Potential performance audit topic

Memorandum

City of Lawrence

City Auditor

TO:	Members of the City Commission
FROM:	Michael Eglinski, City Auditor
CC:	David L. Corliss, City Manager Cynthia Boecker, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglas, Assistant to the City Manager
Date:	April 29, 2010
RE:	Performance Audit Work Plan for 2010

City Code requires the City Auditor to coordinate with the City Manager in creating an annual work program, to annually present the proposed work program of planned major audits and planned special projects to the City Commission. The City Commission may amend or alter the work program as it deems appropriate.

The general principles I followed to identify and prioritize audit projects were to look for topics:

Of importance to residents and the organization;
That could provide information to help develop annual audit plans for future years;
That provide opportunities for the audit function to interact with different departments; and
That can have a defined scope, making the audit work most manageable.

To develop the potential topics, I reviewed previous work and previous audit plans; discussed audit topics with stakeholders in city government; sought suggestions from citizens through the City Audit web page; reviewed suggestions received throughout the year; and discussed proposed topics with the City Manager.

The table lists nine priority performance audit projects. I’ve also included a list of 24 additional projects that were identified but considered lower priority.

My recommendation to the City Commission would be that the performance audit plan for 2010 includes: financial indicator analysis; recommendation follow-up; and 3-5 additional projects.

	Potential performance audit topic	Details
A	Financial indicator analysis	Reviewing a set of financial indicators, comparing them over time and with medians, to describe the city’s financial condition and identify “warning trends.” The performance audit would involve updating analyses done the last two years.
B	Taste of water	Citizens identified the taste of drinking water as the water/waste water issue that should receive the most emphasis in coming years (2007 citizen survey). A performance audit could evaluate management’s approach to monitoring and controlling the taste of drinking water and make comparisons with similar water utilities.
C	Capital improvement planning and budgeting	Capital assets include streets, buildings, water and sewer lines, storm water systems, and city equipment. These assets are important to the city’s future financial condition and to the ability to continue to provide services. Citizens identified maintenance of streets and infrastructure as the major area that should receive the most emphasis in coming years (2007 citizen survey). A performance audit could compare the city’s processes for planning and budgeting with practices recommended by the Government Finance Officers Association.
D	Outside agencies	The city provides funding to a number of outside agencies and requires those agencies to provide progress reports and financial information. A performance audit could review the extent to which the agencies comply with the reporting requirements.
E	Fees and service charges	The city collects a variety of fees and service charges. A performance audit could compare city policies and practices with recommended practices – such as those of the Government Finance Officers Association and the Government Accountability Office. The scope of a performance audit could be broad – covering a wide range of departments and charges – or narrow.
F	Vendor information review	The city maintains information about vendors in the financial system. Accurate and complete information helps ensure payments to vendors are appropriate. A performance audit could involve reviewing the completeness and accuracy of vendor information. The topic was submitted by a member of the public. The topic was included in the 2009 audit plan but was put on hold while the city worked to implement the Innoprise financial system
G	Recommendation follow-up	City Code requires the City Auditor to follow-up on previous audit recommendations. The follow-up report provides information on management’s efforts to implement audit recommendations.
H	Street specifications	Citizens expressed concern about the condition of the city streets in the 2007 citizen survey. A performance audit could look at specifications for construction and maintenance of city streets and compare the city’s specifications and practices with recommended practices and with other jurisdictions.
I	Selected Police Department Performance Audit	A preliminary survey of the Police Department’s Administrative Bureau will be released soon. That report will identify several potential performance audit topics for future audit work. After the preliminary survey is released, it would be appropriate for the City Commission to approve a yet-to-be-named audit topic for inclusion in the 2010 audit plan.

Other potential audit topics identified during the selection process:

Planning and Development Services

Contract monitoring

Implementation of the performance appraisal process (merit pool)

Span of control analysis

Barriers to increased use of performance measurement

Condition of public buildings

Purchase card transactions

Safety and workers compensation

Overtime controls

Solid waste rate structure

Implementing full cost accounting for solid waste

Building security review

Record retention

Financial policies

Pavement markings

Golf course finances

Downtown parking

Sewer backups

Franchise fee verifications

Fleet and equipment management

Risk assessment survey of department and program managers

Recent submissions from public through the City Audit web page:

Improving the flow of traffic (street conditions, traffic signals, roundabouts)

Increasing citizen input in decision making processes

Oread neighborhood street lighting