Meeting_Body
FINANCE, BUDGET & AUDIT COMMITTEE
APRIL 16, 2026
Subject
SUBJECT: AUDIT OF MISCELLANEOUS EXPENSES FOR THE PERIOD OF APRIL 1, 2025 TO JUNE 30, 2025
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE Office of the Inspector General (OIG) Final Report on the Statutorily Mandated Audit of Miscellaneous Expenses for the period of April 1, 2025, to June 30, 2025.
Issue
ISSUE
The Office of the Inspector General (OIG) performed an audit of Metro miscellaneous expense transactions processed from April 1, 2025, to June 30, 2025. This audit was performed pursuant to Public Utilities Code section 130051.28(b), which requires the OIG to report quarterly to the Board of Directors on the expenditures of the Los Angeles County Metropolitan Transportation Authority (Metro) for miscellaneous expenses such as travel, meals, refreshments, and membership fees.
Background
BACKGROUND
All Metro expenditures are categorized into various expense accounts and recorded in Metro’s Financial Information System (FIS). Metro employees have several options for seeking payment for miscellaneous expenses incurred, such as check requests, purchase cards, purchase orders, and travel & business expense reports. Each option has its own policies, procedures, or guidelines.
The Accounting Department’s Accounts Payable Section is responsible for the accurate and timely processing of payments for miscellaneous expenses.
This audit covered a review of Metro miscellaneous expenses for the period of April 1, 2025, to June 30, 2025. For this period, miscellaneous expenses totaled $5,453,707 with 1,059 transactions. We selected 50 expense transactions totaling $2,841,628 for testing.
Discussion
DISCUSSION
FINDINGS
The miscellaneous expenses we reviewed for the quarter of April 1, 2025, to June 30, 2025 generally complied with Metro policies and procedures, were reasonable, and were adequately supported by required documents. However, we noted the following issues:
1. Missing Independent P-Card Expense Approval;
2. Missing Approval for an Exception to the Lodging Dollar Limit;
3. Incomplete Documentation for a Check Request; and
4. Inaccuracies in Justification Memo for a Purchase Card Transaction
OBSERVATIONS
During our review of miscellaneous expenses for the period of April to June 2025, we observed the following:
• Union Contract negotiations with AFSCME, ATU, TCU, and TEAMSTERS have been ongoing between January 2024 and December 2025 which has resulted in payment of business meals being extended well over original plan/estimate.
• Vendor GP GENERATE LLC invoices provided only a general description of services provided with no detailed description/support of actual services rendered.
• Multiple instances of payments for high dollar value seminars/conferences/certification programs were observed in the audit period, but there is no Certification Program Policy in place to guide and control such expenditures.
• Four employees/board members traveled internationally at a cost of $13,730. One of the four traveled to various US, Canada, and Korea supplier facilities to review their design and production of HR5000 Heavy Rail Vehicles. One employee traveled to Hamburg, Germany, for the International Association of Public Transport (UITP) Conference. Another employee traveled to Toronto, Canada, for the Women’s Transportation Seminar (WTS) International Annual Conference. The last employee traveled to Milan, Italy, to study the city’s preparations for the 2026 Winter Olympics.
RECOMMENDATIONS
We recommend the following:
Strategic Financial Management (Vendor/Contract Management - Support Services)
• Consider including a section within the P Card Guidelines that an alternate approver, such as a departmental budget or administrative analyst, be utilized if the approving official would appear to receive a benefit from the purchase.
Countywide Planning & Development (Complete Streets & Highways)
• Ensure that approved exceptions to the lodging dollar limits are submitted with associated Travel and Business Expense Reports.
• If circumstances change during travel, e.g., the hotel fails to honor the government per diem rate, the employee should submit an explanatory memo with their Travel and Business Expense Report.
• Instruct the employee to read and follow Metro Travel Business Guidelines (GEN 65) regarding exceptions to per diem rates while traveling.
Chief Executive Office (Diversity & Economic Opportunity)
• Ensure that future payments for business meals with external entities include all supporting documentation as specified in Metro’s Check Requests (ACC-01) policy Section 1.1.1.aa Business Meals for events and business meetings.
• Instruct the employee to review and follow Metro’s Accounting Procedures & Guidelines - Check Requests (ACC-01) policy.
Chief of Staff (Community Relations)
• Verify and confirm that all information in expense justifications is complete and accurate prior to submission for approval.
Equity_Platform
EQUITY PLATFORM
It is OIG’s opinion that there is no equity considerations or impacts resulting from this audit.
Vehicle_Miles_Traveled_Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
While this item does not directly encourage taking transit, sharing a ride, or using active transportation, it is a vital part of Metro operations, as it contributes to fiscal responsibility and reports on miscellaneous expenditures of the Los Angeles County Metropolitan Transportation Authority (Metro). The Metro Board has adopted an agency-wide VMT Reduction Target, and this item supports the overall function of the agency and is consistent with the goals of reducing VMT.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
Recommendations support strategic plan goal no. 5.2: Metro will exercise good public policy judgment and sound fiscal stewardship.
Next_Steps
NEXT STEPS
Metro management will implement corrective action plans.
Attachments
ATTACHMENT
Attachment A - Final Report on Statutorily Mandated Audit of Miscellaneous Expenses for the Period April 1, 2025, to June 30, 2025 (Report No. 26-AUD-04)
Prepared_by
Prepared by: Dennis Young, Auditor, (213) 244-7326
Yvonne Zheng, Senior Manager, Audit, (213) 244-7301
George Maycott, Senior Director, Special Projects, (213) 244-7310
Reviewed_By
Reviewed by: Karen Gorman, Inspector General, (213) 922-2975
