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03-005 Pay Phone Pilot Audit Report2

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29 pages
AUDIT OF PAY TELEPHONE PILOT PROGRAM FOR THE PERIOD MAY 1, 2001, THROUGH MAY 31, 2002. AND SELECTED CONTROLS/TRANSACTIONS THROUGH MARCH 15, 2003 TABLE OF CONTENTS INTRODUCTION.......................................................................................................................................... 1 SCOPE AND OBJECTIVES.......................................................................................................................... 2 METHODOLOGY......................................................................................................................................... 4 AUDIT FINDINGS IN BRIEF....................................................................................................................... 5 FIRST AMERICAN TELECOMMUNICATION COMPANY (FAT)...................................................... 5 LACK OF COMPLIANCE WITH THE TERMS OF RESOLUTION 01-449 AND CERTAIN PROVISIONS OF THE CITY CODE.................................................................................................... 5 PUBLIC WORKS DIVISION (PWD) ....................................................................................................... 7 PAY TELEPHONE APPLICATIONS AND OTHER PERTINENT RECORDS WERE NOT MAINTAINED....................................................................................................................................... 7 THE PILOT PROGRAM HAS NOT BEEN EVALUATED AS ...
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   AUDIT OF PAY TELEPHONE PILOT PROGRAM FOR THE PERIOD MAY 1, 2001, THROUGH MAY 31, 2002. AND SELECTED CONTROLS/TRANSACTIONS THROUGH MARCH 15, 2003  TABLE OF CONTENTS INTRODUCTION.......................................................................................................................................... 1 
SCOPE AND OBJECTIVES.......................................................................................................................... 2 
METHODOLOGY ......................................................................................................................................... 4 
AUDIT FINDINGS IN BRIEF....................................................................................................................... 5 FIRST AMERICAN TELECOMMUNICATION COMPANY (FAT)...................................................... 5 LACK OF COMPLIANCE WITH THE TERMS OF RESOLUTION 01-449 AND CERTAIN PROVISIONS OF THE CITY CODE.................................................................................................... 5 PUBLIC WORKS DIVISION (PWD) ....................................................................................................... 7 PAY TELEPHONE APPLICATIONS AND OTHER PERTINENT RECORDS WERE NOT MAINTAINED....................................................................................................................................... 7 THE PILOT PROGRAM HAS NOT BEEN EVALUATED AS REQUIRED...................................... 7 PAY TELEPHONE PERMIT APPLICATIONS AND/OR SITE-PLAN WERE NOT SUBMITTED AS REQUIRED...................................................................................................................................... 8 PAY TELEPHONE-SITES WERE NOT INSPECTED/PERMITS WERE NOT ISSUED. ................. 8 THE INVENTORY OF PAY TELEPHONES WAS NOT MAINTAINED.......................................... 9 AUDIT FINDINGS AND RECOMMENDATIONS ............................................................................... 10 FIRST AMERICAN TELECOMMUNICATION INC. (FAT)................................................................ 10 LACK OF COMPLIANCE WITH THE TERMS OF RESOLUTION 01-449 AND CERTAIN PROVISIONS OF THE CITY CODE.................................................................................................. 10 PUBLIC WORKS DEPARTMENT (PWD) ................................................................................................ 14 PAY TELEPHONE APPLICATIONS AND OTHER PERTINENT RECORDS WERE NOT MAINTAINED..................................................................................................................................... 14 THE PILOT PROGRAM HAS NOT BEEN EVALUATED AS REQUIRED.................................... 14 PAY TELEPHONE PERMIT APPLICATIONS AND/OR SITE-PLAN WERE NOT SUBMITTED AS REQUIRED.................................................................................................................................... 15 PAY TELEPHONE-SITES WERE NOT INSPECTED/PERMITS WERE NOT ISSUED. ............... 15 THE INVENTORY OF PAY TELEPHONES WAS NOT MAINTAINED........................................ 16 EXHIBIT I............................................................................................................................................ 25  
 
 
INTRODUCTION  Resolution number 01-449, which was passed and adopted on May, 10 2001, by the City Commission authorized the City Manager, with the assistance of the Public Works division to initiate, administer, and evaluate a one-year pay telephone pilot program (May/2001 through May/2002) limited to the Downtown District, the Latin Quarter District, and the areas of Southeast Overtown Park West, and Little Haiti bounded by Northwest 54thSecond Avenue. The purpose of the pilot program was to and  Street install standardized two modular enclosure advertising panels on pay telephones located on publics right-of-way. The President of First American Telecommunication Inc., in a letter sent to the City Manager dated February 19, 2001, agreed to pay to the City 15% of the advertising revenues generated from the pilot program.  The pay telephone pilot program is a component of an overall effort to promote the revitalization and redevelopment of the City and to encourage the reduction of visual blight. This one-year pilot program was designed to improve and standardize the appearance of pay telephone enclosures on the publics right-of-way, in such a way that these enclosures contribute to and do not unreasonably detract from the appearance of the overall aesthetics of the surrounding areas. At the conclusion of this pay telephone pilot program, the City may consider the resulting recommendations for possible amendments to Chapter 54, Article XI, of the City Code, titled Streets and Sidewalks, Use of the Publics right-of-way for installation of Pay telephones.           
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SCOPE AND OBJECTIVES  The proper administration of public funds requires agencies to establish and maintain internal controls that would ensure that the agencies achieved their primary objectives/responsibilities as mandated by the City Code/Charter. As part of its oversight responsibilities, the Office of Internal Audits (OIA) performs financial, operational, performance, and compliance audits to determine the extent of compliance with certain objectives. This audit examined and evaluated pertinent records to determine whether First American Telecommunication, Inc., (FAT) complied with the terms of the pilot program. Additionally, we examined the internal control procedures in the Citys Public Works Division to determine whether they were adequate and effective in administering and overseeing the pay telephone pilot program.  The examination covered the period May 1, 2001, through May 31, 2002, and selected controls/transactions through March 15, 2003. In general, the audit focused on the following 7 objectives:   To determine whether FAT complied with the terms of the pilot program, which authorized FAT to install standardized modular advertising enclosures on the pay telephones, located on designated publics right-of-way.  
 To determine whether the appropriate percentage advertising revenues and permit fees were remitted to the City pursuant to Resolution 01-449, and City Code/Charter.   To determine whether the monies remitted to the City were deposited into the Citys treasury and also properly reported in the Citys financial accounting system.
  To determine whether pay telephone permits were issued prior to installation.  
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To determine whether all the insurance and surety bond coverage were adequate and in compliance with City Code.
To determine whether adequate internal control procedures were maintained.
Other audit procedures as deemed necessary.
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METHODOLOGY  We conducted our audit in accordance with generally accepted government auditing standards and applicable standards contained in theStandards for the Professional Practice of Internal Auditing, obtain an Toissued by the Institute of Internal Auditors. understanding of the internal control procedures, we interviewed appropriate personnel, reviewed applicable policies and procedures, and made observations to determine whether effective controls were in place. The audit methodology included the following:  
 Obtained sufficient understanding of the internal control policies and procedures and determined the nature, timing and extent of substantive tests necessary, and performed the required tests.   all the objectives noted on pages 2 and 3.Determined compliance with  
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AUDIT FINDINGS IN BRIEF
FIRST AMERICAN TELECOMMUNICATION COMPANY (FAT)
LACK OF COMPLIANCE WITH THE TERMS OF RESOLUTION 01-449 AND CERTAIN PROVISIONS OF THE CITY CODE.  The Pay telephone Pilot Program is a component of an overall effort to promote the revitalization and redevelopment of the City and to encourage the reduction of visual blight. Our review disclosed that the appropriate percentage advertising revenues were remitted to the City. However, our test of a sample of 20 of the 77 pay telephone enclosures installed in the pilot project area disclosed the following deficiencies:   Resolution 01-449, the installation of the advertising panels onIn accordance with pay telephones for this pilot program was limited only to the Downtown District, the Latin Quarter District, and the areas of Southeast Overtown Park West, and Little Haiti bounded by Northwest 54th However, weStreet and Second Avenue. noted that at least 5 of the 77 pay telephone enclosures were installed outside the area approved for the pilot program.
  Our review disclosed that none of the 20 pay telephone enclosures tested was painted dark green with a powder finish, which is consistent with the color approved for news racks located on the publics right-of-way, as required by Section 54-268(b) of the City Code. We noted that 4 of the 20 enclosures tested were painted stainless/silver color; 15 of the enclosures were painted beige/top light brownish color; and 1 of the enclosure was painted black/top light brownish color.
  Pursuant to Resolution 01-449, the pay telephone enclosures must have two advertising panels located on opposite sides. However, we observed that 4 of the 20 pay telephone enclosures tested had 3 advertising enclosure panels.
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  Four (4) of the 20 pay telephones tested did not have dial tones.  
 Section 54-421(3) of City Code states that pay telephones shall be maintained in a clean and neat condition and in good repair at all times. However, graffiti were sprayed/written on 4 of the 20 pay telephone enclosure panels examined. Please see Exhibit I on page 26.
  Section 54-420(d) of the City Code requires a minimum distance of 500 feet between 2 pay telephones. However, we noted that the distance between 2 of the pay telephones tested were less than the required 500 feet from each other.  The deficiencies noted above are clearly not consistent with the intent of Resolution number 01-449, which was designed to promote revitalization/redevelopment of the City; encourage the reduction of visual blight; improve and standardize the appearance of pay telephone enclosures, in such a way, that the enclosures contribute to and do not unreasonably detract from the appearance of the overall aesthetics of the surrounding areas and publics right-of-way.  
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PUBLIC WORKS DIVISION (PWD)
PAY TELEPHONE APPLICATIONS AND OTHER PERTINENT RECORDS WERE NOT MAINTAINED.   Pursuant to Article XI, Section 54-414(a) of the City Code, a written pay telephone application, along with the permit application fee, shall be filed with the Public Works department for each public pay telephone to be installed by any telecommunication company within the City limits. Pursuant to Section 54-414(b) of the City Code, an application for the grant of pay telephone permit shall be accompanied by a site-plan; a public service commission certification; a surety bond; a general comprehensive liability indemnification/hold harmless insurance; and property damage insurance indemnifying, defending and holding the City, its officers, boards, commissions, agents and employees harmless. However, our audit of pertinent records disclosed the following internal control deficiencies:  THE PILOT PROGRAM HAS NOT BEEN EVALUATED AS REQUIRED.  
 
ƒ In accordance with Resolution number 01-449, this pilot program was a one-year (May 2001 through May 2002) program. The Resolution stipulated that at the conclusion of the Pilot Program and based on the outcome, the City may consider the resulting recommendations for possible amendments to Chapter 54, Article XI, of the City Code, titled Streets and Sidewalks, Use of the Publics right-of-way for installation of Pay telephones. However, as of the date (11 months after the end of the pilot program) of this audit report, the pilot program has not been evaluated and no recommendations have been proffered.
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