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Audit Report

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STORMWATER DEPARTMENT OPERATIONS AND MAINTENANCE DIVISION STORMWATER OPERATIONS AUDIT 07-21 NOVEMBER 5, 2007 STORMWATER DEPARTMENT OPERATIONS AND MAINTENANCE DIVISION STORMWATER OPERATIONS AUDIT 07-21 INTRODUCTION The Stormwater Operations and Maintenance Division (Division) manages the stormwater runoff due to non-pervious man-made surfaces (i.e., buildings, roads, sidewalks, etc.). The Division is responsible for stormwater force main construction, street sweeping, inlet and pipe cleaning, ditch maintenance and monitoring the mowing contracts for ditches and retention ponds. STATISTICS FY07 FY06 FY05 Personnel Services $4,496,151 $4,121,555 $3,651,874 Operating Expenses 2,906,563 2,564,955 3,032,416 Total $7,402,714 $6,686,510 $6,684,290 Authorized Positions 80 80 75 Source: FY07 Budget, FY 06 and FY 05 Actual per FAMIS. STATEMENT OF OBJECTIVES This audit was conducted in accordance with the Internal Audit Department's FY07 Audit Agenda. The objectives of this audit were to ensure that: 1. A preventive maintenance plan was in place and deviations from the plan were explained. 2. The mowing and maintenance contracts were properly monitored for compliance with contract terms. 3. City streets were swept in accordance with the sweeping schedule and inspections of swept routes were performed. 4. Responses to stormwater service requests received from the ...
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STORMWATER DEPARTMENT OPERATIONS AND MAINTENANCE DIVISION STORMWATER OPERATIONS AUDIT 07-21 NOVEMBER 5, 2007
 
 
 
STORMWATER DEPARTMENT OPERATIONS AND MAINTENANCE DIVISION STORMWATER OPERATIONS AUDIT 07-21
     INTRODUCTION  The Stormwater Operations and Maintenance Division (Division) manages the stormwater runoff due to non-pervious man-made surfaces (i.e., buildings, roads, sidewalks, etc.). The Division is responsible for stormwater force main construction, street sweeping, inlet and pipe cleaning, ditch maintenance and monitoring the mowing contracts for ditches and retention ponds.   STATISTICS   FY07  FY06 FY05  Personnel Services $4,496,151 $4,121,555 $3,651,874   Operating Expenses 2,906,563 2,564,955 3,032,416  Total  $7,402,714 $6,686,510 $6,684,290    Authorized Positions  80 80 75  Source: FY07 Budget, FY 06 and FY 05 Actual per FAMIS.    STATEMENT OF OBJECTIVES  This audit was conducted in accordance with the Internal Audit Department's FY07 Audit Agenda. The objectives of this audit were to ensure that:  1.  A preventive maintenance plan was in place and deviations from the plan were explained.  2.  The mowing and maintenance contracts were properly monitored for compliance with contract terms.  3.  City streets were swept in accordance with the sweeping schedule and inspections of swept routes were performed.  4.  Responses to stormwater service requests received from the City’s Customer Service Message Center were timely.
 
STATEMENT OF SCOPE  The audit period covered stormwater maintenance activity that occurred from October 1, 2005, to March 31, 2007. Source documentation was obtained from the Operations and Maintenance Division. Original records as well as copies were used as evidence and verified through physical examination.  STATEMENT OF METHODOLOGY  The sample size and selection were statistically generated using a desired confidence level of 90 percent, expected error rate of 10 percent, and a desired precision of 10 percent. Statistical sampling was used in order to infer the conclusions of test work performed on a sample to the population from which it was drawn and to obtain estimates of sampling error involved. When appropriate, judgmental sampling was used to improve the overall efficiency of the audit.  To achieve the audit’s objectives, reliance was placed on computer-processed data contained in the Division’s Work Order and Job Costing databases. We assessed the reliability of the data contained in the Work Order and Job Costing databases and conducted sufficient tests of the data contained in each of them. Based on these assessments and tests, we concluded the data was sufficiently reliable to be used in meeting the audit’s objectives.  STATEMENT OF AUDITING STANDARDS  We conducted our audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to afford a reasonable basis for our judgments and conclusions regarding the organization, program, activity, or function under audit. An audit also includes assessments of applicable internal controls and compliance with requirements of laws and regulations when necessary to satisfy the audit objectives. We believe that our audit provides a reasonable basis for our conclusions.  AUDIT CONCLUSIONS  Based upon the test work performed and the audit findings noted below, we conclude that:  1.  A preventive maintenance plan was in place and deviations from the plan were explained.  2.  The mowing and maintenance contracts were properly monitored for compliance with contract terms.  3.  City streets were swept in accordance with the sweeping schedule; however, inspections of swept routes were not consistently performed. The liquidated damages for downtime provided for in the street sweeper lease agreements were not pursued.
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4.  Responses to stormwater service requests received from the City’s Customer Service Message Center (CSC) were timely; however, improvement is needed in closing (CSC) messages.
NOTEWORTHY ACCOMPLISHMENTS  The Division has made significant improvements in its work order system since the prior audit.  While the findings discussed below may not, individually or in the aggregate, significantly impair the operations of the Division, they do present risks that can be more effectively controlled. Before we completed our audit, the Division implemented some of the Internal Audit Department's recommendations.     
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LEASE AGREEMENT  On February 6, 2003, the City Council of the City of Tampa (City Council) passed and adopted Resolution No. 2003-0146 approving the proposal for the lease and maintenance of two street sweepers for $76,200 per year for four years. This lease was extended for an additional 6 months until September 17, 2007 for $38,100. In addition, on August 26, 2004, City Council passed and adopted Resolution 2004-1106 approving the proposal for the lease and maintenance of four additional street sweepers for $158,670 per year for four years from the same leasing company.  The leasing company provides all repairs and maintenance of the sweepers. The company also guarantees that the sweepers will be available for operation at least 95 per cent of normal workdays and that the sweepers would not be out of service for more than three (3) consecutive normal workdays nor more than five (5) normal workdays in any 100 consecutive workday period. In the event repairs can’t be completed within three (3) normal workdays, a relief unit can be provided for the City’s use until the leased sweeper is repaired.  The lease agreement provides for liquidated damages for downtime when a relief unit is not provided. On a quarterly basis, a representative from the leasing company is to meet with a designated City representative to review the repair orders and calculate the machine downtime (downtime does not apply to equipment unavailability during routine maintenance or equipment put out of service due to theft, vandalism, accident, City personnel negligence, or act of God). Since inception of the two lease agreements, the City has incurred $45,396 in repair costs to fix sweepers damaged by City personnel. In the event liquidated damages are due the City, a check would be mailed within seven (7) business days of the quarterly meeting to compensate the City for downtime in cases where a relief unit was due and not provided. The agreement allows the City to charge the leasing company a daily amount of $300 for each normal workday required to provide 95 percent availability and for each normal workday exceeding the three (3) consecutive workday repair time allowance.  We were informed that quarterly meetings were not held with the City, and the City has never billed the leasing company for liquidated damages even though significant downtime has occurred. For example, an analysis prepared by the Division disclosed that during the period of January 1, 2007, to June 6, 2007, there were 172 days in which one or more sweepers were not operational. In some of those instances, some sweepers were down for more than 3 consecutive normal workdays. Moreover, it was represented by Division personnel that one of the two sweepers under the first lease agreement, has been out of service since January 2006 due to a blown engine. The leasing company provided a relief unit, however, as of June 6, 2007 the relief sweeper had been out of service since May 23, 2007, and another sweeper was not available. The Division is currently reviewing the repair orders for all sweepers to determine the amount of liquidated damages due the City.      
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RECOMMENDATION 1  The Division should bill the leasing company for all liquidated damages as provided for in the lease agreements. Based on initial estimates, liquidated damages due could exceed $40,000. In addition, management should meet with the leasing company on a quarterly basis as prescribed in the lease agreements to calculate the liquidated damages for any future occurrences of downtime.  AUDITEE RESPONSE Concur. We are working on the amount of liquidated damages owed and will be meeting with the vendor short term. The vendor meetings described above will be held at the end of each 100 normal work day cycle. It is at these meetings that guaranteed availability and any liquidated damages are to be agreed upon. We will request Purchasing to be in these meetings to ensure the agreement is adhered to. RECOMMENDATION 2 Management should provide additional training for employees on the use and daily maintenance of the equipment to help prevent future damages and associated repair costs.  AUDITEE RESPONSE Concur.
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STREET SWEEPING PROGRAM Street sweeping services are delivered by the Division on a regularly scheduled basis for residential and commercial areas. There are 32 residential routes and 67 commercial routes. Sweeping also occurs before and after special events such as parades and marathons. Only streets that have curbs and gutters are scheduled for sweeping services. The sweeping schedule is on the City’s website. The Division’s procedures require that the residential routes be inspected after sweeping. However, our test of ten residential routes swept during the period of November 27, 2006, to March 20, 2007, disclosed that eight of those routes were not inspected. It was represented that commercial routes are not inspected (except for those swept for the Florida Department of Transportation). Consequently, there is a lack of assurance that routes were swept adequately.  RECOMMENDATION 3  Routes should be inspected upon completion of sweeping and such inspections should be documented.  AUDITEE RESPONSE  Concur. The Division has an informal inspection program. It has never been a policy to inspect all routes. Upon completion of the residential routes, the maintenance zone s Engineer Support Technician will spot check the routes for quality control and e-mail the City-Wide Planner Scheduler when the routes are inspected. The majority of the commercial routes fall under FDOT jurisdiction for which we are being compensated. These routes are inspected by State personnel and it is by their inspection and concurrence of completion that we are being paid.
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WORK ORDERS An analysis performed on the Work Order database disclosed gaps in the numerical sequence of work orders issued during the period of October 1, 2005, to March 31, 2007. There were 84 missing work order numbers. It was represented that the missing work orders contained corrupted information. To repair the database, the corrupt work orders must be deleted and a new work order entered. To ensure the integrity of the database, all work orders should be accounted for and work orders to be deleted be independently reviewed to ensure the deletion is proper.  RECOMMENDATION 4 The numerical sequence of work orders should be accounted for. A separate log of deleted work orders should be maintained.  AUDITEE RESPONSE  The database we are using was built in-house. Support staff and the Information Technology Specialist are the only staff that have the right to delete work orders. They only do so when data has been corrupted and the database will not function. By omission, the corrupted work orders are accounted for. Since this is a standalone in-house system, its maintenance and use is for our benefit only and is not intended to reconcile with any other system. We look forward to the City having a standardized enterprise system so a master records management structure will allow corrupted files to be tracked.  AUDITOR COMMENT It is a standard internal control procedure to account for the numerical sequence of numbered documents to ensure the integrity of the database. The omission of a work order does not necessarily indicate it was corrupted.
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RECORDATION OF INVENTORY WITHDRAWALS
Inventory withdrawals of parts and materials were charged to one work order even though some of the parts and materials were used to complete activities applicable to other work orders. For example, we noted instances on work orders where the square footage of sod withdrawn from inventory was greater than the square footage installed. It was represented that if all the sod withdrawn was not installed for a particular work order, it would be used on another work order but the second work order would be marked ‘N/C’ – No Charge for sod. Consequently, the job cost for the affected work orders were not represented accurately.  RECOMMENDATION 5
All inventory withdrawals should be properly charged to work orders for which the parts or materials were used. Only actual usage should be charged to the work order. If parts or materials are not utilized, they should be returned to inventory.  AUDITEE RESPONSE
Concur. Multiple copies of Stock Issues will be used to follow material usage and charges to the Job Costing system. Work orders will have material used assigned to them as necessary.  The term “No Charge” is misleading, it is usedwhen there is no direct stock issue to offset usage. The material, even though labeled “N/C” was still charged in job costing.
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