1. Fiscal Year 2020-21 First Quarter Report 40% Internal Audit Department
DENTON 215 E. McKinney St., Denton, TX 76201 • (940) 349-7228
MEMORANDUM
DATE: February 10, 2021
TO: Audit/Finance Committee
FROM: Madison Rorschach, City Auditor AL A4� G.—
SUBJECT: Fiscal Year 2020-21 Quarter One Report
FY20-21 Annual Audit Plan Status
Audit Project Status—The Internal Audit Department is responsible for conducting audits to assess
a variety of risks including internal control weaknesses, inefficiencies in City operations,
ineffectiveness of City programs, and noncompliance with laws, regulations, and policies. Each
year, an annual audit plan is approved by the City Council to establish the workload of the Internal
Audit Department. The following table summarizes the status of each audit project included on
the FY20-21 Annual Audit Plan at the end of the first quarter.
Table 1: FY20-21 Audit Project Status As of 12/31/20
Audit Project Status Time Budgeted Time Actuals
Health Insurance Operations Complete 1 Month 1 Month
Meter Reading&Billing Reporting 2 Months 3 Months
Utility Payment Assistance Program Planning 2 Months TBD
Municipal Court Payments Process Planning 2 Months TBD
Building Permit Process Not Started 3 Months NA
Water Production&Distribution Not Started 4 Months NA
Emergency Medical Services Not Started 4 Months NA
Payroll Administration Not Started 2 Months NA
Utility Street Cuts Follow-Up Complete 1 Month 1 Month
COVID-19 Response:Disaster Reimbursements Follow-Up Not Started 1 Month NA
Accounts Payable Follow-Up Not Started 1 Month NA
Roadway Quality Management Follow-Up Not Started 1 Month NA
Police Overtime Follow-Up Not Started 1 Month NA
Police Property Room Follow-Up Hold 1 Month NA
Risk Assessment Not Started 2 Months NA
Post-Audit Feedback Survey Results — Based on the two audit project reports issued during the
first quarter of fiscal year 2020-21,the Internal Audit Department's services were rated five out of
five stars by auditee department's staff with a 25%response rate.
Avg. Q 1 Internal Audit Service Rating:
OUR CORE VALUES
Integrity • Fiscal Responsibility • Transparency • Outstanding Customer Service
Ad-Hoc Project Updates —The Internal Audit Department completed the following Consultation
and Investigation projects during the first quarter of fiscal year 2020-21:
➢ An Analysis Report Regarding the Denton Fire Department Uniform Program;
➢ Seven Advice requests and one Data Aid request from City departments including
providing support to the new Grants Management Department as it was formed; and
➢ A preliminary investigation of a Fraud Hotline Complaint submitted on 12/31/2020. This
preliminary investigation was conducted per City policy 509.01 "Fraud Directive." The
Investigation Committee determined that the complaint was not substantiated, and the
Investigation project was subsequently closed.'
Continuing Professional Education Annual Compliance Report
Standards Requirements — The Internal Audit Department currently follows the 2018 revision of
Government Auditing Standards as promulgated by the United States Government Accountability
Office. These standards require audit staff to develop and maintain their competency by
completing continuing professional education(CPE) as follows:
➢ At least 80 hours of CPE for every two years of employment;
➢ At least 20 hours of CPE during each year of employment; and
➢ At least 30 percent of CPE hours must be related to government auditing.
Compliance Assessment Results—The table below shows the number of CPE hours each Internal
Audit Department auditor completed during the last two calendar years based on available records.
Required CPE was calculated assuming ten CPE hours should be completed for every three months
of employment with the City.2
Table 2: Continuing Professional Education Summary(CY 2019 & 2020)
Required 2019 2020 Percent Gov.
Employee Title Adequate
CPE CPE CPE Related
Umesh Dalal City Auditor 54 Unknown Unknown Unknown Unknown
William Mafi Staff Auditor 14 18 NA 89% Yes
Amber Jackson Senior Auditor 4 NA 393 0% TBD
Madison Rorschach City Auditor 80 46 59 76% Yes
Neeraj Sama Senior Auditor 60 10 50 65% Yes
Based on the above information, the City of Denton's Internal Audit Department does not have
adequate evidence to verify compliance with the CPE requirements of Government Auditing
Standards. This issue was identified in June 2020 and a process has since been developed to ensure
Internal Audit staff: 1) understand CPE expectations and requirements, 2) retain CPE certificates
adequately and consistently, and 3) monitor and report CPE completion appropriately. This
process has been formalized in the Internal Audit Procedures Manual.
1 Additional details of this investigation may be discussed during the City Auditor's performance review on February 16 during Closed Session.
2 Per Department procedure,compliance adequacy is only determined for auditors who have been employed by the City at least one year;
however,all auditors employed during the reporting period are reviewed.
3 Ms.Jackson completed all reported hours prior to employment with the City.
2
Additional Items of Note
Audit Benchmarkin Study Results—In September 2020,the Internal Audit Department conducted
an informal benchmarking study of municipal audit shops in the DFW metroplex to assess the
appropriateness of the Department's structure. Seven audit shops were reviewed as part of this
study, the details of which are attached. In general, the Department appears to have a comparable
budget to other shops in the area. In addition, the Department has a reasonable number of auditors
given the Department's age,City budget,and municipality size;however,most benchmarked audit
shops had a clear career path within their shop.
For this reason, a Senior Auditor position level was created through collaboration with Human
Resources. Having both a Staff and Senior Auditor level creates a career path within the
Department, which should help retain institutional knowledge and attract more highly skilled
individuals to the organization.
Two Staff Auditor positions were then reclassified to the Senior Auditor level to reflect current
job expectations and Department workload. The new organizational chart is shown in Figure 1.
The cost of these position reclassifications is not expected to exceed the Department's adopted
FY20-21 budget.
Figure 1: Internal Audit Department Organizational Chart(FY20-21)
Shared
1
Senior Senior
Auditor Auditor
Audit Staffing Addition—Amber Jackson began work as a Senior Auditor for the City in December
2020. Ms. Jackson is a Certified Fraud Examiner and has over five years of internal audit
experience.
Audit Report Translations—The Internal Audit Department began offering translated audit reports
to City residents upon request.In addition,all new`Audit at a Glance' and`Follow-Up at a Glance'
report summaries are being translated into Spanish and are currently available to residents on the
City's website. During the first quarter, about $150 was spent to translate five `at a Glance'
summaries into Spanish. Offering translations of Internal Audit reports will improve transparency
and accountability throughout the City.
Attachment:
1. Benchmarking Study Results
3
Fiscal Year 2020-21 Quarter One Report
Attachment 1: Benchmarking Study Results
Table 1: Reporting Structure & Budget Benchmarking
Audit Shop Municipality Reports To Municipality FY19-20 Budget
Population (2019) City Audit Shop City Staff Auditors
City of Dallas City Council 1,343,573 $3,789,500,063 $3,398,923 15,484.0 23.0
City of Forth Worth City Council 909,585 $1,985,882,287 $2,138,734 7,170.0 15.0
City of Arlington City Council 398,854 $552,059,290 $721,343 2,660.0 5.0
City of Garland City Council 239,928 $1,109,730,000 $624,387 2,161.0 5.0
City of Irving Chief Financial Officer 239,798 $687,926,200 $145,576 2,384.0 1.5
City of Grand Prairie Management Services City Manager 194,543 $477,353,107 $387,841 1,444.0 4.0
City of Denton City Council 141,541 $1,233,556,997 $643,519 1,731.1 3.0
City of Lewisville Finance Director 109,212 $417,622,663 $100,572 840.0 2.0
DFW Average: 447,129 $1,281,703,826 $1,020,112 4,234.3 7.3
2018 National Benchmarking Study(ALGA) Unknown $771,949,354 $833,883 Unknown 3-5 Range
Table 2:Salary Benchmarking
Audit Shop Municipality Staff Auditor Salary Range Senior Auditor Salary Range Appointed City
Min. Max. Min. Max. Auditor
City of Dallas $50,201 $86,816 $61,328 $116,370 $200,000
City of Forth Worth $52,275 $83,640 $62,451 $99,922 $160,660
City of Arlington $48,671 $73,008 $62,320 $93,479 $140,698
City of Garland $55,016 $85,010 $63,253 $101,234 $134,209
City of Irving $63,888 $90,096 $73,968 $104,292 NA
City of Grand Prairie Management Services $55,684 $84,083 NA
City of Denton $51,845 $86,063 $59,164 $98,212 $110,000
City of Lewisville $64,676 $91,698 NA
DFW Average: $53,940 $84,102 $63,880 $100,744 $149,113
2018 National Benchmarking Study(ALGA) $60,345 $87,188 $76,777 $107,145 $126,817