DATE: June 18, 2018 TO: Honorable Members of the Audit Committee FROM: Eduardo Luna, City Auditor SUBJECT: City Auditor Activity Report – May 2018 This report provides information on the Office of the City Auditor’s activities as of May 31, 2018. This includes any audit reports issued during the month of May, the status of current audit projects, a list of planned audits that have not yet started, and a list of audit and hotline investigation reports completed during Fiscal Year 2018. The “Target Completion Date” provided for each audit project indicates our estimate of when the audit report will be issued. However, future circumstances may delay report issuance, such as delays in receiving data for review, numerous and extensive findings that require further evaluation, and additional discussions with management to prove and demonstrate that our audit findings are valid and recommendations for improvement are necessary. We should also note that the displacement of our office in January 2018 continues to have an impact on the day-to-day activities of our staff and audit operations. A new office location has been secured for us by the Real Estate Assets Department, but the equipment needed to move in has not yet been installed. Reports Issued May 2018: May 16, 2018– Issued our Fraud Hotline Investigation of Disabled Person Placard Fraud. The report can be found on our website at: https://www.sandiego.gov/sites/default/files/fraud_hotline_investigation_of_disabled_person_placar d_fraud.pd May 21, 2018– Issued our Fraud Hotline Investigation of Water Theft and Theft of Cleaning Supplies. The report can be found on our website at: https://www.sandiego.gov/sites/default/files/fraud_hotline_investigation_of_water_theft_and_theft_ of_cleaning_supplies_0.pdf OFFICE OF THE CITY AUDITOR 202 C. STREET, 3RD FLOOR ● SAN DIEGO, CA 92101 PHONE (619) 533-3165 ● FAX (619) 533-3036 TO REPORT FRAUD, WASTE, OR ABUSE, CALL OUR FRAUD HOTLINE: (866) 809-3500 Page 2 Honorable Members of the Audit Committee June 18, 2018 Audits in Progress – Report Writing Stage 1 Target Completion Date Audit Hours Used Budgeted Hours 1 Audit Audit Objective Facilities Financing - Development Impact Fees (DIF) The objective of this audit is to determine if fees are collected and deposited into the applicable community fund, the methodology for assessing and spending fees can be improved, and expenditures are in compliance with the Mitigation Fee Act. Reports Issued June 5, 2018 2,033 1,800 Data Security Controls Audit of Sensitive Police Department Data The objective of this audit is to determine if the Police Department utilizes sufficient IT controls over their sensitive data to prevent loss or theft. Report Issued June 5, 2018 892 800 Transportation & Storm Water – Storm Water The objective is to evaluate Storm Water Division’s asset management and revenue generation strategies. Report Issued June 14, 2018 3,049 1,800 City’s Fiscal Sustainability and Financial Condition The objective for this audit is to review the fiscal sustainability and financial condition of the City of San Diego by analyzing trends in the City's financial data over a 10-year period. June 2018 329 600 Human Capital Audit – Office of the Chief Operating Officer/ Personnel/ Human Resources The objective for this audit is to evaluate the efficiency and effectiveness of the City’s recruitment, retention, and development of employees. Because the subject matter is broad, this is the first of a series of audits reviewing various aspects of human capital issues. June 2018 1,085 1,800 For audits carried over from FY17, “Budgeted Hours” reflects the hours used in FY17 Audit Work Plan. Page 3 Honorable Members of the Audit Committee June 18, 2018 Audit Audit Objective Target Completion Date Audit Hours Used Budgeted Hours 1 Real Estate Assets – Leased and Surplus Properties The objective for this audit is to evaluate the management of Cityowned surplus property. June 2018 1,379 1,400 Transportation Storm Water – Transportation Engineering Ops Division and Streets Division – Curb Painting Process/Program The objective for this audit is to evaluate the efficiency and effectiveness of the City’s Curb Painting process/program. July 2018 572 600 Public Utilities – Water Operations – Construction & Maintenance – Water Meter Cover Replacement Process The objective for this audit is to evaluate the efficiency and effectiveness of the Water Meter Cover Replacement Process. July 2018 962 800 Target Completion Date Audit Hours Used Budgeted Hours July 2018 (for the water billing report) 2,198 2,000 Audits in Progress – Fieldwork Stage Audit Public Utilities – Customer Support Services Division and Water Billing 2 2 Audit Objective The objective for this audit has been changed to include a review of the accuracy of water billing. Once this audit is completed, a separate audit will review the efficiency and effectiveness of the Customer Support Division call center – call wait times and customer service. The scope of the Public Utilities Customer Support Services Division Audit has been changed to include a review of Water Billing Accuracy, and the estimated budgeted hours has been increased from 800 to 2,000 hours. Page 4 Honorable Members of the Audit Committee June 18, 2018 Audit 3 Audit Objective Target Completion Date Audit Hours Used Budgeted Hours Community Planning Group Audit 3 The objectives for this audit are to determine if Community Planning Groups have an effective control environment, are they in compliance with key elements of Council Policy 600-24 and Administrative Guidelines, and are they a contributing factor to permit approval delays. July 2018 990 1,800 Fleet Services – Vehicle Acquisition The objective for this audit is to determine if Fleet Operations’ vehicle acquisition process is efficiently meeting the City’s needs. July 2018 1,093 1,800 IT Audit of the Accela Software Implementation This is a cursory audit of the Accela software implementation. The objective of this audit is to help ensure Accela is configured to mitigate the risks identified in prior audit recommendations and proper system implementation procedures are followed. July 2018 454 500 Annual Mission Bay Fund Audit FY17 The Annual Mission Bay Funds Audit is required by the City Charter, Article V, Section 55.2 (e). The objective of this audit is to verify the prior fiscal year collection, allocation, and use of Mission Bay Funds are in compliance with City Charter requirements. July 2018 104 420 This audit replaced the Risk Management – Public Liability Audit as mentioned during the July 26, 2017 Audit Committee Meeting. Page 5 Honorable Members of the Audit Committee June 18, 2018 Audits in Progress – Planning Stage Audit Audit Objective Target Completion Date Audit Hours Used Budgeted Hours Security Audit of Cityhub and Supporting Infrastructure The tentative objective is to determine whether Cityhub data is adequately secured through the application and supporting infrastructure as a data repository for department sensitive information. TBD 115 700 Annual Central Stores Inventory Audit FY18 San Diego Municipal Code Section §22.0501 requires an annual count of inventory in City storerooms and warehouses. The objective of this audit is to confirm the valuation of Central Stores inventory. TBD 28 20 Target Completion Date Audit Hours Used Budgeted Hours Other Audit Activity Audit Audit Objective Follow-up on Audit Report Recommendations We report the implementation status on a semi-annual follow-up report, and we periodically issue other recommendation follow-up reports. Our most recent report was issued on March 29, 2018. On-going 860 800 Fraud, Waste and Abuse Hotline City Auditor investigative staff reviews Fraud Hotline calls received and performs investigations for allegations of material fraud, waste or abuse. Reports are issued for substantiated fraud-related allegations, and we issue a Quarterly Fraud Hotline Report with the status of activities. On-going 2,466 3,100 Page 6 Honorable Members of the Audit Committee June 18, 2018 FY 2018 Planned Audits Not Yet Started Planned Audits Estimated Audit Hours IT Audit of Disaster Recovery Preparedness 1,100 Audit and Hotline Investigation Reports Completed During FY 2018 July 13, 2017 Performance Audit of the City’s Quality Management of Street Repaving Projects August 31, 2017 Audit of Mission Bay and San Diego Regional Parks Improvement Funds, Fiscal Year 2016 September 8, 2017 Agreed-Upon Procedures Related to the Central Stores Physical Inventory - Fiscal Year 2017 September 19, 2017 Performance Audit of the La Jolla Children’s Pool Lifeguard Station September 20, 2017 Confidential IT Security Audit Report: PUD Wastewater Industrial Control Systems September 25, 2017 Hotline Investigation of Charitable Activities Conducted on City Time September 28, 2017 Performance Audit of the Economic Development Department's Business Cooperation Program October 12, 2017 Confidential IT Security Audit Report: PUD Water Ops Industrial Control Systems October 12, 2017 Performance Audit of the Park and Recreation Department’s Maintenance Operations October 19, 2017 Performance Audit of the Communications Department’s Charges for Services to Enterprise Funds October 20, 2017 Performance Audit of the City's Grant Management December 4, 2017 Hotline Investigation of an Information Technology Contract December 22, 2017 Fraud Hotline Investigation Report of Waste in the Transportation Alternatives Program December 28, 2017 Fraud Hotline Investigation of Water Theft Page 7 Honorable Members of the Audit Committee June 18, 2018 January 16, 2018 Performance Audit of the Economic Development Department's Business and Industry Incentives Program February 6, 2018 Hotline Investigation of Attempted Theft of City-Provided Clothing March 29, 2018 Fraud Hotline Investigation of City Youth Sports League Referee Background Checks May 16, 2018 Fraud Hotline Investigation of Disabled Person Placard Fraud May 21, 2018 Fraud Hotline Investigation of Water Theft and Theft of Cleaning Supplies Respectfully submitted, Eduardo Luna City Auditor cc: Honorable Mayor Kevin Faulconer Honorable Members of the City Council Kris Michell, Chief Operating Officer Stacey LoMedico, Assistant Chief Operating Officer Jessica Lawrence, Policy Advisor Andrea Tevlin, Independent Budget Analyst Mara Elliott, City Attorney