parE: 10: SUBJECT: Memorandum ele CITY OF DALLAS (Report No. A16-005) January 22, 2016 Honorable Mayor and Members of the City Council Special Audit of the Accounts of Six Former City Council Members* The Office of the City Auditor (Office) completed ‘Special Audit the Special Audit of the Accounts of Six Former City Council Members (Special Audit) regarding | Upon the death, resignation, removal, the former City of Dallas (City) Council Members | °* expiration ofthe term of any officer whose terms expired on June 23, 2015. This the ca Looe shel pat epee Special Audit verified whether the City and/or | Sn investigation of the accounts of former City Council Members Jerry Allen, Tennell | such officer to be made and shall Atkins, Dwaine Caraway, Carolyn Davis, Vonciel | report to the city manager and the Jones-Hill, and Sheffield Kadane properly: beet Pa ting ate ae it, ° indebted tothe ot, th city autor, or + Controlled and accounted for any City | Sinerporsonmmalng such aud shall assets assigned to andlor purchased with | immediately ‘give notce of such City funds by the former City Council | indebtedness fo the council the cy Members manager, and the cy attomey, and the city attorney shal as srected by | the city ‘councl, proceed to collet + Removed the former City Council | suen indebtedness. Members as authorized agents of the City Source: Cty Charter Chapter IX, Section & + Ensured the former City Council Members did not have any outstanding debts owed to the City ‘The Office found that the City continues to have difficulties consistently following appropriate procedures to meet these objectives. As a result, certain City policies and "this auc was conducted under the autoriy ofthe Cty Charter, Chaptr Ik, Sections 3 and 4 and in accordance withthe Fiscal ‘Year 2018 Aud Plan approved by the Dallas Cl Councl. The audit objectives ar listed above. The audt scope Included Fscal ‘Yoor (FY) 2014 and FY 2018; howaver, certain ober mater, procedures, and ansactons ouside that period were revewed Unde'stand and very Information during the aut period. The prformance audit was conducted in accordance with generally f2ccaptad government audting standards. Those standards require that we plan and perform the audio obtain sutint, “Sppropiate evidance to rovise 9 reasonable basis fr our ndings and conclusions based on our audit objecives. We beleve {hat the evidence obtained provides a reasonable basi or our findings ang conclusions based on our aust objectives. To achieve ‘our objectives, ve interviewed Mayor and City Counel staf and perorsed addtional alt procedures to vei: (1) Kem assigned {o andlor purchased witn City funds, wore propery eontoled and accauntod fr, (2) the former City Counc! Members information technology syatem and City bulding access wore rovoKed; and. (3) al payments to the former City Council Members were ‘curate and that no debs were owed Dallas, the City that Works: Diverse, Vibrant, and Progressive.”Honorable Mayor and Members of the City Council January 22, 2016 Page 2 of 2 procedures were not always followed, outstanding debts were owed to the City, and compliance exceptions reported in prior Special Audits still exist (See Attachment 1). Attachment II contains additional details regarding compliance exceptions related to the purchase and disposition of City assets. We recommend the City Manager improves compliance with City policies and procedures by implementing the recommendations shown in Attachment | of this report. Please see Attachment Ill for Management's Response. We appreciate the cooperation we received from City management during the conduct of this audit. If you have any questions or need additional information, please contact me at 214-670-3222 or Carol Smith, First Assistant City Auditor, at 214-670-4517. Sincerely, Craig D. Kinton City Auditor Attachments ©: A.C, Gonzalez, City Manager Warren M.S. Ernst, City Attorney Rosa Rios, City Secretary Jeanne Chipperfield, Chief Financial Officer William Finch, Director ~ Department of Communication and Information Services Michael Frosch, Director — Department of Business Development and Procurement Services Molly McCall, Director - Department of Human Resources Jo M, (Jody) Puckett, P.E., Director ~ Department of Dallas Water Utilities Edward Scott, City Controller Errick Thompson, P.E., Director ~ Department of Equipment and Building Services Elsa Cantu, Assistant to the City Manager ~ City Manager's Office “Dallas, the City that Works: Diverse, Vibrant, and Progressive.”‘s1oquiow wouneg yg s2uu0} Jo 2101/9813 Summuugns pur Buneyiuoo £q_sanpeooid SxH mol, wes OW 8l4 sainsua saBeuey yg _2u3_pusuwooay om uopepuowiwossy AiO Jo uonisodsip pue eseyoind ey 0} paypjes suondeoxe eoueljdusoo Bulpse6es s| S,8010 8y) pue ‘pny jeoadg JoUd e Ul pajoU sem UoAdeoxe a_eS at) JOU 10 JoYJYM ‘sUONdeoxe souRYdiOS ay) Jo UBWUNS: & *(20JQ) JoUPNY Ail By) Jo Boy} a4) Aq payenjend sua Iuawyseny 504, pny repeds oud 2 ul paION uondaaxg “8p UONEUIUa, paInpaYDS .seNpIAPUI OW Jo SoUEAPE u seam omy ssa001d .Sulpse09-yo, a\) ‘Ul PaNfonu! siuouuedap iy nou 0} weuorluid A'9 BuIA—o| ‘swuowedep fauinbas seunpeoe.d (3H) seounosey BUN Jo WWsWLedsq oy, ssuodsau asouy 1 fjautn onjo004 10 uy Bursseooud Ing AUD o} 89008 saakoIdus jqisuodses ssso0ud ,Buipse0q 105 Aig saUo} XS ‘aunsus 0} voxeoy pue swoishs Suneuuuor Gunsuises se yons ‘ “yo, yw sjueuiyedep "nse! & sy “SIOQUOWN fF ie J siep uoyeuuusy aup Jaye sXep omy sO UOREDYRON UOREUIIEL Sjuongerg ponnugns yes (QW) #UAC AID PUB JOABA OL pajou uonsdeoxe eaueydwoy ‘sunsoy uonenjeng sjuawasnbey aouerdwo5 Jap JeUoNIPpe 404 ueuoydue fx Sunea_jenpmpur ue 405 ‘ssa00id Sup1e0q-yo, auf 01 parejas ‘Seinpaodid pue sormyed (449) Se4e0 30 AD 9 UIP poydiuos SieqWeyY Hound Ap sows as 19 poyNaA peyenteag squoweuinboy eueyduo bas eoueljduios oyloads ey) SMOYS MOjeq UOREWOJU! 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When information Is entered, the ETNF generates an email to the ManageriSupenisor immediately after submiting the terminaling employee's information, confirming the information was successfuly submited. An error was made \whon staff llempled fo complete the ETNF for, Going forward, a dual checks will be {developed for MCC and CMO stat fo ensure the timaly termination and notification to all appropriate departmenis responsibe for completing the separation activities necessary te process terminating employees, Implementation Date June 30, 2017 Responsible Manager City Manager, Mayor and Counc Ofice Gy Manager, CMO “Dates, the City hot Workx: Overs, "Special Audit of the Accounts of Six Former City Council Members. Recommendation We recommand the City Manager ansures the MCC staf dovolops and uses s ‘Chain of Custody? form to document all Cy property issued to and returned by City Counc Members, Management Response / Corrective Action Plan Agee Disagree) In the interest of providing mora sccountabilily forthe Ciy-cwned personal proparty Considered high-isk for loss or thet (ie, cal phones, tables, and other electronic ‘equipment issued fo the City Counel Members, the Cty Manager wil ensure that MCC Saf develops a “Chain of Custody" form or similar recepting form to document and ‘acknowiedge the Issuance and return forthe Ciy-owned perseral property considered Figheisk fr foss or thet. Implementation Dat dune 30, 2017 Responsible Managor Assistant tothe Cy Manager, Mayor and Council Office Recoms We recommend the City Manager ensures the MCC staff keep detalles records for purchases of personal property eansidered highisk for loss or tel, for example: call hones, tablels, and other electronic equipment. Management Response / Corrective Action Plan Agree) Disagree) Purchase records were maintained cn a decentralized basis; however, the City Manager will ensure the MCC staff keep centralized records for purchases of personal property Considered Highisk for loss or thet, for example: cell phones, tabets, and einer electronic equipment. Implementation Date ‘Assistant io the Clly Manager, Mayor and Counc Office Responsible Mana sure 30, 2017 “Dati, te Cy thal Warks: Oiveren, Vibrant and Progressive.” Page 20f6 2Special Audit of the Accounts of Six Former City Council Members Recommendation IV \We recommend the City Manager ensures MCC sta consistently follow AD 415, Management Response / Corrective Action Plan Agee) Disagree L) (On June 20, 2014, addtional Nexbilty was afforded the City Councll Members 1o meet desired purchasing objectives of an expedited process for purchasing emall dolar iors with a purchasing credit card (P-Card) issued to Cily Council Members or thei BSssistanls. BOPS wil revise Administrative Directive 418 to clarify the prohibited purchases section BBDPS provides user training to all purchasing card holders prior to Issuance of thelr credit card. Adltanaly, BDPS provides mandatory taining ta all purchasing card holders on an annual basis Implementation Date Cecamber 31,2018 Responsible Manager Assistant Director, BDPS We recommens the City Manager works with the Mayor and City Councll Members to elerrine whether the Ciy's Code of Eiics and the Mayor and City Counc’ rules Should be amended lo: (1 ese the circumstances under which a former Cly Counel Mamaer may purchase ems assigned to them during ther term(s); (2) determine an appropriate methad for establishing the value of the ilems and documenting the eale price: and, (3) cially the ceumstances under which Gly equipment can be donaled of transferred to external entives. Management Response / Gorrective Action Plan Agree! Disagree 1) Consideration of possible changes to the Ciy’s Cede of Ethics andlor the Mayor and Gity Councils Rules of Procedure area planned topic of dlscussion for February 2018, BOPS and the City Controller's Office wil work to ravi the procedures esscoisted with the canirel and disposal of city property to provide dary and updates. ‘Business Developmen! & Procurement Services (BDPS) Is responsible for disposing property deemed surplus by City departments. The propery relerenced In the uci fepor was deemed surplus by Equipment and Bulding Services (EBS) in accordence lth BOPS' writlen procacures. As part of this procedure, BDPS priced the proparty ‘based con lis condition, markel value and tke item comparisons conducted through interel searches, EOPS concluded that k would ba more advanlageaus tothe City 10 sel the prope lo Ilecested parties due lo the immediate opportunity of ebeining the “Dallas, the Cty that Works: Over brant and Progressive” Pago 3 of6 8Special Audit of the Accounts of Six Former City Council Members. full asking price with minimal staff involvement and no additonal cost 10 move the property 1 the City Store The Dallas City Code Sec. 2-37.9 provides a list of staff that are not eligible to purchase property from the Cty. The lst iclades th following: City employees who werk in the ‘iy managers office orn the department designated by the ely manager to enforce ard fsdmiister this aricle and the person who determines thal the property Is sup tbsolete, warn oul r useless. The Iist does nal Include elected official. Implementation Date December 31, 2018, Rosponsible Manager Chiot Financial Officer Recommendation VI We recommend the MCC staff works with the Director of the Department of Communication anc Information Services (CIS) to ensure electronic devices are transferred for Cily use or uses the e-Cycie buy-back program for ali wireless devices, Management Response / Corrective Action Plan Agree Disagree Pending the City Counci's determination on Recommendation V, MCC staff will work with CIS to ensure electronic devices are transferred for City use or It wil use the e-Cycle buy-back program forall wireless devices, Implementation Date June 30, 2017 Responsible Manager Assistant to the City Manager, Mayor and Council Office Recommendation Vil We recommend the City Manager continues to identity and formally inform City Coune!! Members, prior to their departure, of any Indebtedness to the Ciy Management Response / Corrective Action Plan Agree Diag ‘The Chie! Financlal Offesr conducted a review of all departing Councimembers ‘accounis In February, 2015 end delivered 8 writen memo slang the curent resus 10 ‘each departing council member to gle tham an opportunity to remedy any outstanding lems and to ensure they were aware of the upcoming audk. Additonaly, the CFO periedcally and upon request reviews City Council meeting atlendance to test the “Daas, the City tht Works: Oivese, Vibrant ane Progressive.” Pege dot 6 14Special Audit of the Accounts of Six Former City Council Members. compliance with the Charters slfendsnce requrement for counell members. Any deficiencies are communicated tothe counelmember ‘The CFO will continue to cond regular reviews and provide notification to council members Implementation Date NA Responsible Manager Chet Financial Offcar Recommendation IX We recommend the Dicactor of HR establishes a policy that epenfias the work weak of Mayor and Cty Council Members 60 a conisient guide wil be used in case of ary pyoll deductions inte fire, Management Response / Corrective Action Plan Agr Disagree CI “The Director of HR will wor, in conjunction wih the City Atomey’s Offs, fo establish a standard work week for the Mayor and City Counel Members anc precent 2 ‘ecommendation o he Cy Manager. After which. a policy wll be drafed and presented 1 the Dallas City Council for approval Implementation Date June 20, 2017 Responsible Manager Director of Human Resources Recommendation X We racommend the Director of KR consuls with the Chief Financial Officer to determine whether the former City Counc Members should receive the addllonal 32 hours of final ay. Management Response Corrective Action Plan Agree Disagree) ‘The Dractor of HR wil determine whether the former Cty Counc Members should receive the additonal 3.2 nours of final pay and notly the Cily Controle’ Office to pay the hours If needed. Implementation Date February 29, 2016 Responsible Mar Director of Human Resources “Dots, the Cly that Works: Overs, Vibrat and Progressive." Pasi of 15Special Audit of the Accounts of Six Former City Council Members Recommendation x! We recommend the City Manager ensures MCC staff Umoly collect Cityssued 10 badges and Parking Dscals prior to the departure of former City Councl Memiers and submil these items withthe Termination Acton Form, Monagement Response | Corrective Action Plan Agree Disagree () ‘A staff meeting was held on June 6, 2015, wih Council sta to go over the procedures {or termination of outgoing Counel members, Sia was advised that 1Ds and Parking Decals would be collected upon lermination. Addionaly, the Cy Auditor sent out 2 memo 10 City Coun an May 11. 2015, informing them of the Special Aut to be conducted on outgoing Council members, per Cily Charter. City.lsued 1D Badges and Parking Decals ware collecied for the majonty of ougoing Galina members and submited with tha Termination Aston Forms. Al Ds, nckcing those that were lost were descivatad by Equipment and Bulding Services on June 23, 2016. MCC Staff will conduct period inventories on |O Badges and Parking Decals lo ensure (uf compliance (or eollecing the lems prior Yo departure of formar Couned members. Implementation Date June 30, 2017 Rosponsible Manager Assistant ta tha City Manager, Mayor and Council fice Sincerely, Eis” Cantu, Assistant the Gly Manager Mayor and City Council Office Ag Frosch Director, Business Development & Procurement Services “Daas the Cy that Works: Diverse, Vibrant and Progressive" Page 6 of 6 16Special Audit of the Accounts of Six Former City Council Members Memorandum RECENED 1) JAN 21 206 ey cry Ros Office c ofr January 21,2018 7 aig. Kon, Cy Auster fH Respoee to Ast Repo Spade! Aut ee Rossa o Sx FomerGtyGounet Marbers (Our respons tothe audit port recommendations are as folows: Recommendation Vil We recommend the Cily Attorney attempts to collect the outstanding debi owed by the formar City Council Member. Management Response / Corrective Acton Plan Agres[ Disagree L} ‘The City has a contract with Callas County to collect property taxes owed tothe City ‘and, in tur, the Counly has a contact with the Lnebarger law fim to collect property faxes owed to the City. Our offee wil contact he former Counc! Member and request that the propery taxes be pals. If the former Counell Member does not do so In & sonable lie, we wil reler the matter to the Linebarger frm for collection. Implementation Date February 1, 2016 to contact the Council Member. ‘March 1, 2016 to refer the mater to the Linebarger frm i necessary. ‘losponsiblo Manager Chis Bowers, Fist Assistant Cy Atlorney Sincerely, iz Aa Fd Warren MS. Ernst City Attorney ©: AC. Gonzalez, Ciy Manager “Data, the Ciy tht Werks: Diverse, Vibrant and Progrosiv: Page of 17