IA Report June 22, 2020 Part 1
Posted by Sandy on August 4, 2022 · Leave a Comment
My comments in Italic
IA (Internal Audit) report is lengthy and below is what jumped out at me. I have included the entire report below for your review. If you take the time to read it something may jump out at you that I missed.
The Internal Auditor (IA) dept. is overseen by the City Commissioners and the report (part 1) was issued when the dept. was severely understaffed.
IA Responsibility:
“Perform audits and provide services to help the City achieve the highest level of effectiveness and efficiency with uncompromised integrity. Promote compliance with laws, rules, regulations, policies, procedures, contracts, and agreements through reviews and analyses of the City’s services and activities.”
Contents: Page 3:
BACKGROUND Page 1
STATEMENT of SCOPE Page 2
STATEMENT OF OBJECTIVES Page 3
STATEMENT OF METHODOLOGY Page 3
STATEMENT OF AUDITING STANDARDS Page 3
AUDIT CONCLUSIONS AND SUMMARY OF FINDINGS Page 4
NOTEWORTHY ACCOMPLISHMENT Page 4
CRA ORGANIZATION CHART Page 5
OPPORTUNITIES FOR IMPROVEMENT Page 6
1. STAFF ASSIGNED TO THE CRA Page 6
2. MONITORING PURCHASES Page 9
3. COMPREHENSIVE OVERSIGHT OVER CRA ACTIVITIES Page 12
4. CONTRACT PROCUREMENT Page 14
RESPONSE FROM CITY ADMINISTRATION Page 16
RESPONSE FROM RMA (CONTRACTOR) Page 17
AUDITOR’S COMMENTS Page 18
ATTACHMENT A – PBC INSPECTOR GENERAL (IG) REPORT Page 25
ATTACHMENT B – GOVERNOR’S EXECUTIVE ORDER AND RELATED DOCUMENT Page 26
Page 1: Community Redevelopment Areas in the City of West Palm Beach:
“The CRA consists of two separate Redevelopment Districts the City Center Community Redevelopment Area, more commonly known as the Downtown CRA, and the Northwood/Pleasant City Community Redevelopment Area.”
CRA Funding:
“The primary funding source available to the CRA consists of Tax Increment Revenues. Tax Increment Revenues are a unique tool available to cities and counties for redevelopment activities and are used to leverage public funds to promote private sector activity in the targeted redevelopment areas.”
Page 2: CRA Management and Staffing Contracts:
“Up until 2013, the CRA was managed and staffed by the City of West Palm Beach. In 2013, a competitively bid contract to manage and staff the WPB CRA was awarded to Redevelopment Management Associates (RMA) for a three-year term to commence on January 1, 2014. In September 2018, a new contract was entered into with an effective date of October 1, 2018, and it was not competitively bid.”
CRA Revenues:
“From 2014-2019
“Downtown City Center CRA: $174, 271, 223” Appears to me the City considers Downtown the only area in need of improvement. The City should look at areas of the city that are pitch black at night. I’m sure residents would appreciate lighting.
Northwood/Pleasant City CRA: $19,101,58” Home of the Sunset Lounge. City (James) is concerned the City is paying a few thousands a month while waiting for MadMen LLC although the Commissioners approved Vita LLC the contract. He was a City Commissioner for 8 years, was not concerned about millions.
Total spent in 2 areas: $193,372,808.00, click to enlarge.
Page 3: Statement of Scope:
“The scope of the audit was from January 2014 through December 2019 (audit period) which is the period of time since the City outsourced the management and staffing of the CRA to RMA.”
Statement of Objectives:
“The objectives of the first part of this audit were to:
a. Determine whether the CRA was adequately staffed and had sufficient oversight over day-to-day operations; and
b. Determine whether CRA funds were used for CRA activities and properly accounted.”
Statement of Methodology & Statement of Auditing Standards. Also on page 3.
Page 4: Audit Conclusions and Summary of Findings:
“We concluded that there were opportunities to improve internal controls and management and oversight of the CRA operations. Specifically:
1. We found that some RMA employees assigned to the City’s CRA did not meet minimum qualifications for the positions they filled.
2. We found that there was inadequate oversight over the purchases made on City PCards such that p-cards were issued to non-City employees, purchases were not allocated to projects, purchases did not have sufficient justifications, and some purchases were not permissible under the P-Card policy.
3. RMA employees, acting as CRA staff, did not have comprehensive documented and/or established project management processes and procedures, that would have allowed them to independently provide comprehensive information on all CRA activities and the associated public funds.
4. The second contract with RMA did not go through a competitive bidding process, though it was approved by the Commissioners. We found that the supporting documents did not clearly indicate that a). a new competitive bidding process was required to obtain a new contract, and b). the Commissioners were being asked to waive this requirement. The procurement of the first contract was assessed by the Palm Beach County Inspector General’s Office and the report has been attached.”
Noteworthy Accomplishments:
“We acknowledge that the CRA under RMA’s management has been instrumental in improving various streetscapes and increasing community engagement through marketing and special events such as Bowties and Bourbon, the Heart and Soul Festival, and BBQ, Blues and Brews. We commend the Finance Department for taking immediate corrective action and deactivating the P-Cards.”
Page 6 – 8 Opportunities for Improvement
1. “Staff Assigned to the CRA
“Auditing standards indicate that disclosures should be provided when there are limitations or uncertainties with the reliability or validity of evidence. As such, we provide the following disclosures.
Over the course of audits, multiple attempts are made to obtain the data necessary to complete the review. Further, auditors follow up with audit clients to ensure that the data obtained is accurate. During the audits, we notify the audit client when we identify potential concerns and we provide sufficient information to facilitate a candid discussion. Specifically, we found the following concerns at the time the individuals were hired by RMA:”
Pages 6 -8 contain more info; and I encourage readers to take the time to read these 3 pages and notice the lack of over site from City leaders, concerning the contract with RMA not honoring the contract with unqualified employees earning from $95 to $155/hr. Two Employee closely related to RMA partner. It’s disgraceful.
Page 9-11:
Monitoring Purchases:
Condition
“The City’s Procurement Card Policy states that employees who have regular status with the City are eligible to obtain a purchasing card (P-Card). RMA’s contracts did not grant regular City employee status to RMA employees. RMA’s contracts clearly stated that some expenditures were subject to reimbursement and administrative fees and other expenditures could be paid for directly by the City. The contracts did not mention P-Cards. Based on our review, we found that an average of two RMA employees were issued P Cards with monthly spending limits of $10,000 per card and the majority of purchases were placed on an administrative assistant’s P-Card.”
Inadequate Oversight of Purchases
“From 2014 through 2019, there were about 1,040 P-Card transactions totaling about $253,000. Based on our review, we found insufficient oversight of purchases made as follows: For example, we identified purchases for:
1. Award luncheons/banquets and applications for awards (over $4,000),
2. Gift Cards (over $2,000), and
3. Work pants and shirts for RMA Employees (over $2,500).”
Once again I ask readers to read pages 9-11 for more shocking disclosures of the CRA and RMA.
As I have mentioned multiple times the importance of the WPB Internal Auditor Department, and Beverly Mahaso, Chief Internal Auditor, and her limited staff, who gave the City a straight forward and balanced report to help the city with it’s problem solving. If not for them we would not be aware on the millions of taxpayer dollars wasted, and/or missing. The good news is the City has not renewed the contract with RMA, and it is now being overseen by Christopher Roog, Executive Director of the CRA. Will the City do anything to re-coop money wasted by abuse? I doubt it. Let sleeping dogs lie.
The end!