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OKAY,

[00:00:01]

GOOD EVENING.

MY NAME IS ED MOORE

[Audit Committee Meeting on September 5, 2023.]

AND, UH, I AM THE CHAIR.

IT WOULD APPEAR OF THE AUDIT COMMITTEE, AND I'M VERY GLAD TO BE HERE.

THIS IS MY FIRST MEETING, UH, AS THE CHAIR.

I HAVE, UH, BEEN PART OF THIS COMMITTEE, UH, ON DIFFERENT OCCASIONS IN THE PAST, AND SO IT'S NOT COMPLETELY FOREIGN TO ME, BUT I WANT YOU TO KNOW THAT, UH, THERE ARE SEVERAL OF US TONIGHT, THIS EVENING THAT ARE FIRST, IF YOU ARE FIRST, JUST KIND OF RAISE YOUR HAND.

IF THIS YOUR FIRST MEETING, RAISE YOUR HAND IF IT'S YOUR FIRST MEETING.

WHERE YOU AT? I SEE.

LOOK AT YOU, MITCH.

PUT YOUR HAND DOWN.

OKAY.

I WANNA WELCOME ALL YOU FIRST TIMERS.

OKAY? AND DO KNOW THAT WE'RE IN VERY CAPABLE AND COMPETENT HANDS.

UH, WE HAVE A STAFF HERE THAT IS READY, WILLING, AND ABLE TO ASSIST US TO GET THROUGH THIS, AND THAT'S WHAT IT'S ALL ABOUT.

SO, WITH THAT, WE HAVE A VERY CHALLENGING, A VERY CHALLENGING, UH, AGENDA AHEAD OF US THIS EVENING, AND A VERY CHALLENGING DAY.

SO, WITHOUT FURTHER ADO, LET'S GET INTO OUR MEETING.

UH, FIRST THING ON THE, UH, MEETING, UH, ON OUR IS TO APPROVE THE MINUTES OF THE APRIL 27TH, UH, MEETING I HAVE WITH ME.

THIS, UH, EVENING, OUR COMMITTEE, UH, MEMBERS, MR. CHRIS OTT FROM DISTRICT EIGHT, AND, UH, BJ WILLIAMS FROM DISTRICT FOUR.

UH, GENTLEMEN, IF YOU'VE HAD OPPORTUNITY TO READ THE MINUTES, I'LL TAKE A MOTION.

MR. CHAIRMAN, I'D LIKE TO MAKE A MOTION THAT WE ACCEPT THE MINUTES AS THEY'RE PRESENTED, MR. CHAIRMAN.

SECOND.

OKAY.

THERE'S BEEN MOTION, AND SECOND TO ACCEPT THE MINUTES AS THEY'RE PRESENTED.

ALL IN FAVOR? AYE.

AYE.

ALL OPPOSED? AND THE MINUTES ARE ACCEPTED.

OKAY.

PUBLIC COMMENTS.

DO WE HAVE ANYONE FROM THE PUBLIC HERE TODAY WHO, UH, WOULD LIKE TO MAKE ANY COMMENTS? SEEING NONE.

LET'S MOVE NOW INTO OUR AGENDA ITEMS FOR INDIVIDUAL CONSIDERATION.

WE'LL START THIS MEETING WITH OUR WEAVER PRESENTATION, AND WE'RE GOING TO RETURN OUR MEETING AT THIS POINT OVER TO, UH, JED.

CHAIRMAN.

UM, GOOD AFTERNOON COUNSEL COMMITTEE MEMBERS.

GOOD AFTERNOON.

WE HAVE SARAH ADAM DEMPSEY, WHO'S THE PARTNER WITH WEAVER.

UM, IN FACT, ACTUALLY THIS IS THEIR 10TH YEAR, UM, BEEN WITH US.

AND SO I'M JUST GONNA TURN THIS OVER TO SARAH, UH, WHO'S GONNA GO OVER THE F I 23 AUDIT PLAN.

HOW'S THAT LOOK? OKAY, GREAT.

THANK YOU FOR HAVING ME TODAY.

MY NAME IS SARAH DEMPSEY.

I'M THE AUDIT PARTNER ON THE ENGAGEMENT.

AND REALLY WHAT I'M HERE TODAY TO TALK TO YOU ABOUT IS THE 9 30 20 23 AUDIT.

SO YOUR YEAR END IS COMING UP, AND THIS IS CONSIDERED THE PLANNING MEETING.

SO THIS IS UNLIKE THE LAST TIME I WAS HERE, WHERE IT WAS THE RESULTS.

THIS IS WHERE WE TALK THROUGH WHAT THE AUDIT COULD LOOK LIKE, WILL LOOK LIKE, AND THEN THE REQUIRED COMMUNICATIONS THAT WE HAVE WITH THE AUDIT COMMITTEE, IF THERE IS ANYTHING THAT YOU WOULD LIKE TO DISCUSS THE AUDIT APPROACH, ANYTHING LIKE THAT.

IT'S REALLY TO OPEN THOSE LINES OF COMMUNICATION BETWEEN YOU AND US BECAUSE WE REPORT TO YOU.

WE WORK WITH THE CITY TO GET THE AUDIT COMPLETED.

SO WE HAVE TO TEAM UP REALLY WELL WITH THE INTERNAL AUDIT DEPARTMENT, WITH THE FINANCE STAFF AND THE OTHER DEPARTMENTS.

BUT THAT'S MORE, YOU KNOW, TO GET THE WORK COMPLETED.

TEAMING UP.

WE, WE REPORT TO THE AUDIT COMMITTEE.

SO THAT'S WHY I'M HERE TODAY IS TO LIKE OPEN UP THOSE COMMUNICATION LINES.

SO I'LL GO THROUGH AN INTRODUCTION OF THE AUDIT PROCESS, UM, GO THROUGH THE INTERIM COMMUNICATIONS THAT WE'RE REQUIRED TO HAVE, TALK ABOUT NEW ACCOUNTING PRONOUNCEMENTS, AND THEN, UM, OPEN IT UP FOR ANY CONCERNS OR QUESTIONS THAT YOU HAVE OR HAVE MY CONTACT INFORMATION THERE SO THAT YOU CAN REACH OUT TO ME.

UM, THIS IS THE AUDIT LEADERSHIP TEAM.

SO IT HASN'T CHANGED.

I'M THE AUDIT ENGAGEMENT PARTNER AND I HAVE BEEN, CLAIRE HAS BEEN THE MANAGER.

WE STILL HAVE THE IT ADVISORY PARTNER THAT WILL COME OUT AND LOOK AT THE IT SYSTEMS, THE IT CONTROLS.

UM, WE STILL HAVE THE DATA ANALYTICS TEAM.

SO BECAUSE THERE IS SO MUCH INFORMATION THAT GOES THROUGH THE GENERAL LEDGER, UM, BASICALLY THE DEBITS AND CREDITS OF THE ACCOUNTING SYSTEM.

WE USE DATA ANALYTICS TO FILTER OUT UNUSUAL ITEMS. SO WE STILL HAVE THAT TEAM.

UM, OUR SENIOR AND THE TEAM MEMBERS HAVE NOT CHANGED.

JUST, UM, NO TURNOVER, THANK GOD.

SO , UH, THIS IS THE TIMELINE FOR THE AUDIT.

UH, WE DID INTERIM WORK IN AUGUST, SO THAT'S REALLY WHERE WE LOOK AT INTERNAL CONTROLS.

SO, UM, WE'RE LOOKING AT IT DURING THE YEAR THAT WE'RE TESTING IS, SO AUGUST OF 2023, WE CAME IN AND WE LOOKED AT THE CASH DISBURSEMENT PROCESS, THE PAYROLL PROCESS, THE TAX RECEIPT PROCESS, UTILITY BILLING.

WE GO THROUGH THOSE MAJOR TRANSACTION CYCLES.

WE'RE NOT GIVING AN OPINION

[00:05:01]

ON CONTROLS, BUT WE DO HAVE TO, UM, WALK THROUGH THOSE KEY CONTROL PROCESSES TO MAKE SURE THAT THEY'RE OPERATING AS DESIGNED AND THAT IN THOSE AREAS, THE NUMBERS WOULD BASICALLY FLOW THROUGH TO THE FINANCIAL STATEMENTS AND BE MATERIALLY CORRECT, BECAUSE THAT'S WHAT, THAT'S WHAT THIS EXTERNAL AUDIT IS, IS MAKING SURE THAT YOUR FINANCIAL STATEMENTS AT YEAR END ARE MATERIALLY CORRECT.

UM, AND THEN JUST GOING BACK, WE'LL COME BACK AND DO THE AUDIT AFTER YEAR END.

WE'LL COME BACK AROUND JANUARY AND THAT'S WHEN WE'RE TESTING THOSE 9 30, 20, 23 BALANCES.

AND THEN WE'LL DO THE PRESENTATION IN MARCH FOR THE RESULTS.

SO OUR AUDIT, OUR AUDIT PROCESS IS ALWAYS RISK-BASED.

IT'S A RISK-BASED APPROACH.

IT'S NOT THE SAME THING EVERY YEAR, ALTHOUGH THERE ARE SOME THINGS THAT WON'T CHANGE.

WE WILL ALWAYS TEST CASH, THE BANK RECONCILIATIONS, THINGS LIKE THAT.

BUT WE ALSO LOOK AT A RISK-BASED APPROACH TO SEE WHAT NEW TRANSACTIONS HAPPEN DURING THE COURSE OF THE YEAR.

SO WE'LL READ THE COUNCIL MINUTES AND WE'LL LOOK THROUGH THE GL TO SEE IF THERE WERE ANY LARGE TRANSACTIONS THAT OCCURRED.

SO, UM, A RISK-BASED APPROACH.

WE'LL ALSO LOOK FOR NEW AND UNUSUAL ITEMS AS WELL, UM, ALONG WITH TESTING SOME OF THOSE, UM, SIGNIFICANT RISKS.

SO WE, UH, LOOK AT OVERSTATEMENT OF REVENUE AS A RISK TO ALL OF OUR GOVERNMENTS, UH, MEANING THAT MANAGEMENT, UM, MIGHT WANT TO, UH, MAKE REVENUES APPEAR BETTER THAN THEY ARE.

AND SO THAT'S CALLED THE RISK OF OVERSTATEMENT OF REVENUE.

SO THAT'S GOING TO BE A RISK.

WE'LL LOOK AT UTILITY BILLING, UM, THE ELECTRIC UTILITY, UM, THOSE AREAS JUST TO, TO CHECK ON THE REVENUE RECOGNITION PROCESS.

UH, LONG-TERM DEBT CAPITAL ASSETS, UM, INVESTMENTS.

SO SOME AREAS THAT, THAT WE LOOK AT THAT WE CONSIDER TO BE SUSCEPTIBLE TO RISK.

ALWAYS MANAGEMENT OVERRIDE OF CONTROLS, WHICH IS BASICALLY BEING ABLE TO POST A JOURNAL ENTRY THAT WASN'T APPROVED.

SO WHERE MANAGEMENT COULD GO IN OVERRIDE CONTROLS AND POST A JOURNAL ENTRY THAT DOESN'T HAVE SUPPORT OR COULD MATERIALLY MISSTATE THE FINANCIAL STATEMENTS.

SO THAT'S JUST A RISK THAT WE SEE ON ALL OF OUR GOVERNMENTS.

IT'S NOT ANYTHING WHERE SOMETHING HAS HAPPENED AT GARLAND.

THOSE ARE JUST OUR SIGNIFICANT RISKS WHEN WE'RE IN THE LOCAL GOVERNMENT SPACE.

UM, FOR INTERIM FIELD WORK, WHAT WE DID IN AUGUST, WE DID COMPLIANCE TESTING, WE DID CAPITAL PROJECTS TESTING, AND I WALKED THROUGH THOSE SIGNIFICANT TRANSACTION CYCLES THAT WE LOOKED AT.

THEY'RE JUST HERE ON THE SCREEN SO THAT YOU CAN SEE THEM AS WELL.

UM, IN CASE I MISSED ANY, UM, THE ONE THAT MAYBE I DIDN'T SAY WAS INVENTORY AND GRANT REVENUE.

SO BECAUSE THE CITY EXPENDS MORE THAN $750,000 OF FEDERAL FUNDING, WE WALK THROUGH THE GRANT REVENUE RECOGNITION PROCESS AND LOOK AT THOSE EXPENDITURES AS WELL.

WE ALSO TEST THE CENSUS DATA BECAUSE YOU HAVE A LARGE PENSION PLAN, YOU HAVE A LARGE OPEP PLAN.

AND SO THIS, THE INFORMATION THAT IS COMING FROM THE CITY'S PAYROLL SOFTWARE, UM, IS WHAT MAKES ITS WAY TO THOSE ACTUARIES.

SO WE DO LOOK AT THE CENSUS DATA AS WELL.

UH, WE TEST THE ACCOUNTING CONTROLS OVER THE CASH PAYROLL, UH, THE CONTRACT BIDDING PROCESS.

UH, LIKE I MENTIONED, WE DO THAT SINGLE AUDIT, WHICH IS BECAUSE THE CITY EXPENDS MORE THAN $750,000, SO THAT'S GONNA BE YOUR HOME PROGRAM THIS YEAR.

YOUR EMERGENCY RENTAL ASSISTANCE PROGRAM, AND THEN YOUR CLEAN, CLEAN WATER GRANT.

SO THAT LOAN PROCESS.

SO, UM, THOSE ARE THE THREE MAJOR PROGRAMS THAT WE HAVE THIS YEAR.

INTERNAL AUDIT ASSISTS US WITH THAT TESTING.

UH, WE ALSO HAVE THEM ASSIST WITH JUST GENERAL CASH DISBURSEMENTS, PAYROLL, AND THEN THE UTILITY BILLING TESTING.

SO THEY'RE REALLY HELPING US WITH A LOT OF THE CONTROL TESTING WORK.

UM, WE SELECT A LARGE NUMBER OF SAMPLES, AND SO IT JUST HELPS, UH, SPEED UP THE AUDIT PROCESS REALLY IS HAVING THEM, UM, LOOK AT THOSE SAMPLES, TEST THEM, AND THEN WE REPERFORM THOSE PROCEDURES.

SO SOME OF THE REQUIRED COMMUNICATIONS I'VE ALREADY MENTIONED, BUT WE DO THE AUDIT IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS, GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS.

SO THOSE ARE THE STANDARDS THAT WE'RE USING WHEN WE'RE DOING OUR AUDIT AND PLANNING.

AND THEN THE UNIFORM GUIDANCE IS THE SINGLE AUDIT.

UM, AND THEN THAT'S WHAT I'VE ALREADY SAID WITH THE GAGS AND UNIFORM GUIDANCE.

UM, FOR THE IT CONTROL UPDATE, THE SYSTEMS THAT WE'RE LOOKING AT ARE LISTED HERE.

WE CAN'T LOOK AT EVERYTHING, BUT WE DO PICK THOSE MAJOR PROCESSES, UH, AND REALLY HAVE OUR IT ADVISORY PARTNERS LOOKING AT THOSE.

WE HAVE A SEPARATE ENGAGEMENT TEAM.

I STAY ON THE TECHNICAL ACCOUNTING SIDE, AND THEN WE HAVE THE, THE IT PEOPLE THAT REALLY SPECIALIZE IN THAT, AND THAT IS NOT ME, UH, THE CONTROL AREAS TO BE TESTED, UM, THAT THEY LOOK AT PROGRAM CHANGES, UM, MIGRATION TO PRODUCTION, COMPUTER OPERATIONS, ACTUAL PHYSICAL ACCESS TO THE COMPUTERS AND TO THE DATA.

UM, AND THEN ACCESS TO PROGRAMS AND DATA SECURITY ADMINISTRATION.

SO THAT'S WHAT THEY LOOK AT.

AND THEN THIS YEAR, ONE OF THE BIG MAJOR PRONOUNCEMENTS THAT THE CITY IS HAVING TO IMPLEMENT IS G A SS B 96.

[00:10:02]

LAST YEAR WAS LEASE IMPLEMENTATION.

SO THAT WAS THE LEASES OF BUILDINGS, UM, AND THINGS LIKE THAT AND ACTUAL PHYSICAL LEASE.

AND THOSE CAME ONTO THE BALANCE SHEET LAST YEAR.

THIS YEAR IT'S IT SOFTWARE SUBSCRIPTION.

SO THAT'S WHAT THE BIG PRONOUNCEMENT IS THAT THE CITY'S WORKING TO IMPLEMENT FOR THIS, UM, THIS YEAR'S AUDIT.

IT'S A HEAVY LIFT FOR SURE TO IDENTIFY EVERY DEPARTMENT THAT'S USING SOME SORT OF IT SOFTWARE SUBSCRIPTION.

AND IF IT'S MATERIAL TO GET IT ON THE BALANCE SHEET.

UM, THIS CAN BE MICROSOFT OFFICE.

UM, ALL SORTS OF PACKAGES FALL UNDER THAT.

AND THEN HERE'S SOME THAT ARE COMING OUT FOR LATER.

2024, YOU HAVE 99, AND THEN 2025 IS STATEMENT 1 0 1 WITH COMPENSATED ABSENCES.

NO MAJOR IMPACTS THERE.

I THINK THE LARGEST, UH, YEAR OF IMPLEMENTATION WILL BE THIS YEAR'S G A SS B 96 AND LAST YEAR'S LEASES.

BUT 2024 AND 2025 LOOK A LOT BETTER.

AND THEN THESE ARE JUST REALLY THE QUESTIONS THAT WE WANT TO MAKE SURE THAT YOU'RE AWARE OF THAT YOU CAN TALK TO US ABOUT AT ANY TIME.

UM, ANYTHING THAT YOU THINK IS MATTER RELEVANT TO THE AUDIT, ANY RISK THAT YOU WOULD LIKE US TO FOCUS ON, ANY CONCERNS THAT YOU'VE HEARD THAT COULD POTENTIALLY HAVE A MATERIAL IMPACT ON THE FINANCIAL STATEMENTS, WE WANNA HEAR, YOU KNOW, IF YOU HAVE THOSE CONCERNS OR QUESTIONS FOR US.

AND WE'LL BE REACHING OUT TO TALK TO YOU ONE-ON-ONE ALSO SO THAT YOU CAN ASK US ANY QUESTIONS OR TELL US ABOUT ANY CONCERNS THAT YOU HAVE.

AND THAT'S WHAT I'VE PREPARED FOR YOU TODAY.

I'M HERE TO ANSWER ANY QUESTIONS THAT YOU HAVE, UM, OR TALK ABOUT THE AUDIT IN GENERAL.

OKAY.

COMMITTEE, WE HAVE HEARD, UH, THE PRESENTATION WANTED.

AND ALSO, LET ME SAY THAT THE, THE MICS ARE PRETTY MUCH OPEN AT THIS POINT.

UM, RIS, OH NO.

OKAY.

I LIKE THAT.

PUNCH THE BUTTON.

.

ALRIGHT.

COUNCILMAN WILLIAMS. ALRIGHT, THANK YOU.

UH, TARA, AS USUAL, THANK YOU FOR THAT, THAT INTRO.

SURE.

BRIEFLY, VERY COLORFUL SLIDES.

OH, WERE THEY ? IT WAS, COLORS IS GREEN, SO OH, GOOD.

DID YOU PICK THE, USUALLY ACCOUNTING, UH, SLIDES IN PRESENTATIONS ARE NOT EXCITING, SO I'M GLAD YOU LIKE SOMETHING ABOUT IT.

, CONGRATULATIONS.

IF YOU PICKED THE COLORS TEAM, IF I CAN WALK AWAY WITH ONE GOOD POSITIVE, I WOULD TAKE IT.

I LIKE IT.

IT IS, UH, SOME OF THE FINANCIAL STUDENTS HAVE LOOKED AT, IF NOT NEARLY AS CALLED, RIGHT, .

SO, UH, APPRECIATE THAT.

JUST A, JUST A COUPLE OF THOUGHTS.

UM, AND, AND I, I, I GUESS I'M CALLING THIS BRIDGE IN THE GAPS, AND CAN YOU TALK ABOUT INTEGRATION OF THIS INTO WHAT YOU PRESENTED US? UM, UH, UH, JUDD AND HIS TEAM HAVE DONE AWESOME JOBS YEAR AFTER YEAR AFTER YEAR.

AND WE HAVE, UH, FINDINGS, TEAM REPORTS HERE AND RECOMMENDATIONS, IMPLEMENTATION PLANS END MOVING FORWARD.

UH, IS THERE A WAY TO SORT OF BRIDGE THE GAP? EXAMPLE, SOME OF THE AUDIT IN THIS CURRENT HERE, UH, THAT HAVE ALREADY BEEN SHARED WITH US, UH, INCLUDING FINDINGS AND RECOMMENDATIONS, STAFF HAS GIVEN REPORTS ON WHAT, WHAT THEY HAVE, HAVE, HAVE DONE.

IS THERE ANY WAY TO, DO WE LOOK BACK AT SOME OF THOSE AUDITS THAT HAVE BEEN COMPLETED, THAT'S BEEN REPORTED AND EVERYTHING, GET UP, GET UPDATES ON THAT, WHAT I CALL PROCESS IMPROVEMENT.

MM-HMM.

SOME OF THE ACTIONS THAT HAVE BEEN DONE.

IS THERE ANY WAY TO, TO CAPTURE, UH, SOME OF THE, FOR LACK OF BETTER WORD, PROGRESS? SURE.

SOME OF THE STRENGTHENING THAT HAS TAKEN PLACE AS A RESULT OF NOT SPENDING A LOT OF TIME AS A RESULT OF BETWEEN YOUR TEAM, JUDD AND, AND, AND OUR STAFF.

ANY WAY TO CAPTURE, OKAY, SO IT WAS DONE LIKE THIS YEAR OR LAST YEAR MM-HMM.

KIND OF, SO WHAT, YEAH, WHAT, WHAT DIFFERENCE DOES, DO THEY MAKE? IS THERE ANY WAY IN THIS PROCESS THAT, THAT, UH, AND I'M NOT TALKING ABOUT ALL OF THE AUDITS, I'M TALKING ABOUT MAYBE A SAMPLING YEP.

OF THIS IS, THIS IS TAKING A LOOK BACK AT THIS, THIS IS WHERE WE ARE NOW, THIS A BENEFIT.

SURE.

AND THAT'S A GREAT CONVERSATION FOR US TO HAVE, IF THAT'S SOMETHING THAT YOU WOULD LIKE.

WHAT WE DO DURING THE COURSE OF THE AUDIT IS WE OBTAIN ALL OF THOSE AUDITS AND WHEN WE THINK THAT IT MIGHT HAVE A MATERIAL IMPACT ON THE FINANCIAL STATEMENTS, WE DEFINITELY DIVE INTO IT TO SEE IF THE PROGRESS HAS BEEN MADE, IF THE RECOMMENDATIONS THAT INTERNAL AUDIT MADE ARE BEING INCLUDED INTO THE NEW PROCESS, KIND OF THE, UM, MAKING

[00:15:01]

SURE THAT THE FINDING HAS BEEN ADDRESSED.

SO WE DO THAT PART.

WE SELECTIVELY LOOK AT IT AND SEE IF IT HAS, UM, THE POTENTIAL TO HAVE A MATERIAL MISSTATEMENT.

IF YOU WANTED A SAMPLE.

THAT'S SOMETHING THAT WE COULD DEFINITELY DO WHERE MAYBE WE DON'T THINK IT HAS A MATERIAL IMPACT ON THE FINANCIAL STATEMENTS, BUT YOU WOULD JUST BE MORE COMFORTABLE IF WE CHECK TO SEE THE PROGRESS.

WE COULD DEFINITELY DO THAT, BUT JUST KNOW THAT WE DO LOOK AT THE ONES THAT WE THINK DO HAVE A MATERIAL IMPACT ON THE FINANCIAL STATEMENTS AND FOLLOW UP ON THOSE TWO.

OKAY.

OKAY.

THANK YOU.

YEAH.

COUNCILMAN, IF I MAY ECHO TO THAT.

UM, SO BEFORE THEY PLANNED THE AUDIT FOR FISCAL YEAR, THEY DO ACTUALLY MEET WITH ME, UH, TO GO OVER THE AUDIT REPORTS THAT WE ISSUED FOR THE PAST YEAR, AT LEAST DURING THE FISCAL YEAR.

AND ALSO WE TALK ABOUT ANY POTENTIAL FRAUD, WASTE OR ABUSE, THAT KIND OF DEAL.

SO, UH, THE OBJECTIVE OF THE FINANCIAL STATEMENT AUDIT IS SLIGHTLY DIFFERENT THAN THE OPERATIONAL AUDIT, BUT, UH, AS SARAH INDICATED, UM, FROM A MATERIAL IMPACT PERSPECTIVE, THEY DO LOOK AT OUR REPORTS AND IF WE HAVE DONE ANY INVESTIGATIONS, THEY DO EVALUATE THEM BEFORE THEY FINALIZE THEIR AUDIT PLAN.

OKAY.

SO, SO COULD YOU PROVIDE THIS COMMITTEE WITH JU JUDGE SOME OF THOSE OBSERVATIONS AS A RESULT OF WHAT YOU JUST SAID? YEAH, IT, UH, WELL, I DON'T NECESS I DON'T KNOW WHO'S, WHO'S HERE, BUT WHAT SOMEBODY COULD BE THIS COMMITTEE, I THINK IT WOULD BE, IT WOULD BE HELPFUL.

SURE.

WE COULD PROVIDE THAT.

LOOK AT WHAT THE REPORTS THAT WE LOOKED AT THIS YEAR, THOSE CONVERSATIONS THAT WE'VE HAD.

AND WE COULD PROVIDE AN UPDATE FOR YOU.

IS THAT WHAT YOU'RE LOOKING FOR? YES.

YEP.

WE CAN DO THAT.

WE CAN BRING THAT TO THE NEXT AUDIT COMMITTEE.

MM-HMM.

? YEP.

OKAY.

THANK THAT'S WHAT THE COMMITTEE WANTS TO ALRIGHT.

THANK YOU.

THANK YOU MR. CHAIR.

THANK YOU.

WELL, MS. WEAVER, UH, MS. DEMPSEY, SARAH, I THINK THAT YOU'VE DONE A OUTSTANDING JOB OF, UH, THE PRE PRESENTING TO US, UH, WHAT WE'RE LOOKING FORWARD TO IN THIS COMING YEAR, UH, AS A KIND OF A NEWCOMER.

UM, I DON'T KNOW IF MR. UH, COUNCILMAN WILLIAMS, HE DOESN'T LIKE FOR ME TO STILL KIND OF USE THAT, BUT KINDA AS A, AS A NEWCOMER, UH, ONE OF THE THINGS THAT WE HAVE BEEN PRIVILEGED TO IS SITTING DOWN WITH, UH, JED AND HIM EXPLAINING TO US THE PROCESS THAT YOU GUYS HAVE GONE THROUGH AND, UH, WHAT WE'RE GONNA BE LOOKING AT IN THE FUTURE.

HE'S VETTED YOU, I SAY QUITE WELL, AND KNOWING ALSO, UH, THE RELATIONSHIP THAT YOU'VE HAD WITH US IN THE PAST, UH, I THINK THAT WE ARE TRULY LOOKING FORWARD TO, UM, ANOTHER GREAT YEAR OF WORKING WITH YOU.

LET ME STOP AT THIS POINT AND ASK, ARE THERE ANY QUESTIONS, ANY COMMENTS FROM ANYONE ELSE AS IT RELATES TO THE SUBJECT OF FORCE? UH, COUNCIL NOT JUST HAD ONE, UH, ONE DEFINITION QUESTION.

WHAT IS A DRINKING WATER REVOLVING? LUNG DRINKING WATER? YEAH.

THAT'S ONE OF THE FEDERAL PROGRAMS THAT IS BEING EXPENDED THIS YEAR.

SO WHAT WE DO IS WE TEST, UM, BASICALLY FEDERAL PROGRAMS. SO BECAUSE THE CITY EXPENDS MORE THAN $750,000 OF FEDERAL FUNDING, WE HAVE TO GO THROUGH AND SEE WHICH OF THOSE FEDERALLY FUNDED GRANTS, UH, SHOULD BE SELECTED FOR THE AUDIT.

SO THAT'S BASICALLY A CAPITAL'S PROJECT TO IMPROVE THE DRINKING WATER.

SO WE'LL SEE A LOT OF CONSTRUCTION INVOICES AS WE LOOK INTO THAT PROGRAM, BUT IT'S BASICALLY A FEDERALLY FUNDED GRANT THAT THE CITY HAS.

OKAY.

AND I DON'T KNOW IF YOU WANNA TALK MORE THROUGH THAT.

YEAH.

WE USE THAT GRANT TO FUND OUR WATER METER REPLACEMENT PROGRAM.

SO THAT'S WHAT THAT, THOSE FUNDINGS ARE COMING IN FROM.

UNUSUAL NAME? IT'S YES.

YEAH.

WALTER BEATER.

OKAY.

REPLACEMENT PROGRAM.

OKAY.

ANYONE ELSE? OKAY.

IT SOUNDS LIKE YOU HAVE ONE ACTION ITEM BEFORE US, AND THAT IS THAT YOU'RE GONNA GET INFORMATION BACK FOR COUNCILMAN WILLIAMS AS IT RELATES TO UPDATES IN THE PAST.

THANK YOU SO VERY MUCH FOR YOUR PRESENTATION.

THANK YOU.

OKAY.

WITH THAT, LET'S NOW MOVE TO OUR FUEL AND PROPANE MANAGEMENT AUDIT.

AGAIN, JU CHAIRMAN, UH, THANK YOU FOR THE OPPORTUNITY TO GO OVER SOME OF THESE AUDITS THAT WE RECENTLY COMPLETED.

UH, AARON PENNY ACTUALLY WAS THE LEAD ON THIS AUDIT.

I DO WANNA TAKE A MINUTE TO INTRODUCE THIS AUDIT WHILE THEY'RE SETTING IT UP.

THERE WERE TWO OBJECTIVES, UH, EVALUATE THE FUEL ORDER AND DELIVERY PROCESS TO VERIFY IF THE CITY HAS EFFECTIVE MONITORING IN PLACE.

THE SECOND PART WAS TO VERIFY THE ACCURACY OF THIRD PARTY BILLING.

UM, AS PART OF THIS AUDIT, WE LOOKED AT NOT ONLY FUEL, BUT ALSO THE PROPANE MANAGEMENT.

THE FUEL PART WAS BASICALLY A REVIEW OF THE FLEET, UH, PROCESSES.

UH, I DO WANNA REALLY, UM, SINCERELY APPRECIATE THE FLEET DEPARTMENT, ESPECIALLY GARTH.

THEY HAVE GONE THROUGH A LOT OF CHANGES IN THE PAST YEAR, AND, UM,

[00:20:01]

SO YOU WILL SEE SOME OPPORTUNITIES FOR IMPROVEMENT.

HOW, HOWEVER, HOW, UH, IMPACTFUL THEY WERE, HOW, HOW THEY WORKED WITH US, HOW COOPERATIVE THEY WERE DURING THE AUDIT IS COMMENDABLE.

UH, SO I DO WANNA MENTION THAT APPRECIATE GARTH AND AS WELL AS PHIL.

I'M NOT SURE IF PHIL IS HERE.

UM, UH, AS YOU KNOW, UH, THE CITY HANDLES A LOT, UH, HAS ABOUT 28 LOCATIONS WHERE WE, WHERE WE DEAL WITH FUEL.

AND SO DURING THIS AUDIT TIME, OUR INITIAL SCOPE OF THE AUDIT WAS FROM JANUARY, 2020 TO DECEMBER, 2022.

WE DID FIND SOME, UH, INACCURACIES, UH, SO WE HAD TO EXPAND BOTH THE FUEL AND AS WELL AS, UH, THE PROPANE TESTING, THE PROPANE TESTING.

ALSO WANNA EMPHASIZE THAT IT'S NOT JUST THE FLEET DEPARTMENT.

THERE ARE A NUMBER OF DIFFERENT DEPARTMENT USERS, PROPANE, AND THEY ALSO PROCURE AND PAY.

UH, SO THAT, THAT WAS A CITYWIDE.

SO OUR RECOMMENDATIONS FOR THOSE IS NOT JUST FOR FLEET, IT'S FOR A CITYWIDE.

I DO WANT TO THANK, ONCE AGAIN BEFORE I TURN IT OVER TO AARON, UH, THE CITY MANAGER SUPPORT HIS STAFF SUPPORT BECAUSE AS YOU, YOU KNOW, FROM AN INTERNAL CONTROL PERSPECTIVE, TONE AT THE TOP MATTERS.

SO THE, THE TONE THAT JARED AND HIS TEAM SETS IT UP MAKES A HUGE DIFFERENCE.

SO I DO WANT TO THANK THEM FOR, UH, THEIR CORPORATION DURING THIS AUDIT.

WITH THAT, I'M GONNA TURN IT OVER TO ERIN.

SHE'S GONNA GIVE YOU SOME, A LITTLE BIT MORE BACKGROUND.

SHE KNOWS WAY MORE THAN I DO , SO SHE'LL COVER THOSE.

OKAY.

GOOD AFTERNOON.

GOOD AFTERNOON.

UM, SO I JUST WANT TO BE CLEAR THAT FOR THE PURPOSE OF THIS REPORT, THE TERM FUEL REFERS TO GASOLINE AND DIESEL.

PROPANE HAS A SEPARATE, SEPARATE PRICING TERM, SEPARATE DELIVERY PROCESS.

SO ALTHOUGH PROPANE IS FUEL, WE'RE SEPARATING IT WHEN WE'RE TALKING ABOUT IT IN THE REPORT.

UM, SO AS JED MENTIONED, THE FLEET FLEET WAS VERY HELPFUL THROUGHOUT THE AUDIT.

UM, BEFORE I BRIEF THE BACKGROUND, I WANNA RECOGNIZE FLEET'S EXCEPTIONAL MONITORING CONTROLS, UM, THAT THEY HAVE IN PLACE FOR FUEL ORDERING AND DELIVERY PROCESS.

UH, THESE SPECIFIC CONTROLS INCLUDE THE MANUAL MEASUREMENT OF TANKS FOR EACH DELIVERY, PERIODIC INVENTORY MEASUREMENTS, AND TIMELY ORDERING OF FUEL TO MAINTAIN A, A SUFFICIENT SUPPLY.

JUST TO PROVIDE PERSPECTIVE, THEY PROCESS ABOUT 430, UH, FUEL DELIVERY INVOICES EACH YEAR.

SO THE FLEET SERVICES DEPARTMENT MAINTAINS A FUEL INVENTORY FOR THE CITY'S FLEET OF VEHICLES.

FLEET RECEIVES AND ISSUES ABOUT 1.4 MILLION GALLONS OF FUEL EACH YEAR.

ACCORDING TO APPROXIMATELY $3.5 MILLION, THE CITY'S FUELS PURCHASED THROUGH AN INTERLOCAL AGREEMENT MANAGED BY TARRANT COUNTY.

APPROXIMATELY 550 OTHER MUNICIPALITIES AND GOVERNMENT ENTITIES PARTICIPATE IN THIS COOPERATIVE.

IT'S VERY HARD TO FIND A MUNICIPALITY THAT DOESN'T COOPERATE WITH IT.

UH, TWO CONSECUTIVE AGREEMENTS WERE USED DURING THE SCOPE OF THE AUDIT.

EACH PROVIDED THE SAME LIST OF ALLOWABLE TAXES.

UH, THESE INCLUDE STATE MOTOR FUEL TAX, A STATE PRODUCT DELIVERY FEE.

YOU'RE GOOD.

UM, FEDERAL LEAKING UNDERGROUND STORAGE TANK TRUST FEE, AND A FEDERAL OIL SPILL LIABILITY FEE.

BOTH AGREEMENTS SPECIFICALLY STATED ACCORDING TO THE I R S STANDARDS, PARTICIPATING ENTITIES ARE EXEMPT FROM PAYING A FEDERAL EXCISE TAX ON FUEL.

AND I CONFIRMED THIS WITH, UH, THE CITY ATTORNEY'S OFFICE FINANCE DEPARTMENT, AND TARRAN COUNTY FUEL'S ORDERED THROUGH EMAIL CORRESPONDENCE TO THE VENDOR.

WHEN IT TANKS, INVENTORY REACHES 50% CAPACITY.

THE VENDOR BUYS FUEL AT A TERMINAL WHERE THE, WHERE A SINGLE BILL OF LADING IS PROVIDED FOR THE ENTIRE TRUCKLOAD OF FUEL.

THIS BILL OF LADING STAYS WITH THE TRUCK UNTIL ITS FINAL DELIVERY.

WHEN THE VENDOR DELIVERS THE FUEL, A DELIVERY RECEIPT IS PROVIDED, UH, WHICH DOCUMENTS THE NUMBER OF GALLONS DROPPED, THE SPECIFIC TANK DELIVERED TO, AND THE TANK MEASUREMENTS VERIFIED BY THE CUSTOMER SEPARATELY FROM GASOLINE AND DIESEL.

SEVERAL DEPARTMENTS SUCH AS THE FIRE DEPARTMENT, LANDFILL AND OTHERS PURCHASE AND USE PROPANE IN SPECIALIZED EQUIPMENT, HEATING BUILDINGS AND FIRE TRAINING.

AS A FEW EXAMPLES, A FEW DEPARTMENTS EVEN HAVE THEIR OWN ONSITE PROPANE TANKS TO WHICH A PROPANE VENDOR DELIVERS PROPANE DIRECTLY.

THE CITY'S PROPANE EXPENSE IS MUCH LESS THAN GASOLINE AND DIESEL AVERAGING ABOUT $22,000 A YEAR.

MOST OF THE CITY'S PROPANE HAS BEEN PROCURED THROUGH A SINGLE LONGTIME VENDOR IN WHICH WE'VE HAD A SET CONTRACTED PRICE.

UH, SMALLER AMOUNTS ARE PURCHASED USING PCARD.

UH, THIS LONGTIME VENDOR IN THE REPORT IS REFERRED TO AS PROPANE VENDOR A.

THEIR FINAL CONTRACT EXPIRED IN SEPTEMBER OF 2022.

AROUND THIS TIME, ANOTHER VENDOR BOUGHT PROPANE VENDOR A'S BUSINESS AND RESUMED SUPPLYING THE CITY WITH PROPANE WITHOUT ESTABLISHING, UH, CONTRACTED PRICING TERMS. UH, THIS REPORT REFERS TO THAT VENDOR AS PROPANE VENDOR B.

[00:25:03]

SO IN THE CONTRACTS THAT WERE ACTIVE DURING THE SCOPE OF THE AUDIT, PROPANE VENDOR A'S PRICING TERMS INCLUDED A FIXED BASE PRICE PER GALLON IN ADDITION TO THE MONT BELLEVUE RATE.

THE CONTRACTS DIDN'T ELABORATE ON WHAT MONT BELLEVUE RATE IS, BUT OUR RESEARCH FOUND THAT MONTT BELLEVUE'S TERMINAL SPOT PRICE IS COMMONLY USED AND WIDELY ACCESSIBLE, SUCH AS THROUGH THE UNITED STATES ENERGY INFORMATION ADMINISTRATION WEBSITE, WHICH PUBLISHES DAILY PRICES.

CURRENTLY, THE CITY'S PROPANE DELIVERY PROCESS HAS LESS INVOLVEMENT FROM DEPARTMENTAL PERSONNEL THAN FUEL DELIVERIES.

THE TANKS HAVE METERS THAT PROVIDE PRINTOUTS DETAILING TANK CAPACITY BEFORE AND AFTER A TANK IS FILLED.

AND THESE ARE PROVIDED TO DEPARTMENTS AND RETAINED WITH RECEIPTS SOME OF THE TIME, UH, FROM SPEAKING WITH DIFFERENT DEPARTMENTS WHO HAVE PROPANE DELIVERED.

SOME DEPARTMENTS PLACE ORDERS WITH THE VENDORS WHILE OTHER DEPARTMENTS TANKS ARE MONITORED BY THE VENDOR AND REFILLED AS NECESSARY.

STARTING WITH ISSUE ONE, IA FOUND THAT THE CITY INTERMITTENTLY PAID OVER 217,000 IN FEDERAL EXCISE TAX FOR GASOLINE AND DIESEL FROM JUNE, 2022 THROUGH APRIL, 2023.

UM, EVEN THOUGH THE CITY IS EXEMPT FROM PAYING THIS TAXED, UM, AS I MENTIONED EARLIER IN THE BACKGROUND, UM, ALL TAXES, I MEAN, SORRY, ALL THESE TAXES WERE INVOICED BY THE SAME VENDOR.

UH, THIS IS LIKELY DUE TO A LACK OF UNDERSTANDING OF THE APPROPRIATE TAXES AND TURNOVER OF MANAGEMENT AND ACCOUNTS PAYABLE PERSONNEL WITHIN THE FLEET SERVICES DEPARTMENT.

UH, SO I RECOMMENDS THAT THE CITY, THAT CITY MANAGEMENT REQUEST REIMBURSEMENT OF TAXES INAPPROPRIATELY CHARGED BY THIS FUEL VENDOR AND ENSURE FLEET DEVELOPS AND IMPLEMENTS POLICIES AND PROCEDURES FOR VERIFYING THE APPROPRIATENESS OF ALL CHARGES, INCLUDING TAXES AND FEES.

MANAGEMENT CONCURS, UH, AS OF JULY 31ST, 2023, FLEET HAS FILED FOR A REFUND WITH THE I R S AND SUBMITTED A TAX EXEMPTION FOR THE FUEL VENDORS.

UM, IN OCTOBER, 2022, FLEET ESTABLISHED A NEW METHOD FOR PROCESSING PAYMENTS, INCLUDING CROSS TRAINING ADMINISTRATIVE STAFF.

SO MORE THAN ONE STAFF MEMBER CAN PROCESS ACCOUNTS PAYABLE, UH, AND CROSS TRAINING ALSO INCLUDES TRAINING ON INVOICE TAXES.

ADDITIONALLY, CITY MANAGEMENT WILL REVIEW CURRENT POLICIES, TERMS AND CONDITIONS RELATED TO APPLICABLE TAXES BY DECEMBER 1ST, 2023.

ISSUE TWO.

I FOUND THAT FROM JANUARY, 2018 THROUGH JUNE, 2022, PROPANE VENDOR A CHARGED THE CITY A HIGHER, A HIGHER RATE PER GALLON THAN AGREED TERMS STATED IN THEIR TWO LATEST CONTRACTS TOTALING OVER $26,000 IN OVERCHARGES PAID BY SIX DIFFERENT DEPARTMENTS.

AND THIS IS LIKELY DUE TO A LACK OF UNDERSTANDING OR MONITORING OF PROPANE CHARGES, AS WELL AS VENDOR INVOICES, NOT CONTAINING RATE CALCULATION DETAILS.

WE RECOMMEND CITY MANAGEMENT REQUEST A REIMBURSEMENT OF EXCESS CHARGES FROM PRO PROPANE VENDOR A AND ENSURE DEPARTMENTS PURCHASING PROPANE, DEVELOP AND IMPLEMENT POLICIES AND PROCEDURES FOR VERIFYING VENDOR CHARGES.

CITY MANAGEMENT CONCURRED, UM, CITY MANAGEMENT WILL REVIEW THE IDENTIFIED EXCESS CHARGES AND SEEK CREDITS OR REFUNDS AND REVIEW CITYWIDE POLICIES TO PROVIDE DIRECTIONS FOR VERIFYING VENDOR CHARGES BY OCTOBER 1ST, 2023.

ADDITIONALLY, FLEET IS WORKING TO ESTABLISH A CONFIRMED BASE CHARGE WITH A NEW OR EXISTING PROPANE VENDOR.

UM, FOLLOWING THE ACQUISITION OF PROPANE VENDOR A'S BUSINESS SIX BILLS WERE PAID TO PROPANE VENDOR B, WHICH CAUSED SOME CONFUSION WITH PROPANE VENDOR A'S CONTRACT RENEWAL WHEN IT WAS PRESENTED BACK IN DECEMBER.

ISSUE NUMBER THREE, I A FOUND THAT ORDER DOCUMENTATION, DELIVERY RECEIPTS AND BILLS OF LADING CONTAIN KEY INFORMATION SUCH AS GALLONS ORDERED OR DELIVERED DATES AND TANK LOCATIONS.

SUCH DOCUMENTS CAN BE USED TO VERIFY CITY FUEL AND PROPANE INVOICES.

DELIVERY RECEIPTS ARE PRIMARY SUPPORT DOCUMENTATION FOR FUEL AND PROPANE INVOICES.

ORDER DOCUMENTATION AND BILLS OF LADING ARE SECONDARY AND NOT REQUIRED, BUT THESE DOCUMENTS WHEN AVAILABLE PROVIDE ADDITIONAL PER PURCHASE INFORMATION THAT'S SOMETIMES LEGIBLE OR MISSING FROM DELIVERY RECEIPTS.

UPON REVIEW, I A IDENTIFIED THE FOLLOWING THREE OF 68 SAMPLED FUEL INVOICE FILES AND 60 OF THE 75 PROPANE INVOICE FILES DID NOT INCLUDE DELIVERY RECEIPTS.

20 OF THE 68 SAMPLE FUEL INVOICE FILES DID NOT INCLUDE BILLS OF LADING ORDER DOCUMENTATION WAS ALSO NOT RETAINED WITH FUEL OR PROPANE INVOICE FILES, BUT FUEL ORDER EMAILS ARE RETAINED BY FLEET OUTSIDE OF THE CITY'S DOCUMENTATION RETENTION SYSTEM.

I WANNA NOTE THAT FUEL INVOICE FILES THAT DID NOT INCLUDE EITHER DELIVERY RECEIPTS OR BILLS OF LADING WERE VERIFIED FOR ACCURACY WITH FLEET'S INVENTORY REPORTS IN THEIR ORDER.

EMAILS, UH, THE FOLLOWING

[00:30:01]

ARE POTENTIAL CAUSES OF THIS MISSING.

FUEL DELIVERY RECEIPTS, UM, MAY BE DUE TO ADMINISTRATIVE ERROR WHILE SCANNING DOCUMENTATION INTO THE DOCUMENTATION.

RETENTION RETENTION CENTER RECEIVING DEPARTMENTS DO NOT REQUEST A DELIVERY RECEIPT FOR PROPANE.

BILLS OF BLEEDING ARE NOT CONSISTENTLY PROVIDED OR REQUESTED UPON DELIVERY.

RETAINING ORDER DOCUMENTATION WITH INVOICE FILES IS NOT CURRENTLY A REQUIREMENT.

AND THE CURRENT DOCUMENT RETENTION SYSTEM MIGHT HAVE TECHNICAL ISSUES AND LIMITATIONS.

I RECOMMEND CITY MANAGEMENT ENSURE DEPARTMENTS PURCHASING PROPANE, DEVELOP AND IMPLEMENT POLICIES AND PROCEDURES FOR OBTAINING AND RETURN RETAINING AT MINIMUM DELIVERY RECEIPTS.

ENSURE FLEET DEVELOPS AND IMPLEMENTS POLICIES AND PROCEDURES FOR RETAINING AT MINIMUM DELIVERY RECEIPT, BUT CONSIDERS RETAINING ORDERING DOCUMENTATION AND BILLS OF LADING AS FEASIBLE FOR FUEL DELIVERIES DETERMINE WHETHER NEW THE NEW FINANCIAL MANAGEMENT SYSTEM HAS A BETTER DOCUMENT RETENTION CAPABILITIES.

CITY MANAGEMENT CONCURS, UM, AND IS IN THE PROCESS OF CENTRALIZING HIGH VOLUME PROPANE PROCUREMENT WITH THE FLEET SERVICES DEPARTMENT.

FLEET STAFF WILL REQUEST THAT THE PROPANE VENDOR PROVIDE DELIVERY RECEIPT FOR INVOICE VERIFICATION PURPOSES FOR FUEL FLEET WILL CONTINUE TO INVOICE, UM, WILL CONTINUE TO CONFIRM DELIVERY RECEIPTS WITH INVOICES AND MAKE PAYMENTS AS REQUESTED BY FUEL VENDORS AS WELL AS VERIFY FUEL DELIVERIES USING MANUAL AND ELECTRONIC LEVEL MONITORING.

IF THE CITY'S THE ONLY AND OR FINAL DELIVERY CUSTOMER FOR A SPECIFIC FUEL TRUCK, A COPY OF THE BILL OF LADING WILL BE REQUESTED UPON DELIVERY.

CITY MANAGEMENT WILL EVALUATE DOC THE DOCUMENT RETENTION CAPABILITIES OF THE NEW FINANCIAL MANAGEMENT SYSTEM AND THESE ACTION PLANS.

IMPLEMENTATION DATE IS OCTOBER 1ST, 2023.

FOR THE FINAL ISSUE.

I REVIEWED ALL PROPANE PURCHASES AMONG CITY DEPARTMENTS AND FOUND THAT PROPANE VENDOR A'S CONTRACT EXPIRED IN SEPTEMBER, 2022.

AND NOT ALL AVAILABLE PROCUREMENT OPTIONS HAVE BEEN EVALUATED.

WE ALSO FOUND THAT PROPANE PROCUREMENT IS NOT CENTRALIZED AND DEPARTMENTS PURCHASED PROPANE FROM MULTIPLE VENDORS.

THIS IS BECAUSE PROPANE VENDOR A'S CONTRACT WAS NOT RENEWED AFTER ITS EXPIRATION IN SEPTEMBER, 2022.

AND A NEW CONTRACT WAS NOT ESTABLISHED WHEN PROPANE VENDOR B ACQUIRED PROPANE VENDOR A'S BUSINESS.

THIS IS ALSO A RESULT OF NO CENTRAL POINT OF OVERSIGHT OR MANAGEMENT OF THE CITY'S PROPANE PROCUREMENT.

IA RECOMMENDS CITY MANAGEMENT CONDUCT A CITYWIDE INVENTORY OF ALL PROPANE USE EQUIPMENT AND COST FOR EACH DEPARTMENT AND EVALUATE PROCUREMENT OPTIONS AND CENTRALIZE HIGH VOLUME PROPANE PURCHASES.

MANAGEMENT CONCURRED AND IS UNDER THE OPINION THAT WITH AN ANNUAL SPEND OF APPROXIMATELY $40,000 FOR PROPANE, A CONTRACT IS NOT NEEDED.

CURRENTLY, THERE ARE NO HISTORICALLY UNDERUTILIZED BUSINESSES THAT PROVIDE PROPANE DEPARTMENTS WILL STILL BE ABLE TO USE PCARDS TO PURCHASE PROPANE AS NEEDED.

CITY MANAGEMENT'S IN THE PROCESS OF CENTRALIZING HIGH VOLUME PROPANE PROCUREMENT WITH THE FLEET SERVICES DEPARTMENT AND HAD DIRECTED FLEET TO CONDUCT A CITYWIDE INVENTORY OF PROPANE USE, UM, THEY GAVE AN IMPLE IMPLEMENTATION DATE OF, UH, OCTOBER 1ST, 2023.

AND WITH THAT, ARE THERE ANY QUESTIONS? OKAY.

ALRIGHT.

COMMITTEE, YOU'VE HEARD THE PRESENTATION AND I THINK JUST THROWN OUT BY SAYING THAT WAS, UH, EYE OPENING.

SO THANK YOU VERY MUCH.

UM, COUNCIL WILLIAMS. THANK YOU MR. THANK YOU, MR. CHAIRMAN.

LET'S SEE.

CAN YOU HEAR ME? YES, SIR.

YES, SIR.

UH, JUST A COUPLE OF THREE QUESTIONS.

ONE IS, YOU DID SAY THAT, UH, FOR THE PROPANE VENDOR, THE CONTRACT EXPIRED SEPTEMBER, 2022.

AND MY QUESTION, UM, IF YOU CAN ANSWER IT OR MISS CITY MANAGER OR JU CAN, DO WE, DO WE HAVE A PROCESS OR A GAME PLAN? ARE WE GOING TO SEEK BIDS OR NEW VENDORS FOR, FOR THIS, THIS FUEL SOURCE GOING FORWARD? THAT'S, THAT'S MY FIRST QUESTION.

UH, SECONDLY, YOU REPORTED ALSO THAT THE OVERCHARGES AND YOU ATTRIBUTED, WOULD YOU REPEAT AGAIN WHAT YOU SAID ABOUT WHAT YOU ATTRIBUTED THOSE OVERCHARGES TO FOR THE PROPANE OR FEDERAL EXCISE TAX OR BOTH? YOU CAN PUT THEM TOGETHER.

OKAY.

UM, FOR THE TAX, UH, WE THINK IT'S LIKELY DUE TO AN LACK OF UNDERSTANDING OF WHAT TAXES SHOULD HAVE BEEN CHARGED.

UM, AND THEN ALSO THERE WAS A BIG TURNOVER WITHIN FLEET SERVICES DEPARTMENT WITH MANAGEMENT AND ALSO THE ACCOUNTS PAYABLE PERSONNEL.

[00:35:01]

RIGHT, OKAY.

UH, IN BOTH OF THOSE INSTANCES, THERE WERE SOME, THERE WERE SOME MISSING INVOICES, DOCUMENTATION, IN OTHER WORDS, CORRECT? YES.

WELL, SO WHAT WE ARE RECOMMENDING IS JUST ADDING TO WHAT THEY USUALLY DO KEEP TO VERIFY.

SO FOR FUEL, THEY KEEP WHAT'S CALLED A DELIVERY RECEIPT, AND THAT'S AT MINIMUM WHAT THEY SHOULD BE KEEPING.

WE FOUND THREE THAT DIDN'T HAVE IT, BUT WE THINK THAT'S A SCANNING MISTAKE OUT OF THE 68 THAT WE AUDITED.

UM, THE REST OF THE DOCUMENTATION SUCH AS THE BILLS OF LADING, UM, THAT'S A MORE SUFFICIENT, UH, DOCUMENTATION BECOMES, IT COMES FROM A THIRD PARTY FROM THE ACTUAL TERMINAL ITSELF, NOT THE DELIVERY TRUCK.

UM, SO WE THINK THAT'S A MORE, UM, SOLID DOCUMENT TO KEEP.

IF THEY CAN KEEP IT, IT'S NOT ALWAYS AVAILABLE TO THEM BECAUSE IT HAS TO BE THE, THE FINAL DELIVERY OF THE TRUCK.

OKAY.

OKAY.

SO, MR, CAN YOU ANSWER MY QUESTION ABOUT MY INITIAL QUESTION? I ASKED ABOUT THE, UM, PROPANE, UM, OVERCHARGED.

AND MY LAST QUESTION HAS TO DO WITH THE XR TAX.

UM, I DON'T KNOW WHAT THAT VETTING PROCESS WAS, BUT DO WE KNOW WHETHER WERE WE THE ONLY PARTICIPATING ENTITY? 'CAUSE YOU, YOU EXPLAINED THAT WE'RE PART OF A MM-HMM.

METROPLEX, I'M NOT SURE THE TERM YOU USED, BUT A GROUP TO PURCHASE THIS FUNERAL.

WERE WE THE ONLY CITY THAT WAS IMPACTED BY THE OVERCHARGES? IF I MAY ANSWER, UM, TO THAT, UH, WE DID TALK TO TARRANT COUNTY.

UM, THEY DID NOT PAY FEDERAL EXCISE TAX, UH, ON THEIR, UH, INVOICES.

OBVIOUSLY WE DID NOT KNOW, WE DIDN'T SURVEY ALL THE OTHER CITIES.

OKAY.

OR OTHER, OTHER COUNTIES OR OTHER AGENCIES.

WHAT HAPPENED IN THIS CASE? UM, THERE WERE SOME CHANGES ON THE VENDOR SIDE AS WELL.

THEIR ACCOUNTS, UM, RECEIVABLE OR WHOEVER IS PREPARING THE INVOICING, WE BELIEVE THEY HAD SOME TURNOVERS ON THEIR END AND WE HAD SOME TURNOVERS ON OUR END.

AND YOU KNOW, OBVIOUSLY WHEN YOU SEE A TAX, YOU KIND OF MAKE THE ASSUMPTION THAT IT IS TAX YOU'RE SUPPOSED TO PAY.

AND, UH, AND AS YOU'RE AWARE, COUNCILMAN, AND AS WE INDICATED BEFORE, FLEET SERVICES WAS SHORTHANDED LAST YEAR AND WITH GARTH JUST SETTING EVERYTHING UP, AND THEY ALSO HAD A, UNFORTUNATELY ONE OF THE ACCOUNTS PAYABLE PERSON, UM, UH, HAD AN UNFORTUNATE EVENT DURING THAT TIME.

SO THEY NEEDED SOME TIME TO, TO PUT EVERYTHING TOGETHER.

UH, AND, AND THAT'S WHAT HAPPENED.

BUT WE FEEL CONFIDENT THAT, AND FLEET, AS SOON AS WE BROUGHT, BROUGHT THIS TO THEIR ATTENTION, THEY'RE PUTTING A PROCESS IN PLACE, THEY'RE CROSS TRAINING, THEY'RE PUTTING A CHECKLIST TOGETHER, SO THEY'RE PUTTING THAT PROCESS IN PLACE.

AND MY UNDERSTANDING IS THEY WORKED WITH THE FINANCE DEPARTMENT AND THEY ALL ALREADY REACHED OUT TO THE I R S TO OBTAIN THAT REIMBURSEMENT BACK.

SO I FEEL VERY GOOD ABOUT THE PROCESS MOVING FORWARD.

INTERNALLY, WHAT IS, IS THE VENDOR ALSO AWARE OF THE FINDING AND THE VENDOR MAKING APPROPRIATE, TAKING APPROPRIATE ACTIONS TO ENSURE WE DON'T HAVE A REPEAT OF THIS? I, I APPRECIATE AND UNDERSTAND WHAT WE ARE DOING ON OUR, OUR SIDE AND WHAT MY QUESTION IS SPECIFICALLY FOR THE, FOR THE VENDORS VENDOR, WHAT'S, IF WE, PARTICULARLY IF WE ARE GOING TO BE CONTINUING USE, THIS VENDOR'S GONNA BE SERVICING THE GROUP.

SO, UH, IS THE VENDOR AWARE OF, OF THIS DISCUSSION, IS THE VENDOR AWARE ON THE VENDOR SIDE? YES, SIR.

THEY ARE.

I'M CHARGING YOU AS A VENDOR.

AM I AWARE? YES, I UNDERSTAND WHAT WE ARE DOING, BUT MY QUESTION HAS TO DO WITH THE VENDORS.

YES, SIR.

THEY, THE, THE VENDOR KNOWS, UH, THE NEW VENDOR WHO BOUGHT OUT THE OTHER CONTRACT.

SO THE VENDOR KNOWS WE'RE STILL GOING THROUGH A PROCESS TO SEEK, UH, TO SEE IF WE CAN GET A BETTER COST ON THE PROPANE SIDE.

OUR INITIAL LOOK AT IT, IT WAS GONNA COST US A LITTLE MORE.

SO WE'RE, WE'RE TRYING TO TWEAK THAT PROCESS, UH, TO SEE IT'S A, IT'S A MUCH SMALLER VALUE.

I THINK THAT'S WHAT'S IN THERE.

I THINK IT WAS LESS THAN $40,000.

MM-HMM.

.

SO IT'S SOMETHING THAT WE'RE GONNA DO WORK THROUGH.

UH, BUT THE VENDOR KNOWS, STAFF KNOWS THE PROCESS HAS BEEN FIXED.

ALRIGHT.

THANK YOU.

THANK YOU.

THANK YOU MA'AM.

THANK YOU MR. CHAIR.

OH, MS. , DO YOU HAVE ANYTHING? WE DON'T BUY MUCH PROPANE, SO I, I THINK AS FAR AS PURCHASING IT, IT'S, IT'S GONNA BE PROBABLY SOME SORT OF HYBRID OF A CONTRACT FOR HIGHER VOLUMES AND, UH, JUST USING THE PCARD TO, TO PURCHASE IT WHERE WE CAN.

THERE'S THE, WE'RE LOOKING AT LOTS OF DIFFERENT OPTIONS AS MITCH MENTIONED ABOUT PURCHASING PROPANE, BUT WE JUST, WE JUST DON'T BUY A LOT, SO WE'RE NOT GRILLING A LOT OF HOT DOGS AND HAMBURGERS.

YEAH, I, I I KNOW THAT'S, THAT'S, THAT'S, UM,

[00:40:01]

THE SMALL SIDE.

CAN YOU SPEAK IT ALL TO THE, THE, THE VENDOR ON THE GASOLINE, THE EXCISE TAX ISSUE FROM VENDOR STANDPOINT? THAT'S A BIG, THAT'S A BIGGER PIECE OF THE PIE.

YEAH.

SO THEY, THE VENDOR'S AWARE OF OUR BIDDING PROCESS FOR OUR VENDORS.

I KNOW THEY'RE PART OF A GROUP.

CAN YOU SPEAK TO THAT PIECE FROM A, FROM, FROM THE EXCISE TAX PIECE? SURE.

SO THE, THE VENDOR'S AWARE OF, OF WHAT HAPPENED, UH, AND OF COURSE AS A STAFF, UH, WE'RE GOING TO, WE'RE GOING TO, WE'VE ALREADY FIXED OUR PROCESS IN TERMS OF REVIEWING THE, THE INVOICES TO MAKE SURE WE DON'T PAY THAT.

SO, UH, WE, WE HAVE EVERY EXPECTATION THAT THAT MONEY WILL BE COMING BACK TO THE CITY.

OKAY.

OKAY.

AND I KNOW WE'RE DEALING WITH I R S, UH, MATT, THERE'S NO TIMELINE.

THEY DO IT WHEN THEY GET READY.

RIGHT.

UH, BUT THAT REIMBURSEMENT PROCESS IS IN MOTION ALREADY AS, AS YOU SPEAK, MR. CITY MANAGER.

YES.

YES, THAT'S CORRECT.

AND I, I, WE DON'T KNOW THE TIMELINE FOR THAT EITHER.

ALRIGHT.

THANK SIR.

THANK YOU MR. CHAIR.

THANK YOU, SIR.

, I THINK IT'S VERY, UH, A, A VERY THOROUGH ANALYSIS.

UH, THE $217,000 EXCISE TAX, THAT'S A LOT.

BUT WE SHOULD GET A REFUND ON THAT.

AND WE'RE, WE'RE AN EXEMPT ORGANIZATION, SO LOOKING FORWARD TO THAT, GETTING BACK INTO THE, UH, INTO OUR TREASURY.

SO, UM, KEEP UP THE GOOD WORK.

IT SOUNDS LIKE THE PROCESS IS ALREADY BEEN FIXED.

OKAY.

IF THERE ARE NO OTHER COMMENTS, MY, UH, MY CONCERN BECOMES, UH, ALWAYS WHAT HAS BEEN DONE TO, TO, UH, ADDRESS THE ISSUE OF, IT SOUNDS LIKE THE RECORD KEEPING ASPECT.

UH, AND YOU PROBABLY, UH, DEALT WITH IT, BUT I'M GONNA ASK YOU TO DO THAT AGAIN.

AND WHAT I'M SAYING THERE IS THIS, IT WOULD APPEAR THAT THERE WERE A LOT OF, UH, SITUATIONS WHERE GAS OR FUEL WAS ALLOCATED, WAS PROVIDED, BUT THE RECORD KEEPING JUST DID NOT OCCUR.

IN OTHER WORDS, WE DIDN'T HAVE, UH, WE DIDN'T KNOW IF WE RECEIVED IT, WE DIDN'T KNOW HOW MUCH WE RECEIVED AND SO ON AND SO FORTH.

WHAT IS THE RECOMMENDATION AS IT RELATES TO POLICY, PROCEDURES, SOPS? WHAT ARE WE DOING TO ASSURE THAT THAT DOES NOT CONTINUE? WE, WE ACTUALLY DO HAVE THE RECORD KEEPING.

SO WHAT I THINK AUDIT IS RECOMMENDING IS SOME ADDITIONAL, UM, AND I'M NOT GONNA SAY WHAT'S, UH, THE ADDITIONAL ENHANCE, ENHANCE THE INTERNAL CONTROLS.

THAT'S IT.

SO WE HAVE DOCUMENTATION THAT COMES THROUGH FOR EVERY PURCHASE THAT WE GET.

SO THAT'S THERE, THEY'RE, THEY'RE RECOMMENDING SOME ADDITIONAL DOCUMENTATION JUST TO MAKE SURE TO BE ON THE SAFE SIDE.

OKAY.

SO IT'S NOT A MATTER THEN OF A LOT OF, UH, THE GAS, UH, FUEL COMING IN AT DIFFERENT POINTS AND THINGS OF THAT NATURE AND WE'RE NOT ABLE TO IDENTIFY.

IT'S NOT THAT AT ALL.

IT HAS BECAUSE THAT'S WHAT IT WOULD SOUND LIKE.

THAT'S IF I MAY, YES.

SO YES.

SO THEY DO HAVE SUFFICIENT RECORD KEEPING.

SO, UH, WHAT WE LOOK FOR IS AREAS OF IMPROVEMENTS, RIGHT? UH, SO EVEN IF, SO AS AARON MENTIONED EARLIER, THIRD PARTY CONFIRMATION IS BETTER THAN INTERNAL CONFIRMATION.

MM-HMM.

.

SO IF I GET A RECEIPT FROM A THIRD PARTY, FOR EXAMPLE, FROM THE RACK MM-HMM.

THAT SHOWS THEY GIVE THE VENDOR 7,000 GALLONS TO DELIVER TO GARLAND.

THAT DOCUMENT VALUES MORE THAN THE VENDOR SAYING, I DELIVERED 7,000.

OKAY.

SO THAT'S THE PIECE THAT WAS MISSING IN BETWEEN.

OKAY.

SO IT'S JUST TO ENHANCE OUR VERIFICATION FURTHER, BECAUSE AS YOU KNOW, WITH FUEL, THERE IS ALL KINDS OF FRAUD THAT COULD OCCUR.

WE DID NOT FIND ANY EVIDENCE OF ANY KIND OF INCONSISTENCIES OR ANY KIND OF FRAUD.

RIGHT.

THAT IS HAPPENING.

THIS IS JUST TO ENHANCE FURTHER THAT'S ALL.

HAVE ANY THEY DO, THEY DID HAVE THE RECORDS.

OKAY.

THEY HAD THE INVENTORY REPORTS.

UH, WE WERE ABLE TO, UH, OBTAIN THE EMAIL CONFIRMATION OF HOW MUCH THEY ORDERED.

WE ALSO GOT THE INFORMATION FOR THE MOST PART, THE RECEIPTS THAT THE VENDOR PROVIDED.

SO WE WERE ABLE TO CORROBORATE ONE WAY OR THE OTHER THAT YES, WE ARE PAYING FOR WHAT, WHAT WAS ACTUALLY DELIVERED.

WE FELT A HUNDRED PERCENT COMFORTABLE ABOUT IT.

WE JUST WANTED TO ENHANCE A LITTLE BIT MORE.

SO JUST IN CASE IF SOMETHING HAPPENS, WE HAVE A, WE HAVE THAT THIRD PARTY CONFIRMATION.

OKAY.

IN THE WAY OF THE, UH, OVERPAYMENTS, HAS ANY OF THAT MONEY BEEN RE, RE RETURNED, REIMBURSED? WE'VE BEEN SEEKING THE REIMBURSEMENT.

WE HAVE NOT RECEIVED IT YET FROM THE VENDOR, BUT WE'VE HAD POSITIVE CONVERSATIONS.

OKAY.

SO THERE'S NOT A SITUATION, UH, I'M, AS OF RIGHT NOW, I'M CONFIDENT THAT IT'LL HAPPEN.

IT'S JUST A MATTER OF TIME.

THANK YOU SO VERY MUCH.

ARE THERE ANY OTHER COMMENTS THAT IT RELATES TO THE SUBJECT? THANK YOU VERY MUCH, MAN.

[00:45:03]

OKAY, LET'S MOVE FORWARD NOW TO ITEM C, MUNICIPAL COURT COMPLIANCE PROGRAM AUDIT.

JED, ONCE AGAIN, CHAIRMAN, I'LL KICKSTART THIS AS WELL.

PATRICIA MO DID THIS AUDIT.

WE HAD TWO OBJECTIVES.

UH, WE WANTED TO MAKE SURE THAT, UH, THE COMPLIANCE DEPARTMENT WITHIN THE MUNICIPAL COURT HAD INTERNAL CONTROLS OVER THE PROGRAM AND WHETHER THE PAYMENTS ARE MONITORED FOR DEFAULT.

MM-HMM.

, THE SCOPE OF THE AUDIT WAS FROM OCTOBER, 2020 THROUGH JANUARY 17TH, 2023.

MM-HMM.

, WE RECEIVED A LOT OF COLLABORATION DURING THIS AUDIT, OBVIOUSLY.

UH, I JUST WANNA APPRECIATE THE TWO JUDGES, UH, HOW CLOSELY THERE WORKED WITH US DURING THIS AUDIT.

I ALSO WANT TO THANK KEVIN SLAY, WHO WENT ABOVE AND BEYOND TO PROVIDE EVERYTHING.

AND, AND PAIGE ASSISTED DURING THE AUDIT, BUT SHE WAS OUT IN BETWEEN.

BUT KEVIN, UH, WORKED WITH THE STAFF TO PROVIDE ALL THE INFORMATION AND WE WORKING TOGETHER AS A TEAM FELT REALLY GOOD, UH, DURING THIS AUDIT BECAUSE WE WERE EDUCATING OURSELF.

THE JUDGE JUST PROVIDED A LOT OF INFORMATION.

EVEN THE ATTORNEY'S OFFICE PROVIDED A LOT OF INFORMATION.

SO THIS WAS COLLABORATIVE, IT WAS A COLLABORATIVE EFFORT.

MM-HMM.

, WE FEEL LIKE, UM, THERE'S A PLAN IN PLACE RIGHT NOW, BUT I'M NOT GONNA STEAL THE THUNDER.

PATRICIA WILL GO OVER THAT.

UH, BUT, UH, AGAIN, I THINK IT WAS A VERY VALUE ADDED AUDIT.

THANK YOU.

OKAY.

WITH THAT, I'LL TURN IT OVER TO PATRICIA LADIES.

UH, OKAY.

THE CITY OF GARLAND MUNICIPAL COURT HEARS, UH, A VARIETY OF CLASS C MISDEMEANOR CASES AND CITY, CITY ORDINANCE VIOLATIONS, WHICH ARE WRITTEN BY A NUMBER OF CITY DEPARTMENTS, INCLUDING ANIMAL SERVICES, CODE COMPLIANCE, HEALTH, FIRE, AND POLICE COURT HAS SEVERAL DIVISIONS SUCH AS WARRANTS, DOCKET, AND COMPLIANCE.

AND THIS AUDIT FOCUSED ONLY ON THE COURT COMPLIANCE DIVISION.

UM, THE, THE, THEIR FUNCTION IS TO ALLOW DEFENDANTS WHO RECEIVE CITATIONS TO SET UP PAYMENT PLANS, UM, OVER A PERIOD OF TIME TO PAY MONTHLY.

ON THE COURTROOM SIDE OF IT, THE JUDGES HEAR LEGAL MATTERS AND MAKE RULINGS SUCH AS DRIVER SAFETY COURSES, COMMUNITY SERVICE AND WAIVERS OR REDUCTION OF COSTS.

AND PER THE STATE LAW, THERE ARE SOME DUTIES THAT MAY BE DI DELEGATED TO COURT STAFF FOR SPECIFIC PROCEDURES OR SITUATIONS BY THE JUDGE WRITING A STANDING ORDER, A STANDING ORDER CLEARLY DOCUMENTS DELEGATED AUTHORITY AND ARE CONSIDERED BEST, BEST PRACTICE TO HELP IMPROVE EFFICIENCY IN THE COURTS.

ON THE ADMINISTRATIVE SIDE OF IT, MANAGEMENT OF THE CASE RESOLUTION LIFECYCLE OCCURS IN THE COMPLIANCE DIVISION, AND THIS MAY INCLUDE UPDATING CASE FILES, ASSISTING DEFENDANTS WITH COMPLIANCE OF COURT ORDERS, SETTING UP PAYMENT PLANS, COLLECTIONS AND RECORDS RETENTION COMPLIANCE.

AND THE COURT MUST COORDINATE ACTIVITIES AND WORK CLOSELY.

BUT COMPLIANCE DOES NOT HAVE AUTHORITY TO EXERCISE JUDICIAL DISCRETION.

IF A DEFENDANT CANNOT PAY THEIR CITATION IN FULL BY THE DUE DATE, THE DEFENDANT MAY REQUEST A PAYMENT PLAN THROUGH COMPLIANCE IF NO WARRANT HAS BEEN ISSUED, AND IF THEY'RE WILLING TO SIGN A GUILTY PLEA.

PRESENTLY, MOST PAYMENT PLANS ARE REQUESTED THROUGH COMPLIANCE, WHICH REQUIRES COMPLETION OF AN APPLICATION.

THE APPLICATION CAPTURES LIMITED INFORMATION AND THE JUDGES ARE NOT AWARE OF THE INFORMATION COLLECTED OR THE AGREEMENT TERMS. ALTERNATIVELY, THE DEFENDANT MAY REQUEST A HEARING TO DISCUSS THESE MATTERS WITH THE JUDGE.

AT THE HEARING, THE JUDGE MAY ALSO ORDER A PAYMENT PLAN, BUT HAS THE DISCRETION TO PROVIDE OTHER ALTERNATIVES SUCH AS WAIVING OR REDUCING FEES OR ORDERING COMMUNITY SERVICE.

IN BOTH INSTANCES, PAYMENT PLAN INFORMATION IS ENTERED INTO THE SYSTEM AND COMPLIANCE MONITORS THE PROGRESS, ENSURING PAYMENTS ARE MADE TIMELY AND AMOUNTS ARE CORRECT.

OCCASIONALLY THE, THE DEFENDANTS MAY REQUEST A REVISION TO THEIR PLAN WHEN CIRCUMSTANCES OCCUR, WHICH APPEARS TO OCCUR MOST OFTEN.

MOST OFTEN WHEN SOMEONE RECEIVES ADDITIONAL CITATIONS WHILE ALREADY ON A PAYMENT PLAN FOR ALL CITATIONS NOT PAID BY THE 30TH DAY AFTER JUDGMENT, STATE LAW MANDATES APPLYING A $15 TIME PAYMENT FEE.

DURING THE SCOPE OF THE AUDIT, WHICH JED MENTIONED WAS OCTOBER 1ST, 2020 TO JANUARY 17TH, 2023.

THERE WERE 3,650 PAYMENT PLANS CREATED OR REVISED.

SOME OF THESE PLANS HAVE MULTIPLE CITATIONS FOR A TOTAL OF NEARLY 7,000 CITATIONS.

THE TOTAL CHARGES WERE NEARLY TWO AND A HALF MILLION DOLLARS AS A RESULT OF COLLECTION EFFORTS AND PROCESSES THROUGH THE COMPLIANCE DIVISION, AROUND 70% HAVE BEEN RESOLVED AT THE TIME OF WRITING THIS REPORT.

APPROXIMATELY 728,000 IS STILL OUTSTANDING.

UM, AS JED MENTIONED, OBJECTIVE B IS TO DETERMINE IF THE PLANS ARE MONITORED FOR DEFAULT AND WE FOUND THAT THEY ARE DOING A GREAT JOB DOING THAT.

A COMPREHENSIVE REVIEW OF 132 OF THE PAYMENT PLANS REVEALED CASE MONITORING WAS DONE TIMELY AND EFFECTIVELY BY COMPLIANCE STAFF REGARDING CONTACTING DEF DEFENDANTS FOR PAYMENTS.

THE STAFF PERFORMED THE CONTACT VIA PHONE CALLS, EMAILS, AND LETTERS, AND

[00:50:01]

DOCUMENTED ALL OF THOSE EFFORTS.

SO FOR THE FIRST OBSERVATION, UH, WE FOUND THAT THE ALTERNATIVE PAYMENT OPTION PROCESSES ARE NOT CLEARLY DEFINED.

MUNICIPAL COURTS ARE STATUTORILY AUTHORIZED TO DEVELOP THEIR OWN LOCAL RULES AND POLICIES FOR ALTERNATIVE PAYMENT OPTIONS AND INDIGENCY DETERMINATION PROCEDURES.

ANY DEFENDANT WHO ENTERS A PLEA AND CANNOT PAY IN FULL MAY REQUEST ALTERNATIVE PAYMENT ARRANGEMENTS.

THIS INCLUDES PAYMENT PLANS, PERFORMING COMMUNITY SERVICE, INDIGENCY DETERMINATION, OR WAIVERS OR REDUCTIONS OF COSTS BY A JUDGE.

IF A DEFENDANT REQUESTS A PLAN FROM COMPLIANCE, AN APPLICATION IS COMPLETED ALONG WITH A PHOTO ID AND A PLEA OR JUDGMENT STAFF PERFORMS AN INTERVIEW, VERIFIES THE CONTACT INFORMATION AND PREPARES AN AGREEMENT WHICH OUTLINES THE PAYMENT AMOUNTS AND LENGTH OF TIME TO PAY.

ALTHOUGH THE INCOME AND EXPENSES ARE DISCLOSED ON THE APPLICATION, SUPPORTING DOCUMENTATION IS NOT REQUESTED OR VERIFIED, AND THERE ARE LEGAL REASONS FOR THAT.

UM, COMPLIANCE THEN INTERVIEWS THE DEFENDANT, INCLUDING THE DISCUSSION REGARDING ABILITY AND RESOURCES TO PAY.

THE TEXAS CODE OF CRIMINAL PROCEDURE STATES THAT ONLY A JUDGE HAS THE AUTHORITY TO DETERMINE IF A DEFENDANT HAS SUFFICIENT RESOURCES, IS ELIGIBLE FOR COMMUNITY SERVICE OR ELIGIBLE FOR WAIVERS OR REDUCTIONS DUE TO CURRENT OPERATIONAL PRACTICES.

ELIGIBILITY FOR ALTERNATIVE PAYMENT OPTIONS MAY NOT ALWAYS BE FULLY VETTED.

IF A DEFENDANT INFORMS COMPLIANCE THAT THEY WANT TO SEE A JUDGE OR INDIGENT OR WANTS TO PERFORM.

COMMUNITY SERVICE STAFF PROCESSES THE CASE IN THE SYSTEM WITH THE TOTAL AMOUNT DUE AND THEN SCHEDULES A HEARING.

HOWEVER, THE JUDGES DO NOT SEE THE COMPLETED PAYMENT PLAN APPLICATIONS AND THE DEFENDANTS MAY NOT BE AWARE THAT DOCUMENTATION SUPPORTING THEIR ABILITY TO PAY IS REQUIRED FOR THE HEARING.

FINALLY, WAIVERS OR REDUCTIONS OF FINES AND COSTS WERE BEING PERFORMED BY COMPLIANCE ON SOME OCCASIONS.

AND THIS IS DISCUSSED IN THE NEXT OBSERVATION.

WE RECOMMENDED WORKING WITH THE JUDGE TO DEVELOP PROCEDURES AND REEVALUATE BASELINE CRITERIA FOR THE PAYMENT PLANS AND ALTERNATIVE PAYMENT OPTIONS.

IMPLEMENT TWO SEPARATE APPLICATION PROCESSES TO DISTINGUISH DEFENDANT'S OPTIONS AND THEN SEPARATELY TRACK STANDARD PAYMENT PLANS FROM THOSE WITH ALTERNATIVE PAYMENT OPTIONS.

MANAGEMENT CONCURRED AND HAS ALREADY BEEN WORKING WITH THE JUDGES TO ACCOMPLISH THAT.

NEW FORMS ARE CURRENTLY BEING DEVELOPED AND THE JUDGES ARE DISCUSSING ESTABLISHING AN INDIGENCY HEARING PROCESS, WHICH MAY ALREADY BE IN PLACE.

I'M NOT SURE WHERE THAT IS.

UM, COMPLIANCE IS ALSO WORKING WITH IT AND THE JUDGES WHO DEVELOP MORE APPROPRIATE TRACKING OF PAYMENT PLANS AND ALTERNATIVE OPTIONS AND IMPLEMENTATIONS IS EXPECTED BY NOVEMBER 1ST.

ANY QUESTIONS ON THAT ONE? THERE'S GONNA BE A FEW.

SO I THOUGHT I'D YOU, I HAVE ONE QUESTION ON IT.

SO TELL ME, UH, WHERE ARE WE THEN PRESENTLY AS IT RELATES TO THIS ALTERNATIVE? AS FAR AS THE JUDGES, IT, IT'S NOT LIKE THE JUDGE IS THE ONLY ONE THAT CAN REALLY DETERMINE IF THE DEFENDANT IS INDIGENT, CORRECT? THAT'S CORRECT.

BUT SOMETHING IS TAKING PLACE.

IS THERE A CONCERN THERE THAT SOMETHING IS TAKING PLACE, THAT THE JUDGE IS NOT ACTUALLY DOING THAT AND SOMEONE ELSE MAY BE? OR DO I NEED TO WAIT TILL I CAN WAIT IF YOU, UH, NO, IT'S A FAIR QUESTION.

UM, I THINK THAT THERE HASN'T BEEN A GREAT UNDERSTANDING OF WHAT DETERMINES INDIGENCY.

AND WHILE THE DEPARTMENT ITSELF WAS TAKING THE INCOME AND EXPENSE INFORMATION, IT'S ON THE APPLICATION, THEY WOULD THEN HAVE A CONVERSATION WITH THE DEFENDANT AND THE DEFENDANT MIGHT SUGGEST, YOU KNOW, I CAN'T AFFORD TO PAY THE ENTIRE AMOUNT, YOU KNOW, ALL AT ONCE.

AND THEN THEY MIGHT ASK, OKAY, WHAT CAN YOU AFFORD TO PAY? AND SO THERE WOULD BE A CONVERSATION ABOUT THAT, WHICH KIND OF MAY GET INTO AN AREA OF DETERMINING WHETHER THEY'RE INDIGENT OR NOT.

SO WE, IT, IT'S SOMETHING THAT THE JUDGES WANTED TO BE MORE INVOLVED IN.

OKAY.

ALRIGHT.

THANK YOU.

GO AHEAD.

SURE.

SO FOR OBSERVATION NUMBER TWO, ROLES AND RESPONSIBILITIES MAY NEED CLARIFICATION.

THERE ARE SOME DUTIES WHICH MAY NOT BE FULLY UNDERSTOOD OR ARE NOT CLEARLY DEFINED, ABSENT A CURRENT AND SPECIFIC STANDING ORDER FROM THE JUDGE.

DURING THE AUDIT PERIOD, WE OBSERVED PLANS WERE BEING APPROVED AND REVISED BY COMPLIANCE WITHOUT A STANDING ORDER.

UM, THERE WERE FIVE PLANS WHICH WERE ORDERED BY A JUDGE AND THE LENGTH OF TIME AND OR THE MONTHLY PAYMENT AMOUNTS WERE REVISED BY THE COMPLIANCE DIVISION.

PLANS WERE BEING REVISED REPEATEDLY, SOMETIMES AS MANY AS SEVEN TIMES, AND FOR AS LONG AS 10 AND A HALF YEARS, UH, FOR A PARTICULAR PAYMENT PLAN.

UM, FIVE CITATION CHARGES WERE REDUCED BY THE COMPLIANCE DEPARTMENT.

THREE CITATIONS WERE REDUCED USING A STANDING ORDER FROM A PREVIOUS JUDGE WHO'S NO LONGER WITH THE CITY THREE WERE REDUCED USING

[00:55:01]

A MAGISTRATE'S WARNING, WHICH IS NOT SUFFICIENT.

AND THREE CITATIONS WERE PAID ON OR AFTER THE 31ST DAY REQUIRING THE TIME PAYMENT FEE, WHICH WAS NOT CHARGED, IT WAS ORIGINALLY ASSESSED, THEN STAFF REMOVED THE FEE.

SO OUR RECOMMENDATIONS WERE TO WORK WITH THE JUDGES TO ESTABLISH AND DEVELOP WRITTEN PAYMENT PLAN CRITERIA AND PROCESSES FOR PLANNING REVISIONS TO GAIN AN UNDERSTANDING OF WHAT CIRCUMSTANCES A STANDING ORDER MAY BE APPROPRIATE FOR PAYMENT PLANS AND MANAGEMENT CONCURRED WITH BOTH OF THOSE.

WE ALSO ASK THAT THEY CONSIDER ADDITIONAL STAFF TRAINING ON AUTHORITY ROLES AND RESPONSIBILITIES AND MANAGEMENT CON CONCURRED WITH THAT AS WELL AND INDICATED IMPLEMENTATION OF NOVEMBER.

ANY QUESTIONS ON THAT ONE, MR. HUT? DID I UNDERSTAND THAT YOU SAID THAT MORE THAN ONE CASE, THERE WAS SOMEONE THAT HAD 10 AND A HALF YEARS TO PAY OFF A CITATION? THIS PARTICULAR INDIVIDUAL'S, UM, SITUATION WAS THAT HE RECEIVED THREE CITATIONS, WENT ON A PAYMENT PLAN WHILE HE WAS ON THE PAYMENT PLAN, RECEIVED MORE CITATIONS, WHICH UPPED HIS AMOUNT DUE AND EXTENDED HIS TIME.

AND THIS CONTINUED TO HAPPEN, UH, TO WHERE HE CURRENTLY, UH, WILL BE ON A PAYMENT PLAN FOR 10 AND A HALF YEARS UNDER THE CURRENT.

THAT'S UNBELIEVABLE.

YEAH.

WOW.

THAT'S QUITE A QUESTION, .

OKAY.

SO ANY OTHER QUESTIONS ON THAT ONE? NOT SO FAR, YEAH.

OKAY.

OKAY.

OBSERVATION NUMBER THREE.

MINIMAL PERFORMANCE MEASURES AND REPORTING HAVE BEEN ESTABLISHED.

THERE WERE NO REPORTS FOR SEATED ADMINISTRATION TO BE INFORMED ON MATTERS SUCH AS THE NUMBER OF PLANS, TOTAL AMOUNTS DUE OR THE LENGTH OF TIME THAT WERE CARRYING PLANS.

PAYMENT PLANS.

THE RECOMMENDATIONS WERE TO DEVELOP PERFORMANCE MEASURES AND APPROPRIATE REPORTING TO ASSIST IN MONITORING EFFICIENCIES AND EFFECTIVENESS AND MANAGEMENT.

CONCURRED AGAIN, A NOVEMBER IMPLEMENTATION DATE.

ANYTHING ON THAT ONE COMMITTEE PLEASE CONTINUE.

UH, NUMBER FOUR, APPROVAL IS LACKING ON PLAN PAYMENT PLAN TERMS. THE COMPLIANCE DIVISION MANUAL STATES THAT PLANS SHOULD BE FOR A MINIMUM OF $100 PER MONTH UNLESS ORDERED BY A JUDGE OR APPROVED BY A COMPLIANCE MANAGER.

ON REVIEW OF 132 SAMPLED PLANS, 27 OF THOSE HAD PAYMENTS THAT WERE LESS THAN A HUNDRED DOLLARS, SOMEWHERE AS LOW AS $10 PER MONTH, FOUND NO EVIDENCE OF APPROVAL.

THE MANUAL ALSO STATES THAT PAYMENT PLANS SHOULD BE NO LONGER THAN ONE YEAR UNLESS ORDERED BY A JUDGE OR APPROVED BY THE COMPLIANCE MANAGER.

AND OF THOSE SAME ONE HUNDRED AND THIRTY TWO THIRTY NINE WERE GRANTED MORE THAN ONE YEAR ALSO WITHOUT EVIDENCE OF APPROVAL.

OUR RECOMMENDATIONS WERE TO WORK WITH THE JUDGES TO REEVALUATE THE PAYMENT PLAN CRITERIA FOR MINIMUM MONTHLY PAYMENTS AND LENGTH OF TIME AND APPROVALS, TRAIN THE STAFF AND UPDATE THEIR MANUALS ACCORDINGLY, UM, AND PERFORM PERIODIC MONITORING MANAGEMENT CONCURRED AND SAID IT WOULD BE IMPLEMENTED BY NOVEMBER.

ANY QUESTIONS ON THAT ONE? AND WOULD YOU SAY THAT THERE MAY BE UH, I'M SORRY, GO .

I DIDN'T HEAR YOU.

GO AHEAD MS. WILLIAMS. SHE DID, SHE DID DISTINCTIVELY.

SHE KNEW I'M .

I HEARD YOUR LITTLE PUN.

DO YOU KNOW IT TOO WELL, , UH, MY, MY QUESTION ON THAT IS DID, BASED ON THAT CHART, UH, THE VARIATION AND, AND, AND THAT'S SHOWN ON THAT, SO WAS THAT, WAS THERE ANY INDICATION? WAS IT DONE ADMINISTRATIVELY? WAS THE JUDGES THE, THE, WHAT YOU SHOWED WE HAD, PEOPLE WERE APPROVED FOR DIFFERENT AMOUNTS AT DIFFERENT TIMES AND THINGS LIKE THAT.

WHAT DID YOU, WHAT DID YOU FIND AS, AS A, WAS THERE ANY, WAS THERE A CONSTANT, DID THAT HAPPEN OR IS THAT BASED ON WORK, YOU KNOW, EXTENSIVE WORKLOAD OR, OR HOW DID THAT CHART MATERIALIZE? ANY, ANY FINDINGS? YEAH, SO WE, WE SELECTED JUST TO LOOK AT 132 SAMPLE SIZE BECAUSE THERE WERE SO MANY PAYMENT PLANS.

SO WE SELECTED TO LOOK AT 132.

RIGHT.

AND IT WAS, YOU KNOW, RANDOM SELECTION.

WE TRIED TO GET, UM, A VARIETY OF CASES BEING MANAGED BY DIFFERENT STAFF MEMBERS.

UM, WHEN THEY RECEIVED THE TI THE CITATIONS BECAUSE OF C O V I D, YOU KNOW, THERE WAS A TIME PERIOD WHERE FEWER CITATIONS WERE BEING ISSUED.

SO WE LOOKED AT A NUMBER OF THINGS AND TRIED TO GET SORT OF ACROSS THE BOARD, UH, SAMPLE SIZE.

AND WE DIDN'T REALLY FIND A PATTERN OF, YOU KNOW, WHY, UH, OR IF IT WASN'T RELATED TO WHICH CLERK WAS ASSIGNED TO THE CASE FOR SURE.

IT WAS KIND OF ACROSS THE BOARD JUST

[01:00:01]

TRYING TO WORK WITH THE, THE DEFENDANTS TO SEE WHAT THEY COULD PAY.

OKAY.

SO IT WAS MOSTLY, MOSTLY INDIVIDUAL DISCRETION AS STAFF WORK WITH SEEMED TO BE, SEEMED TO BE, EVEN THOUGH THEY HAD THE MANUAL.

UM, IF THERE WAS DISCUSSION WITH MANAGEMENT AND APPROVAL WITH MANAGEMENT, IT WASN'T DOCUMENTED.

SO WE, WE DON'T HAVE ANY WAY OF KNOWING THAT.

OKAY.

YEAH.

IF I MAY ADD, ADD SOMETHING TO THAT.

I THINK A BIT MAINLY WE COULD NOT FIND THE EVIDENCE.

IT MAY HAVE BEEN VERBALLY APPROVED, BUT WE JUST DIDN'T SEE THE EVIDENCE IN THE SYSTEM.

SO, UH, THAT, THAT WAS, I WOULD SAY, SO WE, WITHOUT ANYTHING INFORMATION, WE REALLY CAN'T FIND EXACTLY WHAT HAPPENED AND AS A RESULT, GO OVER YOUR RECOMMENDATION.

YOUR RECOMMENDATION AGAIN, TO, TO ADDRESS THIS.

'CAUSE I'M THINKING AND, AND TELL ME IF YOU THINK I'M OFF, OFF BASE GETTING IT WRONG.

IF, IF I'M, IF I'M ONE OF, IF I'M ONE OF US CUSTOMERS AND WE, WE ESSENTIALLY THERE FOR THE SAME REASON, BUT I GET, I GET ONE OPTION AND THEN THE PERSON NEXT TO ME THE SAME MAY GET ANOTHER OPTION, BUT WE ARE THERE FOR THE SAME REASON.

SURE.

IS THAT AM AM I I THINK THERE'S A LOT OF VARIABLES THAT CAN OCCUR.

IT, IT'S OKAY.

AGAIN, YOU KNOW, ONE PERSON MAY HAVE A FULL-TIME JOB, ANOTHER PERSON MA