2. Follow-Up Review of COVID-19 Response: Disaster Reimbursements Audit (Feb. 2021) ABSTRACT
In general, the City has issued additional guidance that
will help to maximize current and future disaster
reimbursements.
%�;.. Internal Audit Department
City Auditor
Madison Rorschach, CIA, CGAP
Audit Staff
AUDIT OF COVI D-19 Neeraj Sama, MBA
RESPONSE
Disaster Reimbursements Follow-Up Review
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The City of Denton Internal Audit Report February 2021
Follow-Up of COVID-19 Response: Disaster Reimbursements(July 2020)
Table of Contents
Follow-Up at a Glance..........................................................................................................................3
Introduction.........................................................................................................................................4
ManagementResponsibility.....................................................................................................................4
Audit Objectives, Scope, and Methodology..............................................................................................4
Recommendation Status Update .........................................................................................................5
Disaster Expense Tracking is Effective; Additional Guidance May Increase Efficiency ............................5
Reimbursable Expenses are Generally Well Supported............................................................................6
Reimbursement Submission Process is Well Designed by Should be Formalized....................................7
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The City of Denton Internal Audit Report February 2021
Follow-Up of COVID-19 Response: Disaster Reimbursements (July 2020)
Follow-Up at a Glance
Why we did this Follow-Up:
This report is intended to provide information on what changes have been made in response to the
COVID-19 Response: Disaster Reimbursements Audit issued in July 2020. The original audit evaluated
the adequacy of controls over disaster-related expenses to maximize COVID-19 related
reimbursements.This follow-up is included on the City's Fiscal Year 2020-21 Audit Plan as approved by
the City Council.
What we Found:
In general, the City has adjusted processes and released guidance that should help to maximize COVID-
19 related reimbursements. In addition, Finance is close to finalizing a revised version of the Finance
Disaster Plan, which will help improve the process for submitting disaster reimbursement packets for
future non-weather emergency events including pandemics. The status of each recommendation is
summarized below:
Recommendation Mgmt. Response Status
1. Release general guidance on what expenses are
Concur Implemented
COVID-related.
2. Ensure Requisition Forms are complete and accurate Concur Implemented
for all COVID- 19 related purchases.
3. Ensure all COVID-19 related timecards are complete Concur Alternative
and signed. Solution
4. Formalize the process for preparing, reviewing, and
submitting disaster reimbursement packets to Concur Implemented
grantors.
IO CITY
DENTON
Audit report translations may be requested by emailing InternalAudit@CityofDenton.com.
Introduction
The Internal Audit Department is responsible for providing: (a) an independent appraisal' of City
operations to ensure policies and procedures are in place and complied with, inclusive of
purchasing and contracting; (b) information that is accurate and reliable; (c) assurance that assets
are properly recorded and safeguarded; (d) assurance that risks are identified and minimized; and
(e) assurance that resources are used economically and efficiently and that the City's objectives
are being achieved.
The Internal Audit Department has completed a follow-up review of the COVID-19 Response:
Disaster Reimbursement Audit issued in July 2020. We conducted this performance audit in
accordance with 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.
Management Responsibility
City management is responsible for ensuring that resources are managed properly and used in
compliance with laws and regulations; programs are achieving their objectives; and services are
being provided efficiently, effectively, and economically.
Audit Objectives, Scope, and Methodology
This report is intended to provide a progress update on recommendations from the COVID-19
Response: Disaster Reimbursements Audit (July 2020), which evaluated the adequacy of controls
over disaster-related expenses to maximize COVID-19 related reimbursements.
Audit fieldwork was conducted during February 2021. The scope of review varied depending on
the procedure being performed.The following list summarizes the major procedures performed:
• Reviewed documentation from the issued audit to develop criteria including industry
standards, best practices, policies, and procedures;
• Examined supporting documentation for COVID-19 related purchase orders and non-public
safety payroll expenses;2 and
• Interviewed City staff from the Finance Department and Procurement & Compliance
Department.
'The City of Denton Internal Auditor's Office is considered structurally independent as defined by generally accepted government auditing
standard 3.56.
z Procurement card(p-card)transactions and public safety payroll expenses were excluded from this review,as there were no recommendations
issued that involved p-card transaction supporting documentation.
The City of Denton Internal Audit Report February 2021
Follow-Up of COVID-19 Response: Disaster Reimbursements(July 2020)
Recommendation Status Update
On March 131h,2020,the City of Denton (City) issued a declaration of local disasterfor public health
emergency to minimize the potential impact of COVID-19. As of February 12th, 2021, the City has
expended almost $10.4 million in COVID-related expenses. About $7.7 million of this amount has
been reimbursed through Coronavirus Relief Funds distributed by Denton County and the Federal
Emergency Management Agency's (FEMA) Public Assistance Programs distributed through the
Texas Department of Emergency Management.
Table 1: COVID-19 Costs (March 131h—February 121h, 2021)
Expense Category Total Expenditures Reimbursed Amount
Personnel Costs $7,240,000 $5,731,000
Capital Expenditures $1,555,000 $1,086,000
Assistance Costs $1,048,000 $803,000
Materials and Supplies $523,000 $103,000
Total: $10,367,000 $7,723,000
It should be noted that the original audit evaluated disaster reimbursement procedures based on
FEMA's requirements as they are generally the most stringent. In addition, the City continues to
incur COVID-related expenses. It is possible that there will be additional opportunities to have these
expenses reimbursed in the future.
Disaster Expense Tracking is Effective; Additional Guidance May Increase Efficiency
1. Release general guidance for employees on what categories of work and expenses are
considered COVID-19 related.
Management Response: Concur
Finance Department Comments: The Finance Department concurs with this recommendation. In
March, at the start of the pandemic, the Finance Department emailed all City departments with
instructions for tracking COVID related expenses.This communication was focused on casting a wide
net through the organization capturing all possible COVID related expenses. However, prior to
submitting for reimbursement the Finance Department will review all expenses for accuracy and
supporting documentation. Today all COVID related expenses are being tracked accounting to this
initial communication. However, the Finance Department agrees that updated communication and
documentation should be sent to departments regarding COVID expenses. In response to this
recommendation the Finance Department will send additional communication to departments in the
coming weeks.
Audit Follow-Up Finding: Implemented
On Sept. 11, 2020, the Finance Department issued an email to all City employees that asked
employees to track costs associated with the management, control, and reduction of immediate
threats to public safety(i.e. emergency operation center cots, disinfection of eligible public facilities,
emergency medical care, and medical sheltering). In addition, some clarification was released on
August 27, 2020 regarding what types of work could be classified as COVID-19 Response.
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The City of Denton Internal Audit Report February 2021
Follow-Up of COVID-19 Response: Disaster Reimbursements(July 2020)
Reimbursable Expenses are Generally Well Supported
2. Ensure Requisition Forms are complete and accurately correspond to the purchase order
and any associated contract for all COVID-19 related purchases.
Management Response: Concur
Procurement Department Comments: The Procurement Department concurs with the
recommendation. Before submitting the final documentation for reimbursement, Procurement staff
will work with the using department to ensure all documentation is clear and accurate. Procurement
staff have corrected the incomplete or inaccurate requisition forms. We have also requested
itemized receipts from the p-card holders who did not provide those initially. The Procurement
Department is sending a reminder communication to remind supervisors wo approve p-card
transactions to check for itemized receipts before approving.
Audit Follow-Up Finding: Implemented
Since May 2020, 15 COVID-related purchase orders have been issued by the City. When requesting a
purchase order, departments must complete a Requisition Form that outlines what is being
purchased and how it is being purchased with regards to procurement regulations. In order to be
considered complete and accurate, a Requisition Form should indicate the procurement process to
be used to make a purchase—including the reasoning for any procurement regulation exemptions—
and any necessary supporting documentation.
Table 2 summarizes the results of a review to determine if the Requisition Forms for these COVID-19
related purchase orders were complete and accurate. Based on this review, one purchase order was
incorrectly marked as using quotes when it was instead procured as an emergency exemption to
procurement regulations. All other COVID-19 related purchase orders appeared to have complete
and accurate Requisition Forms — helping to minimize the risk that expenditures will be excluded
from reimbursement.
Table 2: Summary of Purchase Order Review (May— Dec. 2020)
Determination No.of Purchase Orders Value
Adequate 14 $432,787
Inaccurate 1 $50,000
Incomplete 0 $0
All: 15 $482,787
3. Ensure all COVID-19 related timecards are complete and signed.
Management Response: Concur
Finance Department Comments: We agree. As part of the Finance department's review process
before submitting expenses to federal funding, we have procedures in place to document the status
of all time coded to COVID-19. It documents whether a timecard exist, what function was worked, is
the timecard signed, and is the time worked eligible. If any of the information is missing, Finance will
reach out to the department for completion before any submittal. Additionally, as part of the
department's submittal process, secondary reviews will take place before submittal to ensure the
backup is complete, accurate, and eligible.
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The City of Denton Internal Audit Report February 2021
Follow-Up of COVID-19 Response: Disaster Reimbursements(July 2020)
Audit Follow-Up Finding:Alternative Solution
Table 3 below summarizes the results of a review of 40 non-public safety, COVID-19 related
timesheets3 submitted to Finance between August 2020 and December 2020. While not all reviewed
physical timesheets were approved, all City employees' COVID-19 work hours are approved
electronically in the City's timekeeping system.
Table 3: Summary of Non-Public Safety Timesheet Review (Aug.— Dec. 2020)
Determination No.ofTimesheets COVID-Related Hours
Adequate 23 162.25
Missing Signatures 6 39.50
Missing Time Details 5 142.00
Missing Both 6 107.00
All: 40 450.75
This recommendation was intended to address the risk that non-public safety COVID-19 related
personnel expenses submitted may be excluded from reimbursement due to inadequate
documentation. This is no longer a risk to the City, as non-public safety personnel expenses are not
eligible for reimbursement through the CARES Act nor FEMA's Public Assistance Programs.
Reimbursement Submission Process is Well Designed by Should be Formalized
4. Formalize the process for preparing, reviewing, and submitting disaster reimbursement
packets to grantors.
Management Response: Concur
Finance Department Comments: The Finance Department concurs with this recommendation. The
City's Disaster Finance Plan was last updated in 2017 and doesn't address pandemics. Additionally,
the plan needs clarification on preparing and submitting reimbursement packets to FEMA. However,
the existing plan is considered our official reimbursement guidance document for the current
disaster.The Finance Department will update the plan in the fall of 2020 and make it available to all
City Departments.
Audit Follow-Up Finding: Implemented
The Finance Department has generally updated the Disaster Finance Plan to include references to
pandemics and generalize financial disaster response processes that were previously focused on
responding to natural events. In addition,the revised Plan allows for remote communications during
disaster management periods.
The Finance Department has distributed the revised Disaster Finance Plan to key stakeholders to
solicit feedback. Once this feedback is obtained, the Disaster Finance Plan will be finalized and
distributed throughout the City.
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3 Public Safety timecards were not included in this review because the original audit determined that they were generally adequately supported
for reimbursement purposes.