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Audit Reports

To view a summary of any of the following audit reports, click on the report name.

Audit Of Electric Hopkins Unit 2 Repowering Project (#0901)

We conducted an audit of the City's Arvah Hopkins Power Plant (Hopkins) Unit 2 repowering project during the construction phase. Based on the results of our audit, we were able to determine that adequate project controls were in place to assure that project activities incorporated project management best practices and complied with City policies and procedures and contract requirements.

Our audit was conducted during the construction phase of the repowering project. Our objectives were to provide assurances and advisory services related to project management activities; report on the project status and accomplishments; and provide an independent assessment of risk management, project controls, project goals, and expected deliverables.

We are pleased to report to the Commissioners, executive management, and citizens that the Hopkins repowering project has been successful to date (the project is approximately 97% completed). We concluded that project management over the repowering project was very strong, as evidenced by:

Remaining work to be completed in this project includes closeout of two major contracts, conversion of fuel tanks to hold diesel (#2 fuel oil), and finish modifications to the grounds and repowered unit during the fall and a planned spring 2009 outage. Management estimates that all project work will be completed by June 2009.

Audit of Neighborhood and Community Services Owner-Occupied Home Rehabilitation Program (#0902)

The City is committed to improving the quality of affordable housing in Tallahassee and allocates a substantial portion of its housing budget each year to the owner-occupied home rehabilitation program. The purpose of this audit was to review the processes established by the Neighborhood and Community Services (NCS) housing division to operate and oversee the federally and state funded owner-occupied home rehabilitation program targeted to income-eligible City residents. Additionally, the audit focused on non-profit agencies' provision of home rehabilitation services, the quality of workmanship and materials observed in the completion of the home rehabilitation projects, and the clients' level of satisfaction with the results of the rehabilitations.

Funds available to non-profit agencies through the owner-occupied home rehabilitation program for the rehabilitation of income-eligible homeowners' residences totaled $4.1 million over the three-year period including the 2005, 2006, and 2007 fiscal years. We found that this home rehabilitation program has been a great benefit to many City residents over the years, with 67 income-eligible homeowners receiving home rehabilitation services during the 2005 and 2006 fiscal years. Additional clients continued to be served through the 2007 and 2008 fiscal years. However, we found many deficiencies in the home rehabilitation services provided through the City and various issues of concern among the clients served. Those deficiencies pertain to:

  1. Inadequate, substandard, and/or incomplete rehabilitation construction work;
  2. Inadequate communications by non-profit agencies and/or their contractors;
  3. Inadequate cost estimates;
  4. Questionable and untimely change orders;
  5. Lack of required permitting and inspections;
  6. Reimbursements to participating non-profit agencies prior to the issuance of certificates of completion on rehabilitation projects;
  7. Lack of support that required competitive procurement procedures were used;
  8. Untimely completion of rehabilitation projects;
  9. Excessive waiting periods for homeowners applying for services through the owner-occupied home rehabilitation program;
  10. Lack of required customer satisfaction surveys;
  11. Client dissatisfaction with services;
  12. Lack of sufficient monitoring by the City; and
  13. Lack of required filing of liens.

These deficiencies and concerns indicate a need for the Neighborhood and Community Services housing division, non-profit agencies, and participating contractors to review past performance and determine changes that should be made to provide more successful and complete home rehabilitation services to the citizens of Tallahassee.

During the course of this audit, we became aware that the Tallahassee Urban League was receiving additional monies from the Florida Department of Community Affairs (DCA) to rehabilitate many of the homes also reviewed by us. As follow-up, we have contacted DCA and are coordinating additional fieldwork with them to ensure proper accountability for all city, state, and federal funds applied to homes rehabilitated. To the extent needed, we will issue such additional reports considered necessary as a result of our follow-up audit efforts.

Audit Of Allocated Costs (#0903)

This audit was conducted to evaluate the process for allocating costs of City internal service funds to the various departments and offices that used, or benefited from, the services rendered through those funds. The audit focused on the establishment of budgeted allocated costs for FY 2008 and the actual charges of those costs made for that fiscal year. Costs allocated through this process in FY 2008 totaled $57.3 million. The audit also addressed annual adjustments made in recent years to address differences between budgeted and actual costs and activities.

To improve the cost allocation process, we recommended that the DMA Office of Budget and Policy:

We also recommended that the DMA Office of Budget and Policy consider additional enhancements to the cost allocation process, as identified in the report, that would result in more equitable cost allocations.

Overall, we found that the DMA Office of Budget and Policy has established a reasonable, appropriate, and logical process for equitably allocating internal service fund costs. We concluded that the net impact of overcharges and undercharges to individual funds were not material to the cost allocations taken as a whole.

Instances were identified that resulted in less than equitable allocations of those costs to benefiting departments. Those instances were primarily attributable to misapplications or misinterpretations of data.

Our audit also identified several enhancements to the current allocation process that would result in more equitable allocations if implemented. Those enhancements should be considered by DMA in establishing cost allocations for subsequent years.

Audit Follow-Up on Gas Infrastructure (#0904)

Twenty-one of the 25 action plan steps due as of September 30, 2008, have been completed or resolved. Action to address the four remaining steps has been initiated.

In audit report #0727 we noted that, overall, the City has adequate and proper processes and procedures to ensure a safe and reliable infrastructure. We also noted that significant improvements and enhancements had been and were being made in regard to accounting for and tracking that infrastructure. We reported that installations of new infrastructure met federal and state requirements and that expansions and replacements were planned and funded. We reported that an effective public protection program was established. However, we also identified areas where improvements and enhancements were needed. Accordingly, recommendations were made to install an additional isolation valve, accurately designate critical valves in the Gas Utility geographic information system (GIS), develop a project management plan for refinement of the Gas Utility's GIS, protect stored pipe from environmental elements, ensure timely repair of non-critical leaks, and enhance monitoring of system pressures at a satellite utility facility. Recommendations were also made to improve documentation in several areas, including infrastructure testing and inspection, leak identification and repair, emergency notifications and responses, and other areas.

Twenty-seven action steps were developed to address the identified issues, for which 25 were due for completion prior to or as of September 30, 2008. In our first follow-up report (#0810), we reported that 14 of those 25 action plan steps had been completed as of March 31, 2008. During this follow-up engagement, we found that seven of the 11 remaining steps were completed and actions had been initiated to address the four uncompleted steps.

Actions that were initiated and/or completed during the six-month period addressed by this follow up engagement included:

Audit Follow-Up on Police Overtime (#0905)

This is the second follow-up audit conducted after the issuance of the original audit report #0726, Police Overtime Audit. Police management has made significant progress toward addressing complex issues related to the tracking and management of overtime activities.

During the Police Overtime audit, we identified three areas related to the recording of overtime in the payroll system that should be improved. Management developed 11 action plan steps to address the issues in these three areas. Six steps were completed in the prior follow-up period. Of the five action plan steps due during this follow-up period, two steps were completed and three steps were partially completed.

The two action steps completed included:

The three partially completed steps are related to implementing a process to periodically review payroll transactions involving overtime, and developing procedures to monitor retroactive adjustments and assure all adjustments are properly authorized and approved.

Audit Follow-Up on Fleet Fuel Operations (#0906)

This is the second follow-up on the action plan steps originating from the audit of the City's Fleet Fuel Operations (Report #0801) issued on October 18, 2007.

During our original audit, we noted that the accounting for and safeguarding of fuel had greatly improved since a prior audit conducted in 2003. Processes had been developed and implemented to better account for fuel purchased, issued, and in inventory and to better safeguard the City's fuel inventory. We also noted additional areas where improvements were needed and provided recommendations related to daily fuel operations, reconciliation processes, and fuel tax reporting. The audit report included management's action plan consisting of 15 action plan steps to address the recommendations in the audit report.

During the follow-up period April 1, 2008, through September 30, 2008, one new action plan step and six partially completed action plan steps due in the prior period were due to be completed. Of these seven steps, four steps were completed and three steps remain to be completed.

The four steps completed during this period are related to:

Of the three remaining action plan steps, the following two steps have been partially completed:

The remaining step is to implement additional oversight controls over the fuel operations and involves both Fleet and Accounting Services management. Management has indicated that this oversight will be implemented by March 31, 2009.

Final Audit Follow-Up on Citywide Disbursements 2007 (#0907)

City departments have completed all action plan steps developed as the result of our previously issued audit report #0807, Citywide Disbursements 2007, covering the period July 1, 2006, through June 30, 2007. In audit report #0807, issued March 21, 2008, we identified areas in eight City departments where improvements should be made to ensure that disbursements are proper, authorized, and in accordance with established laws, rules, and procedures. The eight applicable City departments had a total of 12 action plan steps due for completion. We are pleased to report that those departments have timely completed all 12 action plan steps.

Audit Report on Citywide Disbursements 2008 (#0908)

Our audit covered the period July 1, 2007, through June 30, 2008. Total disbursements for that period, $762,983,369, were segregated, for purposes of our audit, into three broad categories: general disbursements, salary payments, and retirement benefit payments.

We found sampled disbursements were proper, authorized, supported, correctly recorded, and in compliance with laws, rules, policies, and procedures. No reportable issues were identified relating to items tested.

Audit Follow-Up of the Purchasing Section of the Procurement Services Division (#0909)

In audit report #0725, on the Purchasing Section of Procurement Services, we identified issues for improvement; in response, management developed 22 action plan steps to address those issues. The issues identified in the audit broadly related to:

This is our second follow-up on the actions taken by Procurement Services in response to the audit action plan. The first follow-up was for actions taken as of March 31, 2008, and in that follow-up we noted that Procurement Services had completed five action plan steps. During this six-month follow-up period there were 16 action plan steps due, eight were completed, five were completed in a prior period, and three were adjusted to be completed at a later date in a prior follow-up period.

Final Audit Follow-Up City P-Card Audit (#0910)

The departments and offices reviewed as part of the City P-Card Audit have completed 88 of the 93 (95%) action plan steps identified for that audit. In view of these successful efforts to date, the 5 remaining steps are referred to management for final resolution and disposition. Actions taken to date should significantly improve controls over City P-Card activity and help ensure that City P-Cards are used for authorized and valid purposes.

In audit report #0805 we audited a cross section of City cost centers (departments and offices). Our audit showed, for the most part, that transactions were proper and controls were in place. No instances of fraud or activities for personal gain were identified for the items tested. However, risks were identified at several locations that increased the likelihood that (1) unauthorized transactions could occur and not be timely detected and/or (2) goods and services are not procured efficiently and in accordance with controlling rules, regulations, and guidelines. Action plan steps were developed to address and mitigate those risks.

Five City cost centers along with the Department of Management and Administration (DMA) and the Office of Treasurer-Clerk's Record Management Division (RMD) had a total of 93 action plan steps. Of those 93 steps, 88 (95%) have been completed. The remaining five steps have been referred to management for final resolution and disposition. These steps include:

 

Audit Of Repayment Of Local Communications Services Tax (#0911)

We conducted an audit of the City of Tallahassee's (City) communications services taxes (CST) and Florida Department of Revenue CST audit procedures to: 1) verify the reasonableness and appropriateness of the information supporting the City Revenue Division's request to the City Commission to increase the local CST rate from 5.49% to 6.1%, effective February 1, 2009; 2) provide assurance that a Florida Department of Revenue (FDOR) audit finding requiring the City to repay $1.4 million is adequately supported; and 3) determine the accuracy of Leon County addresses and assigned jurisdictions in the FDOR CST address database.

Our audit was initiated due to the recent FDOR adjustments that indicated the City was required to repay CST revenue overpayments of $1.4 million to FDOR. The $1.4 million consisted of audit adjustments totaling <$2,148,581> and non-audit adjustments totaling $724,214.

Based on our audit, we made the following four conclusions:

  1. The City Revenue Division's basis for requesting the City Commission to increase the CST local rate from 5.49% to 6.1% appears to be a reasonable and appropriate response to previous years under-collections and the recent FDOR adjustment (made up of audit and non-audit adjustments). However, we were also made aware that additional FDOR audit adjustments are forthcoming, as the first adjustment of $1.4 million was based on the 45-50% audits completed through November 2008. We were not able to provide assurance that the tax rate increase will be sufficient to compensate for future supported FDOR adjustments.
  2. Our review of FDOR audit documentation and discussions with FDOR auditors showed their audit testing methodology for verifying the accuracy of assigned jurisdictions in the providers' billing database was not statistically valid. Our concern is that FDOR is using imprecise audit methodologies to calculate precise audit adjustments. Therefore, we do not agree with FDOR's overall audit conclusion that the City should repay $1.4 million.
  3. Assigned jurisdictions and wrong addresses in FDOR audit testing resulted in the largest portion of the FDOR audit adjustments. Our review of the Leon/Tallahassee address and assigned jurisdictions in the FDOR CST address database indicated that the accuracy had not been verified since it was originally submitted in 2000. Since then, FDOR added address information from the United States Postal Service Master Address Listing causing duplicate addresses, but some with wrong assigned jurisdictions. Inaccurate address and jurisdictional designations data can result in incorrect FDOR audit adjustments.
  4. Other issues identified during the audit related to the FDOR audit processes included: a) FDOR was not including providers' "qualifying discounts" taken on the CST returns when determining adjustments; and b) providers will most likely continue to make CST payments to inaccurate jurisdictions in the future, as they were not likely to correct errors identified in FDOR audits.

Recommendations were provided during the audit to the Revenue Division to address each of the identified issues. All action plan steps were completed and/or actions planned were in progress when the report was released.

Audit Of The City's Ethics Program (#0912)

This audit was conducted to assess and evaluate the design, implementation, and effectiveness of the City's ethics program and activities and provide recommendations for improving the governance process of promoting appropriate ethics and values. Our audit was performed during 2008 and included a review of state laws, other governments' ethics programs and best practices for ethics programs, and components and activities in the City's ethics program, and a survey of randomly selected City employees.

Our assessment of the design and implementation of the City's ethics program indicated that the program includes many of the components recommended for a strong ethics and compliance program, including a code of ethics, oversight of and compliance for ethical behavior, training, reporting of violations, employees' annual review of the code of ethics and critical policies, and transparency and accountability regarding the use of public funds.

We also conducted a survey of randomly selected full-time City employees to obtain their perceptions regarding the ethical environment and workplace behaviors in the City. Surveys were sent to 1,492 employees and responses were received from 643 employees, although not all employees answered every question. Survey responses indicated that the employees were aware of the City's ethics program (94%), knew how to report unethical behavior (86%), and had participated in training that included ethics awareness (83%).

We provided two recommendations to further enhance the ethics program by: 1) formalizing the City's financial disclosure processes between staff in the City Treasurer-Clerk, City Attorney, and Human Resources offices; and 2) improving communications with employees by periodically reviewing where to get assistance regarding ethical concerns, discuss ethical and unethical behavior and issues during staff meetings, and encourage and support reporting of unethical behaviors.

Final Audit Follow-Up on Automated Deposit Reporting and Verification Processes (#0913)

This is the first and final follow-up on the action plan steps originating from the audit of the City's Automated Deposit Reporting and Verification Processes (Report #0818) issued on September 9, 2008. Revenue management completed all three of the action plan steps identified in the audit as of April 1, 2009.

Our original audit was of the automated deposit reporting and verification processes that were implemented and completed within the Treasurer-Clerk's Revenue Division as of April 30, 2008. Our audit scope did not include the bank reconciliation activities performed in Accounting Services, as the automation of their processes was not scheduled for completion until after the audit period. The audit scope focused on the newly implemented automated processes, with specific objectives to evaluate the design and implementation of the selected internal controls (control activities, information and communication, and monitoring) to ensure they were working as designed and effectively.

During the period September 2008 through March 2009, the three completed steps were related to:

Management from the Revenue and Accounting Services Divisions has been working closely together to ensure the automated Revenue processes are working smoothly and accurately. Additionally, Accounting Services will be measuring and evaluating the success of their newly implemented automated bank reconciliation processes in May and June.

Audit Follow-up on Gas Infrastructure (#0914)

Twenty-five of the 26 action plan steps due for completion as of March 31, 2009, have been completed or resolved. Completion of the remaining action plan step has been deferred until a vacant position is filled.

In audit report #0727 we noted that, overall, the City has adequate and proper processes and procedures to ensure a safe and reliable infrastructure. We also noted significant improvements and enhancements had been and were being made in regard to accounting for and tracking infrastructure. We reported installations of new infrastructure met federal and state requirements and expansions and replacements were planned and funded. We reported an effective public protection program was established. However, we also identified areas where improvements and enhancements were needed. Accordingly, recommendations were made to install an additional isolation valve, accurately designate critical valves in the Gas Utility geographic information system (GIS), develop a project management plan for refinement of the Gas Utility's GIS, protect stored pipe from environmental elements, ensure timely repair of non-critical leaks, and enhance monitoring of system pressures at a satellite utility facility. Recommendations were also made to improve documentation in several areas, including infrastructure testing and inspection, leak identification and repair, emergency notifications and responses, and other areas.

Twenty-seven action steps were developed to address the identified issues, for which 26 were due for completion prior to or as of March 31, 2009. In our two prior follow-up reports, we reported 21 of those 26 action plan steps had been completed (i.e., as of September 30, 2008). During this follow-up engagement, we found four of the five remaining steps were completed. Management has deferred completion of the fifth action plan step until a vacancy in a key position is filled.

Actions completed during the six-month period addressed by this follow-up engagement included:

The one deferred action plan step involves development of a project management plan for refinement of the Gas Utility's GIS.

Audit Follow-up on Fleet Fuel Operations (#0915)

This is the third follow-up on the action plan steps originating from the audit of the City's Fleet Fuel Operations (Report #0801) issued on October 18, 2007.

During our original audit, we noted that the accounting for and safeguarding of fuel had greatly improved since a prior audit conducted in 2003. Processes had been developed and implemented to better account for fuel purchased, issued, and in inventory and to better safeguard the City's fuel inventory. We also noted additional areas where improvements were needed and provided recommendations related to daily fuel operations, reconciliation processes, and fuel tax reporting. The audit report included management's action plan consisting of 15 action plan steps to address the recommendations in the audit report.

Four action plan steps partially completed in prior periods were due to be completed during the follow-up period October 1, 2008, through March 31, 2009. Of these four steps, two were completed and two remain outstanding.

The two steps completed during this period are related to:

The two steps that remain outstanding are related to:

Management has revised the date for implementing these controls to September 30, 2009.

Audit Follow-Up on StarMetro Staffing of Drivers and Mechanics (#0916)

This is the first follow-up on the action plan steps originating from the audit of the City's StarMetro Staffing of Drivers and Mechanics (Report #0817) issued on August 14, 2008.

During the audit of StarMetro staffing of drivers and mechanics, we assisted management in developing methodologies to determine staffing needs in the General Transit, Special Transportation, and Garage Divisions and in determining the costs of services for General Transit bus service. We also provided analyses of overtime and temporary wage expenses and provided recommendations toward reducing these expenses in each of the three divisions. The audit report included management's action plan consisting of 20 action plan steps to address the recommendations in the audit report. All 20 action plan steps were due to be completed between August 1, 2008, and March 31, 2009.

During the first six months of FY 2009, StarMetro has decreased overtime expenditures from FY 2008 by 11% and increased temporary wages by 25%. While combined overtime and temporary wages have increased by 1%, StarMetro's increased use of temporary drivers rather than full-time drivers paid overtime has increased the number of driver hours at the most efficient cost. For example, we estimate that StarMetro saves approximately $9.41 for every hour worked when paying temporary drivers at the average regular rate of $10.55 instead of full-time drivers at the average overtime rate of $19.96.

Since August 2008, eight (40%) of the 20 action plan steps were completed. Twelve steps are in process and the targeted completion dates have been extended. Management has revised the dates for completing these action plan steps to be between June 30, 2009, and January 31, 2010.

Audit Report on City Lease Administration (#0917)

This audit was conducted to evaluate the process of executing, approving, and administering City leases of real properties. The primary focus was to review the administration of leases of City-owned properties to other entities, including collection of revenues of those leases. We also reviewed activities relating to the administration of lease of property by the City from external entities.

For the most part, management implemented controls and processes that ensured leases were executed and administered properly. Related revenues were generally collected and properly deposited. Similarly, payments for leases of property from external entities were correct and appropriate. However, we identified issues that indicate the need for improvements and enhancements in the administration of leases of City-owned properties to other entities. Accordingly, the following recommendations were made to address those issues and to ensure:

Audit Follow-Up on Allocated Costs (#0918)

DMA Budget and Policy has successfully addressed only a portion of the action plan steps due for completion as of March 31, 2009.

In audit report #0903 we noted that, overall, the Department of Management and Administration (DMA) Budget and Policy Section had established a reasonable, appropriate, and logical process for equitably allocating internal service fund costs to benefiting City departments and offices. Several issues were also identified that resulted in less than equitable allocations (charges) of those costs. Those issues primarily pertained to misapplications or misinterpretations of data during the cost allocation process. Because many of those issues offset each other, the final impact on the fiscal year (FY) 2008 budget was not significant to the overall accuracy of the costs allocated for all funds taken as a whole. Nonetheless, there were impacts, ranging from undercharges of $560,377 to the Water Operating Fund to overcharges of $328,459 to the Electric Operating Fund.

Nine action steps were developed to address the identified issues, for which six were due for completion as of March 31, 2009. In our follow up we found that the DMA Budget and Policy Section (with assistance from DMA Accounting Services) had completed two of the six steps, and partially completed a third step by:

Actions that were due, but not completed, included:

Not completing these action plan steps resulted in several significant errors being repeated in the FY 2009 cost allocation process. If not corrected for FY 2009, those reoccurring errors may result in significant under and overcharges of FY 2009 internal service fund costs to benefiting City departments and offices. Further analysis by DMA Budget and Policy would be necessary to ascertain the actual impact of these reoccurring errors on the FY 2009 cost allocations.

Accordingly, we recommend that DMA Budget and Policy evaluate whether further analysis is warranted. If such analysis is warranted and performed, DMA should correct the FY 2009 cost allocations for any significant under and overcharges resulting from the reoccurring errors. In addition, DMA should take actions to ensure similar issues are not repeated in cost allocations for subsequent years.

Audit Report on City Water Infrastructure (#0919)

The City's water infrastructure is comprised of 27 active production wells; 8 elevated storage tanks; 1,224 miles of water mains; 73,440 water laterals that connect mains to customer premises; 6,949 fire hydrants; and 24,489 system and control valves. The City's water utility was established in 1907. Much of the current infrastructure has been installed gradually over time as the City grew and new areas were developed.

This audit was conducted to evaluate the processes, procedures, and systems used to (1) physically account for and manage infrastructure components; (2) maintain the infrastructure; (3) ensure new infrastructure is properly designed, constructed, and installed; (4) plan for and replace infrastructure components at the end of their useful lives; and (5) plan for and fund infrastructure expansion due to City growth and increased demand.

We found that several improvements and enhancements were made in recent years. Our audit identified areas where further improvements and enhancements are needed. Accordingly, we made recommendations to:

We also made recommendations in several other areas relating to the City's water infrastructure.

Overall, we found that Underground Utilities adequately accounts for and maintains the City's water infrastructure. For the most part, adequate processes are in place to ensure new infrastructure is properly designed and installed, and to ensure replacements and expansions are properly and adequately planned and funded.

We noted that Underground Utilities made several improvements and enhancements in recent years. As noted below, our audit identified areas for further improvements and enhancements.

Physically accounting for and tracking infrastructure components. Processes need to be developed to ensure all new infrastructure is properly recorded and tracked in the GIS.

Maintaining Infrastructure. Enhancements are needed to allow for the generation of proper, logical, consistent, and informative data through the Mobile Work Management System.

Properly designing, constructing, and installing new infrastructure. Procedures should be developed to ensure applicable projects for new infrastructure are designed or reviewed by the Water Resources Engineering staff.

Planning infrastructure replacements. A viable plan for replacing and upgrading the City's aging downtown water infrastructure should be developed.

Several additional improvements and enhancements are needed for water infrastructure and are identified for management's consideration and disposition.