1999-Audit Master
14
pages
English
Documents
Le téléchargement nécessite un accès à la bibliothèque YouScribe Tout savoir sur nos offres
14
pages
English
Documents
Le téléchargement nécessite un accès à la bibliothèque YouScribe Tout savoir sur nos offres
EXECUTIVE SERVICE CORPS A Division of ZERO-BASED MANAGEMENT REVIEW OF THE CITY OF SAN DIEGO AUDITOR AND COMPTROLLER DEPARTMENT Presentation to the Select Committee for Government Efficiency and Fiscal Reform May 18, 1999 A Report of the Nonprofit Management Solutions/Executive Service Corps for the San Diego City Manager and Select Committee of the City Council 1 Foreword The Nonprofit Management Solutions/Executive Service Corps is pleased to forward this Zero-Based Management Review, which represents many hours of research and interviews undertaken by volunteer consultants, experienced in the area of their study focus. We wish to express our gratitude for the generous contribution of time, talent and expertise these citizen executives have provided to produce the recommendations forwarded to the City of San Diego at this time. When citizens and government and elected officials work together... THE RESULTS CAN BE OUTSTANDING! iBACKGROUND This report is a product of a five-year Zero-Based Management Review effort originated 2by the Mayor’s Change Committee, sponsored by the City Manager, performed under the aegis of the City Council Select Committee for Government Efficiency and Fiscal Reform, and coordinated under the management of the Nonprofit Management Solutions/Executive Service Corps. A select corps of citizen volunteer consulting teams are ...
Voir
Publié par
Langue
English
EXECUTIVE SERVICE CORPS A Division of
ZERO-BASED MANAGEMENT REVIEW OF THE CITY OF SAN DIEGO AUDITOR AND COMPTROLLER DEPARTMENT Presentation to the Select Committee for Government Efficiency and Fiscal Reform
May 18, 1999 A Report of the Nonprofit Management Solutions/Executive Service Corps for the San Diego City Manager and Select Committee of the City Council
1
Foreword
The Nonprofit Management Solutions/Executive Service Corps is pleased to forward this Zero-Based Management Review, which represents many hours of research and interviews undertaken by volunteer consultants, experienced in the area of their study focus. We wish to express our gratitude for the generous contribution of time, talent and expertise these citizen executives have provided to produce the recommendations forwarded to the City of San Diego at this time. When citizens and government and elected officials work together... T H E R E S U L T S C A N B E O U T S T A N D I N G !
i
BACKGROUND This report is a product of a five-year Zero-Based Management Review effort originated by the Mayors Change 2 Committee, sponsored by the City Manager, performed under the aegis of the City Council Select Committee for Government Efficiency and Fiscal Reform, and coordinated under the management of the Nonprofit Management Solutions/Executive Service Corps. A select corps of citizen volunteer consulting teams are recruited, trained and supported by NMS/ESC to conduct departmental systems assessments. The ZBMR corps is comprised of recently retired and semi-retired individuals, as well as loaned executives and working professionals representing a broad range of private and public sector business background. All have demonstrated a commitment to management effectiveness and an ability to contribute through their knowledge, experience and expertise. A typical assignment involves the recruitment of executive-level volunteers who possess the management skills and experience appropriate for their task. A kick-off meeting is conducted with the City Manager, Linc Ward of the Select Committee, the two-person study team, and appropriate levels of the city departments in the operations to be reviewed. The team spends several sessions in the field, applying a macro-management viewpoint. They also conduct research of comparative practices in other cities across the nation. Their reviews focus on operations to determine answers to the following questions: ♦ Is this work function consistent with City goals and direction? ♦ Is this work function (and its related functions) effective and efficient? ♦ Is this work function consistent with other related functions? ♦ Can this function be done elsewhere? ♦ Is it competitive with private industry? At the end of their review, the team prepares a report for the Department Directors, the City Manager, and the Select Committee on Government Efficiency and Reform. The Select Committees Chair Byron Wear, and Council members Harry Mathis and Barbara Warden, meet periodically to assess implementation progress on these reports recommendations. Nonprofit Management Solutions/Executive Service Corps is a major provider of comprehensive management assistance to nonprofit organizations in the region since 1984. NMS/ESC is a volunteer-driven and client-centered nonprofit technical assistance resource. Its purpose is to high-quality management assistance through cost-effective consulting, training and development services. NMS/ESC has built a significant track record of high-quality service to public and private nonprofit institutions, including Arts and Culture, San Diego Community Foundation, Neighborhood House, the Public Health Departments of San Diego and San Bernardino Counties, along with other public and private institutions.
ii
ZBMR TEAM MEMBERS The Auditor and Comptrollers Department was visited by two private industry executives during February March 1999. They met with Department managers and reviewed operational activities in the Divisions listed below: ♦ Audit Division ♦ Payment Services Division ♦ General Accounting Division ♦ Systems Division TEAM MEMBERS: ♦ JEROL (Jerry) SONOSKY Retired Executive Vice President and General Manager, International Division, First Interstate Bank ♦ VICTOR CALDERON Partner, Calderon, Jahan and Osborn, Certified Public Accountants Director: Linc Ward, Chair of Zero-Based Management Review Sub-Committee of the City Council Select Committee. Coordinator: Joel J. Snyder, Ph.D., Volunteer Consulting Services, Support Center/Executive Service Corps. These volunteers represent some of the finest executive and professional skills in the community, bringing a wealth of management and operational experience, success and know-how to each team assignment and to the City of San Diego. It should be noted that this ZBMR team brought two points of view to the study. One member had a strong background in audit, compliance, and accounting. The other member was a senior executive manager with a very large U.S. multinational bank. At times, opposing views emerged, but these differences contributed to a better overall understanding of the issues and resulted in recommendations to help assure the continued development of the Auditor/Comptroller Department.
iii
T ABLE O F C ONTENTS Page Foreword ........................................................................................................ i Background ................................................................................................... ii ZBMR Team Members ................................................................................. iii Overview of the Department ........................................................................ 1 Significant Findings ...................................................................................... 2 Management ..................................................................................... 3 Systems Division ............................................................................... 5 Audit .................................................................................................. 5 General Accounting System .............................................................. 6 Interface with other City Departments ............................................... 6 Recommendations ....................................................................................... 8 Table One Budget Summary ........................................................................... 1
i
Z ERO -B ASED M ANAGEMENT R EVIEW
I. A.
B.
O VERVIEW
A UDITOR A ND C OMPTROLLER D EPARTMENT
OVERVIEW OF DEPARTMENT The Zero-Based Management Review team of Mr. Victor Calderon and Mr. Jerol Sonosky visited the Auditor and Comptrollers Department during February and March 1999. Those interviewed were Mr. Ed Ryan, City Auditor and Comptroller; Terri Webster, Assistant City Auditor and Comptroller; Eugene Ruzzini, Audit Division Manager; Darlene Morrow-Truver, Payment Services Division Manager; Mike Phillips, Accounts Payable and Support Services Section Manager; Bob Lawrence, Payroll Section Manager; Phil Phillips, Accounting Division Manager; and Robert Wilson, Financial Systems Division Manager. This study was undertaken in a relatively short period of time, and it was not possible to visit with all of the key members in a very complex unit. However, the team believes that their findings, if appropriately received, may provide some useful suggestions for future continued growth and development of the Auditor/Comptroller Department. It was their pleasure to assist in the study. Mr. Calderon and Mr. Sonosky wish to thank all of these individuals for their time and the effort they expended. They were all most generous and helpful, and without their honesty, sincerity, and dedication to the project, this report would not have been possible. ORGANIZATION FACTS: The City Auditor and Comptroller is the Chief Fiscal Officer of the City, elected by the City Council for an indefinite term. Mr. Ed Ryan, the incumbent, has served in this position for seventeen years. At least 18 sections of the City Charter directly pertain to the Chief Fiscal Officers work concerning the financial condition of the City and of its Departments. As such the Department oversees an annual operating budget of $1.7 Billion. The Auditor and Comptrollers staff also certifies expenditures and balances of approximately 1,000 city funds, 16 corporations and joint power authorities. 1. In FY1999, the Auditor and Comptrollers Department included 91 positions. Its total budget was $6.2 million, of which $5.7 million was personnel expense. The Departments ratio of budgeted dollars to budgeted positions is similar to comparable California cities, such as San Jose and Long Beach. Overall the Departments formal organization structure reflects relatively little change over the past ten years, as TABLE ONE shows, despite a nearly doubled city budget.
1
Z ERO -B ASED M ANAGEMENT R EVIEW A UDITOR A ND C OMPTROLLER D EPARTMENT
TABLE ONE Auditor and Comptroller Department Budget Summary (in millions)
Positions 84.4 91.3 91.2 Auditor s Budget $ 4,392 $ 5,538 $ 6,227 City Total Combined Budget $956,472 $1,272,252 $1,546,799 In effect, although several positions were added and non-personnel expenses fluctuated, with the reassignment of data processing expenses, the Departments overall budget grew only about the amount of budgetary inflation of four percent over a ten-year period. Increased automation and skill training allowed the Department to handle increasing workloads efficiently. 2. The formal organizational structure has remained relatively unchanged despite widespread reorganization of other city General Fund departments. In practice, the department often operates outside its formal structure. The Departments informal organizational charts in the accounting program include a fourth division, Payment Services, organized to better conduct citywide account payable and payroll functions. Also, the audit program consolidated from three sections to two, which eliminated two section manager positions. Other computer-based financial data management and systems development, officially staffed with 3.5 Department personnel, in its Systems Division, have been closely integrated with 6 data processing analysts currently assigned from the Data Processing Corporation, to work throughout the Department on current projects. These evolutionary changes reflect the ongoing efforts of the Department to improve its operations within available resources and routine operating procedures.
II. A.
O VERVIEW
FINDINGS OVERALL 1. The overall impression of the City Auditor and Comptrollers Department is one of a highly professional organization. Its staff is highly skilled, and its resources are rigorously managed. There are no operating inefficiencies, nor fiscal and monetary improvements, that could provide significant cost savings in the short run. The availability and integrity of financial
2
Z ERO -B ASED M ANAGEMENT R EVIEW
B.
O VERVIEW
2.
A UDITOR A ND C OMPTROLLER D EPARTMENT
information for use by the Mayor, Council members and other senior department directors seems exemplary. The Auditor and Comptrollers Department is a superior performer and is so recognized nationally and statewide. The internal and external information reviewed by the ZBMR team supports this assessment. It is a strong endorsement and compliment to the Auditor and Comptroller and staff members. Even though meaningful efficiency and effectiveness performance measurements of complex, analytical staff functions, such as auditing and financial problem solving, are difficult to find, the proof often lies in the outcomes. In this regard, the Department has achieved an outstanding record. Its ten annual financial statements for the city as a whole and for selected agencies and funds have received an unqualified opinion best evaluations of independent auditors. The IRS has identified the city as an IRS Quality Supplier for accuracy in filing 500,000 information returns without formatting or validity errors. The Department has received the Outstanding Financial Reporting" award for the last 10 years from the California Society of Municipal Finance Officers and National Government Financial Officers Association. The Auditor and Comptroller has received, a City Council Commendation for Leadership, and the 1998 National Association of Government Accountants Distinguished Local Government Leadership Award. Moreover, the city itself has earned high bond credit ratings, of which the Auditor and Comptroller is an important factor. The very nature of its accomplishments suggests that the most useful attention of this review be given to future needs, rather than current operations; i.e., technical and computer systems upgrades, and expanded services to the citywide organizations, while continuing efficient service. The citys projected growth during the next ten years will demand continued accounting expertise throughout city government and strong leadership from the department as well. MANAGEMENT 1. Structure: The formal structure of the department is traditionally hierarchical, in accord with the job classification standards of the public sector. These practices are very useful in maintaining the essential independence of the Audit Division. The purpose of the Department, which is to provide audit, fiscal, and accounting services for all city departments, requires well-defined procedures and reliable financial accuracy. The present structure provides an environment whereby these requirements are effectively met, and it allows operational flexibility when required. Within this framework, as mentioned above, the department often operates in a team approach to projects.
3.
3
Z ERO -B ASED M ANAGEMENT R EVIEW
O VERVIEW
2.
3.
A UDITOR A ND C OMPTROLLER D EPARTMENT
Delegation of Authority: Senior management employs a hands-on approach, down to the lowest level of the organization to ensure consistency with priority and direction. In general, policy direction and financial approval authority for expenditures extends to lower staff levels, for routine budget, accounting or audit projects. a. In addition to written policies and procedures, communication of policies, work status and direction, etc., is conducted through a series of weekly, monthly, and quarterly meetings involving various levels of management and staff, in addition to the normal routine interface with various personnel as needed. Staff meetings provide frequent opportunities to clarify priorities, exchange ideas and requests for information and to define strategies with key managers. b. The members of senior management establish the priorities of auditing and accounting projects. The Auditor and Comptroller stays involved in issues and projects of citywide significance and properly so, based on his independent role under the City Charter. Consequently, lower levels of staff authority sometimes are subject to fiscal and policy considerations that require close coordination among team members, and the continual involvement of senior management. c. There is a danger to be recognized when senior management employs a hands-on approach to the lowest level of the organization. Normal lines of delegation and authority are likely to be aggravated between supervisors and workers and some misunderstandings are likely. In this situation, open and frequent communication is an absolute necessity. Supervisory Levels: The ratio of staff personnel to managers (senior management through middle manager supervisors) is about 7 to 1, which is generally comparable with smaller private industry accounting firms. The complicated, public funding nature of the Departments work often requires high skill levels and collegial project tasking. For example, fund accounting for the citys multiple funds occupies much of the Departments efforts. Competence of the Departments senior accountants also includes broad awareness of citywide fiscal thinking and proven ability to work within department project teams as well as with outside departments. Managers and staff share responsibilities for projects and represent the Department on other City fiscal planning committees and Boards, besides contributing to internal Department teams. These supervisors responsibilities include reviewing the interpretation of financial data by staff members and reviewing and making analytical decisions of considerable consequence. In the future, the
4
Z ERO -B ASED M ANAGEMENT R EVIEW A UDITOR A ND C OMPTROLLER D EPARTMENT
C.
D.
O VERVIEW
4.
technology for financial data transfers and analysis will improve, and the Department will continue and expand its client-based partnership with qualified financial staffs of other city departments. The present structure provides the flexibility to add personnel without a commensurate increase in managers; however, a future process redesign of its structure along more department-oriented, functional lines might reduce the number of formally structured managers without impairing the service efficiency of the Department. Staff Development: The ratio of staff with advanced degrees or certifications, (i.e., CPAs, etc.) employed by the department may be one of the highest in the city, exceeded only by the City Attorneys Department. Therefore, a future management concern will be to continue to employ and to compensate these highly skilled peoples talents most effectively. Senior management has started to address this issue, specifically by instituting a limited Pay for Performance concept for four accountants IV level. They are still pursuing approval of the other classified accounting skill levels (Accountant levels I, II, and III). This concept offers a best means of introducing needed reforms into classified employee job classification compensation, and has been supported by the Citys Personnel Director. Moderate salary increases for accomplishment of performance goals based on tailored employee performance plans will be a valuable result from this reform effort. Accomplishing expanded pay for performance changes would materially assist senior management in more efficiently recognizing, & compensating top performing accounting staff talent, as well as recruiting future candidates, because it would provide the incentive and opportunity for their growth within the present personnel system. THE SYSTEMS DIVISION 1. Technological improvements for financial data are the responsibility of this section. In the absence of overall, citywide systems development priorities and timing, present capabilities of this section are being strained, particularly as more city departments automate their operations. The City Managers A list process has helped this. The Auditor/Comptroller Department is exploring ways to improve its ability to provide information to other departments through the use of internet/intranet technology, and to expand the computerized records access (retrieval) capability. As the City moves forward with its citywide strategic planning, these efforts, especially to resolve or prevent data interface problems between operating and accounting functions, should be included. AUDIT: The Audit Division is well organized and is effectively separated from other activities of the Department to assure an arms length posture. Overall, the Division staff has remained at 21.5 positions for six years, although the
5
Z ERO -B ASED M ANAGEMENT R EVIEW
E.
O VERVIEW
2.
A UDITOR A ND C OMPTROLLER D EPARTMENT
number of audits has fluctuated slightly, due to the Divisional change from three to two sections. Reports are compiled on a scheduled basis, with about 55-65% of its staff-hours assigned to planned audits. The other 35-45% of its resources is tasked on audits requested by city departments. 1. The balance of planned to requested internal audits is based on historically valid workloads. Department management has employed a functional, rather than departmental approach. A sophisticated risk model includes dollar amounts, time since a department or function was previously audited, and potential for loss. This is done annually to determine the planned audit schedule. It also allows the Audit Division to place top priority on cooperating with City Departments that want assistance, and to respond promptly to unforeseen departmental needs. For example, the 1997 proposed contract between the city and the cooperative emergency medical transportation service of the Fire Department and Rural Metro Corporation generated a top priority need for financial auditing. This review resulted in helping the City recover over $1.3 million annually. Requested performance and operational audits often provide reliable data to support departmental planning and more efficient resource allocations. The External Audit Section helps to ensure compliance with City rules and regulations related to Transient Occupancy Tax, Business Tax, Franchise Taxes, and Lease Agreements. Audits are performed within specific time frames mandated by the City Council, i.e., hotels and franchises every two years, leases at least once every three years. These audit cycles encourage compliance with rules and regulations but not to the point of unnecessarily interrupting business operations. External audits have resulted in revenue recoveries of $2 million or more annually. In twelve years, from 1986-1998, over $35 million in recoveries and measurable cost savings resulted from audits, which more than covered the Divisions operating costs. GENERAL ACCOUNTING SERVICES: This staff and budget comprise most of the Department's personnel resources. As such, Accounting Services provides a good example of the Department's attention to measurable standards of operating efficiency. 1. The ZBMR team found that financial reporting routinely surpasses its established goals of five days standard processing time for direct payments or purchase order requisitions. Their average processing time in FY98 was under four days for direct payments, and about two days for requisitions. Auditor Certificates were being processed in less than two days.
6
