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2024-031 FY 2024 Informal Audit Follow-Up Report August 16,2024 Report No. 2024-031 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Fiscal Year 2023-24 Internal Audit Informal Follow-Up Review Report BACKGROUND: The City Auditor's Office has completed informal follow-up reviews of the audit projects listed below. We conducted this performance audit per generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives.We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Previously, the City Auditor's Office completed formal follow-up reviews of the following audit projects and found that only a few recommendations were outstanding: Project 005—Audit of Utility Street Cuts; Project 012—Audit of Economic Development: Recruitment& Expansion; Project 014—Facilities Maintenance; Project 016—COVID-19 Response: Pandemic Preparedness; Project 019—Municipal Court Payments; and Project 022—Building Permit Processes. This report intends to provide an update on the 11 outstanding recommendations from each project. Audit fieldwork was conducted during Dec. 2023 and Jan., March, April, May, July and Aug. 2024. The scope of the review varied depending on the procedure being performed. The following list summarizes major procedures performed during this time: • Reviewed documentation from the issued audit and follow-up reports relevant to the 11 outstanding recommendations; • Examined right-of-way permit inspection documentation and the City's 2024 Standard Construction Details; • Interviewed Economic Development Department management and reviewed the City's amended contract with the Chamber of Commerce; • Compared facility access card users with active employees and reviewed available timeliness and work order reports; • Interviewed Fire management regarding the Business Continuity Plan; • Reviewed new manual citations standard operating procedure and observed citation database; and • Examined building permit quality control inspection documentation and related standard operating procedures. City management is responsible for ensuring that resources are appropriately managed and used in compliance with laws and regulations;programs are achieving their objectives; and services are being provided efficiently, effectively, and economically. August 16,2024 Report No. 2024-031 DISCUSSION: Project 005—Audit of Utility Street Cuts Previously, the City Auditor's Office completed a follow-up review of the Audit of Utilit.. Street Cuts in Dec. 2020 and a second follow-up review of the Audit of Utility Street Cuts in Aug. 2023. At the time of the second review, Staff found that 11 of the issued 13 recommendations had been implemented. The remaining recommendations and the follow-up results are shown below: 2. Develop patch ride quality testing criteria. Management Response: Concur Staff will adopt later this summer [2019] a standard procedure for determining the level of ride quality required when assessing a patch. Staff will review other agencies and city's requirements as a reference for the City of Denton's standard procedure. Audit Follow-Up Finding: Implemented The City's Standard Construction Specifications require utility cut patches to meet certain ride quality standards; however, Public Works Inspections staff did not verify that patches met ride quality standards during the original audit period. For reference, utilities must occasionally cut into streets to perform work on utility lines that run underneath the City's roadway network, as illustrated in Figure 1. Figure 1: Utility Street Cut Illustration Patch Pavement Surface r Road Base Trench Backfill Road Subgrade • Since then, a procedure to test ride quality after a street is patched was adopted in Aug. 2023. Based on a review of 15 right-of-way permits with forms inspections performed during June and July of 2024, six of nine that required a ride quality test were completed appropriately. Based on a discussion with management,the missing tests were due to inspector uncertainty around whether ride quality tests should be performed on restorations completed by the Street Division only. Public Works Inspections Division management stated they will update the standard operating procedure to ensure these restorations are tested for ride quality in the future. 4. Require all restoration contractors to comply with City standards. Management Response: Concur August 16,2024 Report No. 2024-031 The Utility has begun requiring adherence to City Standards on non-emergency work. Staff is working with engineering and inspections to determine if alternative standards are acceptable. If so, these will be noted in later revisions of the standard details. Audit Follow-Up Finding: Implemented During the original audit,the City's Standard Picture 1: Flexbase Backfi111vlaterial Construction Details required utilities to backfill the top of their utility trenches with a concrete "flowable"backfill. The original audit found that the City's Water Utilities were not using this required backfill material and instead would often use the material that had been excavated or a crushed - aggregate material known as "flexbase" as shown in - Picture 1. As reported in the original audit, flexbase is generally used when constructing large sections of roadway and is not necessarily an inappropriate backfill material for utility street cut trenches. However, requiring external utilities to meet a different standard than internal utilities creates inequities. In June 2024, the City updated its standard details to allow external utilities to use flexbase when restoring utility street cuts. Project 012—Audit of Economic Development: Recruitment & Expansion Previously, the City Auditor's Office completed a follow-up review of the Audit of Economic Development: Recruitment&Expansion in September 2022. At that time, Staff found that ten of the issued 11 recommendations had been implemented. The remaining recommendation and the follow-up results are shown below: 5. Require Economic Development and Chamber staff to report the outcomes of their marketing effort to achieve program objectives as established by the City Council. Management Response: Concur Both the City's Economic Development Department and the Chamber's economic development staff will be engaged in the strategic planning process, which will include the development of new metrics and performance measures. Management concurs that both City and Chamber staff should report and focus on efforts to meet the goals and outcomes established in that process. In addition, as the Chamber provides a service to the City under a contract, the Chamber should also comply with metrics and performance measures established in that agreement. Audit Follow-Up Finding: Obsolete Since the original audit, the City has amended its agreement with the Chamber of Commerce to shift the responsibility for economic development marketing activities from the Chamber to the City. Due to staff vacancies,performance measures to track economic development including recruitment and marketing, small business support,workforce development, and downtown initiatives have not yet been developed. August 16,2024 Report No. 2024-031 Project 014—Audit of Facilities Maintenance Previously, the City Auditor's Office completed a follow-up review of the Audit of Facilities Maintenance in February 2022 and a second follow-up review of the Audit of Facilities Maintenance in September 2023. At the time of the second review, Staff found that four of the issued seven recommendations had been implemented. The remaining recommendations and the follow-up results are shown below: 3. Formalize facility access procedures. Management Response: Concur Management agrees and is currently transitioning the security access request process to the TMA Work Order system. This system will centralize and ensure tracking and documentation retention for each request. While the Audit was specific for access cards. Management also recommends evaluating a centralized city-wide key management program for all city facilitates. The currently used TMA software has a Key Management Module that can be added to ultimately facilitate this program if warranted. Management would anticipate a city-wide evaluation of implementing a key management program would be conducted in FY20-21. Audit Follow-Up Finding: Implemented Since the original audit, the Facilities Management has substantially completed transitioning the City's physical security access control to a new system and has established standard operating procedures that adequately detail physical security access system management. In addition, actual system access management has significantly improved since the second follow-up review was conducted in 2023 as detailed in Table 1. Table 1: Access Review Results Potential Issue 2023 2024 Users Percent Users Percent All City Users 1,940 69.1% 2,399 78.8% No Issue 1,753 90.4% 2,365 98.6% Potentially Terminated 136 7.0% 4 0.2% Potential Inappropriate Access 51 2.6% 30 1.3% Non-City Users 866 30.9% 646 21.2% All Users: 2,806 100.0% 1 3,045 100.0% 5. Investigate ways to more accurately report on the timeliness of work order completion in TMA. Management Response: Concur Management agrees and will be updating the reporting system to appropriately reflect when the technician completes the repairs and not when the work order is closeout after receipt of invoices. Audit Follow-Up Finding: Implemented Since the original audit, Facilities has transitioned work order management to a different asset management system that the City already owned, which appears to have improved reporting capabilities. In addition, a timeliness goal of closing work orders within ten days of August 16,2024 Report No. 2024-031 the request has been established and Facilities has begun reporting on compliance with this goal to City management quarterly. Based on the available reports, Facilities meet this goal about 88 percent of the time. 6. Explore the reporting capabilities of TMA to improve the Division's ability to identify equipment with repeat repair issues. Management Response: Concur Management agrees and will be training staff to utilize the enhanced reporting capabilities within TMA. The TMA system is being setup to include monthly asset reports that will be reviewed during staff meeting to identify any equipment or assets that have numerous work orders. Audit Follow-Up Finding: Implemented Similar to the original audit, there is currently no systematic process to review assets to identify repeat repair issue trends, instead technician judgement is relied on. However, the new Facilities work order management system's improved reporting capability allows technicians to easily verify if their judgement is correct and provides better insight into the type and frequency of repairs occurring by asset when queried—improving the Division's ability to identify repeat repair issues. Project 016—Audit of COVID-19 Response: Pandemic Preparedness Previously, the City Auditor's Office completed a follow-up review of the Audit of COVID-19 Response: Pandemic Preparedness in May 2023. At that time, Staff found that eight of the issued nine recommendations had been implemented. The remaining recommendation and the follow- up results are shown below: 7. Incorporate planning for telework during pandemics into the existing Business Continuity Plan. Management Response: Partially Concur Technology Services partially concurs. Technology Services agrees that very specific and unusual department needs for remote work should be included in the business continuity plan (BCP). For example,providing Engineering access to their desktops to run applications too powerful for their laptops was outside of normal operations and should be included. Remote work technology(work from home) is considered a normal day to day technology function/service and not something utilized just in an emergency situation. For instance, we've always provided corporate Wi-Fi and corporate VPN prior to the pandemic. During the beginning stages of the pandemic, Technology Services was busier than normal, but did not provide services beyond normal operations. As a result, Technology Services did not activate the Technology Services BCP plan. Audit Follow-Up Finding: In Progress During the original follow-up review, staff reported that the responsibility for maintaining the city's Business Continuity Plan had been transitioned from Technology Services to the Fire City's Emergency Management Office within the Fire Department. Since then, the Emergency Management Office has determined that the Business Continuity Plan will be August 16,2024 Report No. 2024-031 incorporated into the City's Continuity of Operations Plan, which is being updated with expected completion in October 2024. Based on this, Audit believes the risk will be addressed in early Fiscal Year 2024-25 and feels comfortable recommending this project be considered complete with an 89 percent Implementation rate. Project 019—Audit of Municipal Court Payments Previously, the City Auditor's Office completed a follow-up review of the Audit of Municipal Court Pam in April 2023. At that time, Staff found that ten of the issued twelve recommendations had been implemented. The remaining recommendations and the follow-up results are shown below: 1. Develop a process in consultation with the City's public safety agencies for timely submission of manual citations with the Municipal Court Administration. Management Response: Concur The Records Management Division will electronically scan manual citations to Municipal Court during business hours to expedite the internal process. A Standard Operating Procured pertaining to this procedure will be added to the Records Management SOP manual. Audit Follow-Up Finding: In Progress Occasionally,public safety agencies in the City of Denton must issue manual citations. The original audit found that manual citations were supposed to be recorded in the Municipal Court's case management system within five days of being issued; however, manual citations were not always recorded within that timeframe. In August 2024, the Police Department implemented a standard operating procedure outlining the manual citation process as illustrated in Figure 2. While this process has been created, no manual citations have been submitted since implementation, so the impact on timeliness could not be evaluated. Figure 2: Manual Citation Process Records •Issue Manual Division Process Citations Citation into Courts r-Verify citation informations stem •Drop Citation and Yany voided citations mpleteness in mailroom -Log citation in database •Submit to Courts Officer Courts August 16,2024 Report No. 2024-031 Based on this, Audit believes the risk will be addressed in early Fiscal Year 2024-25 and feels comfortable recommending this project be considered complete with a 92 percent Implementation rate. 2. Maintain a database of manual citations received and create a process for reconciliation of manual citations in consultation with the public safety agencies. Management Response: Concur The Police Quartermaster will maintain a database to record the number of manual citation books issued,unused and destroyed inventory. The Records Management Division will maintain an electronic database of manual citations issued, connected, voided and/or returned. The division will disseminate this information to Municipal Court for reconciliation. Audit Follow-Up Finding: Implemented The original audit found that manual citations were issued by the Municipal Court Administration Division to different public safety agencies but did not track to whom each citation book was issued. In addition, there were often gaps in citation numbers increasing the risk that citations could be lost or abused. As part of its new standard operating procedure, the Police Department has created a database to log manual citations received, allowing for easy reconciliation. In addition, previous follow-up work found that new citation books were ordered and to whom each book was issued is now being tracked by the Police Department's quartermaster, increasing accountability. Project 022 —Audit of Building Permit Process Previously, the City Auditor's Office completed a follow-up review of the Audit of Building Permit Processes in May 2023. At that time, Staff found that nine of the issued eleven recommendations had been implemented. The remaining recommendations and the follow-up results are shown below: 5. Develop a formal inspection review process to provide assurance that inspections are being completed effectively and in accordance with the Division's quality standards. Management Response: Concur Staff ran a test of the new quality control inspection procedures in April 2023. This appears to meet most of the documentation needed,but not all. Staff is exploring new software to obtain this needed documentation capability in the reporting structure. A formal policy has been created to incorporate the rest of the supervising team. Checklists for the supervising team will follow in the coming months. Audit Follow-Up Finding: Implemented The original audit found that building permit scheduling practices might impact inspection quality as there was no limit on the number of inspections that could be scheduled for one day. For this reason,Audit recommended a formal inspection review process as a quality control measure to promote inspection compliance and further safeguard the public's health and safety. August 16,2024 Report No. 2024-031 Since then, Development Services has established a quality control policy that requires building inspections supervisors to complete weekly quality control inspections. Based on review, these inspections are being performed though the exact method and frequency has not yet been set. 6. Establish a process to provide assurance that variable daily inspection workload does not impact the quality of inspections. Management Response: Concur New software failed meeting the expectations that was to be up and running by the end of July, the update was to include time tracking for inspections. Additionally, the Building Safety Team has a third-party inspection company available if workloads become too heavy or the team experiences an increase in absences. Audit Follow-Up Finding: Implemented Development Services has established an inspections policy that provides guidelines on how to supplement building permit staff if their workload becomes too great. In addition, the implementation of the inspection quality control process should help to identify impacts to quality due to workload. CONCLUSION: Based on the information presented in the above Discussion section, the status of each recommendation is summarized below: Recommendation Mgmt. Response Status 005 Audit of Utility Street Cuts 2. Develop patch ride quality testing criteria. Concur Implemented 4. Require all restoration contractors to comply with City standards. Concur Implemented 012 Audit of Economic Development: Recruitment& Expansion 5. Require Economic Development and Chamber staff to report the outcomes of their marketing Concur Obsolete efforts to achieve program objective as established by the City Council. 014 Audit of Facilities Maintenance 3. Formalize facility access procedures. Concur Implemented 5. Investigate ways to more accurately report on the timeliness of work order completion in Concur Implemented TMA. 6. Explore the reporting capabilities of TMA to improve the Division's ability to identify Concur Implemented equipment with repeat repair issues. 016 Audit of COVID-19 Response: Pandemic Preparedness August 16,2024 Report No. 2024-031 7. Incorporate planning for telework during pandemics into the existing Business Partially Concur In Progress Continuity Plan. 019 Audit of Municipal Court Payments 1. Develop a process in consultation with the City's public safety agencies for timely submission of manual citations with the Concur In Progress Municipal Court Administration. 2. Maintain a database of manual citations received and create a process for reconciliation Concur Implemented of manual citations in consultation with the public safety agencies. 022 Audit of Building Permit Processes 5. Develop a formal inspection review process to provide assurance that inspections are being completed effectively and in accordance with Concur Implemented the Division's quality standards. 6. Establish a process to provide assurance that variable daily inspection workload does not Concur Implemented impact the quality of inspections. Based on the results of this informal follow-up review, Staff is recommending the following: • Project 005 —Utility Street Cuts be closed and considered formally complete with a 100% Implementation rate; • Project 012 Economic Development: Retention & Expansion be closed and considered formally complete with a 91% Implementation rate; • Project 014 Facilities Maintenance be closed and considered formally complete with a 100% Implementation rate; • Project 016 COVID-19 Response: Pandemic Preparedness be closed and considered formally complete with a 89% Implementation rate; • Project 019 Municipal Court Payments be closed and considered formally complete with a 92% Implementation rate; and • Project 022 Building Permit Processes be closed and considered formally complete with a 100%Implementation rate. If the City Council has any concerns about the above Staff recommendations, please reach out to the City Auditor before August 30, 2024. ATTACHMENTS: None. STAFF CONTACT: Madison Rorschach, City Auditor City Auditor's Office August 16,2024 Report No. 2024-031 (940) 349-7228 Madison.RorschachkCityofDenton.com REOUESTOR: Staff Initiated PARTICIPATING DEPARTMENTS: City Auditor's Office, Capital Projects, Economic Development, Fleet&Facilities, Fire, Police, Development Services STAFF TIME TO COMPLETE REPORT: 45 Hours (City Auditor's Office only)