Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
JULY 17, 2025
Subject
SUBJECT: AUDIT OF MISCELLANEOUS EXPENSES FOR THE PERIOD OF APRIL 1, 2024, TO JUNE 30, 2024
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE the Office of the Inspector General (OIG) Final Report on the Statutorily Mandated Audit of Miscellaneous Expenses for the Period of April 1, 2024, to June 30, 2024.
Issue
ISSUE
The Office of the Inspector General (OIG) performed an audit of Metro miscellaneous expense transactions processed from April 1, 2024, to June 30, 2024. 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 payment for miscellaneous expenses.
This audit covered a review of Metro's miscellaneous expenses for the period of April 1, 2024, to June 30, 2024. For this period, miscellaneous expenses totaled $4,172,000 with 870 transactions. We selected 51 expense transactions totaling $2,569,822 for detail testing.
Discussion
DISCUSSION
Findings
The miscellaneous expenses we reviewed for the period of April 1, 2024, to June 30, 2024, generally complied with Metro policies and procedures, were reasonable, and were adequately supported by required documents. However, we found issues related to Metro’s P-Card Rules and Regulations, Petty Cash Funds (ACC-11), and Metro’s Business Travel Guidelines (GEN 65).
Purchase Card holders should be reminded to comply with all P-Card Rules and Regulations. All petty cash custodians should provide and obtain petty cash vouchers in accordance with Metro’s policy on Petty Cash Funds (ACC-11). Employees requesting approval for business travel and exceptions for travel expense limits should ensure that the justification memos and Travel Authorization (TA) forms are completed and submitted in accordance with Metro’s Business Travel Guidelines (GEN 65).
The staff’s non-compliance with Metro policy was due to oversight, lack of planning, and inattention of some staff to thoroughly review the transactions.
Recommendation
RECOMMENDATION
We recommend the following:
Office of Board Administration
1. P-Card Holders and Approvers should review the P-Card Program Rules and Guidelines to ensure compliance by requiring a suitable justification memo that includes all required elements for pre-approval of routine purchases.
2. P-Card Holders and Approvers should ensure compliance by requiring a written justification for the pre-approval of restricted item purchases, as outlined in the P-Card Program Rules and Guidelines. The memo should cover up to a one-year period that can be updated and renewed annually. This would allow V/CM to review and approve the memo more regularly to oversee whether it complies with applicable rules and policy.
Bus Maintenance
3. To ensure compliance with policy requirements, we recommend that all approvers thoroughly review the Accounting Procedures and Guidelines - Petty Cash Funds (ACC-11) and verify that all necessary documentation is provided for the disbursement and replenishment of Petty Cash funds, which includes petty cash vouchers.
Government Relations
4. We recommend that all approvers thoroughly review the current Metro Business Travel Guidelines (GEN 65) policy to require that travelling employees disclose known or estimated lodging costs in Travel Authorization Request Forms and any required information accompanying Memos of Justification.
Equity_Platform
EQUITY PLATFORM
It is the OIG’s opinion that there are 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. As part of these ongoing efforts, this item is expected to contribute to further reductions in 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). Because the Metro Board has adopted an agency-wide VMT Reduction Target, and this item supports the overall function of the agency, this item 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.
Attachment
ATTACHMENT
Attachment A - Final Report on Statutorily Mandated Audit of Miscellaneous Expenses for the Period of April 1, 2024, to June 30, 2024 (Report No. 25-AUD-04)
Prepared_by
Prepared by: Anthony Alvarez, Senior Auditor, (213) 244-7331
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