Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
APRIL 14, 2021
Subject
SUBJECT: AUDIT OF MISCELLANEOUS EXPENSES FOR THE PERIOD OF JULY 1, 2020 TO SEPTEMBER 30, 2020
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE Office of Inspector General (OIG) Final Report on the Statutorily Mandated Audit of Miscellaneous Expenses for the Period of July 1, 2020 to September 30, 2020.
Issue
ISSUE
The Office of the Inspector General (OIG) performed an audit of Metro miscellaneous expense transactions processed from July 1, 2020 to September 30, 2020. 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 Metro miscellaneous expenses for the period of July 1, 2020 to September 30, 2020. Between July 1 to September 30, 2020, miscellaneous expenses totaled $484,398with 166 transactions. We reviewed a sample of 30 expenses totaling $96,672. The miscellaneous expenses for the subject audit period dropped significantly compared to $1.8 million for the same quarter of the prior year. This is a direct result of a memo the Chief Executive Officer sent to the Senior Leadership Team in April 2020, "Immediate Cost Reduction Actions," which discussed cost-cutting measures including ceasing expenditures for travel, seminars, business meals, training, and other miscellaneous items from April 1 to October 1, 2020.
Discussion
DISCUSSION
Findings
The miscellaneous expenses we reviewed for the period of July 1, 2020 to September 30, 2020 generally complied with policies, were reasonable, and adequately supported by required documents. However, we found that for three of the expenses reviewed, policy requirements were not followed for travel, P-Card, and media expenses. We also determined that the CEO’s cost reduction actions were effective for travel, seminar, business meal, training, and membership. These costs were reduced by 90 to 98 percent in comparison to last year.
Recommendations
We recommend that:
Human Capital and Development (Pension and Benefits):
1. Remind staff to submit TBE Reports timely and accurately.
Human Capital and Development (General Services Administration):
2. Continue to work with Information Technology Services to create additional program features in the travel system that will generate a “late filers” report and automatically send a reminder to travelers to submit their Travel and Business Expense report on the due date, if they have not yet done so.
Communications (Creative Services):
3. Ensure that Purchase Cardholders obtain adequate itemized receipts before approving the monthly P-Card log.
Communications (Marketing):
4. Instruct the Project Manager to review all invoices under the contract with Civilian and other vendors to ensure they are appropriate and accurate.
Office of the CEO
5. Consider extending the moratorium period beyond October 1, 2020 on CEO interoffice memo dated April 20, 2020 to Senior Leadership Team for “Immediate Cost Reduction Actions through October 1, 2020” related to expenditures on travel, seminar, business meal, training, and membership.
Financial_Impact
FINANCIAL IMPACT
There is no financial or budgetary impact by accepting the report, but compliance with the recommendations would contribute to cost savings and improve the system of internal control.
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 July 1, 2020 to September 30, 2020 (Report No. 21-AUD-06)
Prepared_by
Prepared by: Myra Taylor, Senior Auditor, (Retired)
Asuncion Dimaculangan, Senior Auditor, (213) 244-7311
Yvonne Zheng, Senior Manager, Audit, (213) 244-7301
George Maycott, Sr. Director, Inspector General-Audit, (Interim) (213) 244-7310
Reviewed_By
Reviewed by: Karen Gorman, Inspector General, (213) 922-2975