to the MRF retention policy. 3.2 Field Operations ensure contract labor, including overtime, is paid in accordance with the contract terms and review any potential overpayments in conjunction with Procurement. Partially Concur. It was the contract intent to establish an hourly rate for temporary services knowing that the legal requirement for overtime would be covered by the Department. For clarity, the contract will be amended, and presented to Council for their approval by November 30, 2017. Staffing Specialists Contract C-10230 Amendment #4 was approved by Council in August 2018. Language addressing the payment of overtime was included in the amendment. Closed 3.3 Field Operations ensure vendor early payment discounts are utilized by working with Budget and Finance. Concur. The Field Operations Department has met with the Finance Department to complete the early payment discount. Completed September 19, 2017. Completed in PeopleSoft. The process has changed with the introduction of Simplicity, and Finance is providing ongoing assistance. Closed 3.4 Field Operations develop controls to prevent lapses in contract extensions and amendments. Concur. The Landfill/MRF Division of the Field Operations Department is the last Division to complete the contract tracking spreadsheet. All Landfill/MRF Division contracts have been added. The contact tracking spreadsheet is in use and monitored monthly by the Contract Specialist. Closed 3.5 Budget and Finance formalize and Concur. Budget and Finance conducts Budget and Finance conducts procurement Open _____________________________________________________________________________________ City Auditor’s Office 3 MRF Follow-up Recommendation Management Response May 2017 Management Response October 2018 Status communicate responsibilities for the collection, review, and maintenance of vendor insurance certificates. procurement training annually, most recently in July 2017. The training covers the responsibility for collection, review, and maintenance of vendor insurance certificates. In addition, Budget and Finance will add formal clarification of these responsibilities to the Procurement Policy (FAP#1) by October 31, 2017. training annually, most recently on February 28, 2018. Budget and Finance is in the process of updating Finance Administrative Policy #1 (FAP #1) to include policy and process changes from the implementation of SimpliCity. The next annual training and FAP #1 updates will be completed by June 30, 2019. 4.1 Field Operations enhance controls over the commodity bidding process and update policies and procedures. Concur. At least three bids will be requested for all commodities. The MRF’s policies and procedures have been amended to ensure compliance. Policies and Procedures were amended in October 2017. Closed 4.2 Field Operations review bid procedures to ensure competitive bidding is performed whenever possible to maximize revenue from the sales of commodities. Concur. The MRF bid policies and procedures have been amended. Policies and Procedures were amended in October 2017. Closed 4.3 Field Operations ensure credit file documentation required by the “Procurement and Payment Collections Procedures” is obtained for all potential bidders. Concur. The MRF has amended a policy to ensure appropriate credit file documentation (MRF’s Procurement and Payment Collection Procedures), and the policy requires monthly review by management. Policies and Procedures were amended in November 2017. Closed 4.4 Field Operations review and update the MRF record Concur. The MRF’s record retention schedule has been Field Operations verified in November 2018 that documents retained Closed _____________________________________________________________________________________ City Auditor’s Office 4 MRF Follow-up Recommendation Management Response May 2017 Management Response October 2018 Status retention schedule to ensure bid documentation is retained in accordance with legal requirements. reviewed and updated to comply with legal requirements. were in compliance with the record retention requirements. 4.5 Budget and Finance formalize and communicate procedures for the sale of goods and services. Concur. Budget and Finance will review its procedures for the sales of goods and services by February 28, 2018. Budget and Finance will update Finance Administrative Policy #1 to include procedures for the sales of goods and services by June 30, 2019. Open 5.1 Field Operations perform periodic materials audits for the Town of Wickenburg, in accordance with contract terms or other requirements, and analyze the results. Concur. Audit was completed August 30, 2017, and future audits will be completed in accordance with contract terms. The IGA with The Town of Wickenburg expired June 29, 2017. The City authorized a month to month extension of the IGA from July 1 through October 31, 2017. The IGA was not renewed and their material is no longer being accepted by the City. Closed 6.1 Field Operations work with Equipment Management to ensure vehicles assigned to the MRF and Landfill are utilized in an efficient and cost-effective effective manner. Concur. The Landfill/MRF Division has met with Fleet Services Division in August 2017 to ensure vehicles assigned are utilized in an efficient and cost- effective manner. The Landfill Superintendent met with the Fleet Management Superintendent on May 17, 2018 to review vehicle usage. Three vehicles from the Landfill-MRF fleet have been turned in and are no longer part of the fleet: 6235A01, 6275B01, and 6235B19. This meeting will take place annually, and the next meeting is scheduled for May 23, 2019. Closed 6.2 Field Operations review policies relating to obtaining fuel for vehicles and enhance controls to Concur. All Landfill/MRF staff have been instructed in writing and the directive has been posted that all All passenger cars and trucks are fueled at the Field Operations Complex. Closed _____________________________________________________________________________________ City Auditor’s Office 5 MRF Follow-up Recommendation Management Response May 2017 Management Response October 2018 Status ensure fuel consumption is properly managed and allocated. passenger vehicles (off- road vehicles such as the landfill compactor are exempted) must be fueled at the Field Operations complex to ensure proper controls and tracking. 6.3 Field Operations develop controls that more specifically address vehicle assignment and annual mileage requirements. Concur. The Landfill/MRF Division has met with Fleet Services in August 2017 to improve vehicle utilization efficiencies and to establish annual mileage minimums and operational requirements per vehicle. The usage will be reviewed quarterly. Policies have been drafted, are under review, and should be issued by January 1, 2019. Open 7.1 Field Operations enhance communication between the MRF and the Recycling group relating to the types of contamination included within recyclable materials. Concur. The MRF and Recycling groups have established a regular, in-person meeting schedule as of August 2017. The MRF and Recycling group meet on a regular basis. Closed 8.1 Field Operations develop written policies and procedures for Paradigm that include user access and termination, password requirements, and the assignment of roles, and train staff. Concur. The policy has been amended and a written procedure added to the exit interview process to ensure Paradigm access is removed. Paradigm password requirements and the assignment of roles has been updated. All staff were trained in August 2017. Policy updated, last review completed August 24, 2018. Closed 8.2 Field Operations optimize Paradigm Concur. Audit logs were readily available via Logs are stored on the Landfill N:/ drive. Closed _____________________________________________________________________________________ City Auditor’s Office 6 MRF Follow-up Recommendation Management Response May 2017 Management Response October 2018 Status audit logs to facilitate effective review of user activity by an individual without administrative access to the system. Paradigm. Review of the logs has been added to the procedure in August 2017 to ensure effective, efficient and secure use of the system.