ALGA article pg 12

Featured Articles
• Why Audit Fleet Inventory?
• A Focus on the Fundamentals
• Audit of Metropolitan Nashville's Fuel Management Program
• Risks for Fleet Services
• Kansas City Streetcar's Public-Private Partnership
• Denver International Airport Fleet Management Program Audit
• King County Transit Audits
Local Government Auditing Quarterly
The Journal of Local Government Auditing | Fall 2016
algaonline.org
Auditing Fleets

From the Editor
Welcome to the Fall 2016 issue of the LGAQ,
Auditing Fleets. Much like our Summer issue, we
have a lot of articles for you relating directly to the
issue theme, but we have just as much content that
does not directly relate to the theme of fleet
operations. This is part of what I value about the
Quarterly: providing something for everyone. Not
interested in fuel management or vehicle inventory? Never fear. Your
interest is likely to be piqued by one of our other features, which
address topics as wide ranging as mentorship, quality assurance,
leadership, GASB, and fraud.
This is why we decided to start splitting out our feature articles into two
sections: (Issue Theme) Features and Other Features. We will continue
to have a dedicated theme for every issue but always welcome articles
on other topics of interest to ALGA’s membership. This subtle change
reflects more accurately how the LGAQ has been delivering content to
our readers.
A not-so-subtle change that will affect the Quarterly is our upcoming
change in leadership! Justin Anderson will be stepping down after three
years as Chair of the Publications Committee. Justin has been a
dedicated and thoughtful Chair, keeping things humming along and
helping us bring exciting ideas to fruition. As the Editor of the LGAQ, I
couldn’t have asked for a more supportive partner. I will miss his
advice, encouragement, and perspective. Lucky for us, we will be in
the very capable hands of Lisa Callas, who has been a member of the
Publications Committee since 2014. Lisa’s familiarity with all things
publications will be an asset to what I expect to be a seamless
transition.
Fall isn’t typically thought of as a time of renewal—unless you are
renewed by the arrival of football season—but I love this quote from
The Great Gatsby by F. Scott Fitzgerald: “Life starts all over again
when it gets crisp in the fall.” So, here’s to fresh starts, crisp weather,
and football.
--Emily Jacobson
LGAQ: VOLUME 30, NUMBER 1
About the Quarterly
The Local Government Auditing
Quarterly (LGAQ) is published
four times a year – in September,
December, March, and June
– by the Association of Local
Government Auditors (ALGA)
Association of Local Government
Auditors
499 Lewis Hargett Circle
Suite 290
Lexington, KY 40503
(859) 279-0686
Opinions expressed in the Local
Government Auditing Quarterly
are those of individual authors,
and they may differ from ALGA’s
policies, official statements of
ALGA committees, or those of an
author’s employer.
LGAQ Editor
Emily Jacobson
City and County of Denver, CO
LGAQ Assistant Editor
Kristine Adams-Wannberg
City of Portland, OR
Social Media
Follow ALGA at algaonline.org
Follow ALGA on Twitter at twitter.
com/ALGA_Gov
LGAQ Fall 2016 | Page i

TABLE OF CONTENTS
UPCOMING EVENTS
2
Training Opportunities
2016 ANNUAL CONFERENCE
3
Highlights
COLUMNS
7
Opportunities for Improvement
Gary Blackmer
FLEET FEATURES
12
Why Audit Fleet Inventory?
Nia Young
16
A Focus on the Fundamentals
Jim Williamson
19
Audit of Metropolitan Nashville’s Fuel
Management Program
Seth Hatfield
23
Risks for Fleet Services
Janine Mryglod, Queena Dong & Edwin Ryl
27
Kansas City Streetcar’s Public-Private
Partnership
Jonathan Lecuyer
31
Denver International Airport Fleet
Management Program Audit
Sonia Montano
35
King County Transit Audits
Sean DeBlieck
OTHER FEATURES
38
Reflections on Becoming a Mentor:
Minions, Karma, and Everything In Between
Eric Spivak
41
Q&A About QA
Olga Ovcharenko
46
Principles in Action: Reflections From a
New CAE
Shanda Miller
51
Do We Need a Universal Accounting Model
for Leases?
Khaled Abdel Ghany
57
Preventing Fraud and Detecting Collections
Fraud in Counties
John DuPree
SUBMISSIONS
62
Submitting Abstracts, Articles, and Member
News
LGAQ Fall 2016 | Page 1

TRAINING OPPORTUNITIES
WEBINAR
Oct 11 — Webinar: Stratified Random
Sampling: Common Uses in Performance
Audits
ANNUAL CONFERENCE
2017 ALGA Annual Conference
May 22-23, 2017
Atlanta, Georgia
Pre-conference workshops will be held on
May 21; post-conference workshops will be
held on May 24.
EVENT REGISTRATION AND
MEMBERSHIP MANAGEMENT
PORTAL
ALGA’s event registration site can be found
at alga.membershipsoftware.org.
At this site you can:
• Register for any ALGA event
• Update your contact information and
renew your membership
• Access ALGA’s online directory
• Access ALGA’s members-only online
training resources
Questions about the event registration and
membership management portal may be
directed to ALGA Member Services at (859)
276-0608.
ARCHIVED WEBINARS & FREE
TRAINING VIDEOS
Miss a webinar that you really wanted to
participate in? You can access ALGA’s
archived webinars on the membership
management portal at alga.
membershipsoftware.org!
Most of the webinars cost $50 and are worth
one credit of self-study CPE (not NASBA-
certified). There are also several free
archived webinars.
ALGA members may view several free
training videos in the portal. Videos in the
following areas are available:
• Managing Audit Engagements
• Risk Assessment
• Fraud
• Information Technology
• Public Safety
• Public Works
• More!
You must be a current member of ALGA to
view the archived webinars or to access the
free training videos.

Exemplary Award Winner (Extra Small Shop) - City of College
Station, TX
Distinguished Award Winner (Extra Small Shop) - Deschutes
County, OR
Exemplary Award Winner (Small Shop) - Clark County, WA Distinguished Award Winner (Small Shop) - Sacramento City
Auditor's Office
Exemplary Award Winner (Medium Shop) - City of Palo Alto, CA Distinguished Award Winner (Medium Shop) - City of Scottsdale,
AZ
2016 ANNUAL CONFERENCE HIGHLIGHTS

Distinguished Award Winner (Medium Shop) - City of Seattle,
WA
Exemplary Award Winner (Large Shop) - King County, WA
Distinguished Award Winner (Large Shop) - City of Long Beach,
CA
Exemplary Award Winner (Extra Large Shop) - City and
County of Denver, CO
Distinguished Award Winner (Extra Large Shop) - City of San
Diego, CA
Distinguished Award Winner (Extra Large Shop) - City of San
Francisco, CA

Lifetime Achievement Award Winners - Jerry Shaubel, Jerry
Heer, and Alan Ash
Outstanding Contribution to the Quarterly - Minh Dan Vuong,
City of San Jose, CA
Mark Funkhauser presents at a General Session Peer Review Committee members in discussion
Listening to a General Session
Evening social activities

Kymber Waltmunson receiving the President Award Incoming Board Members
Member Services Evening social activities
Evening social activities Evening social activities

OPPORTUNITIES FOR IMPROVEMENT
WHAT I LEARNED WITHOUT TRAINING
Throughout my 30 years of auditing in three entirely different work environments–
city, county, and state–I was always learning things that were never taught to me.
I’m not criticizing continuing professional education at all; there is just so much to
be learned, more than I acquired in all those classes, conferences, and webinars.
I also learned that some topics should be taught but aren’t, while others simply
can’t be taught except through experience.
EVIDENCE
Evaluation of evidence should be taught. I have sought out practical audit training
on evidence but it simply doesn’t exist. Oh sure, you can look at the Yellow Book
but the definition of sufficiency is vague and circular. In part, there isn’t and can’t
be a specific standard because sufficiency is related to the context of the audit
statement being supported. It seems that such a key concept should be better
explained in the Yellow Book, which could guide some training.
Without training, every audit shop seems to send rookie auditors out to gather
evidence and expect on-the-job-training to establish some concept of sufficiency.
When I was a rookie my first assignment was to perform quality control on
an audit. I was challenged to think about what was persuasive evidence and
it helped me see the kinds of expectations I needed to meet for evidence. I
also saw how audits were assembled, which helped immensely when I started
gathering and organizing needed evidence.
Ironically, many audit shops are pushed by the ‘supervision’ word in the Yellow
Book to think only an experienced auditor understands sufficiency to perform this
function. Everyone needs to understand sufficiency. The most important unmet
training need is a conceptual structure and language to allow auditors to discuss
the various considerations that comprise sufficiency.
By Gary Blackmer

Beyond the lack of clarity, there are efficiencies to be gained if auditors can
distinguish sufficient from superfluous evidence. Gathering unnecessary
evidence can eat a lot of audit hours. Consistent training will help the new
hire develop, improve everyone’s efficiency while assuring compliance with
standards, and reduce problems during quality control reviews.
We developed some training in Oregon to describe the aspects of sufficiency,
which was presented at the ALGA conference in San Diego, and it is the first
I’ve seen.
WRITING
Until I watched a journalist craft an audit report, I didn’t realize how badly I wrote,
and we all wrote. In that audit, the narrative flowed, the findings were accessible,
and the agency’s story was alive. In contrast, my sentences were cumbersome.
My writing contained stale phrases with no spark of humanity. I still don’t write as
well as I wished, but the much higher standard keeps me humble.
This storytelling skill is in us, but we seem to smother it in jargon. At our
internal meetings on audit progress, we talk about our findings in clear and
compelling ways. Then we write as if it were a technical manual for a nuclear
spectroscope. Here’s my scientific explanation: our brains are closer to our
mouths, and much farther from our fingers on a keyboard. The message
degrades in the transmission.
I probably had at least 240 hours of training in my career to write better
and it never made a lasting impression. Stan Stenersen’s training was
the exception. He taught auditors how to translate complex findings into
accessible concepts, which was a big leap. He also covered the second big
step toward improving audit writing: incorporating the entire organization in
addressing its collective writing and editing behavior. Senseless editing will
puree the best sentences to a flavorless pulp.
The last step, expanding the vocabulary to enliven the narrative, wasn’t
covered. We need good training, but organizations must empower our
auditors to write stories for the public in an incisive language.
AUDIT PROCEDURES
There are two perspectives needed here. Managers need to be exposed to
various ways that audits can be performed and staff need to be trained on
the particular procedures chosen by their agency managers.
Anyone who thinks there is only one way to conduct an audit hasn’t been on
a peer review. A common challenge for new peer reviewers is to accept that
their way of conducting an audit is not the only way. Once they’ve overcome
that mindset they will be surprised at how much they can learn about different
ways to conduct audits and still comply with audit standards.
Until I watched a
journalist craft an
audit report, I didn’t
realize how badly
I wrote, and we all
wrote.

There are multiple approaches to produce audits but these are not being
taught. Even if they were, whole management teams need to be trained on
the alternatives to help them agree upon the best steps for their organization.
Once decided and documented, the rest of the staff need to be trained.
Developing this training is important for new hires because the organization
will benefit from a shorter learning curve, improved performance, and greater
impact audits. You may think experienced auditors would need less training
but I’ve also seen ‘generations’ of auditors, and managers, who each cling to
the habits and precepts of their particular brand of early training. Engaging
the whole organization in continual career learning is what we would ask of
our auditees and we should commit to the same standard ourselves.
FACILITATION
One of the most valued classes I took many years ago taught meeting
facilitation for applying a COSO framework. Most of the time was spent on
skills and tools for leading discussions, with an emphasis on the responsibility
of a facilitator to promote open discussion and reach a decision, without
influencing it. It was not taught by an auditor, but by a facilitator.
The role of a facilitator was the big takeaway for me. Of course in exit
interviews, I never declared I would play the ‘facilitator’ but I applied the
skills. Watching the discussion from an observer’s standpoint, rather than
a participant, gave me new insights, especially when I saw the unspoken
body language. What was most valuable to me was the ability to switch from
facilitator to decision-maker when needed. All managers and staff auditors
could benefit from this training.
FINDING FINDINGS
I have said this before in many different ways, but we need to ensure that
our audits address actual recurring problems more than theoretical risks.
Identifying the biggest problems should be the first step of an audit.
Sure, we can train and apply the COSO model or other risk analyses to
identify many things that might go wrong in an organization. Those are
good textbook fundamentals, but we should also train auditors to spot
the problems that impede the agency’s mission, using methods such as
contacting staff, stakeholders, and peers of the auditee. Reality is much
richer than any deductive or theoretical framework. (Trust me on this. I have
a degree in philosophy.)
Yellow Book standards are silent on methods for audit topic selection. They
are written as if setting the scope and objective was the first step of the audit,
then developing findings within that framework. It's like your family doctor
deciding, without even talking to you, that this visit will be about your spleen,
just because there might be something wrong with it.
I have said this
before in many
different ways,
but we need to
ensure that our
audits address
actual recurring
problems more than
theoretical risks.
Identifying the
biggest problems
should be the first
step of an audit.

Using a more inductive audit approach is not recognized in the Yellow Book,
though it is not prohibited in any way. We need guidance on spotting and choosing
potential audit findings, as well as training to compensate for this omission.
ORGANIZATIONAL DYNAMICS
The root causes of findings are spring from the organization. Employees may
not have the supervision necessary for complex tasks. Leadership may not
be hearing what is actually happening on the front lines. Resources may not
match the workload in various parts of the organization. Or line staff may not
be hearing clear direction from leadership.
Here is a sad truism that we have all seen: organizations dominated by
frustrated and unhappy employees are less likely to provide good services.
Talking to managers and line staff can reveal these problems to auditors
who can then follow the causal chain on to their adverse effects on public
services. I know there are public administration classes that teach how to
organize people and resources to achieve an objective, which can be great
criteria, and guide recommendations. A class on common dysfunctions in
organizations could also help auditors more quickly spot the deficiencies.
UNTRAINABLE TOPICS
One of my phrases to auditors has been, “This is not your typical audit, but no
audit is typical.” In reality, auditing is really more like jazz, not sheet music.
Over the years I learned that each audit follows its own path through the
landscape of an organization and its mission, to use another metaphor.
Practice, Practice, Practice ─ A new hire sees that landscape as if it were
a maze. The maze is a combination of audit standards and procedures,
the finding, the relationship with the auditee, and many other factors. The
movement within the maze seems haphazard, without an understanding of
distance or overall direction. Afterward, the path taken and the structure of
the maze can be better understood, as if seen from above. Yet the next audit
is likely to be a different maze, with some factors altered.
Rote training produces unrealistic expectations for auditors. By unrealistic
I mean impractical and unsuccessful when automatically applied. Auditors
need to find the underlying and undiscovered themes that impede an
organization, then draw the managers onto the path to improvement. And
surprises will happen that the best laid plans will never anticipate.
No training can replace the experience gained from multiple audits, and the
experience gained from the departures in subtle and important ways from a
‘standard’ path.
One of my phrases
to auditors has been,
“This is not your
typical audit, but no
audit is typical.” In
reality, auditing is
really more like jazz,
not sheet music.

And multiple audits can instill an understanding of the role and conduct of an
auditor in the course of an audit. We can talk about attitude and ethics and
objectivity and many other important expectations, but again, the situations
add that other layer of complexity, sometimes called real life.
Position of the Auditor ─ Training can’t address the unique ‘contexts’ of an
audit organization or the organization being audited. The attitude toward the
audit organization within the jurisdiction is one determinant of the auditor’s
role. The relationship with elected officials is delicate and complex, starting
with the authority of the auditor, either legislatively directed or independently
elected. Some general principles can be set out in training, but the political
context of the audit organization plays out in agency interactions and public
perceptions of the auditors as they go about their work.
If the agencies respect or distrust or trivialize auditors, then each requires
a different communications style that can’t be taught in a national seminar.
Neither can training instill the correct behavior in an auditor who encounters
angry auditees, an abused whistle blower, or the distraught victim of
inappropriate agency ‘services’.
Good Coaching ─ There is no substitute for experience. And there is no
substitute for a good mentor, on-the-job trainer, or communicative leader
to offer guidance for new hires and experienced auditors. The field of
performance auditing depends upon an apprenticeship period for its new
auditors because there is so much that can’t be taught, or is particular to the
audit organization’s working environment.
A performance auditor’s learning curve will truly span an entire career
because we must never stop seeking ways to be better. And, continuous
learning is one of the most satisfying elements of this profession.
ABOUT THE AUTHOR
Gary Blackmer has been conducting audits for 30 years and recently retired
from his position as Director of the Oregon Audits Division. The Division
conducts performance, financial, and information technology audits, monitors
financial audits of local governments, and responds to hotline allegations.
Previously, Blackmer served 10 years as the elected Portland City Auditor,
eight years as elected Multnomah County Auditor, a management auditor,
and analyst for a variety of state and local agencies. Blackmer is a past-Chair
of the Pacific Northwest Intergovernmental Audit Forum, and past-President
of the Association of Local Government Auditors. He received the ALGA
Lifetime Achievement Award in 2015.
Training can’t
address the unique
‘contexts’ of an audit
organization or the
organization being
audited. The attitude
toward the audit
organization within
the jurisdiction is
one determinant of
the auditor’s role.

AUDITING FLEETS
WHY AUDIT FLEET INVENTORY?
Accurate inventory data reduces the risk of loss or theft and provides information
for the city to manage its inventory to maintain adequate stock for repairs. Data
reliability was a key focus in two of our fleet-related audits. We conducted an
audit in 2011 that evaluated controls and efficiency of fleet inventory operations,
and in 2012 we evaluated controls over city fueling sites.
INACCURATE INVENTORY RECORDS MASKED LOSSES
We set out to match inventory recorded in the system to physical facility and found
that out of a total value of $1.9 million recorded inventory, $500,000 was recorded
with unknown location codes. Staff was unable to tell us where these 18,000 items
were physically located, or whether they had ever been in the city’s custody or
were recorded in error. We also tested stock levels for a random sample of 30
items to compare quantities recorded in inventory to quantities on hand. In eight
instances, fewer items were on the shelf than were recorded in inventory. In one
instance, one more item was on the shelf than was recorded in inventory. Both over
and undercounts flag potential theft or billing problems. Inaccurate records of the
quantity of parts on hand make it more difficult to detect theft or loss.
The Office of Fleet Services’ written policies required employees to conduct
monthly counts of parts inventory, which we discovered had not occurred.
Further, the office had no method to reconcile its fleet management system
records with the city’s financial management system to ensure that all purchased
items were recorded in inventory. Staff entered information into both systems,
which weakened controls in each system that were intended to segregate
incompatible duties and ensure items were accounted for when received. We
identified discrepancies between purchases processed in Oracle and purchases
recorded in the inventory system for the same period. In particular about 700
part purchases, totaling about $350,000 recorded in the inventory system
over an 18-month period, had no corresponding record of receipt. These and
other discrepancies and billing errors suggested that supervisory review and
management approvals were not functioning as effective controls.
Nia Young

AUDITING FLEETS
INACCURATE INVENTORY RECORDS CONTRIBUTED TO
OPERATIONAL INEFFICIENCY
Inaccurate inventory records also made it more difficult to establish and
monitor reorder points to ensure that stock was available when needed. Of
the 541 work orders open during our audit, 21% were waiting for parts that
were supposed to be stock items. Almost 30% of the work orders had been
open for more than 31 days. Longer turnaround times for maintenance and
repairs increase the city’s operating costs. Inaccurate data also made it
difficult to assess operations. Inventory turnover in 2010 was less than half
of the industry standard, which could reflect bad data but could also indicate
that the city was carrying obsolete parts, ordering incorrect parts, or failing to
stock the parts that it needs. The turnover rate measures how often parts are
used by calculating the ratio of parts billed to the average value of parts in
inventory over a specified period.
We also noted that consolidating parts warehouses would improve
operational efficiency and better safeguard inventory. Based on industry
standards, the Office of Fleet Services didn’t have enough parts specialists
to cover all shifts at all facilities. Inadequate staffing increased risk of theft
and loss because incompatible duties were not segregated. To compensate
for lack of parts specialists on duty, mechanic supervisors had keys to parts
rooms. Further, we observed physical security risks, including poor lighting
and unsecured access points, at five of the city’s seven locations.
MISUSE OF FUEL LIKELY COST THE CITY MORE THAN $300,000
PER YEAR
The Office of Fleet Services dispensed over 7 million gallons of fuel totaling
$23 million in between March 2010 and June 2012. The office tracked
departments’ fuel use with an automated fuel management system and billed
departments monthly. Industry experts identify fuel as the second largest
public sector fleet expense and some estimate that 3% of a company’s fuel
budget is lost to theft. Our audit identified significant control deficiencies
and an overall control environment inadequate to prevent or detect theft
or misuse of fuel. The Office of Fleet Services failed to implement system
settings to limit the amount of fuel pumped into vehicles/equipment. The
system configuration allowed most vehicles/equipment to fuel up to 99
times per day, pump fuel after entering erroneous odometer readings, and
even allowed users to dispense more fuel than the recorded capacity of
the vehicle. Configuring the system with limits and to check the validity of
data entered reduces the opportunity for theft and ensures that vehicle use
data are accurate, which can allow fleet services management to identify
underused equipment and to calculate miles per gallon per vehicle to flag
potential problems. As a result of the audit, the fleet services director updated
the system configuration to:
Inventory turnover
in 2010 was less
than half of the
industry standard,
which could reflect
bad data but could
also indicate that
the city was carrying
obsolete parts,
ordering incorrect
parts, or failing to
stock the parts that
it needs.

AUDITING FLEETS
• Set the maximum fueling per day parameter to two to five
• Deny fuel if tries exceeded the parameter
• Deny fuel when the entered odometer reading failed the system validity
check
• Deny fuel that exceeded the capacity set for the vehicle
We recommended the city further strengthen controls by investing in RF
(radio frequency) Vehicle ID technology and repurposing its existing fuel
cards to identify the assigned employee. The Office of Fleet Services issued
a fuel card that stored data about an assigned vehicle to the employee.
Before fueling, the operator swiped the card to identify the vehicle and
manually entered his or her user ID and the vehicle odometer reading into
a key pad at the fueling station. Users, however, could fuel vehicles other
than the one designated by the card and could enter an erroneous user ID
and/or an erroneous odometer reading. Attaching an RFID to the vehicle
would automatically identify the vehicle and transmit the current odometer
reading. Using the existing fuel key to identify the employee instead of the
vehicle would reduce the likelihood of operators entering erroneous IDs at
the key pad. Based on the Ryder Fuel Services estimate that as much as
3% of a company’s fuel budget is lost to theft and the city’s fiscal year 2012
fuel consumption of $10.7 million, we estimated that improved controls could
yield $320,000 in annual savings and the return on investment would be less
than two years.
Based on our reviews of fleet services, we understand that inventory data
control is just as important as operational efficiency. Most of our methodology
and recommendations focused on improving the accuracy of the inventory
records and securing the physical parts inventory, as well as increasing
operational efficiency. Our fleet services audits helped to paint the big picture
that management must take a hands on approach to controls over inventory
and data management to reduce risks and improve operations.

AUDITING FLEETS
ABOUT THE AUTHOR
Nia Young is a Senior Performance Auditor for City of Atlanta. Previously,
she was a government operations consultant with the Department of
Education in Florida, with additional experience in higher education
organizations in program management and evaluation. Nia earned her
Masters of Public Administration degree from Southern University in 2012.

AUDITING FLEETS
A FOCUS ON THE FUNDAMENTALS
It’s easy to get enchanted with innovative ways of doing things and forget about
the fundamentals of the task. In football, you often see an infatuation with new
offenses like the “air raid” or “mobile quarterbacks;” but in the end, most games
turn on which team has the best fundamentals. Blocking, tackling, footwork,
positioning: these are the important fundamentals that successful coaches
never forget. In our profession, using data analysis to develop value-added
recommendations to improve operating efficiency and program outcomes is
now common. More reader friendly reporting styles are developing to enhance
communication of our audit results. Technology is becoming integrated into
almost every aspect of our work. This type of innovation and change is important
to auditors’ continued relevance and success. But, like successful football
coaches, we shouldn’t forget our fundamentals: analytics, assessing internal
controls, and verifying that control procedures are carried out effectively. A recent
audit in Oklahoma City illustrates this point.
THE GAME PLAN
Oklahoma City hires a contractor to operate five parking garages and six surface
lots. The contractor collects and remits $7.5 million in annual operating revenue
by depositing collected revenue directly into a City bank account. The City
reimburses the contractor $2.4 million for annual operating costs and pays the
contractor a $100,000 management fee. We included an audit of this contract
in our audit plan based on the amount of cash handled in the operation and
previous lapses in contractor oversight by the City’s Parking Division staff.
SCANNING THE FIELD
Our initial step in the audit was a comparison of reported monthly revenue to
bank deposits for our fiscal year audit period. This simple comparison revealed a
$190,000 cash shortfall. Initial inquiries with the contractor’s Accounting Manager,
a 15-year employee assigned as our audit contact, were fruitless. The Accounting
Manager’s explanation was that “it must be some sort of timing difference.”
Jim Williamson

AUDITING FLEETS
Her apparent apathy about the issue was disconcerting. The City’s Parking
Division staff were also no help as we discovered they didn’t perform basic
reconciliations of the contractor’s monthly revenue reports to the bank account.
Their oversight was limited to comparing daily cashier reports to corresponding
bank deposits. They had adopted the approach that, “if the daily deposits
match, then the monthly revenue amounts must be accurate.” Knowing that
we had a typical assessment and testing of the contractor’s internal controls
ahead of us, we postponed further investigation of the discrepancy in hopes
that our fieldwork would help us better understand the subject.
BLITZING
Our control assessment revealed no obvious weaknesses and this seemed
to be confirmed during our walk-through. However, in testing, we quickly
identified missing cashier deposits from the daily revenue collections. We
elevated our discussion of the discrepancies to the contractor’s Controller
who, after not being able to explain the missing funds, proceeded to call
the Accounting Manager into her office. The Accounting Manager reiterated
that “it must be some sort of timing difference.” At this point we informed the
Controller that we believed the missing cashier deposits were the reason for
the $190,000 cash shortfall discovered in our initial analysis. The Controller
responded by saying, “What $190,000 shortfall?” The Accounting Manager
had not informed the Controller of our earlier inquiry. Later that day, when the
Accounting Manager didn’t return from lunch, the Controller contacted us to
say she was afraid there was a problem.
THE FAKE
As our investigation progressed we discovered that, contrary to contractor
policy, the Accounting Manager often took the daily revenue collections to the
bank. Given the Accounting Manager’s revenue responsibilities, this violated
the basic segregation of duties principle. Separate deposits were made for
each cashier. During a trip to the bank, the Accounting Manager would open
the sealed bank bag, remove a cashier deposit, and then seal the remaining
cashier deposits in another bank bag to which she had access. Upon
returning to her office, the Accounting Manager would simply omit the stolen
funds’ daily cashier report from those sent to the City’s Parking Division.
She hid her embezzlement from City staff, but she did not have the ability to
change daily deposit summaries required by the contractor’s corporate office.
To hide her theft from corporate staff, she included the stolen cashier deposit
amounts on a calculator tape, obviously not supported by receipted deposit
slips, but nicely matching the daily revenue reports. She emailed the packet
to the contractor’s corporate office where, as she had hoped, employees
relied on the calculator tape rather than receipted deposit slips confirming the
daily revenue total. The Accounting Manager carried out this scheme from
May 2012 through November 2015, embezzling almost $420,000.

AUDITING FLEETS
SACKING THE QUARTERBACK
Due to the magnitude of the fraud and the fact that grant funds are involved
in financing the City’s Transportation and Parking Department, the Police
Department referred the case to an Interagency Task Force comprised of
local, state, and federal agency representatives, including the IRS. We
provided evidence of the embezzlement to the Task Force and assisted
them in developing the case. The Task Force presented the case to the US
Attorney General’s Office who filed charges against the Accounting Manager.
During sentencing, the Accounting Manager admitted embezzling to “cover
up a gambling addiction.” She was convicted in federal court of wire fraud
(emailing false revenue reports) and tax fraud (failing to declare income
from her embezzlement). The Accounting Manager was ordered to pay
$500,000 in restitution, spend 5 years on probation, and serve 216 days in
jail on weekends. The City’s agreement with the contractor stipulates that the
contractor is responsible for the operating revenue until it is deposited in the
City’s bank account. The contractor remitted all of the missing revenue to the
City. The contractor’s insurance company and the IRS will receive most of
the restitution payments.
WINNING THE GAME
Our detection of this fraud was a good reminder to focus on the
fundamentals; it was perpetrated without segregated duties, concealed
with falsified documents, and undetected by management due to control
procedures not being carried out effectively. It was detected through basic
analytics, control assessment, and compliance testing. We auditors should
continue to strive to be innovative and forward thinking but, like successful
football coaches, we can’t afford to forget our fundamentals.
ABOUT THE AUTHOR
Jim Williamson joined the Office of the City Auditor in 1988, was appointed
City Auditor in 2008, and has over 32 years of auditing experience. Jim
has held several positions with ALGA including President and Peer Review
Committee Chair as well as several positions with the IIA’s Oklahoma City
Chapter including President. He serves as Past-Chair on the Peer Review
Oversight Committee for the Oklahoma Accountancy Board. Jim is also an
AICPA, OSCPA, ACFE and AGA member.
Our detection of this
fraud was a good
reminder to focus on
the fundamentals;
it was perpetrated
without segregated
duties, concealed
with falsified
documents, and
undetected by
management due to
control procedures
not being carried out
effectively.

AUDITING FLEETS
AUDIT OF METROPOLITAN NASHVILLE’S FUEL
MANAGEMENT PROGRAM
INTRODUCTION
In September 2008, rumors spread that Nashville would run out of gasoline
due to recent hurricanes along the gulf coast. The rumors caused a run on gas
stations and left the majority of them dry. Two years later, a 1,000-year flood
brought Nashville to a standstill and caused extensive damage to Nashville’s
businesses, homes, and infrastructure. The Metropolitan Nashville police
cruisers, fire trucks, and public works vehicles were able to keep operating during
these extraordinary situations due to the effective fuel management practice
of maintaining internal fuel sites. This highlights how important an effective
fuel management program can be for your city. In 2012, our office conducted a
performance audit of the government’s motor fuel usage. The purpose of this
article is to highlight the objectives, testing, and recommendations from our audit.
BACKGROUND
In 2004, Transportation Consultants, Incorporated conducted a review of the
Metropolitan Nashville and Davidson County fuel program. The recommendations
from that report helped shape the current structure of the government’s fuel
management program. One recommendation was the creation of the Office
of Fleet Management with the goal that it would be the principal entity for
procurement, dispensing, accounting, and billing for fuel. This was accomplished
by Mayor Karl Dean’s Executive Order Number 31, which established the Office
of Fleet Management in hopes to centralize the fuel management function. The
Office of Fleet Management is comprised of five programs: Contracts and Assets,
Parts, Repair Shops, Special Operations, and Fuel and Assets Financials.
OBJECTIVES
Our audit primarily focused around the fuel management within the Fuel and
Assets Financials Program: billing for fuel usage, internal fuel sites, and fuel
cards. For fuel usage billings, we wanted to determine if billings were complete
Seth Hatfield

AUDITING FLEETS
and accurate. With the internal fuel sites, we wanted assurance that fuel
purchased, received, and pumped was being tracked, and the sites were
physically protected. For the fuel card program, our objective was to
determine that payments made were for authorized transactions.
FUEL USAGE BILLINGS
The Office of Fleet Management uses either allocated billings or direct
billings to recover the costs of fuel and preventative maintenance.
Allocated billings are used for vehicles purchased through the Office of
Fleet Management reserve fund, and direct billings are used for vehicles
purchased through grants, forfeitures, and other fleet additions.
The specific department’s previous years’ fuel consumption is the basis
for the allocated billings. Once an approved budget was in place, the
department’s allocation percentage was multiplied by the budget to
determine the amount of the billing.
For direct billing vehicles, the actual usage is directly billed to the
department. The Metropolitan Nashville owned fuel sites have a Fuel
Master system which requires a “prokee” to obtain fuel. All transactions
from Fuel Master and the fuel card vendor, Wright Express, are recorded,
downloaded once a month, and directly billed to departments. The Office of
Fleet Management uses a Microsoft Access database to capture the billing
information and to create invoices to the departments. A journal entry is
then performed to move funds from the department back to the Office of
Fleet Management. Our office reconciled the billing invoices back to the
original data pulled from the Fuel Master system and found that 56 percent of
invoices were incorrect. Another 27 percent of invoices did not have payment
detail, indicating that payment may never have been received. Some of our
recommendations around billing included ensuring the direct bill download
matched the original information from Fuel Master and Wright Express,
updating the Access database to include a field for check numbers so
payment reconciliations could be completed, and periodically running reports
to determine if a billing journal entry or check number is missing indicating
that payment was not received.
INTERNAL FUELING SITES
The Metropolitan Nashville government has a total of 21 fuel sites. Six
are operated by the Office of Fleet Management, six are operated by the
Parks and Recreation Department, and another nine are operated by the
Fire Department. Our office selected three sites and performed a quarterly
inventory. The reconciliations found variances ranging between negative
4,157 gallons and positive 767 gallons. The Office of Fleet Management
personnel stated that the veeder root probes, the gauges measuring the
fuel, were not regularly calibrated. The calibrations were not required by
Tennessee State law because the fuel was not being sold to the public.
Our office reconciled
the billing invoices
back to the original
data pulled from the
Fuel Master system
and found that 56
percent of invoices
were incorrect.
Another 27 percent
of invoices did not
have payment detail,
indicating that
payment may never
have been received.

AUDITING FLEETS
The veeder root probes were only calibrated when a problem caused an
operational error or alarm. Additionally, the mechanical pulsars could stick,
count too fast/slow, and can create metering errors causing the gallon
count to be off in the Fuel Master system. The American Petroleum Institute
recommends daily and monthly inventory reconciliations as a good practice
and that operational practices should be carefully examined when variances
exceed five gallons per every 1,000 gallons. Our office recommended veeder
root equipment be calibrated per equipment guidelines, quarterly calibrations
tests be completed and documented for pumps and meters, and daily and
monthly reconciliations be completed.
Purchasing motor fuel at a competitive price is an important area to review
when auditing a fuel program. Daily quotes received by the Office of Fleet
Management for 45 days were compared to Oil Price Information Service
historical rack prices for the Nashville market as part of the audit procedures.
No material pricing differences were observed.
Physical and internal protection of fuel sites is necessary to prevent
unauthorized access from the general public. Our auditors visited fuel sites
around the city and found most sites to have adequate protection. The fuel
sites operated by the Office of Fleet management had the protection of the
Fuel Master “prokee” which is necessary to pump fuel. The fuel sites operated
by Parks and Recreations had fences and padlocks to protect their pumps.
The only issues were with the diesel pumps located at fire stations which had
no protection against unauthorized use. However, the proximity to the fire
stations acted as a thief deterrent factor. It was evident that with three different
entities operating fuel sites, the government was not achieving a centralized
fuel management program as recommended by Mayor Dean’s Executive
Order 31. We recommended that the Office of Fleet Management coordinate
with the Office of the Mayor to determine if the current operating practices were
aligned with the intent of the Metro-wide fuel management system.
FUEL CARDS
Fuel cards are used by Metropolitan Nashville vehicles when access
to internal fuel sites may not be possible or convenient. We wanted to
determine if fuel cards were being used for authorized purchases and that
no duplicate payments existed. An administrative order specifies fuel and car
washes to be the only acceptable purchases with a fuel card. Specifically,
only 87 Octane gasoline, E85 Ethanol, and #2 diesel fuel purchases were
allowed for fuel. We requested all purchases from Wright Express during the
audit period and uploaded them into ACL Analytics for analysis.
The “Look for Duplicates” function was used to locate any duplicate charges
that would have been paid. This test pinpointed 66 duplicate payments
between January 1, 2010, and December 31, 2011. To locate unauthorized
transactions, any product description that did not match an authorized
We recommended
that the Office of
Fleet Management
coordinate with
the Office of the
Mayor to determine
if the current
operating practices
were aligned with
the intent of the
Metro-wide fuel
management
system.

AUDITING FLEETS
fuel type or car wash was extracted into a new table. This test located
15,331 unauthorized transactions out of a total 251,994 transactions.
With the number of duplicate and unauthorized payments, it was obvious
that transactions were not being reviewed before payment was tendered.
Each department within the Metropolitan Nashville Government has a fleet
coordinator responsible for ensuring compliance with fuel guidelines and
policies. We recommend the fleet coordinators monitor monthly statements
from Wright Express to locate duplicate and unauthorized transactions.
CONCLUSION
We concluded that the Office of Fleet Management was doing a good job
at keeping the government’s vehicles moving and supporting our citizenry.
However, better controls should be implemented to help ensure fuel was
accounted for and protected from unauthorized use. We had a total of
27 recommendations to help improve the fuel management function.
Management accepted and implemented all except for one that was not
possible due to limitations of the fuel card vendor.
ABOUT THE AUTHOR
Seth Hatfield is currently a Senior Auditor with the Metropolitan Nashville
Office of Internal Audit and is a Certified Public Accountant and Certified
Internal Auditor. Prior to becoming a local government auditor in 2013,
Seth spent six years with the Tennessee Department of Revenue as a tax
enforcement officer and tax auditor and two years with a commercial fleet
card provider as a credit administrator.
With the number
of duplicate and
unauthorized
payments, it was
obvious that
transactions were
not being reviewed
before payment was
tendered.

AUDITING FLEETS
RISKS FOR FLEET SERVICES
Since 2007, the Office of the City Auditor for the City of Edmonton has conducted
three audits of Fleet Services. This article summarizes some of the key risk areas
and procedures that we used in these audits. The intent is to provide a resource
for other auditors who may be considering, or actively planning, their own fleet
services audits.
PROFILE
Fleet Services at the City of Edmonton has a large set of responsibilities. They
provide fleet repair, customized fabrication, and maintenance services for the City
of Edmonton as well as select private sector clients. From 15 garages in various
locations throughout the City, Fleet Services maintains:
• Construction and street maintenance vehicles and equipment
• Turf and ice management vehicles and equipment
• Buses, police vehicles, fire vehicles and equipment, and ambulance units
Fleet Services is also heavily involved in the equipment lifecycle process
including procurement. They are responsible for managing the fleet safety
program, and advising on alternative fuels, emission standards, and legislative
requirements. They also provide services related to equipment modifications, and
failure and collision analysis. In short, if there is a vehicle or mobile equipment
used by the City, Fleet Services will usually be involved.
AUDITS
2007 - The objective of this audit was to provide assurance that Fleet Services
was providing economical, efficient, and effective services.
2014 - This audit assessed two aspects of fleet safety: driver training, and driver
permit management.
Janine Mryglod,
Queena Dong,
and Edwin Ryl

AUDITING FLEETS
2015 - The objectives of this audit was to assess the efficiency and
effectiveness of fleet maintenance; to determine if the training program for
Transit and Municipal Fleet Maintenance staff was adequate and appropriate;
and to determine if the procurement process was effective.
RISK/FOCUS AREAS
1. Staff productivity and training
As is the case with most service-based industries, wages tend to be one
of the biggest expenses. As such, there is a significant financial risk and
opportunity when it comes to fleet staff productivity. Staff training was
identified as a risk because it can impact productivity, safety, and compliance
with Occupational Health & Safety rules. To address these risks, we tested:
• If employees were doing the jobs that they were supposed to be doing.
• If there was a reasonable split between productive and unproductive time
(usually referred to as ‘wrench time’).
• If the ratio of buses to transit mechanics was reasonable.
• If there were enough buses available to meet transit scheduling demand.
• If the hours and topics of staff training were reasonable.
• If training records were complete, accurate, timely, and accessible.
2. Operational efficiency/effectiveness
Operational efficiency and effectiveness were key risks because they impact
both cost and quality of service. To assess these risks, we analyzed the
results of operational performance measures, including:
• Fleet availability - This shows if vehicles and equipment were available to
clients when they needed them.
• The amount of planned work versus the amount of unplanned work.
Planned work uses staff more efficiently and effectively, and is more
economical than unplanned work. This is particularly the case when the
work is routine maintenance or non-urgent issues.
• Equipment downtime - This shows if vehicles and equipment were
available when needed and determines if Fleet Services is completing
repairs in a timely manner.
• Shop rates - to determine if the operational costs for the City’s fleet
maintenance program were reasonably comparable to private industry
and other public organizations.
As is the case
with most service-
based industries,
wages tend to be
one of the biggest
expenses. As such,
there is a significant
financial risk and
opportunity when it
comes to fleet staff
productivity.

AUDITING FLEETS
We also identified that one of the factors that reduced efficiency was the
variety of vehicle manufacturers and models that Fleet Services was required
to maintain. Variation means that mechanics and technicians require broader
experience and training, and that a much larger inventory of parts is required
to complete repairs. Reducing the variety of vehicles and equipment helps
make the operations more efficient and reduces maintenance costs.
3. Operational economy and ‘best value’
Throughout the audits, when we assessed risks, we also identified possible
opportunities to streamline operations, reduce costs, or increase value.
These included:
• Compliance with the vehicle and equipment’s required maintenance
schedule. This helps ensure that the asset achieves its full life-cycle. The
City has a program where the cost to replace the vehicle is put aside
in a reserve over the life-cycle of the vehicle. If the vehicle needs to be
replaced before that life-cycle is complete, the funds may not be there to
do it.
• Ensuring that the ongoing maintenance requirements are known before
purchasing vehicles and equipment. This helps reduce the variation. If
vehicles are procured without full understanding of what the maintenance
requirements are, it increases the cost and complexity of maintenance.
• Negotiating fuel contracts on behalf of the City as a whole. This is a more
economical approach as division of client departments meant that fuel
purchases were managed in different ways.
• Tracking and managing vehicle warranty entitlements. Vehicles and
equipment often come with warranties. If Fleet Services does not
properly track and manage them, then it will incur repair costs rather than
the manufacturer or seller.
4. Service, satisfaction, and safety
Much of the work related to fleets is service-oriented. As such, there are
risks related to the delivery of service and the satisfaction of clients. We
assessed service and satisfaction through a blend of objective and subjective
measures, such as:
• Review of Service-Level-Agreement and service delivery targets. They
define the expected service levels for the operation. The agreements can
provide valid, accepted criteria for assessing the service in relation to the
needs and expectations of the clients.
• Review of client satisfaction survey results. They are a good proxy
measure for the reputation of the service. They also provide the business
with the chance to identify opportunities for changes and continuous
improvement.
Much of the work
related to fleets is
service-oriented.
As such, there are
risks related to the
delivery of service
and the satisfaction
of clients.

AUDITING FLEETS
Safety is always a risk. Since the City of Edmonton has an Occupational
Health and Safety program which includes a comprehensive safety audit
every three years, we focused on risks related to drivers. This includes:
• The effectiveness of the City’s driver permit process. City Driver Permits
are issued to employees who operate City vehicles. When the permit
process does not operate effectively, there is a risk that unqualified
employees are operating City vehicles.
• The effectiveness of a driver safety program. We assessed this by
reviewing safety performance measures.
• A review of traffic infractions obtained while operating City vehicles. We
used this to identify safety risks for the operation of the fleet.
The majority of municipalities operate a fleet. They may differ in size and
strategy, but it is likely that they all still share a set of common risks. We
have attempted to provide an overview of the various risks and possible
procedures that may apply to many municipal fleets and hope this is a helpful
resource.
ABOUT THE AUTHORS
The Office of the City Auditor at the City of Edmonton, Alberta has a staff
of 16 and conducts performance audits and investigations, and manages
hotline complaints. As the lead auditors on these reports, Queena Dong,
Janine Mryglod, and Edwin Ryl collectively hold one or more of CIA, P.
Eng., MBA, CRMA, and CPA.
The majority of
municipalities
operate a fleet. They
may differ in size
and strategy, but it
is likely that they all
still share a set of
common risks.

AUDITING FLEETS
KANSAS CITY STREETCAR’S PUBLIC-PRIVATE
PARTNERSHIP
More than 50 years after dismantling its citywide system, Kansas City opened a
2 mile starter streetcar line this past spring. The project was a high profile and
highly controversial endeavor from the get go. During the entire construction
phase, the local media provided daily coverage of every movement and decision
made by the city related to the streetcar. At one point a local TV station did a live
shot of a power substation being installed under a bridge. Thrilling TV! It was
clear everything related to this project was a potential lightning rod. The addition
of an audit to the ongoing project added to the overall pressures faced by city
staff involved. Did I mention this was my first audit?
BACKGROUND
Kansas City tried to pass a variety of more expansive light rail plans for the
past 20 years, but all would fail at the ballot box. The smaller scope of this
project utilized the creation of a political subdivision known as a Transportation
Development District to successfully secure the approval of a voter pool
concentrated around the greater downtown area. To further secure backing
for the streetcar from somewhat weary downtown interests, the city agreed to
develop a non-profit corporation to assist in the management of the streetcar
system. The Kansas City Streetcar Authority is governed by seven privately
established directors and only six publicly appointed directors.
To govern this public-private partnership, the city entered into a tri-party
agreement with the Transportation District and the Streetcar Authority. The
Transportation District essentially became a silent funding mechanism with
revenues flowing through the city while the Streetcar Authority took on a much
bigger role once the operational phase began.
WHAT WE AUDITED AND WHY
The streetcar system is a city-owned asset with both physical infrastructure and
a newly minted fleet of streetcars. Our audit’s objective was to determine whether
Jonathan Lecuyer

AUDITING FLEETS
the tri-party agreement protected the city’s interest in these assets. It was
important to make sure the city retained enough control over the project
in proportion to the risk it had assumed. We released the audit about nine
months prior to the beginning of the streetcar’s operations.
Kansas City’s strategy to include a private non-profit in the governance of
the streetcar was, in part, modeled after a similar agreement in Portland that
had been in place for nearly 20 years. When we saw an audit released by
the Portland Auditor’s Office that had findings and recommendations related
to this type of partnership, it caught our attention.1
(If you’d like to know
more about their audit, Tenzin Choephel wrote about Portland’s experience
in the Spring 2015 Quarterly, I recommend you check it out.) We saw this
as an opportunity to identify any potential issues and offer management
recommendations to address these issues prior to any actual operation of the
streetcar. Auditing for the future!
Public-private partnerships are increasingly becoming a common practice
among local and state governments to provide a variety of services and
capital projects. It is important to audit these types of agreements to ensure
they adequately protect the public’s interest in these assets and programs.
These projects exist on a continuum that, depending on their structure, shifts
a portion of the control, funding, ownership, risk, and potential revenues
towards a private entity. By giving up some control and revenue, a city is
often able to undertake projects it could otherwise not afford or politically
achieve on its own. It is crucial for an audit of public-private partnership
to understand how each project is unique in its agreement, roles, context,
structure, and intent. Though Kansas City’s agreement was initially modeled
after Portland’s agreement, we quickly found out the actual structures were
quite different.
WHAT WE FOUND
Because our audit scope focused on the agreement itself, we created
a framework to assess whether the agreement adequately addressed
recommended practices for public-private partnerships. We were pleased
to find that the agreement addressed a large portion of recommended
practices. The three areas we found the agreement to be lacking centered on
accountability and transparency during the ongoing operational phase of the
streetcar.
Specifically, the agreement did not adequately define a transparent budget
process that included all costs and contingent liabilities, it did not ensure that
the ongoing costs and benefits of the agreement were publicly understood,
and it did not include key performance indicators. As part of our framework
outlined in Exhibit 1, we identify some of our audit findings as “partially
followed” because while elements of the recommended practice may have
been present, the overall intent of the recommended practice was not
Public-private
partnerships
are increasingly
becoming a common
practice among
local and state
governments to
provide a variety of
services and capital
projects.

AUDITING FLEETS
achieved. For instance, the city understood the full budget of the program;
however, it did not present this in a clear, transparent way that made it easy
for the public to understand. The Streetcar Authority had its own budget
that accounted for all costs; however, it would not be known that any of the
operating costs were flowing through the city and the city’s responsibility
because it was unidentifiable within the city’s budget (though accounted for
in a department’s budget). We made recommendations to make the streetcar
budget process more transparent; improve the city’s ability to account for its
revenues; and improve the city’s ability to track the project’s performance. In
the city’s 2017 budget, the streetcar’s overall budget is listed as a discrete
program overseen by the city.
Something we had not anticipated finding was a potential conflict stemming
from the Streetcar Authority’s appointment to its role in the partnership. As
mentioned previously, the public-private partnership created was originally
created to allow more direct oversight of the project to the section of the city’s
voters and business owners affected by the newly created transportation
district. To provide assurance of this role, the city appointed the private non-
profit to its role. This appointment created a potential conflict with federal
open competition regulations if the Streetcar Authority undertook certain
roles or received certain monies unless they received written approval
from the Federal Transportation Administration. We provided the city with
recommendations to reduce the city’s risk of conflicting with FTA grant
agreements.
AUDITING YOUR PUBLIC-PRIVATE PARTNERSHIPS
Unlike a request for proposal or typical bid-build contracts, a partnership is
a negotiated position between two or more entities. This negotiation should
be based on what each partner brings to the table and what benefit they will
receive. From a politically expedient perspective it is tempting to have the city
Something we had
not anticipated
finding was a
potential conflict
stemming from the
Streetcar Authority’s
appointment to
its role in the
partnership.

AUDITING FLEETS
assume financial, compliance, operational or other responsibilities without
retaining the appropriate amount of oversight, control, or revenue shares. In
order to “just get the project done” it can be easier to worry about the details
later. What this can lead to is a situation where a city or other public entity
bears the ongoing risks of a project without having the proper oversight and
control necessary 15 to 20 years into a project. At that point the problem will
likely not only be much bigger, but also more expensive to remedy.
Public-private partnerships present a great opportunity for an audit to ensure
the public’s interest has been adequately addressed. These agreements
exist on a wide spectrum of possibilities and can therefore be extremely
complicated in their structure. Sprinkle in regulatory compliance needs
and the details really start to matter. Because each partnership can be so
unique, it is critical to identify where exactly on the public-private spectrum
the partnership you are auditing lies. This process will allow you to define the
roles, responsibilities, assumed risk, and constraints of each partner as well
as external factors influencing the partnership that are necessary to know
prior to assessing it against the framework you establish.
I think our audit helped the city recognize the ongoing risks and
responsibilities it had assumed in the streetcar system’s operation and take
necessary steps to mitigate those risks.
To see our full audit report, you can find it at: https://webfusion.kcmo.org/
coldfusionapps/auditor/showrecord.cfm?ID=573
ABOUT THE AUTHOR
Jonathan Lecuyer has been an auditor with the city of Kansas City, Missouri
since 2015. Prior to joining the office, Jonathan worked in the non-profit
housing development field for six years creating housing communities
for those in mental health services and managing grant compliance. This
work was briefly punctuated by a two-year overseas stint to the Philippines
with the US Peace Corps where he focused on program evaluation and
development of youth programs. Jonathan completed a Master of Public
Administration degree at the University of Kansas City, Missouri where he is
also currently a candidate for a Master of Economics degree.
Public-private
partnerships
present a great
opportunity for an
audit to ensure the
public’s interest has
been adequately
addressed.

AUDITING FLEETS
DENVER INTERNATIONAL AIRPORT FLEET MANAGEMENT
PROGRAM AUDIT
Denver International Airport (DIA) is one of the busiest airports in the United
States and the largest in square miles. Ensuring that personnel can efficiently
and safely navigate the property is important. The weather in Colorado can be
unpredictable and large snow storms can have a significant impact on travel and
safety for personnel as well as customers. Therefore, it is important to have a
well maintained and reliable fleet of vehicles to clear snow and keep operations
intact.
DIA’s Fleet Maintenance section (Fleet Maintenance) manages the airport’s fleet
of more than 1,800 vehicles and units of equipment for all divisions throughout
the airport, many of which provide specialized services. The equipment
comprises a mix of light duty and heavy duty vehicles, as well as stationary and
portable equipment such as generators, portable message signs, and hand-held
push mowers. Much of DIA’s fleet is dedicated to snow removal and runway
maintenance, including a majority of attachment pieces. The budget for fleet
equipment derives from the Airport Enterprise Fund. From 2014 to 2016, DIA’s
budget for all capital equipment expenditures was between approximately $4
million and $8 million per year.
PURPOSE OF THE AUDIT
Our audit assessed the effectiveness and efficiency of DIA’s fleet management
program. The audit examined DIA’s fleet management practices on both the
airside and landside of the facility. Methodologies for the audit included the
following:
• Researching various regulations
• Interviewing personnel from various DIA divisions and sections that interface
with the fleet management program
Sonia Montano

AUDITING EDUCATION
• Reviewing Fleet Maintenance policies and procedures and Standard
Operating Procedures
• Assessing the primary systems used by Fleet Maintenance
• Verifying that fixed assets are properly inventoried and accounted for
• Reviewing data related to controls for take-home vehicles, fuel usage,
and preventive maintenance
• Conducting benchmarking of fleet management practices and metrics at
other airports
FINDINGS
The key finding of our audit was that DIA Management needed to strengthen
oversight of and internal controls over the fleet management program. In July
2012, DIA hired a new Director of Fleet Maintenance, who had started to
address a variety of operational issues, specifically concerning oversight and
internal control weaknesses, many of which were observed during the course
of our audit. The Director had also been granted approval to hire two new
analyst positions to assist with management oversight and strengthening
the internal control environment. These two positions were charged with
improving communication within Fleet Maintenance as well as between Fleet
Maintenance and other DIA departments and divisions. Communication is
paramount due to the number of other DIA departments and divisions that
the fleet affects operationally.
We found two major areas where the fleet management program could
improve its operations, both of which the new Director recognized. Following
are details about these areas.
INSUFFICIENT MANAGERIAL INVOLVEMENT IN AND CONTROL
OVER FLEET ASSETS
Our audit found that Fleet Maintenance did not have sufficient involvement
in and control over fleet assets. These issues could have resulted in
unnecessary costs, an increased risk of misuse of assets, and unsafe
vehicles or equipment. Following were specific areas of concern:
• Noncompliance with some policies governing the take-home vehicle
program
• Inadequate oversight and internal controls governing fuel access
• Lack of a formal fleet utilization program
• Fixed assets not being consistently recorded or monitored
• Preventive maintenance not being consistently tracked and monitored
• Damage to fleet vehicles not being reported timely
The key finding of
our audit was that
DIA Management
needed to
strengthen oversight
of and internal
controls over the
fleet management
program.

AUDITING FLEETS
TAKE-HOME VEHICLE PROGRAM
The city authorizes the use of take-home vehicles for employees whose job
duties include responding to emergencies or responding to non-scheduled
work program service requests that require an emergency vehicle with
specialized equipment outside of normal business hours. Examples of
these kinds of duties include snow removal, street flooding, power outages,
unsafe street conditions, and various public safety emergencies. At the time
of the audit, DIA had approximately 50 assigned take-home vehicles for the
purpose of responding to these instances. Employees authorized to take
a vehicle home generally used the vehicles for personal use commuting to
and from work. To compensate the city for this personal use, an employee
was charged $1.50 for each trip to and from work, which amounted to
approximately $90 per month. However, these employees enjoy the benefits
of not having to pay for the costs associated with owning a personal vehicle,
including monthly payments, maintenance costs, insurance premiums, and
fuel expenses.
In assessing this practice, we determined that requirements surrounding
take-home vehicle usage were not being consistently monitored or complied
with. The city’s Fiscal Accountability Rule requires that the driver of a take-
home vehicle reside within a 25-mile radius of his or her main or regular
place of work. Our testing determined that 12 of the 53 individuals (23
percent) with take-home vehicles were identified as residing beyond the
maximum 25-mile radius from DIA. The further a driver resides from the
airport, the longer it will take to respond to an emergency outside of normal
business hours, reducing the effectiveness of the take-home vehicle policy.
We determined that individuals with take-home vehicles who were residing
beyond the 25-mile radius requirement were consuming more fuel, which
was increasing overall fuel consumption and costs to DIA. Based on our
audit work, take-home vehicle users who were residing outside of the 25-mile
radius consumed twice as much fuel as those who lived within the 25-mile
radius. Thus, non-compliance with the city’s Fiscal Accountability Rule
results in additional costs to the city. In addition, another way the take-home
vehicle program was not effectively serving its intended purpose was that a
majority of the miles logged were for commuting to and from work, not for
business use such as responding to emergencies. We determined that DIA
Management would be able to reduce its number of authorized take-home
vehicles without impacting public safety.
INADEQUATE OVERSIGHT & INTERNAL CONTROLS FOR FUEL ACCESS
In addition to monitoring and maintaining take-home vehicles, Fleet
Maintenance also has fiscal responsibility for fuel use at DIA. Fleet
Maintenance is responsible for monitoring fuel obtained through DIA’s fuel
information system, Fuel Force, which is used to control access at fueling
We determined
that individuals
with take-home
vehicles who were
residing beyond
the 25-mile radius
requirement were
consuming more
fuel, which was
increasing overall
fuel consumption
and costs to DIA.

AUDITING FLEETS
locations throughout the airport. Anticipated budgeted costs related to the
delivery, distribution, and review of fuel for 2012 was to exceed $3 million.
Audit work identified four areas where fuel use controls were either not
operating or were ineffective in design, creating a risk for misuse of fuel. We
identified areas of concern related to fuel access activation and deactivation,
exception resets, management oversight, and segregation of duties for those
responsible for oversight.
MISSED OPPORTUNITIES RELATED TO OPERATING & CAPITAL COSTS
We identified several budget and supplemental funding opportunities that
were not being diligently pursued by Fleet Maintenance management, which
could help to offset increasing operating expenses. First, Fleet Maintenance
was not requesting additional funding for preventive maintenance
costs despite a growing fleet. Second, Fleet Maintenance was not fully
documenting or taking advantage of possible supplemental funding available
through grants. Third, DIA missed opportunities to reduce expenses by not
recouping the cost of fuel consumption at DIA by other city agencies and
third parties. With these three opportunities in mind, we found that Fleet
Maintenance should better capture and communicate the costs associated
with maintaining a growing fleet, develop and document processes
undertaken to pursue grant funding, and monitor outside agencies and third-
party vendors in relation to fuel use and invoice them for consumption.
AUDIT FOLLOW-UP RESULTS
We conducted the follow-up to our audit a few years later and found that
DIA had implemented a majority of our audit findings and, as a result, have
realized savings and efficiency improvements. Most notably, by re-designating
28 take-home vehicles to assigned vehicles, Fleet Maintenance has saved
approximately $38,000 annually on fuel as well as over 345,000 miles of wear
and tear on city vehicles. In addition, implementation of an accident/abuse policy
now allows Fleet Maintenance to monitor and record vehicles and equipment
that need repair from either an accident or abuse in a timely manner.
ABOUT THE AUTHOR
Sonia Montano is an audit supervisor in the Denver Auditor’s Office. She is
a Certified Government Auditing Professional and has a Certification in Risk
Management Assurance. She has a bachelor’s degree in Accounting and
over 20 years of professional experience in the government sector.

AUDITING FLEETS
KING COUNTY TRANSIT AUDITS
WHAT IS THE KING COUNTY TRANSIT AUDIT FUNCTION?
In November 2014, the King County Auditor’s Office established an ongoing audit
program focused on King County Metro Transit (Transit). This means that the
office is conducting audits of Transit throughout the year.
HOW IS THIS DIFFERENT FROM WHAT THE AUDITOR’S OFFICE DID
IN THE PAST?
In the past, our office would conduct audits of Transit, but not on a regular,
ongoing basis.
WHY FOCUS ON TRANSIT?
King County Metro Transit is one of the largest transit agencies in the county,
serving a population of over 2 million people. It has an annual budget of $700
million, and is one of the most visible services that the county provides. Given its
size and services, there is a lot of interest in ensuring that it is operating efficiently
and effectively. In addition, with rapid population growth in the region, people are
more concerned about gridlock and being able to get to where they need to go.
An audit by our office in 2009 found millions in potential savings, and there were
issues in 2014 that prompted King County Council and public interest.
LIKE WHAT?
In early 2014, Transit reported a potential budget shortfall and the possibility
of cutting services on over 150 routes. In the spring, county voters rejected a
proposition that would have increased sales tax and car-tab fees to maintain
those transit services, meaning that many routes were slated for substantial cuts.
With a majority of urban voters voting for the failed King County proposition, the
Sean DeBlieck

AUDITING FLEETS
City of Seattle decided to put its own proposition to the voters to mitigate
the impact of the cuts in the city. However, by early fall, sales tax revenues
were more optimistic, showing that most cuts would not have to be made.
Nevertheless, Seattle voters went on to vote to pay for transit services,
the ‘buspacalypse’ didn’t occur—in fact, service increased with the better-
than-expected tax revenue plus the funds from Seattle. As a result, there is
renewed interest in looking more closely at the agency.
WHAT KINDS OF TRANSIT AUDITS HAS YOUR OFFICE COMPLETED
SO FAR?
Our office did a comprehensive audit of the agency in 2009 where we
looked at finances, procurement, capital projects, transit policing, and other
areas. Our first item of business in 2015 was reviewing the status of the
recommendations that were still listed as ‘in progress.’ We then conducted
two new performance audits, one on capital maintenance projects and
another on vehicle maintenance. Our current engagements are examining
the paratransit program and IT projects. We are also following up on the
recommendations we made last year.
WHY THESE PARTICULAR AUDIT TOPICS?
We picked capital maintenance projects because there were concerns
about how Transit prioritized these projects (like HVAC systems, roofs, and
bus lifts) over other capital projects (new bus bases, rapid transit lines,
etc), and what rationale Transit had for proposing these projects. Vehicle
maintenance is a big cost driver at the agency, and our 2009 audit had
several recommendations that found areas of improvement. Paratransit is
required under the Americans with Disabilities Act, and serves people that
have limited transportation options. The King County paratransit program
costs the county about $52 per boarding, compared to $4 for the regular bus
service, so there is interest in finding ways to reduce costs and also to find
ways to improve service. Transit IT projects are another high-cost item, and
critical for operating the bus system.
WHAT KINDS OF THINGS HAVE YOU FOUND IN THESE TRANSIT
AUDITS?
We found that the agency has not been successful in getting major capital
maintenance projects done. We found that the need is real and the agency
has the funds, but the project management has not been sufficient to
complete the work. This means that there is a growing backlog of big,
important projects, like roofs and bus lifts, and these projects are needed to
keep the buses on the road. We also identified approaches that Transit can
employ when making decisions about rebuilding bus parts, which will help
save the county money.
Transit has not
been successful in
completing capital
maintenance
projects due to
insufficient project
management.

AUDITING FLEETS
WHAT IS THE MOST INTERESTING THING ABOUT TRANSIT
AUDITS?
King County Metro Transit is a very large entity, so I am always learning
something new. Most folks are familiar with the front-facing elements of
transit systems, but doing these audits gives us the chance to go behind the
scenes and look at the different parts of the agency that make the system
work. For example, one of the audits we published this year focused on a
vehicle maintenance unit that builds parts for the buses—ranging from bus
seats to electric-diesel-hybrid drives. Before that audit, I never knew that
the battery powering my commute may have been MacGyvered out of Prius
batteries.
WHAT ARE SOME TRANSIT FLEET ISSUES ON YOUR RADAR?
Fleet mix is an interesting topic. I have heard that some transit agencies are
moving back to diesel buses because diesel hybrids have been so costly to
maintain, and when gas prices are low they are cheaper to operate. On the
other end of the spectrum, we are seeing more interest in electric buses. The
technology has come a long way in recent years, but the buses require some
pretty significant infrastructure to operate (like rapid charging stations). It will
be interesting to see if these new buses can get the job done, and still be
affordable to keep on the road.
Another fleet issue is human capital. Agencies could lose a lot of
important knowledge as vehicle mechanics retire. At the same time, as
bus technologies change there may be opportunities to bring in other skill
sets. This raises the question of whether people with those skills actually
exist—and might require more collaboration between transit agencies and
vocational schools.
WHERE CAN WE ACCESS YOUR AUDIT REPORTS?
Our audits are published on the King County Auditor’s Office website. You
can also sign up to get updates on our publications through GovDelivery.
ABOUT THE AUTHOR
Sean DeBlieck is a member the King County Auditor’s Office (KCAO). He
works mainly on transit audits, but finds time for other audit projects. He has
over 10 years of experience in evaluation and performance auditing at all
levels of government.
Technology and
human capital are
both challenges
faced by transit
agencies as they
move into the
future.

OTHER FEATURES
REFLECTIONS ON BECOMING A MENTOR: MINIONS,
KARMA, AND EVERYTHING IN BETWEEN
Seinfeld is what comes to my mind when I think about the concept of mentoring.
Trying to understand why a person would offer to mentor someone, George
Costanza asks, “Does money change hands?” It doesn’t. Confused, George’s
follow up questions were, “So what’s in it for the mentor? Would the protégé pick
stuff up for the mentor: laundry, dry cleaning?”
Most mentoring for the ALGA program takes place long distance, so no dry
cleaning is being picked up. What then is “in it” for the ALGA members who
spend about an hour a month mentoring other AGLA members?
The reasons for and benefits derived from becoming a mentor are as unique as
the individuals participating in the ALGA mentoring program. You may find a few
surprising.
Mentoring is about building an army of people who are
indoctrinated into your way of thinking and whom you can
eventually leverage on your rise to power and prestige.
- Andrew Keegan, Supervising Senior Auditor, City of Austin
Well regarded as a strategic thinker, Andrew realized the long-term importance
mentoring can have on a person’s career growth – his own. So, he became a
mentor in order to start developing his cadre of minions. He became a parent for
similar reasons.
For others such as myself, mentoring isn’t about long-term personal benefits. For
me, it’s about the simple enjoyment of giving really bad advice to someone just to
see if they’ll follow it─knowing that if they do, the outcome will have no negative
consequence on my life whatsoever. A much more short-term benefit.
Eric Spivak

OTHER FEATURES
Fortunately, most mentors are more altruistic than either Andrew or me.
Lise Valentine, Deputy Inspector General with the City of Chicago, finds
gratification when her mentee realizes she (the mentee) knew the answer
all along. She just needed to talk it through with someone in the field, but
outside the office. Then, the mentee reports having had a positive experience
as a result of something they discussed.
ALGA President David Givens finds mentoring to be a fun diversion from his
everyday duties as a County Auditor. For David, the fun comes from helping
some of the newer government auditors. David noted that he had that kind of
help when he started out and is glad to return the favor.
The benefits of karmic balance can’t be understated;
without it, you are more likely to fall and break a hip.
- Anonymous Philosopher
Many other mentors shared David’s sentiment and became mentors to
maintain karmic balance. One noted that as a mentee she received good
advice that helped her manage organizational politics and so she, in turn,
became a mentor and now provides guidance and coaching to someone
else. ALGA Board Member Chris Horton reflected, “this [mentoring] is a way
of paying back all of the individuals who took time to coach and mentor me
as a young auditor.”
You don’t have to first be a mentee to volunteer to serve as a mentor. One
county auditor shared that she became a mentor because she would have
wanted to have one when she was building her audit and leadership skills.
She has found the relationship to be symbiotic. Mentoring causes her to think
about, and articulate, why she does things the way she does. As a result, she
has identified ways to improve her practice. Mentoring also provides her the
opportunity to gain a deeper understanding of how another audit shop across
the country handles issues and faces their challenges.
Given the various benefits you can derive from mentoring – from creating
your own army of minions to good karma – I’d like to ask you to consider
becoming a mentor. The time commitment is only about an hour a month that
involves a monthly phone call and perhaps some e-mails.
I initially requested a mentor to get advice and guidance
on career growth opportunities and was paired with a great
mentor who offered very useful advice.
- Current Mentee
You may not consider yourself to be wise enough or experienced enough
to be effective as a mentor, but you’d be surprised at how much you have
to offer. Mentees appreciate the ability to talk to someone outside their
Mentoring can
help leaders gain
an understanding
of how other
audit shops face
challenges.

OTHER FEATURES
organization, especially when it comes to sensitive topics such as career
growth, interpersonal relationships, or skill development.
My mentor’s time and attention have positively influenced my
approach to building teams, reporting results and developing
professionally.
- Another Current Mentee
Being a sounding board and providing an objective opinion can help a
mentee gain confidence. As Lise Valentine noted above, sometimes a person
just needs to talk through the process with an objective outsider.
To make mentoring even easier, the Mentoring Subcommittee is developing
a mentor’s guide. The guide will contain a list of discussion topics for the
mentee and mentor to discuss.
Mentors from all professional levels are needed. For a newbie auditor, a
senior auditor with three years of experience might make the perfect mentor
to someone just starting out. Moving up the organizational ladder, a person
just one rung higher can offer valuable insights to a person interested in
career growth.
Please use the link below to register yourself on the mentor roster. As
individuals request a mentor, the Mentorship Subcommittee reviews the
request and the mentor roster and then pairs individuals based on factors
such as type of organizational, geographic location, level of experience, etc.
https://algaonline.org/FormCenter/Mentorship-Program-Forms-14/Mentor-
Application-Form-67
From the ALGA homepage the path is: Resources/Mentorship Program/
Mentor Application.
ABOUT THE AUTHOR
Eric Spivak, CIA, CGAP, is the County Auditor for Jackson County, Oregon.
Eric is a member of the AGLA Education Committee and Chair of the
Mentoring Program Subcommittee. Eric would like you to know that he was
just joking when he said he became a mentor for the enjoyment of purposely
giving out bad advice. But was he really???
Note: Clinical studies have not proven that improved karmic balance
prevents falling. If that is your primary reason for considering to volunteer to
be a mentor, you may want to consider yoga instead.
Mentors from all
professional levels
are needed.

OTHER FEATURES
Q&A ABOUT QA
Auditors don't make mistrakes
For the last three years, I have had the pleasure to serve as the Quality
Assurance Coordinator (QAC) for our office. My duties include monitoring the
quality of the projects from a standards compliance perspective and from the
office's established practices perspective, ensuring our review process produces
error-free and well-written outputs, supporting the Audit and Finance Committee,
coordinating internal trainings, and supervising the administrative function.
Before that, I was an auditor for eight years. It was, and is, a fascinating journey
involving figuring out where I can add the most value in my new role with all of my
prior hands-on audit experience.
At this point, I've experimented enough to have some ideas work out. Below,
I'll share the practices that I believe have worked well for us in a Q&A format.
You will notice that I go from a discussion of general terms to government
auditing as a whole, and then to more specific examples from Austin's Office
of the City Auditor. It is very important for me to note that I attribute 99 percent
of the success we have in our Quality Assurance function to how our office's
management supports and models quality and our brilliant staff embracing
improvements in municipal government firsthand. The remaining 1 percent is my
inherited creativity and enthusiasm combined with a desperate need to have a
break from my three kids and five pets. Even though I use a lot of "I" in this text
to describe my QAC activities, none of the goodness would be possible without
every single person in our office doing their part and kindly tolerating me in my
picky role. Now having that said...
WHAT IS QUALITY?
Quality—is something good, something valuable. Quality is the best product for
the user. Quality is superiority. Quality lasts. Quality can be relied on. Quality is a
source of pride.
Olga Ovcharenko

OTHER FEATURES
WHAT DOES QUALITY LOOK LIKE IN GOVERNMENT AUDITING?
Following auditing standards is a start. Passing peer review indicates quality.
Keeping our users happy, while meeting standards, is quality. Governing
bodies usually need relevant, timely, clear, and convincing information to
be happy. Since we usually provide that information through our reports,
our quality, as it relates to users, is in the reports, whatever form they take.
Beyond having users satisfied by information, we have outcomes and we
have change. Organizational changes resulting from our insightful well-
written recommendations reflect quality. And then there is innovation in
auditing, continuous improvement of our own operations, learning from
best practices in the industry, helping grow the industry, reaching out to the
community we serve, and representing government auditing in the world.
HOW DO GOVERNMENT AUDITORS CONTROL QUALITY?
The Yellow Book lays out components of the internal system of controls
within the general standards. The peer review process is the external
component of quality control. Similarly, Red Book standard 1300 requires
a quality assurance system that is a combination of internal and external
reviews. External, or peer, review includes independent evaluation of the
quality control (QC), or quality assurance (QA), system. Passing external
review means that the shop has sufficient system to assure quality. These
standards pretty much read like the Green Book applied to auditing—
starting from the "tone from the top" where the chief auditor emphasizes
quality; covering policies and procedures; and completed by monitoring
requirements. They are a great read. Then there is anything on top of that
that we chose to do to get to the greatest products and outcomes.
IS THERE A DIFFERENCE BETWEEN QUALITY CONTROL AND
QUALITY ASSURANCE?
Yes, there is. Just like the term suggests, QC is controlling quality of the
product. Everybody in the shop is controlling quality before the product is
out: auditors that gather evidence, managers that review it, executives that
direct messages and communicate them to decision-makers. As discussed
earlier, controlling quality of reports is quite important. QA is more about
getting a level of confidence that the system is working well to ensure
quality. It is external to the process and the product. It can very well be
an after-the-fact evaluation that will not affect the quality of the particular
product evaluated. Based on the analysis of the product, QA can point out
systematic opportunities for improvement. Addressing those should lead to
all subsequent products being better.
If we look at any organization, perhaps not even an audit shop, QC is
more of a management function and QA is more of an audit function.

OTHER FEATURES
Referring back to standards, the internal system of control is QC and peer
review is QA. I've seen QA and QC being compared to "prevention" and
"detection" concepts. I've also seen a great yin and yang representation of
the QA and QC relationship. It is not uncommon for those terms to be used
interchangeably or for the concepts to be blended. They clearly complement
each other well. It is also common to have the same people and processes in
smaller operations carry out both functions.
HOW CAN THE CHIEF AUDITOR EMPHASIZE QUALITY?
They can use every opportunity to emphasize the high quality standard they
expect through staff meetings, newsletters, budget documents, policies
and procedures, the mission statement, the appraisal system, and at each
milestone meeting for the project. They can keep saying, "I love timeliness,
but quality is more important." For our shop, we do. It is one of our stated
values; it is one of our pillars of success; it is impossible to miss. Everybody
gets it. We even have a monthly trophy that is awarded at the staff meeting
recognizing quality. It is awarded for thinking outside the box, for being
thorough in collecting and lining up the evidence, for presenting your work
well, and for excelling at everyday tasks.
The chief auditor must be firm in filtering out the lower quality so that nothing
but the best remains. The project will not fix itself later. Management needs
to guide, sort it out, and ask the team to improve it. A "bad quality" trophy
is definitely not what I would recommend, but I do think it is a good idea to
not let lacking quality go unnoticed. Identifying lower quality work creates an
opportunity for staff to recognize it, work on it, get better, and use it for their
development. Staff members that are strong in the relevant area may also be
given an opportunity to coach for better quality.
HOW DO YOU QC REPORTS?
QC of a report is multi-tiered. The first QC of the report is done by the
project manager, who checks that the findings answer the objective, have
all required elements, and are supported by the evidence. Then, before
the message meeting, in my QAC role, I check the evidence supporting
the findings. At the message meeting, our management provides feedback
on the messages, tone, order, desired level of detail, and graphical
representation of the findings. With that feedback, the report is drafted. At the
point that the team is satisfied with the report, I get to perform the QC again.
Thoughts are fully formed at this point and evidence is hyperlinked to support
them. We have found it very useful for a person outside of the team to
perform this function, as the team is so closely familiar with the evidence that
the report language feels like universally-known facts, and the documentation
of all relevant evidence may not be easily visible to an outside reviewer,
as required by standards. I would characterize this additional level of QAC

OTHER FEATURES
review that we added as going from "well supported" to "bullet proof." Before
the report gets finalized, it goes through a few more rounds of review without
management to get to an easily readable, concise report with attractive
graphs and without overly technical terms. Personally, the way I perceive
the characteristics of the report in the order of importance (from the most
fundamental to the more sophisticated, with the goal of hitting all of them) is
depicted on the side.
HOW DO YOU QA REPORTS?
The QA of the report writing process is all about process confidence and
improvement. In our office, it takes several forms. At the team level, we have
a "lessons learned" discussion at the end of the project after it is presented
and closed out. This is my opportunity to speak about what worked and what
did not, in terms of quality. When I see teams use new, effective methods—
for cross referencing, as an example—I might share it with the whole office.
Not-so-successful approaches result in the teams gaining knowledge on how
to recognize issues and avoid them next time. Sometimes I update templates
to prevent the issue going forward.
The second level of QA is with our executive team. I share my observations
at a high level, and together we brainstorm a solution. Often it is training,
templates, a TeamMate program change, or a communication of expectations
to staff.
WHAT CAN YOU SAY ABOUT QUALITY BASED ON OUTCOMES?
I am so glad I get to ask my own questions because outcomes have become
my new passion, and I have great plans in this area. Stepping back a bit, I
see the outcomes of our work to be basically "did things improve as a result
of our work?" Follow-up audits are the best way to know if they did. So far,
we have seen disconnects between what management reports they did in
terms of implementation and what we can confirm they did. Too many of
our recommendations are not being fully implemented, and are not being
implemented timely. In our last three-year follow-up audit where we tested
15 of 91 recommendations we issued, we saw that five have not been
implemented. Also, of 54 that management said they implemented, only 10
percent were implemented as planned by management; the rest are either
still in the works or were implemented much later than planned.
WHAT CAN YOU DO TO IMPROVE OUTCOMES?
We can control the clarity of recommendations. We can maintain a good
relationship with management to get them to buy into our work and want
to implement our recommendations. We can also put more emphasis on
transparency of the gaps we are seeing. Based on recent follow-up work,
we revisited the way we write recommendations and are currently designing

OTHER FEATURES
a better follow-up process. Media and citizens have been helping us more
lately with the transparency and visibility of the issues we are bringing
up. In the last year, we have noted an increase in audit-related citizen
communication at the Committee meetings and online, and many of our
audits were covered by media.
To sum up, as auditors (those who point out improvement opportunities
to others), we must lead the way for self-improvement. A staff member
dedicated to QA can help the office improve its operations, just like we
auditors help our auditees with an outside look. Do auditors make mistakes?
Yes, we do. We misspell and miscalculate every once in a while. The kind of
mistake we should never make is not caring about the quality of our work,
and missing opportunities to improve what really matters in our own work.
ABOUT THE AUTHOR
Olga Ovcharenko is a Siberian-Texan hybrid of creative soul and a task
master. She has degrees in economics and accountancy and is certified
in government auditing, internal controls, and risk management. Olga
spent 8 years auditing in the areas of utility rates, hotel occupancy taxes,
construction inspections, police evidence room operations, fire department
growth planning, eGovernment, and financial oversight in the Office of the
City Auditor with the City of Austin. During the last three years, Olga focused
on coordinating quality control aspects of the shop’s audit and investigative
activities, as well as supporting the Audit and Finance Committee.

ALGA article pg 12

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