City of Tacoma Internal Audit Office Periodic Update as of November 4, 2009

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1 City of Tacoma Internal Audit Office Periodic Update as of November 4, 2009 Long-range financial benefits for the projects completed should result in significant improvements to internal controls and improved efficiency and effectiveness of delivery of citywide services Projects Completed Electronic Content Management Pilot Project Review TPU Financial Audit Contract Award (including TPU Rail) Roles at the City of Tacoma in SAP Quality Assurance Review of LESA PSAP Assessment Study 2009 Scheduled for Completion Domestic Violence Advocacy Program An Internal Controls Improvement Project Asphalt Plant Performance Audit 2010 Projects American Recovery and Reinvestment Act (ARRA) City of Tacoma Readiness to Comply with Federal Requirements Audit Risk Assessment Integration Project Ongoing Projects Citywide Petty Cash & Change Funds Finance: Accounts Payable Recovery Audit Public Works 2006 Performance Audit Wastewater and Surface Water Follow-up Various Policy review and questions answered Administration Citywide Risk Assessment Audit Planning If you have an idea for an Audit please go to the Internal Audit Office at the web and complete and audit request form. State Auditor s Office (SAO) Performance Audits Key information and audit results that our city should know: SAO will NOT be conducting a performance audit of the City of Tacoma during 2010 focus is on state agency audits. SAO has initiated performance reviews to streamline government, improve customer service and save taxpayers money. Reviews differ from audits, as follows: o Reviews take a broad perspective

2 o Reviews look for ideas for government reform On September 16, 2009, SAO issued Report , on the results of its audit of the King County Solid Waste and Wastewater Treatment Utility, identifying cost savings of approximately $90 million. One of the areas of savings related to concerns that the utility was not receiving full benefit from the general government for costs paid. On September 24, 2009, SAO issued Report , on the results of its audit of Seattle Public Utilities Operations this report identified that the taxation practices have a significant effect on the operating costs of the utility, which in turn affect the rates charged to utility customers. This has caused Utility customers to pay more to support the City s general government budget that utility customers in other cities. SAO Fraud Audits The SAO investigated and reported the following: cases-$611,000 losses cases-$1.7 million losses cases-$549,251 losses Audit Liaison Projects Our office is the recognized audit liaison for all City of Tacoma and TPU External Audits including SAO and any other audit projects at the City; we will help you through the external audit process. Be sure to send us a meeting invite for your entrance and exit meetings for all external audits at the Federal, State or local level. For example we are happy to attend meetings for the following audits, see below: State Auditor Performance Audits, Financial Projects, and department reviews Moss Adams Audit of TPU Federal Reviews State Reviews Loss Reporting Losses of city property must be reported to the SAO within 24 hours of discovery. There is no threshold for losses that require reporting. Please ensure that you have read RCW Please contact the IAO and complete the Loss of Funds or Property Loss Report. Recent history of losses: $11, $16, $ 6,229 (to date) The above amounts represent the cost of missing equipment, most of which is composed of laptops and cell phones. For the three years, actual cash losses were about $700. What Are Other Audit Shops Doing?

3 The Washington State Local Government Auditors Association (WSLGAA) has not met since our last update report in late January We will share more information in our next update. Monitor Identify Theft Red Flags Enforcement of the FTC s Red Flags Rule became effective on November 1. This rule applies to creditor organizations, which include any organization that provides goods or services for which customers pay after receiving (e.g., a utility). This rule requires creditors to establish policies and procedures to look for and respond to red flags that an identify thief is trying to use someone else s information, resulting in uncollectible receivables. For complete guidance, consult the FTC web site: Don t forget to check out our Website for the latest reports, audit forms and information The Auditor s Corner Where is The Risk? We continue to assess risk in order to determine where to expend most effectively our audit resources. To ensure our risk assessments include the perspectives of department managers, we are reaching out to all city operations for feedback. We want to integrate our risk assessments with the departments assessments of their daily functions. To this end, we will meet with representatives from Legal, Finance, TPU and IT. Our goal is to share our risk assessments on line and to encourage department directors and program managers to provide independent assessments and feedback.

4 Governance and Enterprise Risk Management (ERM) We continue to encourage a focus on citywide risk. Training can be available from the IAO. The formal publication on this topic (COSO ERM, published in 2004) is complicated and has left many managers frustrated and confused in their attempts to develop risk models. We encourage you to employ a simple approach and use what you know. Try asking four questions: 1. What is the city s overarching objectives? 2. What are the risks related to those objectives? ( What if scenarios are helpful in identifying risks.) 3. How much risk are stakeholders willing to take? 4. How do we mitigate the risk? Objectives Identified Risk Risk Appetite Resolution Example: OBJECTIVE 1: Keep the city safe. RISK 1: Dedicate too many resources to the police department and too few resources to other important areas. RISK APPETITE: Residents want safety, but not at the expense of. RESOLUTION: We will. Be sure to consider the risk and its resolution as a citywide issue. Repeat the above four questions (for key objectives) at the department and program level. Scottie Nix, Internal Auditor, snix@cityoftacoma.org Carolyn Sexauer, Administrative Assistant, FAX

5 City of Tacoma Internal Audit Audit Professional Services: Audit Request Form What area process or program would you like audited? What s the problem or situation that led you to request an audit? Who is involved? If this is a problem or situation, when is it happening? How do you know that it s happening? Do you think this project would save the City money? Yes No Is this something related to the guiding principles?: please check all that apply Service Integrity Accountability Respect Stewardship Innovation Teamwork Is this a time-sensitive issue? Yes No When do you need the audit performed or the audit report issued? Optional: May we contact you for more information concerning this request? Yes No Requestor s name: Phone No.: Date: