A 2013 Audit follow-up recently sent to Mayor Greg Fischer includes 46 issues, 19 of which are new from 2011 and 2012.
Many of those findings have never been made public before now, and almost half of them are at the Louisville Zoo.
Those problems are mostly related to poor management and lack of procedures.
However, problems at the Metro Council are related to lack of oversight for taxpayers’ dollars. Ingram Quick, Metro Louisville’s chief audit executive, conducted the audit follow-up, the sixth since city and county governments merged in 2003. And indeed, some unresolved problems date back almost to merger.
Why some problems date back to 2004 is not clear, and whether there have ever been corrective measures is not clear.
In the report, Quick states that “(f)or purposes of brevity, only the original issues are noted, details of the current corrective actions are not.”
We asked Louisville Zoo officials for more details about corrective actions on all the issues identified by the internal auditor, since Quick’s report did not itemize them, but received no reply.
Further, Quick accentuates the positive, suggesting the internal audit may not be as aggressive as an independent audit, conducted by an outside, third party consultant and not an employee of city government.
From his report:
“There has been considerable progress in addressing the issues through implementation of corrective actions. The progress demonstrates the commitment to an efficient and effective local government and highlights the quality of leadership within Louisville Metro Government departments. There were no areas falling in the red or black categories. We commend the Directors for their efforts. This report also highlights the value of the Office of Internal Audit. While we do not implement the corrective actions, we are often the catalyst for change that results in a more efficient and effective government. We will continue to work with Departments to ensure significant issues and risks are addressed.”
No findings with a black or red status simply means all departments have responded to requests for corrective action information, and those proposed actions have been evaluated, planned or implemented.
“This audit is part of our overall continuous improvement efforts throughout city government,” Fischer spokesman Chris Poynter stated in an email. ” As you can see from the report, most of the items already have been corrected or are in the process of being corrected.”
To that point, many of the issues in the audit predate the Fischer Administration, or occurred at the beginning of Fischer’s term. A few issues date back to 2004, and would include the Abramson Administration. Slightly more than 40 percent of the audit findings occured during the Fischer Administration.
Furthermore, when we asked Poynter to provide us with evidence corrective action had been taken to resolve the one issue the mayor’s office was consulted on in 2011, Poynter referred us to the open records administrator.
Only one issue is rated as “orange” on the follow-up audit’s color-coded ranking, with orange the third-most serious category. That issue, dated 2010, is filed under “Metro Council Financial Operations – Payroll,” and states that “departed employees were still listed as active in the PeopleSoft system.”
Orange denotes “the department assumes risks associated with issue,” according to the audit follow up.
However, the zoo stands out in the sheer number of findings ranging from no oversight over payroll checks to poor accounting methods to unchecked access to fuel pumps.
Issues exclusive to the zoo, all of which have occurred since 2011:
• Hours listed on time card report were manually altered. Printed payroll checks kept in an unlocked drawer in an unsecured area. Timecard reports not consistently signed by employee or supervisor. Lack of documentation regarding prior period adjustments.
• Expenditure activity was charged to an account that did not appear to be descriptive of the activity. Processing of procurement activity was noncompliant with Louisville Metro’s procurement policy.Revenue areas were not consistently reconciled in the presence of two individuals. Issues noted with the efficiency and security of credit procedures.
• Lack of documented policies and procedures. Inadequate segregation of duties. Refunds were not properly documented.
• The food service vendor is not providing in a consistent or timely manner the required financial reports.
• Lack of a list of employees who have been assigned keys to access fuel. Incomplete gasoline and diesel reports. Inconsistent fuel inspections.
• Cash shortages/overages are not recorded in the sales system.
• The Zoo does not maintain formally documented policies and procedures with regards to custodial asset management. The Zoo does not track or maintain an accurate listing of its custodial assets.
One finding at the Louisville Zoo included “Inconsistent fuel inspections,” and was dated September, 2011. Less than a year following that finding, an oil containment unit at the Louisville Zoo would leak into the South Fork of Beargrass Creek.
According to a press release following that spill:“The amount of oil that entered the stream is unknown. The maximum discharge quantity would be 55 gallons, but the exact amount is also unknown at this time.”
The director of the Lousville Zoo, John T. Walczak, was hired by former Louisville Mayor Jerry Abramson in 2004. Before accepting that position, Walczak had been the Zoo’s assistant director since 1992.
In 2009, the zoo’s train derailed, injuring 22 people. State regulators found that poor maintenance and training led to the accident, and fined the zoo $37,000.
While the zoo had the most problems and the most current problems, clearly there are problems across the board in about every department of Metro Government.
For example, the report finds since 2007 that Community Services and Revitalization has “issues with integrity and reliability of loan database. Therefore, unsure of status of loans, and if database is complete.”
At Human Resources Financial Operations – Payroll, time card reports were not reviewed and approved prior to the issuance of payroll; Prior period adjustments were not adequately documented.”
Because of the vague language, it’s impossible to know the scale of the problems. That is, whether no payrolls and time cards were reviewed, or a few? Or over what time frame this problem occurred.
Here are the sections concerning the Metro Council, problems dating back to 2010. Most of those problems are related to poor record keeping and insufficient documentation for procurement.
Some of these findings appear to be outstanding. In many cases, the corrective action has not been completed, or assessed for effectiveness by the departments implementing the actions.
You can see the entire report here: 2013 Audit Follow-up
In a related matter, Metro Louisville’s open records coordinator assured us on New Year’s Eve via email that the findings from the city’s A-133 ‘Single Audit’ would be made available by March 31, 2013.
We’re in the process of looking for that now.
Last year’s Single Audit revealed a host of issues which suggested Mayor Fischer’s public statements may have been on the Pollyanna side: July 10, 2012 | Secret Metro Louisville audit reveals 36 lapses of sound financial practices – and you didn’t hear a peep about it.
That audit revealed that MSD has a derivatives position that now exceeds $100 million in potential losses.