ITEM INFORMATION
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GMMemoNo. 04-271
rRANsrrDtsrRtcr Boardof Directors Summary Executive
Date:August4,2004 Meeting
Gommittees: Committee Planning Committee ExternalAffairs
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Committee E Finance Committeetr Operations
StudentPassCommiftee
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Commifteetr Paratransit
Boardof Directors
D
FinancingCorporation fl
$UBJEGT: InternalAudit4'nQuafter$tatusReport(FY 2003/04) AGTION: RECOMMENDED fit InformationOnly
[] Briefing ltem
f] RecommendedMotion
Fiecal lmpect:
None BacksroundlDlsqlssion: ffitrativeRegu|ationsrequirethatthe|nterna|AuditDepartmentreportquarter|y the statusof Thisreportsummarizes on thestatusof the auditprogram. to the Boardof Directors for throughthe4thquarterof fiscalyear200312004. affauditactivities
BOARDACTION:
Approved as Recommanded lxl Approvedwith llllodification(sl t I
Other
t I
to approvethe ConsentCalendaras presented(6-0-0-0). MOT|of.t:PEEPLES/JAQUEZ Ayes: Noes: Abstain: Absent:
Vice PreSident Peeples,Jaquez,Kaplan,BisChofberger, DirectorS Harper, PresidentWallace 6 None-0 None* 0 None- 0
The aboveorderwas passedand adoptedon 1, 2004, September RoseMartinez,DistrictSecretary By
u t ,
I
GM MemoNo. 04-271 ' Subject:InternalAudit4'dQuarterStatusReport(2003/2004) Date: August4,2004 Iage 2 of 5 -
fourauditswereon going,andtwo auditshad Duringthe 4thQuarterof fiscalyear200312004, Audit,CreditCard fieldworkcompleted.Thefouron-goingauditsinclude:MaterialsInventory PG&EBilling Review, and OperationalAdvisory ComplianceReview,FixedAssetInventory StatusReview Review.Auditswithfieldworkcompletedincludethe PriorAuditRecommendation Review. Inventory andthe Remanufactured Continuingauditadvisorieswerealso providedfor the Translinkprojectin the areaof data securityand control. COilPLETED'INFINAL$TAGE: AUDITPROJEGTS PriorAuditRecommendation StatusReview The purposeof this reviewis to determinethe statusof the prioryear'sinternalaudit effortsto complywith recommendations. The focusof this reviewis to supportdepartmental statuswas completed internalcontrols.Continuousupdateto the recommendation recommended in 2004. as of June30, 2004,with a reportsentto management July status,updatingdepartmental scopeof this reviewincludesreviewingthe implementation lnu -rnternal controlefforts,and providingassistancewith controlissuesthat mayhavearisensince Audit,OaklandTicketOffice the last audit. Priorauditsreviewedinclude:BankReconciliation Audit,S.F.TicketOfficeAudit,DumbartonBridgeExpressServicefollow-upAudit,Brinks& FareboxAudit,AccountsPayableAudit,UnclaimedPropertyAudit,and the PayrollAudit. weremakingsignificantprogres$in the Auditstaffobservedthat manydepartments reviewed,20 Of 36 recommendations auditrecommendations. implementation of FY 2OOZ|03 progress, and I werenot or in 7 werepartiallyimplemented werefullyimplemented, implemented. wereimplementing a majorityof audit In conclusion,it was foundthat departments haveindicatedthat recommendations importantto maintainstronginternalcontrols.Departments will be plannedat a laterdate. Internal of the recommendations implementation of the remainder Auditwill continueto follow-upon theserecommendations. RemanufacturedInventorvAdvisorvReview inventory The purposeof this reviewis to evaluatethe accuracyof the remanufactured accounting and reportingin the MincomEllipseSystem,andto provideadvisoryoversighton an 4n-going basis. It
GM MemoNo. 04-271 . $ubject InternalAudit4d QuarterStatusReport(2003/2004) Date: August4, 2004 dage 3 of 5 -
costdata,and The scopeof this advisoryincludesreviewof the Mincomreportedremanufactured method for regarding best staff the Department Maintenance with and discussions Materials throughJune accumulating costdata.The initialreviewbeganin August2003and hascontinued 2004. inventorythat provided In August2003,a memowas issuedon the remanufactured to improvethe accuracyof the standardcostingmethod.$ubsequentreviews recommendations wereperformedin May and June 2004. At the end of June,the reviewindicatedthat standard were implemented.A final reportis scheduledfor July 2004. costingmethodrecommendations AUDITPROJECTSIN PROGRESS: MaterialslnventorvAudit The primaryobjectiveof this auditis to confirmthe accuracyof materialsand partsinventory recordedin the MincomEllipsesystemandthe June30, 2004generalledger.Staffalso reviewedthe District'syear-endinventoryproceduresand relatedinternalcontrolsto ensurethey adequatelysafeguardinventoryitemsand accuratelyproducecompleteaccountinginformation. scopeof this reviewincludedinterviewswith appropriateDistrictpersonnelto obtainan It'* -understandingof materialsand partsyear-endphysicalinventoryprocedures.Staffalso reviewedDistrictaccountingproceduresrelatingto accuratereportingof materialsand parts inventoryin Districtfinancialstatements.Testingconsistedof physicalinspectionand countsof sampleof materialsand partsinventoryitemsat the CMFwarehouseand stores a representative (locatedat D2, D3, D4 and D6). A sampleof materialsand partsitemswerealsotestedfor their averagecostto determinethat thesewereproperlycostedin the system. Aftercompletionof physicalinventoryat the abovelocations,no materialvarianceswerefound to be betweenthe physicalinventoryand MincomMaterialsReporting.The auditis scheduled finalizedon July30, 2004. Revew CreditCflrdCompliance The purposeof this reviewis to evaluatethe District'screditcardprogramto determineif internal controlsare adequateto ensureaccurateaccountingand compliancewith Districtpoliciesand procedures. The scopeof the auditcoversreviewof internalcontrolsover creditcard issuance,card Transactionsare testedto evaluateinternalcontrolsand degreeof inventory,and expenditures. policy relatingto purchasecards. 4;ompliancewith District tt for July30, 2004. throughJune2004. A draftreportis scheduled The auditcontinued
cM MemoNo. 04-271 . Subject:InternalAudit4'dQuarter$tatusReport(2003/2004) Date: August4,2004 dage 4 of 5 -
FixedAssetInventorvOperationalReview advisorsto the EAMSlmplementation The purposeof this reviewis to participateas independent committee,providingaccountinginformationand internalcontrolanalysison request.The scope policiesand procedures for fixedasset to helpensureoperational of workis to provideguidelines inventorycomplywith FTA regulations,and promoteaccuraterecords. continuedthroughthe 4thQuarterof this year. Advisoryworkthroughcommitteeparticipation physical plans inventorynextquarter.The auditobjective to conducta fixedasset InternalAudit of the fixedassetrecordsfor purposesof will be to assessthe accuracyand completeness annualfinancialreporting. PG&EElectricalBillinqsReview The purposeof this projectis to reviewPG&Eelectricalbillingsanddetermineif the Districtis to reducefastrisingenergycosts. beingproperlybilledanddetermineif thereare opportunities provideconsumerswith the lowest to are not obligated that Researchindieates utilitycompanies rateplan,onlywith applicableones. lt is incumbenton the consumerto checkto see if theyare billedat the lowestrate. feing The scopeof auditincludesa reviewof the District'susercategory,billingratescharged,and lowestrateoptionplan.Staffs reviewwill alsofocuson possiblecost reductionthroughbilling planalternatives, to reduceenergyusage. and useof bestpracticeopportunities for costsaving Auditworkand ongoing advisoryand discussionswithvariousdepartments throughJune2004.Thefinalauditadvisoryreportis hasbeencontinuing opportunities scheduled to be finalizedin the firstquarterof FY2004/05. STATUSOF OTHERAUDITADVISORYPROJECTS: in the 4thQuarterincludedprovidingdatasecurityand control Ourauditprojectsundertaken for implementation of Translinkproject.The purposeof this advisoryis to suppott advisories the revenue the District'sobjectiveof adequatesecurityand othersafeguardsover ridershipffare project planners providing district and TransLink includescollaboratively data. Auditinvolvenrent participants to ensurereliabilityand integrityof criticaldata. with internalcontrolconsiderations requirements for wirelessnetworks,primarilyfocusing Recommendations covered security also on networkintrusionprotectionusingcurrentbestpractices.The advisorywas completedon discussionswiththe TranslinkVendorin the securityarea June30, 2004.Districtmanagement ,-4.restillcontinuing. U
GM MemoNo. 04-271 . Subject:InternalAudit4d QuarterStatusReport(2003/2004) Date: August4, 2004 dage 5 of 5 -
NExTQuARTERscHEDULEDAUDTTPRoJEcT$ ({*'QUARTERFY ?004t200$): Forthe 1s Quarterof FY 2004/2005,it is expectedthatthe PG&EElectricalBill Review,Credit CardComplianceReview,and FixedAssetInventoryAuditwill be completed.The Grants for this Advisorywill be scheduled BenefitEligibility Auditandthe HealthInsurance Expenditure quarter. AUDITPLANFOR FY 2OO4IO5: PROPOSED Attachedis the proposedauditplanfor FY 2$04rc5.Thereis an addedfocuson potentialcost reductions calledfor in the District'scriticalbusinessobjectives. Prior RelevantBoard Actions/Policies: submita quarterlystatusreportof BoardPolicy#334 requiresthat the InternalAuditDepartment auditactivitiesto the Boardof Directors.
Altachments: (A) FY 200312004 Audit Plan Status Report (B) FY 200412005 ProposedAnnualAudit Plan Approvedby:
RickFernandez, GeneralManager
Preparedby:
Jim Gleich,DeputyGeneralManager TomWong,Managerof InternalAudit
DatePrepared:
July23, 2004
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AttachmentB
NTERNt'?,ilIfilE#RrMENr
PROPOSEDFY 2004/2005ANNUALAUDITPLAN
GrantsExpenditures Accounting MaterialsInventoryAudit HealthInsuranceBenefitEligibilityAdvisory FixedAsset InventoryAudit LongTermLeaveProceduralComplianceReview BrinksFareboxRevenueHandling Audit Reviewof EBMUDWaterBilling& Conseruation Efforts OaklandTicketOfficeAudit S.F.TicketOfficeAudit WarrantySystemTrackingProcessReview Remanufactured InventoryProcessReview AuditA/P Payments PettyCashAudit BestPracticesBusinessProcessesCostSavingsOpportunity Review RequestedBusiness,Accounting,and ControlAdvisorie
