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TO GO.ALL RIGHT, WELL, WELCOME TO THE APRIL 27TH, 2023
[Audit Committee Meeting on April 28, 2023.]
MEETING OF THE AUDIT COMMITTEE FOR THE CITY OF GARLAND, TEXAS.I'M CHAIRMAN ROBERT JOHN SMITH.
UH, WITH ME TODAY, I HAVE, UH, COUNCIL MEMBER WILLIAMS, VARIOUS MEMBERS OF CITY STAFF.
UM, LET'S GO AHEAD AND GET STARTED.
AGENDA OF NUMBER ONE IS APPROVAL OF MARCH 27TH, 2023, MEETING MINUTES.
UH, HAVE YOU HAD A CHANCE TO REVIEW AND DO HAVE A MOTION, MR. CHAIR, I'VE REVIEWED AND, UH, MOVE FOR APPROVAL OF THE MINUTES.
WE'VE GOT A MOTION TO APPROVE THE MINUTES.
NONE OPPOSED? UH, THOSE ARE APPROVED UNANIMOUSLY.
UH, AGENDA ITEM NUMBER TWO IS CONTRACT PROCUREMENT AUDIT CHAIRMAN.
I'LL KICKSTART THEN I'LL GIVE IT TO YOU, AARON, TO, UH, GO OVER THE REPORT.
FIRST OF ALL, I JUST WANTED TO INFORM THE COMMITTEE THAT COUNCILMAN WILLIAMS REQUESTED THIS AUDIT, SO I APPRECIATE THAT.
UM, THE OBJECTIVE WAS TO EVALUATE HOW CONTRACTS THAT FELL BELOW THE CITY COUNCIL SIGNATURE AUTHORITY, UH, HOW THEY WERE PROCURED AND ANY RELATED CHANGE ORDERS WERE PROCESSED.
THIS WAS PRIOR TO THE FEBRUARY, 2023 DIRECTIVE UPDATE.
SO ANYTHING LESS THAN A HUNDRED THOUSAND DOLLARS, UH, HOW THE, HOW THE CITY PROCURED.
AND THAT WAS MAINLY THE OBJECTIVE OF THAT AND HOW, HOW THE THEY WERE APPROVED.
I DO WANNA THANK PHIL AND GARY FOR DOING THIS AUDIT PROJECT, FOR WORKING WITH US.
UM, ERIN, DO AN EXCELLENT JOB.
SHE HAD TO, UH, LOOK INTO LIKE FOUR DIFFERENT SYSTEMS TO PULL A LOT OF THIS INFORMATION.
SO THERE WAS A LOT OF DATA GATHERING, AND GARY DID HELP US A LOT DURING THAT TIME AS WELL.
SO, BUT FROM AN AUDITOR'S PERSPECTIVE, THIS WAS HER FIRST AUDIT THAT SHE DID IT INDEPENDENTLY BY HERSELF, SO KUDOS TO HER FOR PULLING THROUGH.
UH, WITH THAT, I WILL TURN IT OVER TO ERIN.
SHE'S GONNA GIVE YOU SOME BACKGROUND AS WELL AS SOME OF THE OBSERVATIONS THAT WE HAD.
UM, SO THE PURCHASING DEPARTMENT'S RESPONSIBLE FOR PROCESSING PROCUREMENTS FOR THE CITY THAT ARE ABOVE $3,000, UM, IN ENSURING THE CITY'S COMPLIANT WITH STATE AND LOCAL PROCUREMENT LAWS AND DIRECTIVES.
UH, PROCUREMENT ACTIVITIES ARE LOCALLY GOVERNED BY THE PURCHASING DIRECTIVE, WHICH REFERENCES THE STATE, UH, THE TEXAS GOVERNMENT CODE AND THE TEXAS LOCAL GOVERNMENT CODE.
UH, THE DIRECTIVE ESTABLISHES, UM, PURCHASING PROCEDURES AUTHORIZATION REQUIREMENTS, AND IT PROVIDES INFORMATION ON PROCUREMENT METHODS FOR THE REQUESTERS.
THIS PAST FEBRUARY, THE CITY REVISED THE PURCHASING DIRECTIVE, WHICH INCREASED THE PURCHASING AUTHORITY AMOUNTS.
UM, BUT THIS AUDIT APPLIED THE CRITERIA OF THE PREVIOUS VERSION DUE TO THE TIME SCOPE OF THE AUDIT.
SO EXCLUDING EXEMPTIONS, THE STATE REQUIRES PURCHASES ABOVE $50,000 TO BE PRESENTED FOR COMPETITIVE BIDDING FOR PURCHASES, $50,000 AND BELOW, IT REQUIRES AT LEAST TWO STATE REGISTERED HISTORICALLY UNDERUTILIZED BUSINESSES OR HUBS, AS WE CALL THEM, UH, WITHIN THE COUNTY TO BE NOTIFIED OF THE BUSINESS OPPORTUNITY.
EXEMPTIONS FOR EITHER OF THESE TWO REQUIREMENTS INCLUDE PROCURING THROUGH INTERLOCAL OR COOPERATIVE PURCHASE AGREEMENTS, EMERGENCY PURCHASES, SOLE SOURCE PURCHASES, AND STATE SPECIFIED PROFESSIONAL SERVICES.
PER THE PREVIOUS PURCHASING DIRECTIVE, CITY COUNCIL APPROVAL WAS REQUIRED FOR ALL PURCHASES, $100,000 OR GREATER INCREMENTALLY LOWER DOLLAR THRESHOLDS REQUIRED LOWER LEVELS OF AUTHORIZATION WITH DEPARTMENT HEAD OR DIRECTOR APPROVAL AS THE MINIMUM REQUIREMENT CHANGE ORDER APPROVALS WERE BASED ON A SIMILAR SCALE, BUT REQUIRED CITY COUNCIL APPROVAL FOR ALL ADJUSTMENTS GREATER THAN 50,000 OR ABOVE 25% OF THE ORIGINAL CONTRACT.
THE PURCHASING PROCESS IS INITIATED BY THE REQUESTING DEPARTMENT USING A PURCHASE INITIATION FORM, WHICH IS COMPLETED ONLINE AND SUBMITTED ELECTRONICALLY TO THE PURCHASING'S CONTRACT LIFECYCLE MANAGEMENT SYSTEM, WHICH I'LL REFER TO AS THE CM SYSTEM, UH, ALONG WITH ANY OTHER ATTACHMENTS THAT THE REQUEST ARE INCLUDED.
SO THIS INFORMATION, UH, PROVIDED BY THE REQUESTER IS AVAILABLE TO, UM, THE PURCHASING DEPARTMENT, UH, FOR A BUYER TO THEN BEGIN A SOURCING EVENT FOR FISCAL YEARS 2021 AND 2022.
COMBINED, THE DEPARTMENT PROCESSED OVER 2,500 PURCHASE REQUISITIONS PRICED BETWEEN $3,000 AND A HUNDRED THOUSAND DOLLARS TOTAL, TOTALING 66.4 MILLION.
THESE PROCUREMENTS UTILIZED NEARLY 1000 DIFFERENT BUSINESSES TO SERVE 45 CITY OF GARLAND DEPARTMENTS.
OF THE 45 DEPARTMENTS, 10 ACCOUNTED FOR 75% OF THE AUDIT POPULATION'S, TOTAL DOLLAR AMOUNT.
AND THESE TOP 10 ARE LISTED IN THE REPORT IN FIGURE TWO
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TO IDENTIFY AND ANALYZE THE PROCUREMENT METHODS USED WITHIN THE SCOPE OF THE AUDIT.A STATISTICAL SAMPLE SIZE OF 106 PURCHASE REQUISITIONS WAS SELECTED.
WE ANALYZED AND RANKED THE DEPARTMENTS BY THEIR SPENDING AND USED THAT INFORMATION TO STRATIFY, STRATIFY THE SAMPLE SELECTION ACROSS THE STOP TOP SPENDING DEPARTMENTS, UH, COMMODITY AND VENDOR DATA WAS THEN CONSIDERED AND JUDGMENT SELECTING SAMPLES TO BEST REFLECT AND PROJECT TO THE ENTIRE POPULATION.
THAT'S 9% FOR INTERLOCAL AND 29% COOPERATIVES.
COMPETITIVE BIDDING MAKE UP MADE UP 14% OF THE SAMPLED POPULATION.
SIMILARLY, 40% OF THE SAMPLES TOTAL DOLLAR AMOUNT WERE PROCURED THROUGH INTERLOCAL OR COOPERATIVE PURCHASE AGREEMENTS.
THAT'S 10% INTERLOCAL AND 30% COOPERATIVE WHILE 26 WAS ATTRIBUTED TO COMPETITIVE BIDDING BECAUSE THESE NON-EXEMPT PROCUREMENT METHODS, AND WHEN I SAY NON-EXEMPT, ASKING ABOUT THE ONES THAT AREN'T EMERGENCY PURCHASES ARE OTHERWISE EXEMPT FROM THE BIDDING REQUIREMENT.
UM, BUT THESE REQUIRE, UH, COMPETITIVE BIDDING.
UH, SO WE WANTED TO ANALYZE THOSE SEPARATELY FROM THE FULL POPULATION, UM, TO DETERMINE WHAT ELSE IS BEING, WHAT OTHER METHODS ARE BEING USED OTHER THAN COMPETITIVE BID ABOVE 50,000.
SO THIS REVEALED THAT 55% OF THE SELECTED SAMPLES, UH, WERE PROCURED THROUGH INTERLOCAL AND COOPERATIVE PURCHASE AGREEMENTS, AND THAT'S 11% INTERLOCAL, 44% COOPERATIVE, AND 33% THROUGH COMPETITIVE BIDDING.
53% OF THE SELECTED SAMPLES, TOTAL DOLLAR AMOUNT, WAS PROCURED THROUGH INTERLOCAL OR COOPERATIVE PURCHASE AGREEMENTS, 10% BEING INTERLOCAL, 43% BEING COOPERATIVE, AND 36% THROUGH COMPETITIVE BIDDING.
WE ALSO ANALYZED COMMODITY CODES WITHIN THE FULL POPULATION OF, UH, 2,552 PURCHASE REQUISITIONS BECAUSE WE WANTED TO ANALYZE WHAT TYPES OF PRODUCTS AND SERVICES UNDER A HUNDRED THOUSAND ARE BEING PURCHASED BY THE CITY.
WE FOUND THE TOP COMMODITIES IN BOTH COUNT AND DOLLAR AMOUNT TO BE PROFESSIONAL SERVICES, COMPUTERS, AND THAT'S HARDWARE, SOFTWARE, UH, CONTRACTORS AND SPECIAL SERVICES
SO UPON COMPLETION OF THE AUDIT, WE DETERMINE THAT PURCHASING IS COMPLIANT WITH THE LOCAL DIRECTIVE AND STATE LAWS.
UM, HOWEVER, OUR EXTRACTION AND ANALYSIS OF THE DATA WITH CONSIDERATION OF THE INTENT OF THE AUDIT LED US TO MAKE THE FOLLOWING OBSERVATIONS.
THE FIRST IS RELATED TO PERFORMANCE METRICS.
SO PRIOR TO 2018, UH, THE DOCUMENT RETENTION SYSTEM SERVED AS THE MAIN REPOSITORY FOR PROCUREMENT DOCUMENTATION.
SINCE THEN, PURCHASING IS TRANSITION, TRANSITION TO A NEW CLOUD-BASED, UH, CLM SYSTEM.
UH, CONDUCTING DATA ANALYSIS WITHIN THIS SYSTEM REQUIRED ADDITIONAL EFFORT TO ENSURE COMPLETENESS AND ACCURACY.
THE SYSTEM ALONE COULD NOT BE USED TO PULL CERTAIN DATA POINTS AND INSTEAD REQUIRED MULTIPLE SYSTEMS AND DOCUMENT RESEARCH DATA SUCH AS PROCUREMENT METHOD AND COMMODITY TYPE WAS NOT CONSISTENTLY AVAILABLE THROUGH THE SYSTEM.
HAVING EASIER ACCESS TO THIS INFORMATION ON A LARGE SCALE COULD FACILITATE MUNICIPAL PROCUREMENT TRANSPARENCY AND PROVIDE MEANINGFUL HISTORICAL FEEDBACK FOR FUTURE PROCUREMENT DECISIONS.
THIS OBSERVATION'S PARTIALLY DUE TO THE CM SYSTEMS LIMITATIONS, UM, AS IT'S NOT INTERFACED WITH THE BIDDING OR FINANCE SYSTEMS. INSTEAD, IT'S HEAVILY RELIANT ON MANUAL INPUT FROM BOTH THE PURCHASING DEPARTMENT AND THE REQUESTING DEPARTMENTS.
I ALSO WANNA POINT OUT THAT COMMODITY TYPE IS CAPTURED THROUGH THE FINANCE SYSTEM.
UM, HOWEVER, BECAUSE IT'S NOT INTERFACED WITH THE CM SYSTEM, PURCHASING DOESN'T HAVE THE ABILITY TO COLLECTIVELY ANALYZE PROCUREMENT TRENDS WITHOUT TAKING EXTRA STEPS OF GENERATING A FINANCE SYSTEM REPORT AND CROSS REFERENCING THEIR TO THEIR OWN SYSTEMS DATA.
UH, THIS PROCESS WOULD ALSO REQUIRE ALL PROCUREMENTS RECORDED IN THE FINANCE SYSTEM TO BE ACCURATELY TIED TO A PURCHASE ORDER, WHICH IS CURRENTLY NOT A SYSTEM REQUIREMENT.
ACCURATE AND MEANINGFUL PERFORMANCE METRICS PROVIDE TRANSPARENCY AND INSIGHT TO THE OPERATIONAL IMPACTS OF CITY POLICIES AND PROCESSES.
BECAUSE OF THIS, WE RECOMMENDED THAT THE PURCHASING MANAGEMENT EVALUATE THE C LM SYSTEM'S CAPABILITIES TO INTERFACE WITH FINANCE AND BIDDING SYSTEMS IN ORDER TO CAPTURE AND ANALYZE ALL PROCUREMENT DETAILS.
IF NECESSARY, CONSIDER OPTIONS FOR A C LM SYSTEM WITH MORE ADVANCED CAPABILITIES.
PURCHASING MANAGEMENT CONCURRED WITH THIS RECOMMENDATION AND PROVIDED THE FOLLOWING ACTION PLAN.
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PURCHASING, FINANCE AND IT TEAMS ARE ESTABLISHING A TIMEFRAME TO INTEGRATE AND GO LIVE WITH A NEW ENTERPRISE RESOURCE PLANNING SOFTWARE, WHICH WILL HAVE PURCHASING AND FINANCE ACTIVITIES CONNECTED PURCHASING'S ALSO REVIEWING THE CURRENT E BIDDING SOFTWARE PACKAGE AND WILL ENSURE A SYSTEM USED USED FORWARD WILL CONNECT WITH NEW EER P SOFTWARE.AN IMPLEMENTATION DATE CANNOT BE PROVIDED AT THIS TIME AS STAFF ARE ESTABLISHING DETAILS FOR THE GOLIVE WITH THE EER P PRODUCTS.
WE ALSO RECOMMENDED THAT PURCHASING MANAGEMENT RECORD AND ANALYZE THE PROCUREMENT METHOD FOR EACH PURCHASE TO FACILITATE TRANSPARENCY AND ASSIST IN EVALUATING THE BEST OPTIONS FOR PROCURING VARIOUS PRODUCTS AND SERVICES.
PURCHASING MANAGEMENT CONCURS WITH THIS RECOMMENDATION AND PROVIDED THE FOLLOWING ACTION PLAN.
WHILE THE PURCHASING DEPARTMENT AGREES THAT DATA FOR PURCHASES CAN POSSIBLY BE PULLED FROM AN E R P SOFTWARE EASIER, THE DEPARTMENT HAS ACCESS TO REQUIRED DATA ACROSS THE CURRENT SOFTWARE PLATFORMS. NOW, THE DEPARTMENT CONSIDERS ITSELF TO BE TRANSPARENT AND GUARDIANS OF TAXPAYER DOLLARS RECOMMENDED DATA SUCH AS PURCHASING TYPE IS BEING CAPTURED IN THE EXISTING CONTRACT MANAGEMENT SOFTWARE.
AS A RESULT OF THE AUDIT STAFF IS ESTABLISHING DETAILS FOR GO LIVE WITH E R P PRODUCTS TO HAVE IMPROVED REPORTING CAPABILITIES.
THE SECOND OBSERVATION IS REGARDING NOTIFICATION OF HUBS.
SO, AS I MENTIONED BEFORE, THE CITY'S REQUIRED TO NOTIFY AT LEAST TWO STATE REGISTERED HUBS IN DALLAS COUNTY FOR NON-EXEMPT PURCHASES ABOVE $3,000 UP TO $50,000 WITH HELP FROM THE PURCHASING DEPARTMENT.
WE PULLED THE CENTRALIZED MASTER BIDDERS LIST FROM THE STATE COMPTROLLER'S WEBSITE TO REVIEW THE LIST OF HUBS THAT PURCHASING USES TO MEET THIS REQUIREMENT.
WE FOUND THAT OF THE 305 HUBS IN DALLAS COUNTY, ONLY 13 ARE IN GARLAND.
THIS INDICATES THAT THE CITY HAS AN OPPORTUNITY TO FOCUS MORE EFFORT INTO PROMOTING HUB REGISTRATION AMONG GARLAND BUSINESSES.
I WANNA POINT OUT THAT CURRENTLY PURCHASING NOTIFIES ALL RELEVANT HUBS IN THE COUNTY FOR PURCHASES OF ANY DOLLAR AMOUNT THAT AREN'T OTHERWISE BEING PROCURED THROUGH AN EXEMPT METHOD SUCH AS SOLE SOURCE AND OR LOCAL, ET CETERA.
WE RECOMMENDED MANAGEMENT EVALUATE METHODS TO FURTHER PROMOTE STATE HUB REGISTRATION.
UH, THIS COULD INCLUDE COLLABORATION WITH THE CHAMBER OF COMMERCE, THE ECONOMIC DEVELOPMENT DEPARTMENT, AND THE BUILDING INSPECTION DEPARTMENT, UH, UTILIZE THE CITY'S NEWSLETTER, DISTRIBUTE AND INFORMATIVE FLYERS AT RELEVANT CITY OFFICES, WHERE LOCAL BUSINESS OWNERS MAY FREQUENT AND ENSURE ALL HUB DOCUMENTATION IS RETAINED.
WITH EACH FILE AS APPLICABLE, MANAGEMENT CONCURS AND STATES THE CITY MANAGEMENT WILL ARRANGE THE RELEASE OF DOING BUSINESS WITH THE CITY OF GARLAND INFORMATION ON THE CITY'S SOCIAL MEDIA AND CITY PRESS.
ALL MAILBOXES IN GARLAND, INCLUDING BUSINESSES, WILL RECEIVE THIS INFORMATION VIA THE CITY PRESS, AS WELL AS THE 28,000 SOCIAL MEDIA FOLLOWERS.
AN IMPLEMENTATION DATE OF JUNE 1ST, 2023 IS LISTED.
UM, HOWEVER, THIS INFORMATION'S CURRENTLY ON THIS CITY'S PURCHASING WEBSITE AND WILL BE REVIEWED ANNUALLY.
THE THIRD OBSERVATIONS REGARDING INTERLOCAL AND COOPERATIVE PURCHASE AGREEMENTS, WE FOUND THAT INTERLOCAL AND COOPERATIVE PURCHASE AGREEMENTS COMBINED MADE UP THE LARGEST PORTION OF THE SAMPLED POPULATION MORE THAN ANY OTHER PROCUREMENT METHOD, PURCHASING EXPLAINED, THESE METHODS ARE USUALLY SELECTED BECAUSE THEY ARE TIME AND RESOURCE EFFICIENT.
THEY'RE NOT NECESSARILY SELECTED AS A RESULT OF COMPARISONS BETWEEN ALTERNATIVE METHODS OR COOPERATIVES.
TO UNDERSTAND COMMON PROCUREMENT PRACTICES, WE SURVEYED EIGHT SIMILAR NORTH TEXAS CITIES TO DETERMINE IF ANY, ANY COMPARE COOPERATIVE PURCHASE AGREEMENTS.
HALF OF THEM FORMALLY OR INFORMALLY REQUIRE COMPARISONS.
SELECTING INTERLOCAL AND COOPERATIVE PURCHASE AGREEMENTS WITHOUT THOROUGH AND RECURRING EVALUATION COULD POTENTIALLY HINDER OPPORTUNITIES FOR LOCAL BUSINESSES.
WE RECOMMEND PURCHASING MANAGEMENT REEVALUATE THE CURRENT PROCUREMENT PRACTICE TO CONSIDER ESTABLISHING PROCEDURES FOR COMPARING COOPERATIVE PURCHASE AGREEMENTS WITH ALTERNATIVES.
THIS MAY ALLOW THE CITY TO ATTAIN THE BEST VALUE AND INVEST IN THE COMMUNITY.
PURCHASING MANAGEMENT PARTIALLY OCCURS WITH THIS RECOMMENDATION, EXPLAINING THAT PURCHASING POLICIES FOR THE CITY OF GARLAND MEET OR EXCEED STATE LAW REQUIREMENTS STAFF WITHIN THE PURCHASING DEPARTMENT ALSO HAVE CERTIFICATIONS SUCH AS CERTIFIED PROFESSIONAL, PUBLIC BUYER, AND CERTIFIED PUBLIC PROCUREMENT OFFICER.
THESE TRAININGS AND CERTIFICATIONS HELP THE DEPARTMENT TO SEEK THE BEST VALUE IN PURCHASING ON A DAILY BASIS, AS WELL AS UTILIZE BEST PRACTICES.
IT'S ALSO IMPORTANT TO NOTE THAT THE CITY OF GARLAND'S PURCHASING DEPARTMENT HAS RECEIVED THE NATIONAL PROCUREMENT INSTITUTE'S ACHIEVEMENT OF EXCELLENCE AND PROCUREMENT FOR 24 YEARS IN A ROW.
A E P AWARD WINNERS DEMONSTRATE TO THEIR LEADERSHIP GOVERNING BODY AND THE PUBLIC THAT THEY EXCEED THE HIGHEST STANDARDS IN INNOVATION, PROFESSIONALISM, AND PRODUCTIVITY.
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A PROCUREMENT AND LEADERSHIP ATTRIBUTES OF THE PROCUREMENT ORGANIZATION POLICIES WILL BE REVIEWED FOLLOWING THE STATE LEGISLATIVE SESSIONS TO ENSURE THE DEPARTMENT IS FOLLOWING ALL STATE RULES AND LAWS.THE PUR THE PURCHASING DEPARTMENT, WILL ALSO STRICTLY EVALUATE ANY NEW PURCHASING COOPERATIVE USE FOR SOURCE SOURCING TO ENSURE VALUE PRIOR TO USE.
UM, DO YOU HAVE ANY QUESTIONS OR STATEMENTS? COUNCIL? I DON'T COME OWN, COME OWN? YES, SIR.
THANK YOU FOR JOB WELL DONE THAT.
I DON'T HAVE ANY, ANY PARTICULAR, ANY QUESTIONS.
I JUST, UM, A CITY MANAGER AND I, I SEE THAT GARY'S, GARY'S ON THE BACK WALL OVER THERE.
UM, I DON'T HAVE ANY QUESTIONS.
I HAD GOTTEN FEEDBACK FROM, UH, JET ON ON THIS AUDIT.
I APPRECIATE, APPRECIATE THE TEAM, APPRECIATE THE THOROUGH WORK REGARDING THE RECOMMENDATION, AND I'M NOT TARGETING ANY PARTICULAR ONE.
UM, ANY COMMENTS OR RESPONSES? NOTICE ONE OF 'EM, WE, WE DIDN'T HAVE A TIMELINE AT THE TIME OF THE AUDIT, BUT ANY OBSERVATIONS, CITY MANAGER OR GARY ON ANY OF THE RECOMMENDATIONS THAT WERE, THAT WERE MADE HERE? ANYTHING THOUGHTS? I, I KNOW A LOT OF, UH, A LOT OF MENTION WAS MADE ABOUT OUR ENTERPRISE RESOURCE PROGRAM AND, AND SOFTWARE THAT HELPS INTEGRATE FINANCE AND PURCHASING.
AND, UM, WE'RE, WE MEET ALMOST ON A DAILY BASIS ON THOSE, ON THOSE SYSTEMS, THE WORKDAY PROGRAM THAT WE'RE IMPLEMENTING AND, AND WHICH WILL OFFER A LOT OF DIFFERENT TOOLS FOR US.
SO, UM, WE LOOK FORWARD TO CONTINUING WITH THAT IMPLEMENTATION THAT WILL HELP US, UM, STREAMLINE THE WORKFLOW, BUT ALSO JUST GIVE US SOME, UH, DATA, DATA POINTS AND ANALYSIS THAT WE HAVEN'T HAD IN THE PAST.
SO, NO, I, UH, APPRECIATE THE, APPRECIATE THE AUDIT AND, UM, I THINK IT'S, I THINK IT'S BEEN A GOOD, UH, EYE-OPENING EXERCISE FOR US.
AND, AND, AND LASTLY ON THE RECOMMENDATION THAT RELATE TO THE INTERLOCAL AGREEMENTS, UH, THERE WERE SOME FEEDBACK, SOME THINGS THAT WE WERE, WERE DOING, AND I, AND I CERTAINLY APPLAUDED AND RECOGNIZED WE'VE GOT AN AWARD-WINNING TEAM, UH, OVER THERE THAT'S DOING THIS WORK.
UM, BUT KIND OF WHERE ARE WE ON THAT PARTICULAR SECTION, UH, AS RE AS IT RELATES TO THE OBSERVATIONS AND RECOMMENDATION, LOOKING AT THOSE AGREEMENTS AND HOW THOSE, THOSE TIE IN TO, TO, TO TRACKING AND THE COMPARISON PIECE THAT WAS DISCUSSED IN THE AUDIT.
I MAY DEFER TO GARY AND PHIL IF YOU GUYS WANNA RESPOND TO THAT.
IF YOU DON'T MIND, I'LL JUST ADDRESS THAT UP REAL BRIEFLY.
WE ARE, UH, UH, CONTINUALLY, UH, LOOKING AT THE COOPERATIVE, UH, PURCHASE AGREEMENTS THAT ARE OUT THERE.
UH, WE HAD AN EMAIL THAT WAS BROUGHT TO US LAST WEEK BY THE FIRE DEPARTMENT.
SO WE ACTIVELY, UH, RESEARCH THOSE, MAKE SURE THAT THEY'RE VALID, MAKE SURE THEY MEET ALL OF THE, UH, STATE REQUIREMENTS AND THE CITY'S REQUIREMENTS AS FAR AS THE DIRECTIVES GO.
AND, UH, SO WE JUST, UH, CONTINUE TO LOOK AT THOSE AND SEEK NEW SOURCES FOR, UH, DIFFERENT COOPERATIVE PURCHASE AGREEMENTS THAT ARE OUT THERE.
AND THERE ARE SOME TOOLS AVAILABLE THAT WE CAN COMPARE THE COOPERATIVES, AND WE DO THAT ON A, UH, UH, ASNE BASIS IF THERE ARE LIMITATIONS ON THE, UH, THE NUMBER OF, UH, GOOD CONTRACTS ARE AVAILABLE FOR US TO UTILIZE.
SO WE'RE JUST CONSTANTLY LOOKING FOR, UH, BETTER WAYS TO SERVE OUR CITIZENS AND TO, UH, GET THE BEST VALUE FOR THE CITY.
THANK YOU, HARRY, SIR? YES, SIR.
THE ONLY, UH, ITEM THAT I WOULD ADD IS, I KNOW THAT THERE IS AN EMPHASIS ON WANTING TO INCLUDE LOCAL BUSINESS AS ANY, UH, OPPORTUNITY WE HAVE FOR, UH, FOR CITY PURCHASES.
AND, UH, ONE THING THAT GARY AND I DISCUSSED, OF COURSE, UH, WE'RE GOING TO ATTEMPT TO REACH OUT TO OUR LOCAL BUSINESSES, BUT THROUGHOUT THESE LOCAL INTERLOCAL AGREEMENTS COOPERATIVE AGREEMENTS, THE, THE LOCAL BUSINESSES ALSO HAVE THE OPPORTUNITY TO, TO BID IN ON THOSE PRODUCTS AS WELL TO, TO OFFER THAT SOURCING TO THE CITY AS WELL.
SO THAT'S A CONVERSATION THAT WE CAN HAVE WITH, UH, THE GROUPS SUCH AS SOURCE WELL BY BOARD TO ENSURE THAT THEY'RE REACHING OUT BEYOND THE, THE FOOTPRINT THAT THEY MAY BE NOW.
AND THEY'RE, THEY'RE REACHING OUT TO THE CITY OF GARLAND, CITY OF DALLAS, ANYBODY THAT'S OUT THERE THAT'S INTERESTED IN, UH, BEING PART OF THE COOPERATIVE AGREEMENT.
UM, YOU KNOW, NO, JUST BECAUSE THE SCOPE OF THE AUDIT WAS THE SMALLER CONTRACTS, DOES IT MAKE MORE SENSE TO RELY A LITTLE MORE HEAVILY ON THE COOPERATIVES, UH, INSTEAD OF SPENDING THE MAN HOURS TO TRY AND DO BIDS AND, AND THINGS LIKE THAT? UH, I GUESS MY POINT IS, DOES IT MAKE SENSE TO SPEND A LITTLE MORE FOR THE CONVENIENCE OF, OF PURCHASING THROUGH A COOPERATIVE AGREEMENT? UH, BECAUSE THESE ARE LOW DOLLAR VALUES INSTEAD OF DEVOTING MORE MAN HOURS, WHICH COST US MONEY AS WELL TO GETTING A SLIGHTLY BETTER DEAL IF WE BID IT OUT.
UH, WHAT, WHAT SORT OF, I'M TRYING TO TAILOR IT TO THE SCOPE OF THE AUDIT, WHICH WAS THE SMALL CONTRACTS.
AND SO THAT'S KIND OF WHERE I'M GOING.
I, I THINK PARTICULARLY, UH, YOU KNOW, THE BIGGEST CATEGORY I THINK WAS,
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UH, ONE OF THE BIGGEST CATEGORIES.IS IT THE HARDWARE AND THE SOFTWARE? YEAH.
AND THAT IS HEAVILY SOURCED THROUGH THE TEXAS DEPARTMENT OF INFORMATION RESOURCES.
THAT'S A GREAT RESOURCE FOR US TO USE FOR THOSE, UH, YOU KNOW, HIGH VOLUME, LOWER DOLLAR, UH, PURCHASES, WHICH ALLOWS US TO TRY TO KEEP THE BOND PROGRAM ON TRACK AND TO CONCENTRATE MORE ON THE CONSTRUCTION PROJECTS.
CUZ ALL THOSE ARE COM COMPETITIVELY BID.
AND WE DO HAVE A LOT OF MINORITY PARTICIPATION AS WELL AS LOCAL PARTICIPATION IN THOSE BIDS AS WELL.
SO WE TRY TO CONCENTRATE ON MORE COMPLEX, THE EVALUATED BIDS ARE AWARDED BASED ON BEST VALUE WITH THE SCORING CRI CRITERIA.
UH, JUST FREEING UP TIME FOR OUR STAFF TO FOCUS ON THE MORE COMPLEX PURCHASES, I THINK GIVES THE CITY A MUCH BETTER VALUE.
AND AS FAR AS PROFESSIONAL SERVICES AS WELL, UH, WE REALLY CAN'T TARGET LOCAL BUSINESSES ON THOSE, OR, OR COMPETITIVELY BID THOSE, CUZ IT HAS TO BE AWARDED BASED ON QUALIFICATIONS.
AND THOSE ARE TWO OF THE BIGGEST CATEGORIES.
SO WE CAN JUST KIND OF, YOU KNOW, PROCESS THOSE, UH, ROUTINELY, THEN CONCENTRATE ON THE MORE COMPLEX PURCHASES.
OH, WE, WE APPRECIATE THE VALUE YOU GUYS DELIVER CONSISTENTLY.
UM, SECOND QUESTION, I GUESS IS SLIGHTLY IN SCOPE, SLIGHTLY OUTTA SCOPE OF, OF WHAT WE'VE TALKED ABOUT HERE.
WE KNOW THAT THE HUB COUNTS ARE GENERALLY PRETTY ABYSMAL, UH, AS FAR AS, UH, THE NUMBER OF BUSINESSES THAT ARE REGISTERED.
AND, YOU KNOW, WE, WE DO HAVE A PARTNERSHIP WITH OUR CHAMBER OF COMMERCE AND, UH, I DON'T KNOW IF WE'VE EVER LOOKED AT TRYING TO GET SOME SORT OF GRANT BASED PROGRAM TO OUR CO C TO, UH, TRY AND HELP DRIVE THOSE NUMBERS UP OR, OR REEVALUATING WHAT IT TAKES TO GET MORE HUBS IN THE DOOR.
BUT I ALWAYS FEEL LIKE OUR, OUR, YOU KNOW, OUR PERCENTAGES OF HUB ENGAGEMENT ARE FINE, IT'S JUST THE PERCENTAGE REGISTERED IS NOT FINE BASED ON THE NUMBER OF BUSINESSES IN THE COUNTY.
AND SO I'D, I'D ASK THAT WE LOOK FROM A, A PARTNERSHIP PERSPECTIVE TO SEE IF WE CAN LEVERAGE SOME OF OUR OUTSIDE PARTNERS TO HELP DRIVE THAT, THAT REGISTRATION.
JUST AN IDEA FOR GOING FORWARD.
AND HAVING JUST FINISHED A RESEARCH STATISTICS FINAL, I HAVE A, AN ENORMOUS AMOUNT OF APPRECIATION FOR WHAT I SAW IN THE PRESENTATION TODAY.
AND I, I FEEL THE PAIN OF THE
UM, I THINK THAT'S ALL I'VE GOT.
LET'S MOVE ON TO ITEM NUMBER THREE, CASH COUNT AUDIT.
READY? OOPS, YOU'RE TURNED OFF.
SO THIS IS, UH, IF YOU, IF YOU REMEMBER, PRIOR TO, PRIOR TO COVID, WE USED TO DO THIS ON A ROUTINE BASIS, UH, THIS AUDIT.
BUT, UH, AFTER COVID, UH, WE, WE STARTED BACK LAST YEAR.
UM, BASICALLY WE JUST WANTED TO GO AROUND AND MAKE SURE THAT OUR CITY DEPARTMENTS, UH, ARE IN COMPLIANCE WITH THE CITY DIRECTIVES AND POLICIES WHEN IT COMES TO CASH HANDLING AS WELL AS CASH IS SECURED AND HAPPY TO REPORT THAT FOR THE MOST PART.
UH, THE 12 DEPARTMENTS THAT WE VISITED, THIS WAS A SURPRISE AUDIT, UH, AND THEY WERE IN COMPLIANCE.
WE DID NOT IDENTIFY ANY MAJOR OVERAGES OR SHORTAGES.
UH, WE, WE LIKE TO HAVE THIS KIND OF REPORT, UH, UH, RATHER THAN COME FINDING OUT THAT, YOU KNOW, THERE'S SOME KIND OF MAJOR FRAUD OR SOMETHING LIKE THAT.
THE PURPOSE OF THIS IS TO PROMOTE INTERNAL CONTROLS AND PROMOTE, PROMOTE GOOD PRACTICES.
SO, UM, SO LIKE I SAID, THIS WAS A SURPRISE CASH CAM.
WE WENT TO 12 DEPARTMENTS, ALEX AND AARON, UM, LED THIS AUDIT.
SO I'M GONNA TURN THIS OVER TO THEM, UH, NO MEASURE, UH, FINDINGS, BUT WE DID HAVE SEVERAL, UH, RECOMMENDATIONS TO ENHANCE INTERNAL CONTROLS.
AND JUST FOR THE RECORDING, I REMEMBER AT THE LAST CASH COUNT AUDIT, UH, WE HAD FALLEN OFF, UM, OF OUR NORMAL PROCEDURES DUE TO COVID.
UH, AND I BELIEVE WE SICKED, UH, MITCH BATES ON EVERYBODY AND GOT THEM ALL BACK INTO LINE.
SO I'M, I'M GLAD WE'RE BACK ON TRACK THERE.
BUT, UH, TURN IT OVER TO Y'ALL.
SO JUST TO GIVE A REFRESHER, UM, CHANGE FUNDS ARE, UH, THE FUNDS THAT DEPARTMENTS MAY KEEP ON HAND TO BE ABLE TO, TO GIVE CASH CHANGE TO CUSTOMERS WHO PAY SERVICE AND FEES.
UM, SO THAT DEPARTMENT'S RESPONSIBLE FOR RECONCILING AND SECURING THAT CASH.
UM, PETTY CASH IS USED FOR SMALL AUTHORIZED REIMBURSEMENTS UNDER A HUNDRED THOUSAND DOLLARS, SUCH AS, YOU KNOW, SMALL PARKING OR TRAVEL EXPENSES, UM, AND A CUSTODIANS ASSIGNED TO THAT FUND.
AND ALSO RESPONSIBLE FOR RECONCILING, ISSUING VOUCHERS, KEEPING ORIGINAL RECEIPTS, AND, UM, REPLENISHING WITH FINANCE WHEN IT'S NEEDED.
SO, UM, THE DEPARTMENTS WE AUDITED WERE A MIX OF THESE.
SOME HAD CHANGED FUNDS, SOME HAD PETTY CASH AND SOME HAD BOTH.
UM, SO AS JED MENTIONED, UH, WE DIDN'T FIND ANY SIGNIFICANT OVERAGES OR SHORTAGES.
UM, AND ALL LOCATIONS WERE GENERALLY COMPLIANT WITH THE DIRECTIVES, UM, OR, UH, IDENTIFY CASH HANDLING WEAKNESSES THAT WE DO NEED TO ADDRESS.
UM, BUT BEFORE ALEX AND I GET INTO THAT, I WANNA SAY THAT ALL OF THE DEPARTMENTS THAT WE WORKED WITH WERE VERY FACILITATIVE AND RESPONSIVE.
UM, SOMETIMES IT'S A ONE AND DONE.
WE GO IN, WE GET WHAT WE NEED, AND SOMETIMES WE HAVE TO STEP BACK AND GO BACK TO THEM AND CLARIFY THINGS AND EVERYONE WAS,
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WAS REALLY EASY TO WORK WITH.SO, UM, I'M GONNA BE BEGIN BY COVERING, UM, THE CASH HANDLING WEAKNESSES THAT APPLY TO BOTH OF THE FUNDS, AND THAT'S UNDER THE ALL FUNDS CATEGORY.
UM, AND I WANNA ALSO GO AHEAD AND MENTION THAT ALL THE RESPONDING LOCATIONS THAT I'M, WE'RE GONNA TALK ABOUT CONCURRED WITH THESE RECOMMENDATIONS.
SO FOR THE FIRST ONE, WE FOUND THAT EVERY CASH HANDLER AT LOCATION B KNOWS THE COMBINATION TO THE SAFE, WHICH HOLDS THE CHANGE FUND, THE PETTY CASH FUND, AND CUSTOMER PAYMENTS.
SO WE'VE RECOMMENDED THAT LOCATION B ACQUIRED DROP SAFE TO RESTRICT FUND ACCESS TO THOSE ABSOLUTELY NECESSARY.
MANAGEMENT RESPONDED THAT A NEW DROP SAFE WILL BE ACQUIRED AS RECOMMENDED FOR THE SECOND ONE, THERE'S NO SECURITY CAMERA COVERAGE OF THE SAFE AREA AT LOCATION B.
SO WE'VE RECOMMENDED LOCATION B CONSIDER INSTALLING SECURITY CAMERAS FOR ADDED COVERAGE OF THE SAFE AND CASH HANDLING AREAS.
MANAGEMENT RESPONDED THAT WORK ORDERS HAVE BEEN PLACED FOR CAMERA INSTALLATION FOR THE THIRD FINANCES LEAD CUSTODIANS LIST IS NOT, DOES NOT CONTAIN THE CURRENT DESIGNATED CUSTODIANS FOR LOCATIONS A, B, E, AND G.
SO WE'VE RECOMMENDED THAT EACH LOCATION ENSURE THEIR LEAD OR THEIR MAIN CUSTODIANS ARE COMMUNICATED TO FINANCE TIMELY.
UH, MANAGEMENT RESPONDED, UH, THAT THE CURRENT CUSTODIAN'S INFORMATION WILL BE PROVIDED TO FINANCE CASH HANDLING AGREEMENTS WERE NOT EXECUTED FOR ONE CASH HANDLER AT LOCATION B THREE CASH HANDLERS AT LOCATION C FOUR CASH HANDLERS AT LOCATION E AND ONE CASH HANDLER AT LOCATION F WE'VE RECOMMENDED EACH LOCATION ENSURE ALL CASH HANDLERS EXECUTE AGREEMENTS WITH THE APPROPRIATE FUNDS AND DUTIES AND DOLLAR AMOUNTS AND SUBMIT TO FINANCE.
TIMELY MANAGEMENT RESPONDED THAT ALL CASH HANDLING AGREEMENTS WILL BE REVIEWED FOR COMPLIANCE AND FUTURE AGREEMENTS WILL BE SIGNED IMMEDIATELY UPON POSITION AND FUND CHANGES.
SO NOW I'M GONNA GO INTO CHANGE FUND LOCATION A'S SAFE COMBINATION WAS NOT CHANGED AFTER A CASH HANDLER WHO KNEW THE COMBINATION RELINQUISHED THEIR CASH HANDLING DUTIES.
WE'VE RECOMMENDED LOCATION A ENSURE SAFE COMBINATIONS ARE CHANGED WHEN THERE'S A CHANGE IN CASH.
HANDLERS MANAGEMENT RESPONDED EXPLAINING THE SAFE COMBINATIONS ARE IN THE PROCESS OF BEING UPDATED AT ALL LOCATIONS AND WILL BE UPDATED ANYTIME.
THERE'S A CHANGE IN CASH HANDLERS FOR INDIVIDUAL LOCATIONS.
ONE CASH HANDLER IS RESPONSIBLE FOR ACCEPTING CUSTOMER PAYMENTS, RECONCILING ALL CASHIERS DAILY INTAKE, AND PREPARING THE DEPOSIT AT LOCATION B.
THIS PROCESS LACKS SEGREGATION OF DUTIES WE'VE RECOMMENDED LOCATION B, ENSURE CASH INTAKE, RECONCILIATION AND DEPOSIT PROCEDURES ARE SEGREGATED AMONG DIFFERENT PERSONNEL AND ENSURE EACH PERSON HAS THE ABILITY TO GENERATE THEIR OWN SYSTEM VERIFICATION REPORT IF UNABLE TO SEGREGATE DUTIES, IMPLEMENT COMPENSATING CONTROLS SUCH AS MANAGEMENT INDEPENDENTLY GENERATING SYSTEM REPORTS AND VERIFYING DEPOSITS.
MANAGEMENT RESPONDED THAT CASH INTAKE, RECONCILIATION AND DEPOSIT PROCEDURES WILL BE SEGREGATED AMONG DIFFERENT PERSONNEL AND EACH PERSON WILL HAVE THE ABILITY TO GENERATE THEIR OWN SYSTEM.
REPORT MANAGEMENT WILL ALSO PERFORM RANDOM VERIFICATIONS OF DEPOSITS EACH MONTH.
LOCATION E IS NOT DOCUMENTING VERIFICATIONS OF THE DAILY STARTUP CASH AND END OF DAY CUSTOMER PAYMENT RECONCILIATION.
WE'VE RECOMMENDED LOCATION E ENSURE DAILY RECONCILIATION VERIFICATION IS DOCUMENTED.
MANAGEMENT RESPONDED THAT FORMS TO DOCUMENT THE VERIFICATION OF THE STARTUP CASH WILL BE USED AND SUBMITTED WEEKLY INTO THEIR TRACKING SYSTEM.
THE SUPERVISOR WILL VERIFY THE FUNDS IN EACH DRAWER AND THE SAFE ON MONDAY.
ON SUNDAY, THE SUPERVISOR WILL SIGN OFF ON EACH DRAWER AND MOVE THE DRAWER FUNDS TO THE SAFE AND ENSURE EACH DRAWER HAS THE ESTABLISHED STARTUP AMOUNT.
CASHIERS WILL VERIFY DRAWERS AT THE BEGINNING AND END OF THEIR SHIFTS USING THE DAILY CASH COUNT FORM.
A PORTION OF THE CHANGE FUND IS NOT SECURED DURING BUSINESS HOURS AT LOCATION F WE'VE RECOMMENDED LOCATION F ENSURE THAT THE CASH IS SECURED AT ALL TIMES.
MANAGEMENT RESPONDED THAT ALL CHANGE FUND, INCLUDING ROLLED COIN, WILL BE SECURED IN A LOCK, SAFE OR CABINET WHEN NOT IN USE LOCATION.
OFFICE LACKS SECURITY CAMERA COVERAGE.
WE RECOMMENDED LOCATION H CONSIDER INSTALLING SECURITY CAMERAS FOR ADDED COVERAGE OF THEIR SAFE AND CASH HANDLING AREAS.
MANAGEMENT RESPONDED THAT WORK ORDERS HAVE BEEN PLACED FOR CAMERA INSTALLATION.
NO METHODS ARE USED FOR DETECTING COUNTERFEIT BILLS AT LOCATION B AND H.
WE'VE RECOMMENDED THESE LOCATIONS IMPLEMENT METHODS FOR DETECTING COUNTERFEIT CURRENCY.
MANAGEMENT RESPONDED THAT MONEY MARKERS ARE BEING DETECTED FOR COUNTERFEIT ARE BEING, SORRY, ARE BEING ORDERED FOR, UM, DETECTING COUNTERFEIT CURRENCY.
AND I'LL LET ALEX COVER PETTY CASH.
AND AT, AT, UH, LOCATION G THE, THE, UM, APPROPRIATE MANAGEMENT APPROVAL WAS NOT BEING
[00:30:01]
OBTAINED FOR RECONCILIATIONS PRIOR TO, TO REIMBURSEMENTS.AND THEIR, OUR RECOMMENDATION WAS FOR THEM TO ENSURE THAT CUSTODIANS ARE NOT REIMBURSING PETTY CASH EXPENSE EXPENSES OR SUBMITTING REIMBURSEMENT REQUEST BEFORE THEY OBTAIN THAT, UH, THAT APPROVAL.
AND THE ACTION PLAN FOR THIS WAS THAT THEY SAID THAT ALL STAFF WILL BE INSTRUCTED TO OBTAIN THE MANAGER OR DESIGNEES WRITTEN APPROVAL BEFORE OR FOR ANY OF THOSE PETTY CASH EXPENSES THAT THEY'RE WANTING REIMBURSED.
UM, AND THE PETTY CASH CUSTODIAN WILL BE INSTRUCTED TO NOT PERFORM OR NOT TO REIMBURSE THOSE EXPENSES WITHOUT THAT, UM, WRITTEN APPROVAL.
AND THE MANAGER AND DESIGNEE WILL VERIFY THE PETTY CASH BALANCE AND REIMBURSEMENT DOCUMENTATION DURING THE QUARTERLY RECONCILIATION.
AND DURING THAT, THEY'LL ALSO MAKE SURE TO APPROVE ALL REPLENISHMENT REQUEST FOR THE NEXT LOCATION.
F WE SAW THAT THE PETTY CASH FUND WAS BEING USED FOR TO USE FOR CHANGE, AND OUR RECOMMENDATION FOR THIS WAS FOR THEM TO CONSIDER ELIMINATING OR REDUCING THE PETTY CASH FUND IF THEY'RE NOT USING THAT, AND ALSO ADJUST THE CHANGE FUND.
AND THEY, THEY STATED THAT THEY WILL, UM, REMOVE THE PETTY CASH FUND DUE TO THE LACK OF USE AND THEY WILL INCREASE THEIR CHANGE FUND AMOUNTS.
THEN THE NEXT ISSUE WE HAD WAS FOR LOCATIONS B AND D, THEIR CUSTODIANS HAVE NOT RECONCILED THEIR PETTY CASH IN OVER EIGHT AND 12 MONTHS RESPECTIVELY.
OUR RECOMMENDATION FOR THIS WAS FOR THEM TO ENSURE THAT PETTY CASH IS BEING RECONCILED QUARTERLY AND THEIR ACTION PLAN SAYS THAT THEY WILL RECONCILE THEIR PETTY CASH AT LEAST ONCE PER QUARTER.
AND THEN FINALLY AT LOCATION B, WE SAW THAT THE REIMBURSEMENT RECEIPTS WERE OUT, UH, OR WERE BEING ISSUED OUT OF ORDER, AND THAT THEY WERE USING THREE SEPARATE RECEIPT BOOKS AND ONE OF THOSE REIMBURSEMENTS WERE ISSUED WITHOUT A NUMBERED RECEIPT.
AND OUR ACTION, OUR RECOMMENDATION FOR THIS WAS FOR THEM TO MAKE SURE THAT EACH REIMBURSEMENT IS ISSUED WITH A NUMBERED RECEIPT AND THAT THEY'RE IN SEQUENTIAL ORDER.
AND THEIR ACTION PLAN FOR THIS WAS THAT THEY'LL ENSURE THAT EACH REIMBURSEMENT IS ISSUED A NUMBERED RECEIPT AND IN SEQUENTIAL ORDER.
JUST JUST THREE QUICK QUESTIONS.
THANK YOU AGAIN FOR THE, FOR THE WORK THAT YOU, YOU GUYS DO.
UM, MY, MY FIRST QUESTION IS, THIS IS A GENERAL, THE GENERAL QUESTION.
UM, DO WE HAVE, DO WE, LET ME REPHRASE THIS.
WHAT IS OUR PROTOCOL FOR, OR DID Y'ALL DEFINE WHAT IS OUR PROTOCOL FOR CHAIRMAN WHO HAS ACCESS TO THE SAFES? HOW IS THAT DETERMINED? DO WE KNOW OR IS THAT, HOW IS THAT ASSIGNED? HOW IS THAT PERSON IDENTIFIED? WELL, UM, I WOULD SAY ANYONE WHO, UM, HAS ACCESS TO CASH NEEDS TO HAVE A CASH HANDLING AGREEMENT ON FILE WITH FINANCE.
UM, AS FAR AS BEING THE DESIGNATED CUSTODIAN, UM, THAT PERSON SHOULD KNOW WHO HAS ACCESS TO THAT CASH.
UM, BUT TYPICALLY FOR SOMETHING LIKE PETTY CASH, WE WANT THAT CUSTODIAN ONLY THAT'S ASSIGNED TO PETTY CASH TO HAVE ACCESS TO IT.
MY, MY SECOND QUESTION IS FOR THE CUSTODIAN, IS THERE ANY, IS THERE ANY KIND OF CLEARANCE, UH, AND I'M NOT GONNA USE THE 10%, BUT IT THERE'S ANY KIND OF CLEARANCE OR SCREENING FOR THAT PERSON WHO THIS CUSTODIAN WHO HAS ACCESS TO THAT? OR IS IT JUST KIND OF OTHER DUTIES THAT'S ASSIGNED? IS THERE ANY KIND OF STREAMING FOR THAT PERSON WHO'S DESIGNATED AS YOUR CUSTODIAN? UH, COUNCILMAN COUNCILMAN, MY UNDERSTANDING
[00:35:01]
IS THE MANAGING DIRECTOR HAS TO APPROVE.SO THE WHO, THE CA CASH CUSTODIAN THE LEAD CUSTODIAN IS.
SO IT HAS TO BE APPROVED BY THE MANAGER OF THE DEPARTMENT.
THEN IT GOES ALL THE WAY TO THE MANAGING DIRECTOR.
SO THE MANAGING, UH, I'M NOT AWARE IF, IF, IF THEY CHECK ANY KIND OF BACKGROUND.
I DON'T THINK THEY DO OTHER THAN WHEN, WHEN THEY BRING 'EM ON BOARD.
BUT MANAGING DIRECTOR HAS TO APPROVE AND DESIGNATE SOMEBODY AS A LEAD CASH CUSTODIAN.
I THINK MATT, YOU HIT OH, THAT, THAT'S ACCURATE.
MANAGING DIRECTORS HAVE TO APPROVE THE CUSTODIAN, UH, WHEN THEY'RE ONBOARDING, ONBOARDING WITH HR.
THERE USUALLY IS A BACKGROUND CHECK AT THAT TIME, ESPECIALLY FOR PEOPLE THAT ARE HANDLING CASH, BUT THERE IS NOT A, A CLEARANCE OR BACKGROUND CHECK FOR WHEN THEY ARE DESIGNATED.
IT'S A MANAGING DIRECTOR SIGN OFF.
I'D LIKE TO LEAVE THAT, THAT OUT THERE FOR CONSIDERATION, THAT WE DO TWO STEP, CONSIDER DOING A TWO STEP WHEN THAT DESIGNATION IS MADE BY, BY THE MANAGING DIRECTOR.
UH, THE SECOND THING IS, I NOTICED YOUR RECOMMENDATION ABOUT THE LACK OF CAMERAS THAT'S BEING TAKEN.
MY, MY MY OTHER QUESTION HAS TO DO WITH, IS THE PERSON WHO IS A CUSTODIAN WHO ACTUALLY OPENS THE SAFE, IS THAT THE SAME PERSON THAT VERIFIES HOW MUCH IS IN THE SAFE? OR IS THAT TWO DIFFERENT DUTIES? OR IS THAT TWO DIFFERENT PEOPLE? IS ONE PERSON PULLING OUT GO TO THE SAFE? IS THAT'S THE SAME PERSON WHO COUNTS TO VERIFY WHAT'S IN THE SAFE? OR IS THAT, HOW, IS, WHAT'S THAT PROCESS LOOK LIKE? I, I WOULD SAY IT DEPENDS, UH, ON THE AMOUNT OF CASH THAT THEY HAVE, UH, IN THEIR CUSTODY AND THE RESOURCES THAT THEY HAVE AVAILABLE.
UH, SO SOME SMALLER DEPARTMENTS, IT COULD BE THE SAME PERSON.
THEN WE ALWAYS LOOK FOR A COMPENSATING CONTROL.
MEANING IF THAT PERSON IS THE ONE WHO'S, WHO HAS THE CUSTODY AND WHO'S COUNTING EVERY DAY, IS THERE A MANAGEMENT APPROVAL? IS SOMEBODY RUNNING A REPORT AFTER THE FACT AND DOUBLE CHECKING THAT WHAT'S IN THE SYSTEM OR WHAT WE HAVE TAKEN, WHAT HAS BEEN DEPOSITED? IS THERE A THREE-WAY RECONCILIATION? OKAY.
UM, SO, UM, BUT IN, IN, IN A BIGGER DEPARTMENT, FOR EXAMPLE, CUSTOMER SERVICE, THEY CAN PROPERLY SEGREGATE IT MM-HMM.
BUT A SMALLER DEPARTMENT, THEY MAY NOT BE ABLE TO DO THAT, BUT THEN WE WILL ASK FOR WHAT KIND OF COMPENSATING CONTROL THAT YOU HAVE.
SO IT'S NOT STANDARDIZED THROUGHOUT THE CITY.
UH, BUT, UM, WE ALWAYS LOOK FOR OTHER CONTROLS.
BUT ON THE SMALLER ACCOUNTS MM-HMM.
THAT'S, THAT'S PRETTY MUCH LEFT UP TO AN INDIVIDUAL.
AND, AND AS FAR AS THE ACCOUNTING AND THE VERIFICATION, THERE'S NO STANDARD VERIFICATION PARTICULARLY, UH, ON THE SMALLER ACCOUNTS, IS IT PRETTY MUCH A ONE, ONE PERSON OPERATION? UM, IT, IT CAN BE ONE THING I WILL LET YOU KNOW, FINANCE DOES, UH, A RECONCILIATION BETWEEN WHAT'S IN THE, IN THE GL OR WHAT'S IN OUR FINANCE SYSTEM TO BANK.
SO THEY DO THAT BANK RECONCILIATION BACK TO THE FINANCE SYSTEM.
WHAT WE USUALLY ASK WHO DOES A RECONCILIATION BETWEEN THE DEPARTMENTAL SYSTEM TO WHAT'S IN THE FINANCE SYSTEM, BECAUSE WE KNOW THIS SIDE IS ALREADY TAKEN CARE WHAT IS HAPPENING HERE.
SO, UH, AND, AND, UH, THAT'S ANOTHER REASON WHY WE ACTUALLY, WHEN WE DO THE CASH COUNTS, WE RUN VOID REPORTS, CANCEL REPORTS, UM, YOU KNOW, UH, GAPS.
UH, WE, AND WE TRY TO DO THREE RARE RECONCILIATIONS AS WELL.
OF COURSE, WE ARE NOT THE PRIMARY CONTROL, WE ARE ONLY THERE ONCE IN WHILE, BUT WE DO ASK THOSE QUESTIONS.
IS THERE SOMEONE ELSE LOOKING AT IT? UM, AND SO AT LEAST, UH, UH, FOR SMALLER DEPARTMENTS, IF THEY'RE NOT TAKING A LOT OF MONEY, UH, AT LEAST PERIODICALLY, MAYBE MONTHLY, UH, IS SOMEBODY RECONCILING IT? OKAY.
WELL, APPRECI APPRECIATE THAT.
AND I, AND I DON'T RAISE THAT POINT BECAUSE I'M AWARE OF IN SOME OTHER CITIES, UM, WHERE SOME ISSUES HAVE, HAVE ARISEN WITH PEOPLE HANDLING CASH.
AND USUALLY MOST OF THOSE ISSUES BEGIN WITH VERY SMALL AMOUNTS OVER SORT OF TRICKLING DOWN, TRICKLING, YOU KNOW, RAINDROPS KEEP ENOUGH, RAINDROPS FALL IN THE BUCKET, THEY'LL EVENTUALLY FILL IT UP, BUT IT'S ONE DROP AT A TIME.
AND I KNOW SITUATIONS AND CITIES THAT BEGAN WITH VERY SMALL KIND OF THINGS, AND THEN THEY, THEY, THEY GREW AND THEY, THEY MAROONED.
SO THAT'S, THAT'S WHY RAISE RAISED THIS BECAUSE, UH, AND, AND I KNOW TWO OF THOSE SITUATIONS, UH, YOU KNOW, THE EXPLANATION
[00:40:01]
WAS IT WAS A SMALL, SMALL, SMALLER CITY, AND, UH, THERE WAS A LOT OF QUOTE, TRUST.AND SO, BUT ONE THING LETS YOU ANOTHER.
SO THAT'S, THAT'S, THAT'S SORT OF WHAT'S, WHAT'S DRIVING MY THINKING ON THIS, THAT EVEN WITH WHAT WE CONSIDER SMALL AMOUNTS, ABSOLUTELY.
THAT, AND I THINK, AND, AND I THINK THAT'S IN THE BEST INTEREST OF, OF, OF, OF ALL EMPLOYEES.
YOU KNOW, AND THIS IS CERTAIN, IT, IT IS, IT'S JUST NOT ACCUSATORY OR ANYTHING LIKE THAT.
YOU KNOW, I, I'M INTERESTED IN PROTECTING OUR EMPLOYEES, YOU KNOW, AND I THINK EVEN, AND, AND SOMETIMES I THINK WE IN THOSE CITIES, AND, UH, I CAN GIVE YOU SOME SPECIFICS, JED, WHEN WE TALK, BUT, BUT I WON'T MENTION 'EM HERE.
BUT THAT'S THE WAY IT EVOLVED AND IT BECAME A REAL, UH, A REAL ISSUE BECAUSE, UH, UH, IT HAD TO DO WITH LONGEVITY OF SOME EMPLOYEES.
AND, UH, ONE THING LED TO THE OTHER.
SO THAT'S REASON THAT I THINK TO PROTECT OUR, OUR, OUR CITY AND PROTECT OUR EMPLOYEES, THAT WE HAVE SOME MEASURES IN PLACE, PARTICULARLY WHEN YOU'RE DEALING WITH CASH, UH, THAT, SO THAT WE DON'T, UM, UH, SO TO ENSURE THAT WE, THAT WE DON'T, UH, HA UH, SET UP POTENTIAL FOR SITUATIONS TO HAPPEN.
AND A LOT OF TIMES IT'S UN IT'S NOT INTENTIONAL.
THINGS JUST HAPPEN OVER, OVER TIME.
AND THEN, THEN, THEN THE FLAMES FINALLY, FINALLY BREAKS THROUGH AND AS A FIRE.
SO THAT, THAT'S, THAT'S SORT OF BEHIND MY THOUGHT.
UM, I'VE JUST GOT ONE QUICK SUGGESTION.
UM, IF WE'RE DOING THE QUARTERLY RE UH, RECONCILIATIONS, UH, AT LEAST IN, IN MY PRIVATE SECTOR ORGANIZATION, YOU KNOW, WE WOULD UPDATE OUR LISTS AT THE SAME TIME FOR OUR CUSTODIANS, AND WE WOULD ALSO CHANGE A SAFE CODE ON THAT SAME QUARTERLY CYCLE.
AND THE REASON IS, IF SOMEBODY SHARED A SAFE CODE OR SOMEBODY'S LOOKED OVER SOMEONE'S SHOULDER, UH, YOU MIGHT NOT WANT TO WAIT UNTIL THERE'S A CHANGE IN CUSTODIANSHIP, BUT YOU MIGHT WANT TO GO AHEAD AND HAVE JUST LIKE ON YOUR, YOUR LAPTOP PASSWORD.
IT'S, IT'S A QUARTERLY OR A 90 DAY CHANGE AND A PHYSICAL ASSET'S NO DIFFERENT FROM AN ELECTRONIC ASSET IN THAT RESPECT.
SO, UH, WHAT WOULD HIGHLY RECOMMEND THAT WE, WE GET ON SOME CADENCE OR FOR, UH, SAFE CODE CHANGES? UH, AND THAT'S ALL.
AND I'M ASSUMING LOCATION B IS A SMALL DEPARTMENT, UM, MEDIUM KIND OF, YEAH.
AND NOT A BIG DEPARTMENT, BUT IT JUST SEEMED WELL, UH, ONE PERSON HAD A LOT OF THE WORK TO DO AND YEAH, ACTUALLY THEY, THEY, THEY DO HAVE THE STAFF TO DO IT.
ANYTHING ELSE ON THIS ITEM? OKAY, LET'S MOVE ON TO ITEM FOUR.
SIR, MAY I MAKE A COMMENT BEFORE WE GO INTO EXECUTIVE SESSION? OF COURSE, PLEASE.
UH, CHAIRMAN, I KNOW THIS IS YOUR LAST AUDIT COMMITTEE MEETING, UH, AS BEING THE CHAIR.
UH, I JUST WANT TO TAKE A MOMENT TO SAY HOW MUCH WE APPRECIATE YOU, UH, FOR THE SUPPORT AND, AND ESPECIALLY FOR READING ALL THE REPORTS, EVEN WHEN YOU'RE ON VACATION
NOW, SERIOUSLY, UM, THANKS A LOT, UH, FOR ALL YOUR SUPPORT TO MYSELF, MY TEAM, AND, AND I KNOW HOW MUCH YOU CARED FOR ALL THE INTERNAL CONTROLS THROUGHOUT THE CITY.
HOPEFULLY YOU'LL CONTINUE TO READ OUR REPORTS AND PROVIDE THE FEEDBACKS.
I APPRECIATE THE KEN AWARDS, SIR.
OKAY, UH, ITEM NUMBER FOUR, UH, THIS COMMITTEE WILL MOVE INTO EXECUTIVE SESSIONS.
THIS IS FOR THE GP L RISK OVERSIGHT COMMITTEE BRIEFING FOR SECTION 5 51 8 6 IN SECTION 5 52 1 13 OF THE TEXAS GOVERNMENT CODE COMPETITIVE MATTERS.
UH, WE WILL RECESS UNTIL 2:20 PM THANK YOU.