Auditing Kansas City Governmentkcaga-cgfm.org/Flyer/2015/AGA Presentation-Auditing KCMO Govt 20150318.pdfElements for a government audit charter Organizational independence Qualifications

Auditing Kansas City Government

Douglas Jones, City AuditorOffice of the City AuditorKansas City, Missouri

Association of Government Accountants, Kansas City ChapterMarch 18, 2015

Agenda City Auditor’s Office history & background

What does the City Auditor’s Office do?

Discussion of recent audits

Office of the City Auditor – Kansas City, Missouri 2

How long has Kansas City had a city auditor? Kansas City has had a city auditor since at

least 1898

The city auditor’s duties in 1898 and 1909 were primarily related to the city’s accounts and taxes

Interesting provisions◊ 1898 city auditor fined $100 to $1,000 if

annual statement on city finances not submitted

◊ 1909 city auditor issued licenses to saloons, beer houses, tippling houses, and dramshops


Why audit local government?What should an audit charter address?Government auditing◊ Provides transparency and accountability◊ Identifies areas for improvement

Elements for a government audit charter◊ Organizational independence◊ Qualifications for the chief audit executive◊ Authority to audit all departments, offices,

boards, activities, agencies, and programs◊ Required use of recognized auditing standards◊ Unrestricted access to records and employees


What does the Kansas City Charter say about the city auditor? Council shall appoint an auditor Auditor shall be a CPA or someone trained and

experienced in governmental or business investigation or administration

Auditor shall keep the Council informed about the city’s financial affairs, investigate the work of all departments, periodically report results, and make investigations directed by Council

Auditor shall not be responsible for keeping accounts

Auditor shall have access to all books, records, and employees of the city


What is the City Auditor’s Office audit environment? City Auditor has 13 bosses

Developing and maintaining good working relationships is important

City has 20 departments, almost 6,900 employees, and next year’s budget is about $1.47 billion

Audit universe covers airports to zoo

City Auditor’s Office has 12 positions and a $1.3 million budget


What does the City Auditor’s Office do?We’re not the IRS or CPAs

We conduct performance audits evaluating department and program performance to improve city operations and strengthen city government’s accountability to the public

We may occasionally conduct limited scope research projects that are not audits

We don’t conduct financial audits


How we conduct performance auditsWe follow Government Auditing Standards

In general our audit work involves◊ Interviewing city management and staff◊ Reviewing the city charter; code of ordinances;

city and department policies, procedures, and practices; and contracts or agreements

◊ Identifying and comparing recommended practices to city policies, procedures, and practices

◊ Evaluating and analyzing data


Questions?


Recent performance audits Traffic Management Center Citywide Overtime Fire Code Inspection Program Disposition of City-Owned Surplus Personal Property Security of the Municipal Court Docketing System Managing Community Center Facility Use: Hockey

League at Line Creek Kansas City Regional Police Academy: Are All Costs

Included in Academy Fees? City's Performance Under the HUD Memorandum of

AgreementOffice of the City Auditor – Kansas City, Missouri 10

Traffic Management Center(October 2013)

Why we did the audit◊ Public safety◊ Efficiency of city’s system of roadways◊ New city function◊ Use of federal grant funds◊ Staffing may not be adequate

Audit Objective – Is the Public Works Department effectively using the Traffic Management Center to manage traffic?


Traffic Management Center – What we found Center was not staffed to meet Public Works’

traffic signal management goal

Center not used to full potential

No plan for funding center operations

Excavation work can damage fiber optic cables

Public Works and Water Services needed a process for handling broken cables


Traffic Management Center – What we recommended Evaluate the goals of the Traffic Management

Center and staff the center to meet the goals

Ensure that operating funds are identified and available before capital improvement projects are built or expanded

Develop a procedure for reporting, repairing, and paying for fiber optic cable damaged by Water Services


Traffic Management Center – What the media reported Kansas City traffic audit raises eyebrows

Millions of dollars spent on technology could help you behind the wheel, but instead a shiny new building in Kansas City has been running on empty.(KSHB-TV 41 10/03/2013)

Staffing Low, Audit Says City manager says KC will hire more people next year to monitor street conditions. (KC Star 10/06/2013)


Citywide Overtime(November 2013)

Why we did the audit◊ Overtime costs are significant◊ Employee health and safety concerns◊ Equity and potential legal issues

Audit Objective – Is the city effectively managing the use of overtime?


Citywide Overtime – What we foundOvertime hours and costs increased

significantly between 2010 and 2013◊ 86% concentrated in Fire, Water Services,

Public Works, and Aviation departments

Multiple factors (collective bargaining, minimum staffing…) drive overtime

Overtime rules and practices not applied consistently

Departments pushing limits of safe and healthy amounts of overtime


Citywide Overtime – What we recommended Evaluating the need to change and/or

renegotiate some overtime provisions in the city code or collective bargaining agreements

Providing written procedures and training on overtime practices

Requiring a written early clock-in policy

Monitoring individual’s cumulative overtime hours and frequency

Tracking overtime and performing periodic analysis


Citywide Overtime – What the media reported KCMO audit shows city's soaring cost of

overtime Audit reveals overtime costs in KCMO have increased significantly over the past four years…(KSHB-TV 41 11/25/2013)

City auditor: KC paid $17.8M in overtime pay in fiscal 2013 Kansas City paid 42.1 percent more overtime pay in fiscal 2013 than it did in fiscal 2010... (Kansas City Business Journal 11/25/2013)

Overtime Outlays Surge Costs have soared 58 percent, from $11.3 million in 2010 to $17.8 million in 2013… (KC Star 11/26/2013)


Fire Code Inspection Program(January 2014)

Why we did the audit◊ Opportunities for operational improvements◊ Concerns about completeness of database

Audit Objectives◊ Are the Fire Prevention Division’s internal

controls over the fire inspection program adequate?

◊ Is the Fire Prevention Division’s inspection database of commercial and multifamily structures reasonably complete?


Fire Code Inspection Program – What we found Prioritizing inspections could improve

inspection timeliness◊ 20% of annual inspections in 2013 were late◊ 171 structures requiring permits were not

inspected in 2012 (lost revenue $21,400) No written policies and procedures to direct

inspectors in the inspection process or guide administrative staff activities

Database reasonably accurate, but some structures needed to be added (additional revenue $19,000)


Fire Code Inspection Program – What we recommended Analyze options for prioritizing inspections

Develop written policies and procedures to direct the work of inspectors and administrative staff

Implement mitigating controls to compensate for inadequate segregation of duties

Continue obtaining address information from other city departments to update the fire inspection database


Fire Code Inspection Program – What the media reported Audit asks KCFD to improve timeliness of

inspections It seems this is a program that’s being run very well, but there are clearly areas that can be improved, said John Sharp, chair of the city’s Public Safety and Emergency Services Committee. (Northeast News 01/29/2014)


Disposition of Surplus Personal Property(February 2014)

Why we did the audit◊ Department management asked for the audit◊ Using surplus property can save money◊ Selling surplus property generates revenue

Audit Objective – Are safeguards adequate to protect city-owned surplus personal property?


Disposition of Surplus Property – What we found Inventory records and disposition

documentation could be improved◊ Some items not in database◊ Receipt of some items not documented◊ Surplus management software needed

enhancements

Policies and procedures to protect assets need to be strengthened◊ Inadequate segregation of duties◊ P&Ps could have been more comprehensive


Disposition of Surplus Property – What we recommended Strengthen documentation as items move

through the surplus property process

Improve functionality of the database

Increase safeguards over security of surplus property

Improve compliance with city requirements for handling surplus property transfers

Expand written policies and procedures


Security of the Municipal Court Docketing System (February 2014)

Why we did the audit◊ System contains criminal justice information◊ Electronic records are the only source◊ Security weaknesses could compromise system

data and operations

Audit Objective - Are controls in place to protect the confidentiality, integrity, and availability of information in the IMDS Plus system?


Security of the Docketing System – What we foundMunicipal court needed to improve controls◊ Access rights not terminated timely◊ Security awareness not always provided or

documented◊ No written policies & procedures regarding the

protection of criminal justice information

REJIS had not◊ Updated its disaster recovery plan◊ Finalized its incident response procedure◊ Established a geographically removed alternate

processing siteOffice of the City Auditor – Kansas City, Missouri 27

Security of the Docketing System – What we recommendedDevelop requirements for protecting criminal

justice information and adopt written policies and procedures to meet established requirements

Encourage REJIS to update and periodically test its disaster recovery plan; finalize its incident response procedure; and establish a geographically removed disaster recovery site

Develop criteria for future information technology service provider contracts


Managing Community Center Use –Hockey League at Line CreekWhy we did the audit◊ Patron complaint about how hockey league fees

were handled◊ Patron confusion about who operated the

hockey league

Audit Objective - Did Parks and Recreation Department staff follow established rules and procedures in managing community center facility use for the summer adult hockey league at Line Creek?


Managing Community Center Use –What we found Staff operated a non-parks league privately◊ Staff members’ dual roles confused participants

and could develop into a conflict of interest◊ Payments not collected and processed as

regular Parks Department transactions

Staff did not follow board policy requiring groups to obtain permission to charge fees on Parks property

Records were inadequate to determine league payments


Managing Community Center Use –What we recommended Issue current policies and procedures and

train community center staffs on methods of providing league activities

Identify revenue by community center program or activity

Provide additional training to community center staffs on use and capabilities of RecTrac


Managing Community Center Use –What the media reported Audit faults hockey league operation at Line

Creek Community Center For three summers, a 23-team adult hockey league was using space Kansas City owned, under the guidance of city employees, but the city didn’t know about it.(KC Star 4/23/2014)


Police Academy: Are All Costs Included in Academy Fees? (November 2014)

Why we did the audit◊ Requested by Board of Police Commissioners

Audit Objective - Has the Kansas City, Missouri Police Department established fees and charges at the Police Academy that reflect all costs of providing services?


Police Academy Fees – What we found KCPD does not consider all costs when setting

academy fees

KCPD can strengthen process for reviewing and updating academy fees◊ Fees last increased in 2012◊ Long-term forecasting of needs or costs and

benchmarking fees was not done

Expanded fee policy will encourage consistent and transparent fee setting◊ Fee policy should address cost recovery goals◊ KCPD subsidizes other agencies’ participation


Police Academy Fees – What we recommended Calculating full costs of all training and facility

use, conducting long-term forecasting, and periodically benchmarking academy fees

Annually presenting full cost, forecasting, and benchmarking data to the Board for consideration when approving academy fees

Incorporating language into the fee policy to address cost recovery goals


City’s Performance Under MOA with HUD (December 2014)

Why we did the audit◊ The MOA requires the City Auditor’s Office to conduct

an annual performance audit of the city’s performance under the agreement

Audit Objective - Did the city fulfill its obligations under the Memorandum of Agreement between the city and HUD from April 1, 2013 to April 30, 2014?


City’s Performance Under MOA with HUD – What we foundMost performance deadlines met, but five

extensions requested after missing deadlines

City addressed most long-term reform measures, but◊ Three subrecipient contracts executed before

HUD’s approval◊ Funding reimbursements not requested in a

timely manner

Additional steps needed to implement new HOME regulations


City’s Performance Under MOA with HUD – What we recommended Recommendations made to ensure◊ Compliance with the MOA’s development

deadlines, extension requests, and approvals of subrecipients

◊ Reimbursement of CDBG/HOME grant funds requested from HUD at least monthly

◊ The city is prepared to implement HUD’s new HOME regulations


Audits currently in progress Information Security (March 2015) City Property Leases (April 2015) Public Works Street-Related Permit Fees Need

Review and Adjustment (April 2015) Accuracy and Validity of 311 Data (April 2015) Protection of Personally Identifiable Information

(April 2015) Governance Assessment 2015 (August 2015) Street Maintenance Activities (tbd) Streetcar Management Agreement (tbd)


Are audit reports available to the public? Audit reports, memoranda, annual reports,

annual audit plans, peer review reports, and other documents are available on◊ Our website kcmo.gov/cityauditor◊ The city’s open data portal data.kcmo.org

We ask the public for their audit ideas kcmo.gov/cityauditor/submit-audit-ideas

Twitter @KCMO #kcmocityauditor


Questions?For more

information, to read our audit reports, or submit your audit

ideas, visit kcmo.gov/cityauditor


Documents

Auditing Kansas City Governmentkcaga-cgfm.org/Flyer/2015/AGA Presentation-Auditing KCMO Govt 20150318.pdfElements for a government audit charter Organizational independence Qualifications