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Audit Services Fourth Quarter 2013

Implementation of Audit Recommendations

Release Date: January 30, 2014 Report No: QR-2013-04

Executive Summary

Recommendations Closed

1. Five recommendations implemented during the 4th Quarter 2013 resulted in closing the following audits: a. Mental Health Center Financial and Management Controls, published in 2008. b. Review of Park and Recreations Operations, published in 2010. c. Management of IT (Hardware) Resources – JCL, published in 2011.

o Collaboration with County Librarian resulted in finalizing an asset management and control strategy. (See page 16)

d. Johnson County Transit Cash Controls, published in 2012.

2. Wastewater Management Audit – JCW implemented three recommendations during this period. (See pages 29 & 31)

3. Fee for Services Audit: Planning elected to use their existing invoicing system in lieu of converting to the Treasurer’s centralized A/R system. Audit Services reviewed existing controls to ensure proper safeguards exist. (See page 14)

Aging of Recommendations

Recommendations Number Days Past Original Comp Date

Total

Implemented

Closed

Open

Not Due 1 Day to 6

Months 7-12

Months 13-18

Months 19-24

Months Over 2 Years

60 9 0 51 14 10 14 7 3 3

Executive Summary

Executive Summary

Matters of Interest for the Commission

1. Audit of Fleet Maintenance: Three recommendations fall in the “Over 2 Years” old category and are targeted for

implementation in 1st quarter 2014. Fleet manager is confident in meeting that time-frame. (See pages 3 & 4)

2. Audit resolution dates have been revised (extended) for the following:

a. Fee for Services Audit

1) County-wide Recommendation: Develop a County-wide User Fee Policy. Resolution date extended from 12/31/13 to 3/31/14. (See page 6) Audit Comment. BFP notes the SPAR scheduled to discuss fee policy was cancelled. BFP plans to “…run the policy up in February or March (2014).”

2) Library Recommendation: Identify reporting tools required from SIRSI to effectively manage, track, and monitor, on a regular basis, the progress made collecting delinquent accounts (JCL). Resolution date extended from 12/31/13 to 6/1/14. (See page 9) Audit comment: Audit Services and County Librarian are addressing recommendations from the Fee for Services Audit.

3) MNH Recommendation: Each receptionist/cashier having their own cash drawer and balancing his/her register activity at the end of their shift. If staff shortages or other organizational limitations prevent this, we recommend other compensating controls be instituted. Resolution date extended from 12/31/13 to 2/28/2014 (See page 12) Audit Comment: Audit Services and MNH representatives met to discuss implementation of audit recommendation. MNH agreed to accomplish the following:

• Reduce the number of individuals with access to cash drawer operations. • Establish two new cash drawers which include a limited amount of cash funds at their Mission

location. • Develop reconciliation procedures.

Executive Summary

4) MNH Recommendation: Establish A/R write-off criteria that more accurately reflects trends existing within

Mental Health’s business environment, collectability of their debt and sound business practices. Write-off criteria should include provisions for waiving debt in those instances where appropriate. Resolution date extended from 3/31/14 to 7/1/14. (See page 13)

5) MNH Recommendation: When managing receivables of a family unit, discontinue the practice of linking accounts of immediate families together (de-link outstanding familial accounts) and treat each family member independently. Resolution date extended from 1/1/14 to 4/1/14. (See page 13) Audit Comment: Audit Services recommended and management concurred to suspend action on items 4) & 5). The MNH audit (authorized by the Board on 1/23/14) will evaluate billing, collection and receivable activity.

b. ARRA Assurance Audit

1) BFP recommendation: Expand the role of the Grant Manager to ensure County departments and agencies

are complying with federal and grant requirements and meeting reporting responsibilities. Resolution date extended from 12/31/13 to 12/31/14. (See page 23) Audit Comment: BFP reported the Grants Manager position is currently vacant and the position responsibilities are being modified to have a “significant compliance piece”.

2) BFP recommendation: Emphasize to all departments the importance of following grant requirements

including familiarizing with all the requirements pertinent to the grant recipient. This would include Federal and State requirements as applicable. OMB Circular No. A-87 contains the Federal cost principles for all federal grants and includes specific allowances and disallowances of costs and should be emphasized in retraining grants staff. (See page 23)

Audit Comment: BFP reported they were “not able to get as much OMB-87 elements into the (2013) year-end training as the action plan describes. OMB-87 has been added to the year-end forms wherein departments do have to sign off (i.e. certify) that they understand and are compliant, but …it really goes as far as we described in the action plan – especially with the training pieces. We also have identified the basic elements for an OMB-87 procedure but haven’t finalized this.”

Executive Summary

c. Johnson County Wastewater (JCW) Management Audit

Recommendation: Develop an Operating Reserve financial management framework for BOCC approval recommending adoption of a formal policy. Financial management framework would include:

• Methodology and criteria used to calculate the reserve target • Minimum and maximum O&M operating reserve target levels or ranges • A process which triggers management action as the balance approaches “minimum” or “maximum”

operating levels. • Business rules to administer the fund.

JCW General Manager will notify the BOCC, as part of the 2015 budget process, that he will be preparing a formal operating reserve policy for their future discussion and consideration. Resolution date extended from 3/1/14 to 9/1/14. (See page 30) Audit Comment: Audit Services concurs with the General Manager’s plan.

Implementation of Audit Recommendations As of Fourth Quarter 2013

When updating this document quarterly, all items noted as resolved on the prior matrix will be dropped. ‘Completed’ comments are the representations of management. ‘No Response’ comments indicate Management declined to comment on, or respond to, this quarter’s report. Updated information will be obtained each quarter from the responsible party within the applicable department. All comments shown are direct auditee responses and have not been audited by our department.

Implementation Status of Audit Recommendations Mental Health Center Financial and Management Controls ............................................................................................................ 1 Audit of Fleet Maintenance Activities ............................................................................................................................................ 3 Parks and Recreation Operations Review ....................................................................................................................................... 5 Fee for Services Activities .............................................................................................................................................................. 6 Fee for Services – Specific Departments: Library ................................................................................................................................................................................ 9 Mental Health ................................................................................................................................................................... 12 Planning ........................................................................................................................................................................... 14 Key Systems Security Enhancements ........................................................................................................................................... 15 Management of IT (Hardware) Resources - JCL ........................................................................................................................... 16 Treasury-Financial Internal Control Review ................................................................................................................................. 17 Johnson County Transit Cash Controls ......................................................................................................................................... 20 Management of IT (Hardware) Resources .................................................................................................................................... 21 ARRA ……... .............................................................................................................................................................................. 23 JCW Sanitary Sewer Connection Process ..................................................................................................................................... 24 Wastewater Management.............................................................................................................................................................. 29


Page 1

Mental Health Center Financial and Management Controls

Audit Comment Department Date

Comment Appeared

Responsible Management Action Plan & Management Comments Resolution Date

Maintain a constant inventory of all prescription drug samples. Mental Health 2nd Quarter

2008 Maury Thompson

The Executive Director of Mental Health has directed and authorized the following: In both Mission and Olathe, there are dedicated rooms that will store the sample medications in a secured environment (rooms will have card readers installed with limited access). Within the secured rooms, sample medications will be held in lockable cabinets.

07/01/2009 08/01/2009 11/01/2009 01/31/2010 05/31/2010 07/01/2010 12/31/2010 01/31/2011 04/30/2011 09/30/2011 12/31/2013 04/30/2012 08/30/2012 11/30/2012 04/01/2013 06/30/2014

12/01/2013* Completed

Additional Comments:


Page 2

Mental Health Center Financial and Management Controls (continued)


Comment Appeared


Establish procedures to test the inventory of prescription drug samples periodically. Mental Health 2nd Quarter

2008 Maury Thompson

The Executive Director of Mental Health has directed and authorized the following: In both Mission and Olathe, there are dedicated rooms that will store the sample medications in a secured environment (rooms will have card readers installed with limited access). Within the secured rooms, sample medications will be held in lockable cabinets.

07/01/2009 08/01/2009 11/01/2009 01/31/2010 05/31/2010 07/01/2010 12/31/2010 01/31/2011 04/30/2011 09/30/2011 12/31/2013 04/30/2012 08/30/2012 11/30/2012 04/01/2013 06/30/2014

12/01/2013* Completed

Additional Comments: Johnson County Mental Health Center leadership is developing a compensating control that adequately addresses our audit recommendation.We will continue to follow-up on this issue until the inventory rooms at both the Mission and Olathe locations have been equipped with the card readers and the inventories of sample medications have been relocated to the more secure environments.


Page 3

Audit of Fleet Maintenance Activities


Comment Appeared


Develop a cohesive enterprise-wide vehicle fleet strategy that reflects vehicle:

• Preventive maintenance guidelines • Replacement guidelines • Utilization guidelines establishing

5,000 miles as minimum mileage criteria for all County vehicles

County Manager

2nd Quarter

2010

Hannes Zacharias/Chris

Butler

The formal consolidation of Fleet Services maintenance activities will take place on January 1, 2013. A timeline for the transition of departmental fleet responsibilities has been developed and calls for the majority of fleet vehicles to be transitioned through the end of 2013. Standards and criteria for an enterprise-wide vehicle fleet strategy will be in place by the end of 2013 and should, at that point, satisfy this audit recommendation. However, it should be noted that several departments having large and/or specialized fleets are currently not anticipated to be transitioned within a 2-year window. As such, not all County owned vehicles will be managed by Fleet Services at the point in which we anticipate requesting closure of this recommendation.

11/30/2010 09/30/2011 03/01/2012 07/01/2012 03/01/2014



Page 4

Audit of Fleet Maintenance Activities (Continued)


Comment Appeared


Establish a fleet management reporting structure instituting departmental responsibility and accountability to the CMO. Reporting structure should include guidelines/instructions to ensure fleet reports are checked for accuracy and include explanations for results that are “outside the norm”.

County Manager

2nd Quarter

2010


Butler

The formal consolidation of Fleet Services maintenance activities will take place on January 1, 2013. A timeline for the transition of departmental fleet responsibilities has been developed and calls for the majority of fleet vehicles to be transitioned through the end of 2013. Current efforts to merge data-management systems will result in standardized data-entry and fleet reporting. This in turn will help ensure accuracy and provide “apples-to-apples” comparability of results that are “outside the norm”. The fleet management reporting structure will be in place by the end of 2013 and should, at that point, satisfy this audit recommendation. However, it should be noted that several departments having large and/or specialized fleets are currently not anticipated to be transitioned within a 2-year window. As such, not all County owned vehicles will be managed by Fleet Services at the point in which we anticipate requesting closure of this recommendation.

11/30/2010 11/30/2011 07/01/2012 03/01/2014

Include in the standard operating procedures instructions, a “how to” approach, that guides those responsible for adjusting inventory levels within the system and performing transactional input.

County Manager

2nd Quarter

2010


Butler

Current efforts to merge data-management systems will result in standardized data-entry, transactional input and fleet reporting. Standard operating procedures and instructions will be adapted directly from the Fleet Management software and from best practices identified through the vendor and outside software user groups.

03/01/2011 11/30/2011 07/01/2012 03/01/2014



Page 5

Parks and Recreation Operations Review


Comment Appeared


Establish a time frame or maximum cost the District is willing to bear for properties that do not have a designated future plan.

Park and Recreation

District

3rd Quarter

2010

Jill Geller

At the November 20th JCPRD Board meeting, the Board approved the updated Housing Action Plan. They established a maximum cost threshold for dwellings that do not have a dedicated funding source to bring them up to their future intended use, i.e. park shelter, community shelter, etc.The maximum cost is market value for routine maintenance and property insurance.

04/01/2011 05/18/2011 10/01/2011 12/31/2011 01/26/2012 06/30/2012 09/30/2012 12/31/2012 03/31/2013 06/30/2013 12/31/2013 Completed



Page 6

Fee for Services Activities


Comment Appeared


Develop a County-wide User Fee Policy that includes the following minimum characteristics:

• Factors to consider when pricing goods and services

• Specifies whether the County’s fee setting philosophy is to recover the full costs of providing goods and services

• Circumstances in which fee(s) might be established at more or less than full costs

• Rationale for management decisions if fee(s) are not established at cost recovery

County Manager/Budget

and Financial Planning

2nd Quarter

2011

Hannes Zacharias/Scott

Neufeld

A costing model has been developed and used for a portion of County departments. This model was also presented to the BOCC in a SPAR session last year. One of the concepts presented was that the portion of costs charged via fees should align with the portion of costs contributing to individual good as opposed to the portion contributing to the overall public good. A fee to offset County costs for DMV was included in the County Manager’s Proposed FY 2014 Budget but was not ultimately adopted by the BOCC. An agenda item to include indirect costs in the fee structure for Contractor’s Licensing will be considered by the BOCC October 10, 2013. Staff will bring potential policy guidelines to the BOCC during fourth quarter 2013.

Submit for Legal review 03/30/2013 12/31/2013 03/31/2014

Calculate the full costs of providing the products/services to provide a basis for establishing charges or fees. Full cost is defined as: (1.) direct costs that can be specifically identified to the service; (2.) indirect departmental costs and (3.) overhead, including charges for the use of capital facilities.



2nd Quarter

2011


Neufeld

BFP will develop full costs of products/services for all departments not included in the MGT report and make recommendations to the BOCC on changes to fees. This will occur as staff time allows and over the course of the next two years

07/31/2012 09/30/2012 12/31/2014

Periodically review and update charges and fees based on the impact of inflation and other costs or economic pressures.



2nd Quarter

2011


Neufeld

BFP to review bi-annually and update schedule on an annual basis subsequent to completion of departmental full cost analysis reviews

07/31/2013 12/31/2014



Page 7

Fee for Services Activities (Continued)


Comment Appeared


Make information regarding the County’s fee setting process available to the public.



2nd Quarter

2011


Neufeld

BFP will incorporate the fee user policy, process and any other pertinent fee information on County’s website. In addition, the fees will be included in the County’s annual budget.

07/31/2013 03/31/2014

Establish a County-wide debt collection strategy that includes the following key principles:

• definition when a debt is considered delinquent

• criteria for and timing when a debt is referred to an outside collection agency

• criteria for and timing when a debt should be written off

• use of available tools to collect all debt owed Johnson County

• minimum standards for waiving all or portion of debt owed

• minimum due process notifications due debtor

County Manager/Treasury

and Financial Management

2nd Quarter

2011

Hannes Zacharias/Tom

Franzen

Treasury & Financial Management (TFM) will draft a debt collection strategy for the County. Due to turnover with Accounts Receivable staffing, additional time is needed to complete the Accounts Receivable policy and procedure documents.

12/31/2012 09/30/2013 03/31/2014

Expand use of the County’s centralized A/R system.



2nd Quarter

2011


Franzen

Transit was added to the A/R system in 2011. Given existing resources and staffing, additional expansions have been put on hold until such time that resources can be made available to do this work.

04/15/2012 Hold Open for Future Follow-

up

Reevaluate differing pricing schedules based on customer served.



2nd Quarter

2011


Neufeld

As part of the MGT report and presentation for the Fee Study, there was discussion about the purpose of different fees, and who is paying them. Going forward BFP will make recommendations on different fee schedules as appropriate when they are presenting changes to department fees.

12/31/2012 12/31/2014



Page 8



Comment Appeared


Establish a fee for use of all meeting rooms owned or managed by County activities. Fee components should include any direct costs incurred, i.e., security and set-up charges, and the incremental costs associated with renting the room such as utilities and custodial charges.



2nd Quarter

2011


Neufeld

MGT’s report included total costs for County meeting rooms under the control of Facilities. JCL and PRK will be evaluated as staff time in BFP and the departments allows, along with a study of all their other fees structures.

12/31/2012 12/31/2014

Migrate those activities not using the County-wide standard to the County standard.



2nd Quarter

2011


Franzen

Of the 55 operating merchant accounts, staff has actively migrated 45 accounts to Elavon. Of the remaining ten accounts, staff plans to migrate four of those accounts to Elavon. Of the remaining six accounts, given their complexity, corresponding business processes and minimal value to be gained, staff does not plan to migrate these to the county standard.

03/31/2013 09/30/2013 06/30/2013 01/01/2015

Additional Comments: Recommendations were made to departments that were included in detailed and/or targeted reviews during the course of the Fee for Services Activities Audit, and are listed above. Generalized recommendations, that were considered enterprise-wide, were included in the overall Fee for Services Audit Report.


Page 9



Comment Appeared


Specific Departments: Identify reporting tools required from SIRSI to effectively manage, track, and monitor, on a regular basis, the progress made collecting delinquent accounts.

Library 2nd

Quarter 2011

Sean Casserley

Since 2007, JCL has considered various solutions such as SIRSI cash drawers, TFM cash management software and Comprise cash management software. There were issues with the SIRSI and TFM software that could not easily be resolved. JCL has decided to purchase cash management software from Comprise which will link patron fine and fee transactions to their SIRSI record. An action plan will be developed by the JCL technology committee. We have experienced some technical problem with the installation of this product and continue to work with the vendor to find a solution. I am hoping this project will be complete by the end of May. There are still outstanding issues concerning the handling of delinquent accounts. I will be working with the auditor’s office to create an action plan in the first quarter of 2014.

Hold Open for Future Follow-

up Action Plan by

09/30/2012 Comprise Revisit -

12/31/2012 Completed

Action Plan – February 2013

06/30/2013 12/31/2013 06/01/2014



Page 10



Comment Appeared


Specific Departments: Develop and implement procedures that pursue collection of account balances under $15 in a timely manner. At a minimum, adopt the following business practices:

• Request payment due at a subsequent checkout, rather than just identifying the balance due amount to the patron.

• Display signage at the checkout counter encouraging payment.

• Email notifications of amounts due to patrons under $15 after 30, 60, and 90 days.

• Educate staff in debt collection techniques that subscribe to the Library’s intent of using a “soft sell” approach when collecting debt.

Library 2nd

Quarter 2011

Sean Casserley

Staff has investigated the feasibility of sending email notifications for amounts due under $15 after specified periods per current policy intervals. There is a notification report in SIRSI, but bugs need to be worked out before the report is usable. The first, second and fourth bullets are resolved. Staff reminds patrons of fines and are encouraged to request payment. Signage does not incentivize fine/fee payment; rather, the marketing of the online payment option on the library webpage and elsewhere should result in increased debt collection.

06/30/2012 Email

notifications: 12/31/2012 03/31/2013 06/30/2013 07/01/2014

Staff collection

efforts & signage: Completed



Page 11



Comment Appeared


Specific Departments: Develop formal written billing procedures. At a minimum, these procedures should:

• Document library practices for billing amounts owed.

• Provide for more aggressive collection effort of those accounts with balances under $15 in a timely manner.

• Email notifications of amounts due to patrons under $15 after 30, 60, and 90 days.

• Address accounts and dollar amounts that are not collected via a third party. Document what, if any collection efforts, are continued after the third party processing has not yielded results.

• Identify and link the SIRSI process to record amounts received on indebted accounts.

Library 2nd

Quarter 2011

Sean Casserley

It has been determined that the SIRSI “cash drawer” software will not work for AR purposes, so JCL is considering purchase of cash management software from Comprise Technologies, pending cost An action plan will be developed based on discussion with Comprise. 3rd bullet: This item was dealt with earlier in the report. 2nd & 4th bullet points: JCL is satisfied with the work that our materials recovery vendor, Unique Management Services, is doing. They are aggressive enough for library purposes, and many libraries use them. In addition, JCL policy allows patron accounts to carry less than $15 in fines and fees. 5th bullet point: Staff will work with Comprise or SIRSI to develop a solution, as indicated earlier in this report. This project will be completed by the end of the third quarter. We have had some staff turnover and this has delayed the project.

Hold Open for Future Follow-

up

Billing practice documentation:

Completed

Email notifications: 12/31/2012 03/31/2013 06/30/2013 07/01/2014

2nd & 4th

bullet points: Completed

5th bullet point:


Action Plan – February 2013

06/30/2013 07/01/2014



Page 12



Comment Appeared


Specific Departments: Modify policy #PS 40-20-60 in the following manner:

• Prohibit cash refunds to patrons until such time the library has the capability and established procedures to reconcile SIRSI to daily deposits reports.

• Following the establishment of

reconciliation procedures, consult with TFM payables to determine an acceptable dollar limit on cash refunds if advisable. Further, require supervisory approval on all refunds.

Library 2nd

Quarter 2011

Sean Casserley

• Effective January 1, 2012, cash refunds will only be issued for $25 or less. Any refunds greater than $25 will be sent to TFM for processing.

• Once we can implement the SIRSI or

Comprise software to enable reconciliation capability, we will proceed. Effective January 1, 2012, supervisors must approve all cash refunds.

Refund items Completed.

Undetermined

pending software

affordability and staffing

Each receptionist/cashier having their own cash drawer and balancing his/her register activity at the end of their shift. If staff shortages or other organizational limitations prevent this, we recommend other compensating controls be instituted.

Mental Health 2nd

Quarter 2011

Maury Thompson

Audit Services and MNH representatives met to discuss implementation of this audit recommendation. MNH has initiated action to accomplish the following: • Reduce the number of individuals with

access to cash drawer operations. • Establish two new cash drawers which

include a limited amount of cash funds at their Mission location.

• Develop reconciliation procedures.

12/31/2013 02/28/2014



Page 13



Comment Appeared


Specific Departments: Establish A/R write-off criteria that more accurately reflects trends existing within Mental Health’s business environment, collectability of their debt and sound business practices. Write-off criteria should include provisions for waiving debt in those instances where appropriate.

Mental Health 2nd

Quarter 2011

Maury Thompson

We will update the A/R write-off criteria. Changes will be incorporated into the new EMR. We plan on having the finalized procedures worked out by the end of the first quarter of 2014. We will finalize procedures once the new EHR is operating and stable. (See Additional Comments **.)

12/31/2011 03/31/2012 Completed* 06/01/2013 09/01/2013 03/31/2014 07/01/2014

When managing receivables of a family unit, discontinue the practice of linking accounts of immediate families together (de-link outstanding familial accounts) and treat each family member independently.

Mental Health 2nd

Quarter 2011

Maury Thompson

Our current software does not allow this. We are currently in the process of considering new billing software. The RFP process is nearing completion. Vendor interviews will be concluded by the end of this month. Selection will be made. Contract negotiations are expected to be concluded by 12-31-2013 with implementation to begin 4-1-2014. (See Additional Comments **.)

12/31/2012 10/31/2013 01/01/2014 04/01/2014

Additional Comments: Recommendations were made to departments that were included in detailed and/or targeted reviews during the course of the Fee for Services Activities Audit, and are listed above. Generalized recommendations, that were considered enterprise-wide, were included in the overall Fee for Services Audit Report. * Completed per Mental Health 1st Quarter 2012; Audit Services determined insufficient completion 3rd Quarter 2012. ** Management action to implement these recommendations has been suspended due to commencement of an audit in MNH.


Page 14



Comment Appeared


Develop financial procedures documenting write-off criteria and methods used to write-off A/R.

Mental Health 2nd

Quarter 2011

Maury Thompson

Financial procedures documenting write-off criteria and methods used to write-off A/R will be updated and submitted for review in late August. Changes will be incorporated into the new EMR. We plan on having the finalized procedures worked out by the end of the first quarter of 2014.

12/31/2011 03/31/2012 Completed* 06/01/2013 09/01/2013 03/31/2014

Develop procedures to begin using the State of Kansas Offset Program regardless of system capabilities or limitations.

Mental Health 2nd

Quarter 2011

Maury Thompson

Our current procedures to specify balances over 1 year will be sent to the Setoff program. Our current billing/AR software does not allow us to adequately track this process. New software will be installed during the coming year that will allow us to utilize the Kansas Setoff Program.

12/31/2012 Hold Open for Future Follow-

up

We recommend adopting the Treasurer’s centralized Accounts Receivable module to prepare external invoices to and manage the debt owed by applicants.

Planning 2nd

Quarter 2011

Dean Palos

After evaluation of our current accounts receivable system and the Treasurer’s system, we have determined that it is more efficient and effective to continue to use our current accounts receivable system. (See Additional Comments **.)

09/29/2012 09/30/2013 12/31/2013

Completed**

Additional Comments: Recommendations were made to departments that were included in detailed and/or targeted reviews during the course of the Fee for Services Activities Audit, and are listed above. Generalized recommendations, that were considered enterprise-wide, were included in the overall Fee for Services Audit Report. *Completed per Mental Health 1st Quarter 2012; Audit determined insufficient completion 3rd Quarter 2012. **Planning elected to continue using existing invoicing system in lieu of converting to the Treasurer’s centralized A/R system. Audit Services reviewed existing controls in December 2013 and have determined proper safeguards are present.


Page 15

Key Systems Security Enhancements


Comment Appeared


Develop procedures to safeguard both employee privacy and County interests in these matters.

County Manager

3rd Quarter

2011

Hannes Zacharias/Becky

Salter

Communication is ready to go to covered employees. HR is finalizing a list of covered employees with TFM and DTI and working with Legal to create an acceptable financial disclosure form. Finalization of all steps is anticipated by the end of January.

06/30/2012 12/31/2012 06/30/2013 09/01/2013 12/31/2013 01/31/2014



Page 16

Management of IT (Hardware) Resources – JCL


Comment Appeared


Update the Library’s Asset Inventory and Management Policy to include at a minimum:

• A specific time interval for reviewing and recording equipment moves, adds, changes and disposals within inventory records.

• Specific time frames for resolving inventory discrepancies.

• A requirement for reporting results of physical inventories to the County Librarian.

• A procedure for reporting and accounting for IT equipment items found to be missing.

Library 3rd

Quarter 2011

Sean Casserley

A meeting was held on 10/23/2013 with Audit Services to review the status of the management of the IT Resources. It is my goal to focus on the audits recommendation for asset management and control over the next quarter. I will specifically be evaluating the areas in the “Audit Comments” section. I have a status update meeting scheduled on January 15, 2014 with Audit Services to give a report on the progress we are making. We had a follow up meeting Jan 21, 2014 and reviewed the new procedures for IT Asset Inventory Management. The auditor’s office gave feedback concerning tightening the language around the timeliness of hardware deployment. Those changes have been made and a copy of the changed document has been sent to the auditor. These procedures are now in effect.

03/31/2012 09/28/2012 Inventory Procedure: Completed

Asset

Management Plan

09/30/2012 Undetermined

Completed



Page 17

Treasury-Financial Management Internal Control Review


Comment Appeared


Develop a list of all of the tasks performed by TFM staff, determine which of the tasks are incompatible with one another, and document the incompatibilities as a set of segregation of duties rules. (Item 1.1)

Treasury and Financial

Management

4th Quarter 2011 Tom Franzen

TFM staff will develop the list of tasks as described and document any incompatibilities found. TFM has established a standardized set of internal controls by business discipline. TFM is working with DTI staff to implement a new software package that will help with automating identification of internal control conflicts within Oracle responsibilities.

09/30/2012 12/31/2012 06/30/2013 10/01/2013 12/31/2014

Determine which employees have been assigned incompatible duties then design and implement mitigating controls for those individuals. (Item 1.2)


Management


Based on the conflicts identified by the software, TFM staff will determine if any employees have incompatible duties and either eliminate the incompatibilities or design and implement mitigating controls for those individuals.

09/30/2012 12/31/2012 06/30/2013 10/01/2013 12/31/2014

Design and implement testing procedures for the transactions determined to need mitigating controls. (Item 1.3)

Oracle Support Center

4th Quarter 2011 Paul Haugan

OSC staff will conduct a comprehensive study of the Oracle system as it has been setup at the County and determine whether custom responsibilities should be eliminated and determine whether additional Oracle features need to be purchased and/or implemented that can catch and/or eliminate incompatible duties. OSC staff will design and implement any testing procedures that are deemed necessary. 6/30/13 Update: Custom responsibilities have been reviewed and deemed appropriate. Monitoring will be put in place based on TFM forthcoming recommendations due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014



Page 18

Treasury-Financial Management Internal Control Review


Comment Appeared


To the extent possible, automate the segregation of duties by designing Oracle reports that will indicate incompatible functions when responsibilities are assigned. (Item 1.4)


4th Quarter 2011 Paul Haugan

OSC staff will design any Oracle reports deemed necessary. 6/30/13 Update: Waiting on TFM direction due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014

Determine the staffing levels needed to maintain adequate internal controls. (Item 1.5)


Management


TFM staff will study the staffing levels needed to maintain adequate internal controls.

09/30/2012 12/31/2012 06/30/2013 10/01/2013 12/31/2014

Develop a list of all of the tasks assigned to current Oracle responsibilities and apply the set of segregation of duties rules developed as a result of Recommendation 1.1.


4th Quarter 2011

Paul Haugan

Oracle staff will develop a list of tasks assigned to current Oracle responsibilities and with the assistance of TFM will apply segregation of duties rules. 6/30/13 Update: TFM work is a prerequisite due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014



Page 19

Treasury-Financial Management Internal Control Review (Continued)


Comment Appeared


Develop and document a naming scheme for Oracle Responsibilities along with a standardized set of tasks for each named responsibility to assure that no responsibility has incompatible tasks built in.


4th Quarter 2011

Paul Haugan

Oracle staff will develop a naming scheme and a standardized set of tasks for each named responsibility. 6/30/13 Update: Update: TFM work is a prerequisite due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014

Develop a monitoring program to ensure that variances from the adopted naming scheme are not allowed.


4th Quarter 2011

Paul Haugan

Oracle staff will develop a monitoring program. 6/30/13 Update: Update: TFM work is a prerequisite due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014

Create and monitor mitigating controls for any assignment of incompatible duties such as the assignment of incompatible responsibilities to a single employee.


4th Quarter 2011

Paul Haugan

Oracle staff will create and monitor controls for the assignment of incompatible duties. Ongoing monitoring will also need to be conducted at the department level. 6/30/13 Update: Update: TFM work is a prerequisite due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014

Develop and document procedures to be used by those entrusted with assignment of Oracle Responsibilities to ensure uniformity, security, and appropriate levels of internal control.


4th Quarter 2011

Paul Haugan

Oracle staff will develop and document such procedures. 6/30/13 Update: Update: TFM work is a prerequisite due 10/1/13. Extend date to 4/1/14.

04/01/2013 04/01/2014



Page 20

Johnson County Transit Cash Controls


Comment Appeared


Discontinue the use of Quick Books for accounting for Special Edition and Premium accounts receivable. Use Oracle for Accounts Receivable, and use Generally Accepted Accounting Practices (GAAP) to record the true costs and revenues of the revenue programs.

Transit 1st Quarter 2012 Alice Amrein

Johnson County Transit will utilize the Oracle accounts receivable module in January for the February billing of Premium services. The January billing was processed in December 2013 in QuickBooks, but all receipts are being reported as JCT revenue.

Hold Open for Follow-Up 01/01/2014 Completed



Page 21

Management of IT Hardware Resources


Comment Appeared


Develop and implement an enterprise-wide IT governance structure specifically tailored to meet Johnson County’s business needs, strategic initiatives and enterprise-wide objectives. The IT governance structure should include, but not be limited to, the following features:

• A governance “body” consisting of representation from the IT community and key County leaders and department heads. These decision makers will review and approve all County IT investments and ensure IT investments align with County objectives and goals.

• Formal policies and procedures describing the criteria used to evaluate and approve IT investments.

• A requirement that IT investments will be supported by a formal business case. The formal business case will include:

o Detailed description of project

o Return on investment o Identification of associated

risks o Risk mitigation plan

County Manager

1st Quarter 2012

Hannes Zacharias/Paul

Haugan

The County hired a Chief Information Officer in June 2012. Under his direction, staff will review these items and determine the appropriate course of action. 6/30/13 Update: A high level framework for IT Steering has been developed and is under review by several departments. Further review by other departments will continue. Extend to Jan 1, 2014

07/01/2013 01/01/2014



Page 22

Management of IT Hardware Resources (Continued)


Comment Appeared


Require all IT equipment hardware purchases be centrally procured, purchased from Purchasing’s recommended source and approved by the IT governance structure previously recommended in this report.

County Manager

1st Quarter 2012


Haugan

The County hired a Chief Information Officer in June 2012. Under his direction, staff will review these items and determine the appropriate course of action. 6/30/13 Update: Policy and Centralized IT Purchasing Under review. DTI Developing pilot program “Web Store” to enable purchase of equipment through a central portal. Extend to Jan. 2014

07/01/2013 01/01/2014

For those support functions the County determines are critical to the success of its IT program, determine the most efficient/effective mechanism for service delivery.

County Manager

1st Quarter 2012


Haugan

The County hired a Chief Information Officer in June 2012. Under his direction, staff will review these items and determine the appropriate course of action. 6/30/13 Update: Part of the continuing consolidation is the analysis of duplicated technology functions and positions across the County. This is currently in review. Extend to Jan 1, 2014.

07/01/2013 01/01/2014



Page 23

ARRA Assurance Audit


Comment Appeared


Expand the role of the Grant Manager to ensure County departments and agencies are complying with federal and grant requirements and meeting reporting responsibilities. Such expansion should include:

• Annual certification by grant managers and financial managers associated with grants, that they’ve read and understand the requirements of OMB Circular No. A-87 (covers allowable costs) and County Administrative Procedure 180.130 (County’s Grant Administrative Procedure).

• Incorporate a narrative description of the basic guidelines and requirements of OMB Circular No. A-87 into County Administrative Procedure 180.130.

County Manager/

Budget and Financial Planning

3rd Quarter 2012


Neufeld

BFP will establish a training program to get all grant and financial managers familiar with OMB Circular No. A-87 and develop a certification form to accompany the training. BFP will establish an annual update for employees on OMB Circular No. A-87 that will coincide with annual end-of-year training and track attendees in order to maintain certification by grant and financial managers. BFP will develop basic guidelines and requirements for OMB No. A-87 and update County Administrative Procedure 180.130 to include these.

12/31/2013 12/31/2014

Emphasize to all departments the importance of following grant requirements including familiarizing with all the requirements pertinent to the grant recipient. This would include Federal and State requirements as applicable. OMB Circular No. A-87 contains the Federal cost principles for all federal grants and includes specific allowances and disallowances of costs and should be emphasized in retraining grants staff.

County Manager/

Budget and Financial Planning

3rd Quarter 2012

Hannes Zacharias/ Scott Neufeld

BFP will establish training and end-of-year updates to ensure all grant and financial managers are certified on OMB No. A-87. These will be part of the regular schedule to highlight the importance of the requirements.

12/31/2013 12/31/2014



Page 24

JCW Sanitary Sewer Connection Permit Process


Comment Appeared


Adopt “E-filing” as the methodology to file legal documents with the Records and Tax Administration Department (RTA) and pursue electronic or digital signatures for signatures required of Johnson County officials.

Wastewater 1st Quarter 2013 John O’Neil

1.2.a. Adopt E-filing: Staff assigned to project. Initiated information gathering 6/17/2013. 1.2.b. Evaluate an increase in fees to cover the additional costs: Staff assigned to project 1.2.c. Add digital signature capability for JCW staff and other JOCO staff as needed (work with DTI): Staff assigned to project (requires outside stakeholders too – need meeting with DTI and RTA to determine how to accomplish)

1.2.a. 06/01/2014

1.2.b. 06/01/2014

1.2.c. 06/01/2014

Additional Comments: Management responded to the audit recommendation by providing multiple steps with the possibility of differing resolution dates to one recommendation. In instances where more than one resolution date is noted, timeliness will be tracked by the latest date identified.


Page 25

JCW Sanitary Sewer Connection Permit Process (Continued)


Comment Appeared


Adopt a “Case Manager” role in the sanitary sewer connection process and designate specific staff for this role. Hold the Case Manager responsible for processing applications from start to finish.


1.3.a. Assign this duty to the plan review supervisor on a pilot basis: Procedures have been updated to reflect “case manager” responsibilities. Commercial plan review case manager duties are assigned to the commercial plan reviewer responsible for the plan review. The New Development Compliance Engineer is the designated case manager for residential permits. The position has not been filled so in the interim case manager duties have been assigned to the Planning Engineer. 1.3.b. Evaluate the process for a period of time.

1.3.a .


1.3.b. 03/01/2014



Page 26



Comment Appeared


Reevaluate current metrics/establish formal metrics for the commercial plan review program such as:

• three submittals (on average) per project,

• in-house processing time as a percentage of total processing time,

• a weighting scale denoting plan complexity, and

• a recurring report to identify the number of plan reviews in process.


1.5.a. Develop a rating or weighting scale to plan reviews: Project assigned to staff 1.5.b. Modify reports from databases to identify the complexity of plan reviews and capture in-house processing time as a percentage of total processing time: Project assigned to staff 1.5.c. Evaluate the value this information adds to the process:

1.5.a.

04/01/2014

1.5.b. 04/01/2014

1.5.c. 10/01/2014

Develop a monthly reporting tool for the General Manager and other leadership that compares program results against established metrics.


1.6. Develop monthly reporting tool for GM: Project assigned to staff 1.6.a. Explore condensing existing reports to one page. Project assigned to staff 1.6.b. Explore putting this report information on a dash board. Project assigned to staff,

1.6. 04/01/2014

1.6.a. 01/01/2014

1.6.b. 01/01/2014



Page 27



Comment Appeared


Develop actions which engage reviewers and stakeholders early within the process:

• Incorporate an Initial Screening Process into the commercial plan review process

• Conduct Pre-Application meetings with developers, contractors and design professionals

Collaborate with City of Overland Park to participate in their Pre-Application Meeting


1.8. Develop actions to engage reviewers and stakeholders early: Project assigned to staff and procedures will be documented to reflect changes. 1.8.a. Explore with Overland Park and other cities what opportunities and benefits exist by coordinating pre-application meetings. Project assigned to staff

1.8. 09/01/2014

1.8.a. 09/01/2014

Consult with Department of Technology and Innovation (DTI) and develop a “needs assessment” analysis leading to a Request for Proposal for an off-the-shelf automated permit tracking software system which will meet JCW’s current requirements and provide flexibility to meet future needs. This recommendation has the potential to extend to other permits issued by JCW.


2.1. Develop needs assessment: Project assigned to staff and DTI. DTI assigned a Project Manager to this project on 7/9/2013. 2.1.a. Investigate possibilities and select replacement. Project assigned to staff and DTI.

2.1. 06/01/2014

2.1.a. 04/01/2016



Page 28



Comment Appeared


Pursue a completely web based (electronic) permitting application and issuance process that migrates the permit process – application, plan submission, plan review, collaboration, payment of fees, status updates, permit issuance – to on-line processing.


2.2 Pursue web based permitting application. Project assigned to staff and DTI. DTI assigned a Project Manager to this project on 7/9/2013. 2.2.a. Options will be evaluated as part of the effort to purchase permitting software. Project assigned to staff and DTI. DTI assigned a Project Manager to this project on 7/9/2013.

2.2. 04/01/2016

2.2.a. 04/01/2016

Develop additional website content addressing:

• JCW User’s Guide for Permitting Permit Process flow charts illustrating process from start to finish


2.3.a. Develop content. Project assigned to staff. To be done in conjunction with County’s web redesign project. 2.3.b. Load to website. Project assigned to staff. To be done in conjunction with County’s web redesign project.

2.3.a. 08/01/2014

2.3.a. 08/01/2014

Establish a single link on JCW’s Home Page to access all permits issued by JCW. Wastewater 1st Quarter

2013 John O’Neil

2.4. Single link to access all permits issued: Project assigned to staff and JCW ITS has started working on this. 2.4.a. Consolidate this information, consistent with the approach on the JOCO web site. Project assigned to staff and JCW ITS has started working on this.

2.4. 01/01/2014

2.4.a. 01/01/2014



Page 29

Wastewater Management


Comment Appeared


Take action to collect outstanding debt. Wastewater 2nd Quarter 2013 John O’Neil Contract has been signed and accounts are

being sent to the collection agency.




Page 30

Wastewater Management (Continued)


Comment Appeared


Develop an Operating Reserve financial management framework for BOCC approval recommending adoption of a formal policy consisting of:

• The proposed O&M framework presented to the BOCC in March 2006 is recommended methodology to calculate the Enterprise Fund’s O&M operating reserve target levels. This is an excellent baseline and starting point which considers JCW’s unique operating environment.

• Minimum and maximum O&M operative reserve target levels, or ranges, based on the March 2006 framework.

• A process which triggers and specifies management action as the fund balance approaches either the minimum or maximum operating levels.

• Business rules to administer the fund, such as:

o Required management action if balance approaches or falls below the minimum threshold

o Required management action if balance approaches or exceeds the maximum threshold

Wastewater 2nd Quarter 2013 John O’Neil

JCW General Manager will notify the BOCC, as part of the 2015 budget process, that he will be preparing a formal operating reserve policy for their future discussion and consideration.

03/01/2014 09/01/2014



Page 31



Comment Appeared


Revise internal procedures and incorporate key policy points found in the County’s AR Policy Draft. This includes:

• Writing off uncollectible accounts from accounting records (at least annually)

• Properly valuing accounts receivable through the regular review of uncollectible accounts

• Developing and following internal guidelines regarding uncollectible accounts

• Beginning collection activities in a timely and effective manner

• Maintaining an optimum accounts receivable turnover ratio


2013 Writeoffs will occur in the 4th Quarter according to internal procedures. Collection activities will be enhanced through the addition of a third party collection agency. Evaluation of maintaining an optimum accounts receivable turnover ratio will be an ongoing process. In the 2nd Quarter of 2014 conditions will be revaluated to determine if internal procedures need to be revised prior to the 2014 writeoff process.

6/30/2014

Institute an aggressive write down campaign of accounts receivable in 2013 Wastewater 2nd Quarter

2013 John O’Neil 2013 Writeoffs occurred in the 4th Quarter according to internal procedures.


Ensure proper adjustments are made in the allowance account. Wastewater 2nd Quarter

2013 John O’Neil Proposed bad debt allowance submitted to TFM.


Implement a continuous monitoring program of accounts receivable that incorporates ratio and trend analysis


A continuous monitoring program is in place now through month end aged accounts receivable reporting. Supplementing that process with ratio and trend analysis is the next step in the process.

6/30/2014



Page 32



Comment Appeared


Establish a new complaint rate success goal using past performance as a benchmark. Wastewater 2nd Quarter

2013 John O’Neil JCW will review when more history is available. 12/31/2015

Implement the following benchmark measurements to determine employee efficiency, customer service costs and billing accuracy:

• Customer Accounts per Employee • Wastewater Processed per

Employee • Customer Service Cost per Account • Billing Accuracy

Wastewater 2nd Quarter 2013 John O’Neil All reports have been completed except

billing accuracy. 01/01/2014


audit services fourth quarter 2013 implementation … quarter... · audit services . fourth quarter...

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