Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
JULY 18, 2024
Subject
SUBJECT: AUDIT OF MISCELLANEOUS EXPENSES FOR THE PERIOD OF JULY 1, 2023 TO SEPTEMBER 30, 2023
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 July 1, 2023, to September 30, 2023.
Issue
ISSUE
The Office of the Inspector General (OIG) performed an audit of Metro miscellaneous expense transactions processed from July 1, 2023 to September 30, 2023. 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 miscellaneous expenses for the period of July 1, 2023 to September 30, 2023. For this period, miscellaneous expenses totaled $1,743,653 with 436 transactions. We selected 69 expense transactions totaling $1,218,890 for detail testing.
Discussion
DISCUSSION
FINDINGS
The miscellaneous expenses we reviewed for the quarter of July 1 to September 30, 2023, generally complied with Metro policies and procedures, were reasonable, and were adequately supported by required documents. However, we found five instances of overbilling by two vendors. We also found higher cost of airfare because the request to travel was made too close to the event.
Other findings include (a) late submission of Travel and Business Expense Report, (b) 2021 corporate membership paid in Fiscal Year 2024, (c) delinquency fee on professional license reimbursed to the employee, and (d) no written pre-approval for a payment made through a Purchase Card. We also noted that the cost of meals at the annual workshop was higher than the per diem for Los Angeles.
Employees should be reminded to review the invoices thoroughly, plan early for their business travel, and adhere to all Metro policies and procedures.
RECOMMENDATIONS
We recommend the following:
Marketing
1. We reiterate our previous recommendation for the department to review the invoices thoroughly and verify that the charges are accurate according to the contract. Metro may want to ask the vendor to have a supervisor review and sign off on invoices to Metro.
Office of Board Administration
2. Review the invoices thoroughly and verify that all charges are proper and accurate.
3. Require the vendor to submit the invoice promptly, as orders are delivered.
System Security and Law Enforcement
4. Management should plan and obtain approval for travel as early as possible to avoid costly travel expenses.
5. Traveling employees should make travel arrangements with the Travel Program Administrator at least 30 days in advance to secure the most reasonable rate.
Program Management (Alternative Delivery/Construction Management)
6. Management should monitor the submission of the Travel and Business Expense Reports of their staff.
7. Require staff to submit Travel and Business Expense Reports in a timely manner, according to policy
8. Direct travelers to read, review, and comply with all the provisions of Metro’s Travel and Business Expense policy (GEN 65) and/or conduct periodic training with the Travel Department.
9. Management should plan and identify conference attendees early to obtain early bird registration discounts.
Workforce Services
10. Assist travelers in a timely manner to help them submit their Travel and Business Expense Reports on or before the due date.
Program Management, Construction & Engineering
11. Instruct employees to keep track of their licenses and ensure timely payment of the same to avoid delinquent fees or penalties for late payment. Late fees should not be reimbursable.
Accounting
12. Discuss with Senior Management whether late and delinquency fees or penalties for miscellaneous expenses, such as professional licenses, should be disallowed or not.
13. Consider updating the Non-Travel Business Expenses Policy (FIN 14) to include late and delinquency fees or penalties in section 2.8 - Prohibited Expenses
Talent Development
14. Consider updating the Corporate and Professional Membership Policy (HR-6) to disallow late and delinquency fees or penalties for Corporate and Professional licenses.
Operations
15. Consider establishing standard rates for business meals that are aligned with the GSA rates.
16. Obtain at least three quotes and compare all the cost elements to determine the most cost-effective option. Include a justification memo in the request for payment whether Metro is paying the combined cost of venue and meals, or meals alone with a free venue.
Executive Office Countywide Planning and Development
17. Monitor corporate and professional membership fees to ensure timely payment and recording of the expense in the correct accounting period.
18. Consider posting the membership date and organization in each employee’s training log as well as posting the corporate memberships without having to request it from the department maintaining the database.
Office of the Chief of Staff
19. Update the HR 6 policy to allow other cost centers to pay for corporate membership fees, when applicable.
Customer Programs and Services
20. Remind the P-Cardholder and approver about the policy of securing a written pre-approval prior to purchases.
21. The Approving Official and Business Coordinator should review the supporting documents of P-Card purchases to ensure compliance with the P-Card policy.
Equity_Platform
EQUITY PLATFORM
It is OIG’s opinion that there is no equity considerations or impacts resulting from this audit.
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
ATTACHMENTS
Attachment A - Final Report on Statutorily Mandated Audit of Miscellaneous Expenses for the Period of July 1, 2023 to September 30, 2023 (Report No. 24-AUD-07)
Prepared_by
Prepared by: Asuncion Dimaculangan, Senior Auditor, (213) 244-7311
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