HomeMy WebLinkAbout06/01/2010 - Report: Risk Assessment - City Council - Audit Committee
Citywide Risk Assessment Results
June 2010
City Internal Auditor’s Office
City of College Station
File # 10.04
Citywide Risk Assessment
Introduction ................................................................................................................. 1
Methodology ................................................................................................................ 2
Results ........................................................................................................................ 4
High Ranking Cost Centers .................................................................................... 4
Planning & Performance ........................................................................................ 5
Average Cost per Customer .................................................................................... 5
Budget to Actual Expenditure Variance..................................................................... 6
Overtime Expenditures ........................................................................................... 7
Average Sick Hours per FTE .................................................................................... 7
Overtime Hours per FTE ......................................................................................... 7
Public Concern & Perception ................................................................................. 7
Media Coverage ..................................................................................................... 7
Claims Against the City ........................................................................................... 8
Organizational Change .......................................................................................... 8
Turnover ............................................................................................................... 8
Budget Trend ........................................................................................................ 9
FTE Change ........................................................................................................... 9
Operation Revenue Change .................................................................................... 9
Size & Complexity .................................................................................................. 9
FTE ....................................................................................................................... 9
Operation Revenues ............................................................................................... 9
Budgeted Expenditures ..........................................................................................10
Expenditure Trend ................................................................................................10
Safety & Liability ..................................................................................................10
Average Worker’s Comp Amounts ...........................................................................10
Average Training Expenditure per FTE ....................................................................10
Fiscal Accountability .............................................................................................10
Purchasing Activity ................................................................................................10
Cash Handling ......................................................................................................11
Insert Report Title Here Insert Report Title Here 2
Professional Service Expenditures ...........................................................................11
Travel as Percentage of Training Expenditures.........................................................11
Audit Coverage ............................................................................................................ 13
Audit Plan ................................................................................................................... 15
Sanitation Operations ...........................................................................................15
Land Acquisition ...................................................................................................15
Convention and Visitors Bureau ...........................................................................15
Asset Management ...............................................................................................15
Payroll Audit Phase II ..........................................................................................16
Fleet Utilization.....................................................................................................16
Change Orders ......................................................................................................16
Implementation of Continuous Monitoring Systems ..........................................16
Water/Wastewater Utility ....................................................................................17
Professional Services Contracts ...........................................................................17
Revenue Generating Cost Centers .......................................................................17
Exhibit A: Risk Factor Data: .......................................................................................... 18
Exhibit B: Risk Factor Scoring: ...................................................................................... 22
Page 1 of 23
Introduction
Every two to three years, the City Internal Auditor performs a citywide
risk assessment as a tool to assist in creating the annual audit plan. The
purpose of the annual audit plan is to allocate scarce audit resources to
areas that will most benefit the city. The risk assessment is the first step
in determining which areas of the city have high risk factors and are
candidates for an internal audit.
In developing the annual audit plan, potential audit topics are identified
based on several factors:
Assessing financial and performance risks through the citywide
risk assessment
Considering requests and suggestions from the City Council, city
management, and other interested parties
Reviewing the external financial auditors’ results
Determining the feasibility of audit topics and the availability of
resources
While a risk assessment provides quantitative information, not all risk
factors are quantifiable – judgment and opportunities to improve
outcomes are also used to recommend audit projects. Therefore, the
following is also considered when making audit selection decisions:
The impact the audit would have (the risks it would address and
the likely types of findings and recommendations to result)
The sensitivity, complexity, and difficulty of the project compared
to its likely impact
The breadth and depth of audit coverage across city government
The availability of other resources
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Methodology
Several quantitative risk factors are identified and utilized in the risk
assessment model. The risk factors used in this assessment are split
between six categories as shown in Table 1.
Table 1: Risk Categories
Fiscal Accountability Planning & Performance
Cash handling Overtime expenditures
Average purchasing expenditures Cost per customer
Professional service expenditures Average sick hours per FTE
Purchasing trend Overtime hours per FTE
Travel as a percentage of training
expenditures
Budget to actual expenditure
variance
Organizational Change Size & Complexity
Budget trend Budgeted expenditures
FTE change FTE
Operation revenue change Operation revenues
Turnover Expenditure trend
Safety & Liability Public Concern & Perception
Average worker’s comp amounts Media perception
Average training expense per FTE Claims against the city
Note: FTE stands for full time equivalent, which equals the number of paid hours
during a work period (part-time and fulltime) by the number of working hours in the
period.
Information for each of the risk factors was gathered from a variety of
sources. The city’s financial information system was used to collect
revenue, expenditure, purchasing, and personnel related data. The fiscal
year 2009 and 2010 approved annual budgets were also a source of data.
Other information was supplied by a number of city employees.
The raw data collected was then aggregated into the risk factors
identified in Table 1 above. These factors were then scored on a scale of
one to five, with five being the highest. A score of one was reserved for
those cost centers that did not have data for that factor or scored a zero
in that risk factor, meaning there would be no or low risk. The rest of the
scale was distributed evenly for each factor when possible.
The scores for each risk factor within a category were then summed to
get a category score, as shown in Table 2 on the next page. The total
scores varied for each category score, since some categories contained
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more risk factors than others. As an example, Residential Collections was
chosen randomly to illustrate the scoring methodology.
Table 2: Category Score Example
Size & Complexity Data Score
Budgeted expenditures 3,451,918 5
FTE 24.15 5
Operation revenues 6,933,172 5
Expenditure trend 4% 2
Residential Collection Size & Complexity Score: 17
Each category was weighted based upon reliability and availability of
data, number of risk measures in the category, and professional
judgment of the risk measure. The category score was then multiplied by
the category weight to get the overall risk score for that cost center. See
Table 3 for an example of the weighted score methodology.
Table 3: Weighted Score Example
Residential Collection Score Weight Weighted Score
Size & Complexity 17 16% 2.72
Organizational Change 10 18% 1.80
Fiscal Accountability 18 22% 3.96
Planning & Performance 23 22% 5.06
Public Perception 5 11% .55
Safety & Liability 8 11% .88
Total: 74 100% 14.97
Each cost center was then ranked by this overall score. The overall
scores were ranked in groups of 19 to 20 cost centers, since there are 98
total cost centers identified in this assessment.
Risk factors were adjusted as best as possible to account for missing and
incomplete data before scoring. For example, the Media Coverage
category contains data for the departmental level only, not cost center.
Therefore, media coverage was distributed among the cost centers of
areas with available data.
In the case of Residential Collections, Table 3 shows a low public
perception score; however, this is the maximum score available for this
cost center. This reflects the lack of media coverage data for Residential
Collections and Sanitation. The public perception score shown above is
entirely weighted on the claims against the city risk factor.
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Results
The risk assessment scores provide a very broad overview of the
departmental cost centers and their activity in various risk factors. The
findings below are not representative of any audit findings and should not
be taken as such.
High Ranking Cost Centers
Table 4 lists the cost centers with the highest weighted risk factor scores.
The risk factors constructed in this model have identified these 20 cost
centers as having high risk functions or opportunities.
Table 4: The 20 Highest Ranked Cost Centers
Department Cost Center Score
Fire Fire Suppression 15.89
BVSWMA Landfill Operations 15.25
Sanitation Residential Collection 14.97
Police Uniform Patrol 14.66
Police Special Services 14.60
Wastewater Fund Ops Wastewater Collection 14.31
Water Fund Ops Water Production 13.54
General Government Economic Development 13.32
Sanitation Commercial Collection 13.17
Fire Emergency Med Services 13.07
Fiscal Services Municipal Court 13.02
General Government City Secretary 12.98
Police Communications/Jail 12.95
Utility Customer Service Billing Collection 12.94
Fire Fire Prevention 12.57
Wastewater Fund Ops Wastewater Treatment 12.55
Public Works Traffic Signals 12.54
General Government Human Resources 12.51
Public Works Drainage Maintenance 12.46
Public Works Streets Maintenance 12.37
The overall risk score measure shows which cost centers obtained higher
values on the risk assessment model. While this does provide a good
measure of risk, there are issues to consider when examining this table.
First, the higher value each of these cost centers received could be due
to the availability of data. If more data is available for the departmental
cost center, there are more opportunities to be rated higher in that risk
factor.
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Second, the size of the department, budget, and responsibilities could
also lend these departments to a higher risk score. However, the score
weighting methodology accounts for some of these discrepancies, making
the above table of cost centers representative overall.
Finally, cost centers that have the highest risk scores may not have
significant issues that need correction. For example, the Municipal Court
was recently selected for an audit based on quantitative risk factors
indicating high risk in the area of cash handling. However, a cash
handling audit revealed that the Municipal Court had strong internal
controls and cash handling practices that significantly mitigated the
inherent risk associated with their operations.
Planning & Performance
Average Cost per Customer
The average cost per customer of a cost center’s services was used as a
risk factor. This measure includes the costs of services per customer for
fiscal year 2009. The ten most expensive cost centers are listed in Table
5 below; however, the list should be considered carefully.
Table 5: Cost per Customer
Cost Center Cost/Customer
Economic Development $128,485
City Manager $119,608
Capital Projects Operations $107,695
Community Development $38,920
Facilities Maintenance $14,384
Public Works Engineering Division $9,155
Communication Services $6,799
Management Information Services $2,515
E-Government $2,428
Warehouse $2,300
The table illustrates the highest cost per customer for each cost center.
However, because the definition of customer changes for each cost
center, this measure is slightly skewed. For example, Economic
Development and Community Development ―customers‖ were only
counted as those that directly use the services of these divisions. This list
was relatively small, since only a few non-profits or companies directly
utilize these divisions’ services. However, the benefit to the city is
greater, since these organizations help many more citizens.
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For some internal services, the number of city employees was used as
total number of customers. The number of employees was gathered
from the online employee directory and does not include many seasonal,
temporary, or unpaid positions. Other internal services do have users
within the city and those numbers were obtained when possible.
Budget to Actual Expenditure Variance
Another risk factor based on expenditures is the variance between the
approved budget for each cost center and the actual amount of
expenditures. When looking at this factor, it should be noted that the
values for variance were taken as absolute values—the rankings do not
represent positive or negative expenditure trend variances.
Figure 1 below illustrates the budgeted expenditures and actual
expenditures of the six highest spending cost centers that went over
budget in fiscal year 2009.
Figure 1: Budgeted to Actual Expenditures
Cost Center Over Budget
Electric Fund Operations Administration $1,959,247
Fire Suppression $100,212
Uniform Patrol $ 274,089
Streets Maintenance $ 95,166
Emergency Medical Services $ 56,619
Utility Customer Service Billing Collection $ 81,253
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Overtime Expenditures
For each cost center, overtime expenditures were gathered using
expenditure data from the city’s financial systems. This information was
used to calculate total overtime expenditures for each cost center.
Average Sick Hours per FTE
Total sick hours for each cost center were calculated from payroll
information. This data was collected from the city’s information systems
and the approved annual budget. The number of sick hours taken for
each cost center was averaged over the three years examined. The data
was not trended due to missing or incomplete numbers.
Overtime Hours per FTE
Overtime expenditure data was used in conjunction with FTE data
collected from the approved annual budget to calculate an overtime
hours per FTE risk factor. While this factor does provide a comparison, it
should be noted that the FTE numbers used for this measure include
employees exempt from FLSA overtime requirements.
Public Concern & Perception
Media Coverage
As mentioned in the methodology section of the report, media coverage
data was unavailable at the cost center level. However, the data
provided was still useful in examining the public perception of city
departments as a whole. Figure 2 illustrates the percentage of media
coverage per department from January 1, 2010 to June 3, 2010.
Figure 2: City Media Coverage
2.5%2.5%2.5%
0.3%
10.3%
33.6%
3.7%
40.2%
4.5%
Fiscal
Fire
Electric
Planning
General Reference
General Government
Parks & Rec
Police
Public Works
Page 8 of 23
Of the news coverage for Police, roughly 80 percent was classified as
reactive, while the other 20 percent was categorized as proactive
responses. The vast majority of the reactive coverage was further
classified as neutral, while proactive coverage was largely positive in
nature. General government coverage was broken into cost centers, but
no cost center experienced a large negative response from the media.
Half of the media coverage was neutral for general government, with
positive coverage at 43 percent. Only 7 percent of the general
government coverage was negative.
Claims Against the City
The number of claims made against the city was totaled for each cost
center to create this risk factor. This number includes the number of
legal claims made against the city, property damages, and vehicle
damages.
Organizational Change
Turnover
To calculate turnover, only fulltime employees were considered in the
calculations; actual FTE data was not used. In using only fulltime
employees, the results of turnover calculations are more comparable
across city departments. The calculations exclude part-time and
temporary/seasonal workers. The cost centers with the largest turnover
are shown in Table 6.
Table 6: Turnover
Department Cost Center Turnover
Full-
time
Information Technology E-Government 50% 2
Community Development Community Development 44% 4.5
Police Special Services 33% 9
Planning & Development P&DS Administration 33% 3
Utility Customer Service Meter Services 30% 10
Capital Projects Capital Project Operation 30% 10
Planning & Development Code Enforcement 25% 8
General Government City Secretary 20% 5
Fiscal Services Budget & Strategic Planning 20% 5
Police Police Administration 18% 11
Parks & Recreation South District 18% 11
Sanitation Commercial Collection 18% 11
Using FTE data to calculate turnover for each cost center would have
resulted in skewed data towards those cost centers that utilize a seasonal
workforce. Parks & Recreation cost centers would likely be affected the
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most by this alternative calculation, as summer and temporary jobs
(lifeguards, event staff, etc) would produce a higher turnover rate.
While these departments do demonstrate a high turnover rate in the
data, consideration should be given to the number of fulltime staff per
cost center. For example, E-government demonstrated a 50 percent
turnover rate; however, there are only two fulltime employees within that
cost center. Thus, the higher turnover rate does not necessarily indicate
more employees lost compared to larger cost centers.
Budget Trend
The approved annual budget provided information on budgeted
expenditures. These expenditures were trended across fiscal year 2007
through 2009 to create the budget trend risk factor.
FTE Change
The budgeted FTE numbers, from the approved annual budgets, provide
the raw numbers for this calculation. The average percent change
between fiscal year 2009 FTE and fiscal year 2007 FTE was used for this
measure.
Operation Revenue Change
Operating revenue was trended for this risk factor. The raw data was
collected from the city’s financial information system. The risk factor
includes operating revenues, charges for services, fines & forfeits, and
licenses & permits. Other categories of revenue were eliminated that did
not represent operating revenues.
Size & Complexity
FTE
The budgeted FTE numbers were taken from the approved annual budget
to create this risk factor. Examining the number of FTE within a cost
center allows comparison across cost centers in regards to staff size and
organizational complexity. Part-time and temporary/seasonal employees
were included in this calculation of FTE.
Operation Revenues
The operational revenues of various services were used to create this risk
factor. The raw data was collected from city information systems. The
risk factor includes accounts for operating revenues, charges for services,
fines & forfeits, and licenses & permits. Other categories of revenue
were eliminated that did not constitute operating revenues.
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Budgeted Expenditures
The fiscal year 2009 approved budgeted expenditures were used for this
risk factor. The budgeted expenditures risk factor identifies cost centers
with large budgets and, when used with other factors, provides a
comparison of size between cost centers.
Expenditure Trend
For each cost center, actual expenditures were trended across the three
years examined. The expenditure trend risk factor reflects the results of
the trend. This risk factor identifies those departments with large
increases or decreases in spending over the course of fiscal year 2007
through 2009. It should be noted that departments with small
expenditures one year and larger expenditures the next could have
skewed trend percentages. The trend for the Internal Auditor is an
example, where the expenditure of $15,889 in 2007 skews the trend
when compared with expenditures of $114,331 in 2009.
Safety & Liability
Average Worker’s Comp Amounts
Reports were generated from the risk manager’s office to obtain the total
number of worker’s comp claims and amounts. The total claim amounts
for each fiscal year were then averaged together to create this risk factor.
It should be noted that not every cost center experienced claims each
year; therefore, a consistent trend was not feasible.
Average Training Expenditure per FTE
The total training expenditures for each cost center were gathered from
the city financial systems. To create this risk factor, the total FTE was
divided into training expenditures to determine the training expenditure
per FTE for each fiscal year. The totals were then averaged together to
complete the risk factor.
Fiscal Accountability
Purchasing Activity
The average purchasing expenditures and purchasing trend risk factors
were combined to create a purchasing activity model. To calculate
purchasing activity, purchasing data was compiled to create a trend of
fiscal year 2007 through 2009. The average purchasing expenditures of
each cost center were also calculated. Both measures include figures for
the total expenditures through purchase orders and through purchasing
card use.
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Figure 3 illustrates the cost centers with the largest purchasing
expenditures and their corresponding purchasing trend for fiscal years
2007 through 2009.
Figure 3: Cost Center Purchasing Activity
Cash Handling
Information regarding cash handling in each cost center was collected
from the cash handling survey conducted by the City Internal Auditor in
2009. Not all cost centers handle cash; therefore, only cost centers that
do handle cash are represented in the data.
Professional Service Expenditures
Data was also collected to provide a trend in the professional service
expenditures for each cost center. These costs could include the costs
for hiring consultants or other miscellaneous professional service related
costs. Not every cost center experienced professional service
expenditures.
Travel as Percentage of Training Expenditures
Travel and lodging costs for training are included in the total training
expenditures. As another risk factor, the travel expenditures were
extracted from total training expenditures. This permits the examination
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of travel expenditures as a percentage of total training expenditures for
each cost center.
Table 7: Percentage Travel Costs of Training Expenditures
Department Cost Center % of
Training
Expenses
% of Total
Expenses
Parks & Recreation Xtra Education 100% 1%
Parks & Recreation Hotel Tax Program (Athletics) 99% 14%
Parks & Recreation Heritage Programs 82% 2%
Parks & Recreation Recreation 81% 1%
Fire Emergency Management 76% 2%
Parks & Recreation Senior Services 71% 1%
Electrical Utility Dispatch Operations 66% 0%
Parks & Recreation Special Facilities Admin 66% 1%
Police Communications/Jail 65% 1%
BVSWMA BVSWMA Administration 65% 1%
The Xtra Education in Table 7 has relatively low training costs, but 100%
of those costs are in travel. Therefore, it is logical for these percentages
to be taken into context of the total training expenditures of a cost
center.
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Audit Coverage
Many areas of city government have been directly audited or have fallen
under the purview of a recent internal audit. The audits conducted have
provided a broad coverage of topics within the City of College Station;
however, not all cost centers have fallen under the scope of a previous
audit. Table 8 lists the highest scoring departments from Table 4 that
have not received audit coverage.
Table 8: Top Cost Centers without Audit Coverage
Department Cost Center Score
Fire Fire Suppression 15.89
Sanitation Residential Collection 14.97
Wastewater Fund Ops Wastewater Collection 14.31
Water Fund Ops Water Production 13.54
General Government Economic Development 13.32
Sanitation Commercial Collection 13.17
Fire Emergency Med Services 13.07
General Government City Secretary 12.98
Fire Fire Prevention 12.57
Wastewater Fund Ops Wastewater Treatment 12.55
Among previous audits, an audit of purchasing processes, policies and
procedures has likely had the broadest scope. The report of findings
from the purchasing audit identified areas of improvement for internal
controls, purchasing practices, and check security. The Purchasing
Audit’s recommendations affected citywide purchasing and requisition
policies, procedures, and practices by strengthening internal controls.
The 2010 Payroll Phase I audit provided an analysis of payroll practices
throughout the city. The findings from this audit focused mainly on
overtime and compensatory pay policies, procedures, and practices. The
audit was applicable to all city cost centers and found some payroll
practices were exceeding the minimum Fair Labor Standards Act
guidelines. Other payroll issues will be audited at a later date in Phase II
of the payroll audit.
The Ethics Hotline, established and maintained by the City Internal
Auditor, provides an opportunity for city employees and individuals to
anonymously report suspicious activity without fear of retaliation.
Hotlines repeatedly have proven their ability to detect and deter illegal
behavior. According to the ACFE's 2004 Report to the Nation on
Occupational Fraud and Abuse, fraud losses are reduced by nearly 60
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percent when a hotline is present. In the past year, there have been nine
hotline reports submitted by city employees from various city
departments. All reports submitted through the hotline have been fully
investigated and resolved.
A performance audit was performed by external consultants in 2008,
which examined the Police department in detail. The report provided
recommendations for all cost centers within the Police department.
Recommendations included alternative methods of scheduling work
hours, improvements to reporting incidents, and overall organizational
improvements.
The City Internal Auditor conducted an audit of fuel inventory, purchasing
and use throughout the city. This audit discovered areas of improvement
in fuel practices within the city. In addition, recommendations to improve
internal controls included using an odometer reasonability control for all
fuel cards, verifying prices and terms independently of the vendor, and
restricting the quantity of fuel available for each fuel card.
Cash handling audits were performed within the Utility Customer Billing
and Municipal Court cost centers. These audits examined the internal
controls and security for cash and cash equivalents. The
recommendations included more segregation of duties, improved receipt
practices, and improved recordkeeping.
In November 2008, the City of Bryan hired a consultant to perform an
audit of the Brazos Valley Solid Waste Management Agency (BVSWMA).
The City Internal Auditor assisted the City of College Station’s Finance
Department during the duration of this review.
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Audit Plan
Based on the results of the risk assessment, professional judgment,
findings from previous audit work, and information provided by city staff,
the following areas are potential audit topics for the next fiscal year.
Sanitation Operations
Based on risk assessment results, both residential and commercial refuse
collections were identified as high risk cost centers when compared to
other cost centers throughout the city. An internal audit of sanitation
operations would include a review of internal controls, procedures, and
practices. In addition, the audit could identify opportunities to mitigate
safety and liability concerns, increase efficiencies, reduce overhead costs
and other expenses, or potentially increase revenues.
Land Acquisition
At first glance, the process of acquiring land for new city developments is
not uniform across departments. While the land agent does provide
some services for most of the departments purchasing land in the last ten
years, there may be room for improvement and uniformity. Within the
last ten years the following departments/divisions have been involved in
the purchasing of land: BVSMA, Capital Improvement Projects, City
Manager’s Office, Economic and Community Development, Fire, Planning
and Development, Parks and Recreation, Public Works, and Electric and
Water Utilities. Currently, Economic and Community Development and
Electric Utilities land acquisition processes differ from other departments
in that they do not use the city’s land agent when purchasing land or
property.
Convention and Visitors Bureau
During the June 18, 2010, City Council retreat, a potential audit of the
Convention and Visitors Bureau was discussed. Depending on future
direction from the City Council, an audit of the Convention and Visitors
Bureau may be included in the fiscal year 2011 audit plan.
Asset Management
Asset management was identified as a high risk auditable area in the
2007 risk assessment. Although this area received some audit coverage
during the Fleet Fuel Inventory audit, management of city assets
throughout the city still remains an area of risk. The area of the largest
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risk exists in College Station Utilities, which maintains a large warehouse
of water, wastewater, and electric asset related inventories. In addition,
the Information Technology Department inventories some computer
equipment and the Fleet Services Division inventories various equipment
and parts for fleet maintenance purposes.
Payroll Audit Phase II
In May 2010, a payroll audit was completed that examined the overtime
and compensatory pay practices of the city. Phase two of this audit will
expand the scope to include a review of all other payroll practices,
policies and procedures. Audit test to detect common payroll frauds will
also be performed.
Fleet Utilization
There are over 600 vehicles or equipment city staff operates on a daily
basis. Most of these vehicles and equipment are utilized by the Fire,
Police, Public Works, Parks and Recreation, and Utilities departments.
Utilization of these vehicles and equipment constitute a significant risk to
the city because (1) of the high monetary value of these assets and (2)
the potential liability the city faces if these assets are not used prudently.
Included in this audit would be a review of efficient and effective use,
safety and training, personal or inappropriate use, and compliance with
city, state, and federal laws and regulations.
Change Orders
A purchasing card audit and purchasing processes audit were conducted
in 2007 and 2008 respectively. However, a review of the change order
process was not included in the scope of these audits. An audit to
inspect the number of contract changes after the bidding process is
closed could find potential cost savings for the city. This audit would
examine the number of change orders for each vendor. Cost savings
could be found by switching to vendors that would not likely require a
change in the contract after the bidding process is completed. This audit
could also identify potential areas of risk within vendor contracts.
Implementation of Continuous Monitoring Systems
Continuous monitoring is the automated collection of indicators from the
city’s information systems on a frequent or continuous basis. Through
the use of analytics, continuous monitoring is also an automated
feedback mechanism to ensure that the systems and controls have been
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operating as designed and transactions are processed appropriately. The
purpose of implementing continuous monitoring systems is to (1) help
ensure compliance with policies, procedures, and regulations and (2) act
as an early warning system to detect control failure on a timelier basis
than under traditional approaches. Using Audit Command Language
(ACL) analytics and scripts, the City Internal Auditor is capable of
developing robust automated monitoring systems. A continuous
monitoring system of the city’s purchasing card program will be the first
system developed due to the risk associated with this program (i.e. the
majority of city purchases across all city departments are made on city
credit cards).
Water/Wastewater Utility
Based on the risk assessment results, water and wastewater were
identified as a high risk area. An audit of the water/wastewater utility
would include a review of compliance with state and federal regulations,
meeting service demands, and cost of providing services. In addition, the
audit could include an evaluation of the adequacy of planning and
performance monitoring practices necessary to direct and control
departmental operations in the short and long term; financial
management practices necessary to protect the financial condition of the
utility and to provide accounting information for cost control and decision
making; management practices for facility operation to promote efficient
and effective use of that major investment; and staffing policies,
procedures and practices necessary to ensure efficient utilization of
workforce and retention of qualified personnel.
Professional Services Contracts
The city expends over $2.3 million in professional services each year. A
citywide review of all professional services contracts and expenditures
would include a review of compliance with city policies and procedures
and a cost benefit analysis of the method of outsourcing versus
performing the service in-house.
Revenue Generating Cost Centers
One of the strategic goals that the City Council formed during the June
2010 city council retreat was that services should pay for themselves. A
citywide audit of revenue generating cost centers would review these cost
centers’ financial management practices, policies and procedures. In
addition, the audit could include a cost utility analysis, cost minimization
analysis, and a staffing analysis.