Fort Wayne’s Internal Audit Department examines city departments to ensure there are proper financial controls, that city resources are not being wasted and that required functions are being carried out. Here are some of the department’s findings in the last three years; in every case officials accepted the findings and were in the process of correcting them by the time the audit was released:
July: The Information Technology Department failed to perform regular reviews of who had access to city computer systems, allowing dozens of potentially unauthorized users to access city data. Auditors also outlined concerns over the lack of a proper contingency plan in case the main system was incapacitated by a disaster.
April: City Utilities Data Control paid $7,030 during a year for data lines no longer in use. The department also did not thoroughly track information as to the timeliness of work done by employees, allowing employees to receive productivity bonuses, despite their being no record those bonuses were earned.
April: The city’s Animal Care & Control provides pet registration tags to local vets but did not thoroughly track registrations sold, so there was no way to know whether the system was being abused.
January: City employees with take-home cars were not tracking their personal use of the vehicles, sometimes approved their own vehicles and were not taxed the appropriate amount on the value of the car.
July 2011: The Foellinger-Freimann Botanical Conservatory billed caterers for a percentage of the total food and beverage charges the caterers assessed to their customers, allowing the caterers to name their own fee when they provide an invoice to the city. In addition, the conservatory had a difficult time getting copies of caterer bills from groups renting the facility because the request was made after the event. If payment is not received from a caterer, the conservatory was unable to pursue traditional collections because no set fee was established.
April 2011: Multiple city departments were using a collections firm, despite Neighborhood Code Enforcement having the only contract, which was dated May 1, 2000. Other departments had simply latched onto the contract without getting anything in writing to guarantee the price. There was also no policy on when to send debts to collections, so some departments worked to collect debts on their own and others shipped the debts to the firm for collection when they became 30 days past due.
February 2011: Haulers unloading sewage at the Fort Wayne treatment plant were allowed to determine how much the city should charge them and sometimes avoided paying anything at all. Haulers – typically dumping sewage from septic systems – were basically left to the honor system to report to the city when they come to the plant and how much was being dumped. Also, two of the three gate security cameras were not working, and audit staff were able to gain access to seven buildings without the needed key card.
October 2010: Transportation Administration and Support was not charging the proper amount for two types of permits. It charged $30 for commercial driveway closure permits, when it should have been charging $100, and it charged $15 for residential drive reconstruction permits, though the City Council set a minimum driveway permit fee of $40.
October 2010: When the payroll department changed software systems, there were six employees outside the payroll department who had unrestricted access to the software. Two of those employees had greater access than required for their jobs and two had access they shouldn’t, which would have allowed them to make changes to payroll, including pay rate.
April 2010: City Utilities failed to keep accurate records of its equipment, improperly tracked construction projects and had improper use of city credit cards. Auditors found nearly 90 percent of the department’s assets studied were not properly tagged with city identification.
To save money, the City Council is considering dramatic reductions or total elimination of a department whose sole objective is to find inefficiencies and waste in city government.
Early in 2013, the council will consider cutting up to $272,971 from the $140 million city budget and eliminate the city’s Internal Audit Department.
During the budget debate last month, Councilman Marty Bender, R-at large, proposed cutting the entire allocation for the department from the 2013 budget and thus shutting down the operation.
“We’re already covered by the State Board of Accounts,” Bender said at the time. “I don’t see a reason to have that particular department.”
But the State Board of Accounts examines only the city’s financial statements. Its job is to ensure those statements accurately represent the city’s financial position.
The city’s Internal Audit Department, according to its mission statement, examines financial and operating information, identifies and minimizes risks to the city, ensures regulations, laws, policies and procedures are followed and standards are met and that resources are used efficiently and economically.
“Internal Audit is critical in these times,” Deputy Mayor Mark Becker said. “Without strong internal controls, some bad things could happen.”
Bender’s proposal failed, drawing only three of the nine council members’ votes, but Councilman John Crawford, R-at large, then proposed cutting $198,000 from the department’s budget, leaving only enough to pay for it for the first quarter of 2013.
That, he said, would give officials time to revamp their mission or reorganize staff or justify their current makeup and come back to the council for a final decision.
That proposal passed 7-2, meaning the department could cease to exist April 1.
Tracy Neumeier, director of the Internal Audit Department, citing the political situation, said it would be best not to comment for this story.
Carol Helton, city attorney and a member of the Audit Committee the department reports to, said Internal Audit has become more than just a financial watchdog.
“A lot of departments use Internal Audit as a resource,” Helton said. “If they’re getting a new computer system, or they have some specific issue, or they want Internal Audit to look at a process and see if it can be done better, they go to them.”
There is no way to know how much fraud and waste have been prevented by the department, but just this year its auditors found issues with take-home cars; found that Animal Care & Control had no way to track pet licenses sold by veterinarians; that City Utilities had paid more than $7,000 a year for data lines it wasn’t using; and that unauthorized users might still have access to city computer systems.
Most recently, auditors found that high-risk buildings – those holding 1,000 or more people, schools, hospitals, nursing homes, child-care centers and high rises – were not getting their required fire inspections because of a shortage of inspectors. That situation also led to a lack of emergency plans and fire drills for those buildings.
Even though the audits often show problems with city government, Mayor Tom Henry’s administration said pointing out such flaws is critical for improvement.
“In the public sector, you have the importance of transparence,” Becker said. “In the private world, internal audit departments are doing the same thing, but you’re not reading about it on the front page of the newspaper. (Publicizing it) is a good thing, though, because it keeps us accountable.”
Helton said much of the value of Internal Audit’s work can’t be quantified because it prevents things from happening. Its main focus, she said, is to ensure controls are in place to avoid problems.
“It’s absolutely crucial to have those controls in place,” Helton said. “They’re really the eyes and ears into the administration what we’re doing on a day-to-day basis and how we do it.”
Still, Becker said, the council’s scrutiny gives the city a chance to do for Internal Audit what the department does for the city: make sure it is operating in the most effective and efficient way possible.
“It’s a good opportunity for us to kind of step back,” Becker said. “The ordinance (creating and governing the department) probably hasn’t been looked at for many years. … This provides us with an opportunity to see if we can do it better.”
Becker said the city is in the process of appointing a committee to study the issue and has already begun examining almost 20 other cities of similar size to see how they handle internal auditing functions. Of those cities, he said, only one does not have an internal audit department.