Open Session A. Approval of Agenda Briefing Materials B. 1. Audit Reports Fleet Services Performance Audit 2. Continuous Compliance Audits Bi-weekly Payroll Compliance Review 3. Status Updates 1 st Quarter FY ‘19 Fraud, Waste & Abuse Hotline Report Other Business C. Adjournment D. Next Meeting Date E. 2
Background In accordance with the approved Fiscal Year 2017 Risk-Based Audit Plan, OIG performed a limited-scope audit of the Fleet Services Division and assessed compliance with WSSC policies and procedures designed to enforce/support internal and external rules, laws and regulations. We conducted the audit in accordance with the International Standards for the Professional Practice of Internal Auditing. Audit Team: Angela Makle Fortune – Senior Auditor Janice Hicks - Auditor 5
Objective The objective of the audit was to provide an independent assessment of Fleet Services compliance with WSSC policies and procedures. Scope Limited scope to include transactions and processes effective during FY’s 2016 and 2017. Fleet Services activity affecting administrative operations. Excluded vehicle repairs and recommend further exploration into analyzing vehicle maintenance. 6
Findings Rating Recommendations 1. Lack of segregation of duties High Establish internal controls and for Materials Planners ensure the duties of ordering, receiving, recording, and reconciling are segregated. Management Response FSD created an intra-office procedure (IOP) titled Materials Purchasing and • Inventory Policy – effective July 30, 2018. The following requirements were added: Garage Supervisors now required to approve any adjustments to o inventory Fleet Parts Specialists (referenced as Materials Planners) will be rotated o to perform inventory counts at different garages on a regular basis. Supervisors will conduct independent random cycle inventory counts o once a quarter annually to verify the accuracy of Fleet Parts Specialists inventories and address discrepancies 7
Findings & Management Response (Cont’d) Management Response (Cont’d) o Fleet Parts Specialists are now required to obtain approval of any purchases over $1,000 by their Garage Supervisor. FSD has requested IT and the Procurement Department to • restructure the current P-CARD approval process to have the approval of a Fleet Parts Specialist’s P-CARD purchases go to the Garage Supervisor onsite instead of the Division Manager. 8
Findings & Management Response (Cont’d.) Findings Rating Recommendations 2. Unused inventory applied to Medium • Establish controls and work orders, but not re- procedures to mitigate loss of entered into the system inventory Ensure proper accounting for • vehicle maintenance costs Enable accurate evaluation of • inventory. Management Response FSD’s current system has a ‘stock checkout’ module that allows unused • items to be returned to inventory. The new Materials Purchasing and Inventory Policy specifies the requirement to return parts to inventory if not used. FSD anticipates enhanced inventory controls with the implementation of • WAM 2.2 as part of Project Cornerstone. 9
Findings & Management Response (Cont’d.) Findings Rating Recommendations 3. Assets are not timely Medium Create and enforce a receiving process recorded in TEAMS that mandates all assets are recorded promptly in TEAMS upon receipt. Management Response FSD believes that assets are recorded timely in TEAMS, the current Fleet • Asset Management system, based on when the appropriate paperwork is received. The “Acquisition Date” (date of acceptance) and the “In Service Date” (date assigned and put into field) are both entered. FSD created a new IOP called Procedures for New Vehicle and Equipment • Intake to standardize and specify all requirements regarding receiving, inspection and data entry for such new assets. The Procedure was effective July 30, 2018. 10
Findings & Management Response (Cont’d.) Findings Rating Recommendations 4. Inventory Medium Management work with the Information adjustments can be Technology Department to incorporate entered into TEAMS mandatory authorization controls without supervisory regarding adjustments in the system. review or approval Management Response FSD adopted the new Materials Purchasing and Inventory Policy. • Section IV.A.8 now requires supervisor approval prior to making any adjustments in the system. FSD will work with IT and the WAM 2.2 implementation team to • incorporate the suggested authorization controls into the new system functionality. 11
Findings Rating Recommendations 5. Lack of formal Medium • Ensure formal documented inventory documented procedures are created and administered for inventory vehicles, equipment, parts and supplies. procedures Adhere to mandated inventory counts of all • Fleet Services assets in the formal procedures. Require consistent and continual inventory • processing training for Material Planners. Management Response FSD developed an IOP entitled Materials Purchasing and Inventory Policy to • address the changes. Effective July 30, 2018. 12
Findings & Management Response (Cont’d.) Management Response (Cont’d) The policy formalized inventory procedures, and establishes a system • that rotates Fleet Parts Specialists between garages and requires a Garage Supervisor to assist in the monthly inventory once a quarter annually. FSD believes these changes provide the formalized requirements, cross-training and oversight to ensure consistent results. FSD will look into more formalized training, should this new procedure and on-the-job training prove insufficient 13
Findings & Management Response (Cont’d.) Findings Rating Recommendations 6. Insufficient High Incorporate segregation of duties for the • segregation of auction process. departmental duties in the Fleet Services auction process Management Response FSD agrees with the recommendation, and will prepare the list of vehicles • available for surplus, and turn that list over to the unit assigned to handle disposition of surplus goods. That function is performed by the General Services Department (GSD), outside of FSD. The disposition of the surplus vehicles or equipment will be handled by that unit pursuant to WSSC’s Standard Procedure titled Disposition of Scrap Metal and Surplus Goods. 14
Findings & Management Response (Cont’d.) Management Response (Cont’d) The final disposition amounts will be provided to FSD by the GSD • to allow FSD to update the asset records in TEAMS or current asset management system. This change is effective as of July 30, 2018. . 15
Findings & Management Response (Cont’d.) Findings Rating Recommendations 7. Auction inventory Medium Establish a process to have a unique lists contain identifying number for all items leaving the inventory items Commission for auction. without identifying asset numbers Management Response FSD agrees with the recommendation, and will prepare the list of vehicles • available for surplus, and turn that list over to the unit assigned to handle disposition of surplus goods. That function is performed by the General Services Department (GSD), outside of FSD. The disposition of the surplus vehicles or equipment will be handled by that unit pursuant to WSSC’s Standard Procedure titled Disposition of Scrap Metal and Surplus Goods. 16
Findings & Management Response (Cont’d.) Management Response (Cont’d) The final disposition amounts will be provided to FSD by the GSD • to allow FSD to update the asset records in TEAMS or current asset management system. This change is effective as of July 30, 2018. . 17
Findings & Management Response (Cont’d.) Findings Rating Recommendations 8. WSSC Motor High Enforce the standard procedure SP LOG Vehicle and 07-01 and take measures to properly Equipment monitor the use of vehicles. Assignment Regulation Violation Management Response FSD agrees that managers are responsible for enforcement of the stated • Procedure. FSD recently installed AVL (Automatic Vehicle Locator) technology that will assist in identifying vehicle usage. This information is made available to the assigned driver’s respective Section/Division Manager as well as to FSD. FSD will be reviewing the mileage and use data on a monthly basis and reaching out to managers across the Commission to follow up on unusually high mileage or outliers. This review and communication should assist the consistent application of these policies. 18
Findings & Management Response (Cont’d.) Findings Rating Recommendations 9. Some assigned Medium Ensure the Fleet staff follow the same vehicles do not criteria in SP LOG 07-01 regarding vehicle meet the vehicle request and replacement process as assigned usage required of other departments and requirement divisions. Management Response FSD agrees that its vehicles assignments should meet the same criteria as • others across the Commission. The three vehicles identified in the audit had been assigned to employees that had recently retired or resigned. Since that time, two vehicles were reassigned to Project Cornerstone and the Materials Management Division. 19
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