To: City Manager’s Office and Department Directors
From: Greg McDowell, City Auditor
Re: Monthly Audit Update – April 2016
April 29, 2016
Performance Audit Reports Issued
Purchased Assets - We have completed an audit of assets purchased during FY15 to determine whether assets are reasonably safeguarded and properly recorded. A sample of purchases was made from rolling stock (e.g., vehicles), non-rolling stock and personal technology devices (tablets).
Conclusion – Controls are in place to ensure that capital assets and select personal technology devices are reasonably safeguarded and properly recorded on the City’s books.
Note: Full reports can be found on Internal Audit’s CNet webpage.
Audits in Progress
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Union County Wastewater Operation and Maintenance Agreement – An “Agreed Upon
Procedures” approach was announced in November, to address the Water Department’s request. A draft report has been discussed with Water and should be issued in May.
•
Service Contracts – As announced in January, staff have begun a review of service contracts, as a part of our ongoing audits of procurement activities. Some early follow-up has focused on obtaining supporting documentation (e.g., RFQs, quotes and insurance certificates) that was not provided in Munis TCM (Tyler Content Management).
•
Airport Rental Cars – At the request of Aviation, auditors initiated a review of Hertz and
National, the two largest rental car companies based on market share in August. Auditors conducted fieldwork and testing of FY15 transactions, and coordinated with Aviation staff before making additional requests for information. Auditors received some, but not all, of the requested information (from Hertz and National) in January/February and conducted additional tests. Following a review of preliminary results with Aviation staff, a follow-up request for information was made of Hertz in late April.
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CATS Blue Line Extension Construction – After conducting a risk assessment of CATS construction projects, audit staff selected the Civil B and C contract with Lane
Construction for review. The audit may include reviews of related contracts (e.g., project management and inspection services) and CATS’ management controls. The audit announcement was made to CATS in January. Auditors have reviewed project management controls related to inspections and measuring, payment applications,
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scheduling, compliance (DBE, Davis Bacon), change orders and quality control and are developing an audit program to address the most significant risk areas.
•
Airport Parking – An airport-requested review is initially focusing on revenue controls.
In addition to cash collections, auditors will review the automated parking control system, including PCI compliance. Auditors have been testing transactions and controls since March. Staff will meet with Aviation to discuss preliminary findings by June.
•
Employee Travel Expense – We issued an audit report on this topic in February 2016 and concluded that a higher rate of compliance (with the revised travel policy, effective
January 2015) is needed. This review continues our efforts and is focused on the first six months of FY16. Auditors are reviewing a sample of employee reimbursements.
Questionable claims and documentation deficiencies are being addressed with travelers and Finance staff, as they are identified. Fieldwork for the six-month period is nearly completed, and a review of January through March will begin soon. We will summarize six-month findings for management in an interim report, while a full report will address
FY16 as a whole.
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Grant Accounting – The preliminary objectives are to ensure that effective controls are in place for the processes and procedures of grant administration. We are reviewing the external auditor’s related work and developing an audit plan which complements their approach, focusing on issues outside the financial statement audit scope.
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P-card Compliance – This is a follow-up to the FY14 Procurement Card Audit (report dated November 19, 2015 and distributed on January 21, 2016). Auditors are reviewing samples of FY15 transactions and upon completion will provide a summary of preliminary findings to the appropriate departments. We have made initial inquiries with departments and received their responses. The results of this review will determine our scope for testing FY16 transactions.
Other
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MWSBE Construction Sub-contractors – At the request of M&FS-Charlotte Business
INClusion (CBI) management, audit staff have begun a review of controls for ensuring payments made to MWSBE construction sub-contractors are accurately reported. We expect to determine the scope and announce the audit in May.
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Construction Manager at Risk (CMAR) – This review is focusing on the completeness of processes and controls as they relate to the City’s application of the CMAR delivery method. The majority of the review is being conducted by external consultants RSM
(formerly McGladrey), under Audit staff direction. The result of this effort is expected to provide some recommended best practices to the departments, while assisting Internal
Audit with risk assessment and planning for subsequent audits of payments made on
CMAR-type contracts. glm
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