Receive a presentation from Deliotte and Touche, LLP on the Community Development Block Grant-Disaster Recovery (CDBG-DR) Quarterly Internal Audit Report, and provide direction to Staff.
Agenda Item 06: CDBG-Disaster Recovery Quarterly Internal Audit Report Presentation
- Thread starter COSM_Admin
- Start date
- Status
MDerrick
CoSM Members
So the city paid sales tax in what amount? How can you just credit it to the next bill with the company? For transparency when I did purchasing, grant compliance, and budgets I always believed the tax should be credited back to that invoice and notations made regarding this issue. I used to be able to get even WalMart to locate a receipt where tax was charged and then fix it properly by crediting it to that receipt of purchase. Since we have MUCH turn-over in this area, I would not think you'd not just leave an invoice in our records that shows we paid tax, it could be confusing to new hires who may see past purchases in the system.
"Action Item: To enhance current procedures and practices, the Purchasing Policy will be amended to more clearly lay out the path for reviews and approvals of changes in service to engineering agreements to reflect the proper controls and limitations in writing. The written policy and procedures will include the signatures to be obtained during review and approval processes, thresholds for City Council approval, and a clear description of the not-to-exceed master agreement/ACIS phased approval process over time for engineering services contracts.
"The City should amend its current policies to create an internal control for ACIS for professional services" - do we need to hire a new position or how will we achieve this?
Can these new purchasing policies be provided to All CC once completed. I understand that 6 mistakes doesn't seem like a lot but they only reviewed 30% of activity, and when dealing with Federal Funding it is very important and reflects on our ability to follow the rules. How might this report and the fact that we are now known by HUD to be a "slow spender" affect our ability/competitiveness when applying for other HUD monies?
"The City has expressed that policies pertaining to construction change orders does not apply to...needs no vote from CC for changes $50K or more. Please explain, I think it's b/c we've already approved the total amount, but when paying additional funding to 3rd party vendors, in my opinion, we need more oversight.
Thanks!!
"Action Item: To enhance current procedures and practices, the Purchasing Policy will be amended to more clearly lay out the path for reviews and approvals of changes in service to engineering agreements to reflect the proper controls and limitations in writing. The written policy and procedures will include the signatures to be obtained during review and approval processes, thresholds for City Council approval, and a clear description of the not-to-exceed master agreement/ACIS phased approval process over time for engineering services contracts.
"The City should amend its current policies to create an internal control for ACIS for professional services" - do we need to hire a new position or how will we achieve this?
Can these new purchasing policies be provided to All CC once completed. I understand that 6 mistakes doesn't seem like a lot but they only reviewed 30% of activity, and when dealing with Federal Funding it is very important and reflects on our ability to follow the rules. How might this report and the fact that we are now known by HUD to be a "slow spender" affect our ability/competitiveness when applying for other HUD monies?
"The City has expressed that policies pertaining to construction change orders does not apply to...needs no vote from CC for changes $50K or more. Please explain, I think it's b/c we've already approved the total amount, but when paying additional funding to 3rd party vendors, in my opinion, we need more oversight.
Thanks!!
Responses provided by Amanda Hernandez, Assistant Director of Planning:
AGENDA ITEM 6 – Deloitte Audit
Receive a presentation from Deliotte and Touche, LLP on the Community Development Block Grant-Disaster Recovery (CDBG-DR) Quarterly Internal Audit Report, and provide direction to Staff.
Questions from CM Derrick
Q1 - So the city paid sales tax in what amount? How can you just credit it to the next bill with the company? For transparency when I did purchasing, grant compliance, and budgets I always believed the tax should be credited back to that invoice and notations made regarding this issue. I used to be able to get even WalMart to locate a receipt where tax was charged and then fix it properly by crediting it to that receipt of purchase. Since we have MUCH turn-over in this area, I would not think you'd not just leave an invoice in our records that shows we paid tax, it could be confusing to new hires who may see past purchases in the system.
A1 - The City paid sales tax in the amount of $581.63. The City has resolved this issue in the past two ways. The vendor either provided a credit on the next invoice to be sent to the City for payment or the vendor cut a check to the City for the amount of the sales tax to satisfy the overpayment. Historically, the vendor has agreed to provide a credit on the next invoice to show reimbursement of the sales tax paid. The vendor would notate on the next invoice the credit, and what the credit was for. Since this finding was found after payment was made, it was agreed to refund the sales tax on the next invoice. Our internal auditors are also in agreement with arrangement. There is an audit trail that is documented in both the grants records and in Tyler (The City’s financial software) to show the resolution of the sales tax issue. Also, with the development of the checklist we are anticipating this issue will no longer continue since we are also requiring the vendor to sign off on the checklist to ensure sales tax is not included on future invoices. We do agree that it would be ideal to catch the sales tax in the beginning, correct the invoice and pay the proper amount owed.
Q2 -Regarding "Action Item: To enhance current procedures and practices, the Purchasing Policy will be amended to more clearly lay out the path for reviews and approvals of changes in service to engineering agreements to reflect the proper controls and limitations in writing. The written policy and procedures will include the signatures to be obtained during review and approval processes, thresholds for City Council approval, and a clear description of the not-to-exceed master agreement/ACIS phased approval process over time for engineering services contracts.
"The City should amend its current policies to create an internal control for ACIS for professional services" - do we need to hire a new position or how will we achieve this?
A2 – No additional staff are needed for this issue. The additions made to the Purchasing Policy simply state in writing the processes that are already followed by current staff.
Q3 - Can these new purchasing policies be provided to All CC once completed. I understand that 6 mistakes doesn't seem like a lot but they only reviewed 30% of activity, and when dealing with Federal Funding it is very important and reflects on our ability to follow the rules. How might this report and the fact that we are now known by HUD to be a "slow spender" affect our ability/competitiveness when applying for other HUD monies?
A3 - Purchasing Policy revisions/updates are the responsibility of the Purchasing Manager and are made routinely as improvements or updates are required. This particular recommended revision was coordinated with the CDBG team and the Engineering team before finalizing it. The proposed Purchasing Policy revision has been completed and is pending submission to the City Manager and City Attorney for final signatures. Once the Purchasing Policy has been amended it will be updated and made available to the full Council as well as all City Departments.
As an entitlement City, San Marcos does not compete with others for HUD funding. A set amount is allocated, and then is awarded after an acceptable action plan has been submitted.
If HUD is concerned about an audit report or a grantee’s rate of spending, HUD increases the number of times the grantee is contacted for monitoring and technical assistance.
HUD is aware that the all the CDBG-DR infrastructure projects are nearing completion of design and will be under construction this summer. Construction will rapidly expend the funds.
Q4 - "The City has expressed that policies pertaining to construction change orders does not apply to...needs no vote from CC for changes $50K or more. Please explain, I think it's b/c we've already approved the total amount, but when paying additional funding to 3rd party vendors, in my opinion, we need more oversight.
A4 - This statement is specifically relating to the legal threshold of change orders for construction contracts not exceeded 25% of the original contract. Staff felt it was important to make the distinctions that are made in law. All changes over $50,000 do require City Council approval whether it is a change order for construction over $50,000 or a change in services to a professional services agreement over $50,000. The revisions to the Purchasing Policy pertaining to changes in service to professional engineering agreements addresses the oversight by the CDBG team, Engineering team and Finance team.
AGENDA ITEM 6 – Deloitte Audit
Receive a presentation from Deliotte and Touche, LLP on the Community Development Block Grant-Disaster Recovery (CDBG-DR) Quarterly Internal Audit Report, and provide direction to Staff.
Questions from CM Derrick
Q1 - So the city paid sales tax in what amount? How can you just credit it to the next bill with the company? For transparency when I did purchasing, grant compliance, and budgets I always believed the tax should be credited back to that invoice and notations made regarding this issue. I used to be able to get even WalMart to locate a receipt where tax was charged and then fix it properly by crediting it to that receipt of purchase. Since we have MUCH turn-over in this area, I would not think you'd not just leave an invoice in our records that shows we paid tax, it could be confusing to new hires who may see past purchases in the system.
A1 - The City paid sales tax in the amount of $581.63. The City has resolved this issue in the past two ways. The vendor either provided a credit on the next invoice to be sent to the City for payment or the vendor cut a check to the City for the amount of the sales tax to satisfy the overpayment. Historically, the vendor has agreed to provide a credit on the next invoice to show reimbursement of the sales tax paid. The vendor would notate on the next invoice the credit, and what the credit was for. Since this finding was found after payment was made, it was agreed to refund the sales tax on the next invoice. Our internal auditors are also in agreement with arrangement. There is an audit trail that is documented in both the grants records and in Tyler (The City’s financial software) to show the resolution of the sales tax issue. Also, with the development of the checklist we are anticipating this issue will no longer continue since we are also requiring the vendor to sign off on the checklist to ensure sales tax is not included on future invoices. We do agree that it would be ideal to catch the sales tax in the beginning, correct the invoice and pay the proper amount owed.
Q2 -Regarding "Action Item: To enhance current procedures and practices, the Purchasing Policy will be amended to more clearly lay out the path for reviews and approvals of changes in service to engineering agreements to reflect the proper controls and limitations in writing. The written policy and procedures will include the signatures to be obtained during review and approval processes, thresholds for City Council approval, and a clear description of the not-to-exceed master agreement/ACIS phased approval process over time for engineering services contracts.
"The City should amend its current policies to create an internal control for ACIS for professional services" - do we need to hire a new position or how will we achieve this?
A2 – No additional staff are needed for this issue. The additions made to the Purchasing Policy simply state in writing the processes that are already followed by current staff.
Q3 - Can these new purchasing policies be provided to All CC once completed. I understand that 6 mistakes doesn't seem like a lot but they only reviewed 30% of activity, and when dealing with Federal Funding it is very important and reflects on our ability to follow the rules. How might this report and the fact that we are now known by HUD to be a "slow spender" affect our ability/competitiveness when applying for other HUD monies?
A3 - Purchasing Policy revisions/updates are the responsibility of the Purchasing Manager and are made routinely as improvements or updates are required. This particular recommended revision was coordinated with the CDBG team and the Engineering team before finalizing it. The proposed Purchasing Policy revision has been completed and is pending submission to the City Manager and City Attorney for final signatures. Once the Purchasing Policy has been amended it will be updated and made available to the full Council as well as all City Departments.
As an entitlement City, San Marcos does not compete with others for HUD funding. A set amount is allocated, and then is awarded after an acceptable action plan has been submitted.
If HUD is concerned about an audit report or a grantee’s rate of spending, HUD increases the number of times the grantee is contacted for monitoring and technical assistance.
HUD is aware that the all the CDBG-DR infrastructure projects are nearing completion of design and will be under construction this summer. Construction will rapidly expend the funds.
Q4 - "The City has expressed that policies pertaining to construction change orders does not apply to...needs no vote from CC for changes $50K or more. Please explain, I think it's b/c we've already approved the total amount, but when paying additional funding to 3rd party vendors, in my opinion, we need more oversight.
A4 - This statement is specifically relating to the legal threshold of change orders for construction contracts not exceeded 25% of the original contract. Staff felt it was important to make the distinctions that are made in law. All changes over $50,000 do require City Council approval whether it is a change order for construction over $50,000 or a change in services to a professional services agreement over $50,000. The revisions to the Purchasing Policy pertaining to changes in service to professional engineering agreements addresses the oversight by the CDBG team, Engineering team and Finance team.
- Status