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ANTHONY S. COOPER OFFICE OF THE DISTRICT OF COLUMBIA AUDITOR May 8, 1997 PURPOSEPursuant to a telephone call made to the Office of the District of Columbia Auditor from a concerned resident of the greater Washington D.C. area, informing the Auditor of the possible misuse of property of the District government by a District government employee, the Auditor conducted an audit of certain expenditures and events in the Of fice The concerned resident provided evidence to the Auditor to support this claim. OBJECTIVES. SCOPE AND METHODOLOGYThe objectives of this audit were:
To accomplish these objectives the Auditor examined the records and events of the Office of the Mayor regarding the alleged misuse of government property, for the period October 1, 1995 through January 31, 1997. The Auditor interviewed the person making the allegations, the employee in the Of fice of the Mayor whom the allegations were made against, chief management personnel within the Office of the Mayor, and other employees in the of fice with knowledge of these matters. The Auditor obtained available evidence, and reviewed the applicable laws, regulations and policies of the District government to determine if any violations occurred. The examination was conducted in accordance with generally accepted government auditing standards (GAGAS) and included other tests of records as deemed necessary. BACKGROUNDThe Office of the Mayor, located at 441 Fourth Street, N.W., is a budgetary unit of the Executive Office of the Mayor within the District government. It is comprised of the following five units:
The primary function of the Of fice the Mayor is to provide coordination and insight for a broad range of executive branch activities. Mayor Marion Barry's office is located within the Of fice of the Mayor. As the District's chief elected of ficial, the Mayor is responsible for providing leadership, exercising management control over executive agencies, supervising labor relations, ensuring the integrity of the District's financial affairs, and proposing, reviewing, approving or vetoing legislation enacted by the Council of the District of Columbia. The Of fice of Chief of Staff is responsible for providing direction and oversight of all activities in the Executive Of fice of the Mayor, including the Of rice of the Mayor. The Of fice of the Mayor FY 1996 revised budget was $1,548,275 with 25 full-time equivalent positions. SUMMARY OF EVENTSOn, or about, February 5, 1997, the Office of the District of Columbia Auditor received a phone call from a concerned resident of the greater Washington, D.C. area, informing us that since September 1996 he had received three business documents delivered to his work address in the District from an employee of the District government with whom the concerned resident had a business arrangement. Each time the documents were delivered by courier and were always enclosed in a manila envelope imprinted with the name Government of the District of Columbia in the return address section of the envelope. Upon observing the repeated use of these envelopes for the delivery of documents to his office, the concerned resident questioned whether use of the District government envelopes represented a misuse of District government property. This led to additional questions about whether the courier service used to deliver the envelopes was being paid with District government funds. Having maintained one of the envelopes as evidence, the concerned resident decided to telephone the Office of the District of Columbia Auditor to report this matter. After receiving the initial telephone call from the concerned resident, the Auditor interview him for more details on the events involved. The following additional details or evidence were provided during the interview:
Citing the possible misuse of District government property and funds by an employee and the potential damage to the integrity of the District government, the Auditor conducted an audit of specific expenditures and events in the Office of the Mayor for possible violations of the laws, regulations and policies of the District of Columbia. FINDINGSDISTRICT GOVERNMENT PROPERTY MISUSED BY AN EMPLOYEEThe Auditor interviewed the accused employee the Office of the Mayor concerning the employee's knowledge of the claims made by the concerned resident, and the employee's possible misuse of government property. During the interview the employee admitted to the following:
The employee stated that usage of the envelope was an oversight on her part and was not a conscious attempt to misuse District government property. The employee also stated that the courier service was paid in cash from her personal funds at the time of pick up, and that no charges should be billed to the District government. The Auditor's examination of voucher payments at the Of fice of the Mayor did not disclose any evidence of payments made by the District government for the courier services used by the accused employee. The examination revealed that payments for courier services were made to only one vendor, the Federal Express Company, for the delivery of documents and packages relating to activities in the Office of the Mayor. The Auditor found no relationship between payments made to the Federal Express Company and the courier deliveries made to the employment address of the concern resident. Based on the above information obtained from the employee, and a review of D.C. Personnel Regulations Part I, Chapter 18, it appears that one or more of the following regulations were violated when the manila envelope, property of the District government, was used by the employee for sending personal documents by courier for matters unrelated to the business of the District government.
Regulation 1801.1 states that:
RECOMMENDATIONThat management issue a memorandum to staff members stating that employees are not to use envelopes or any other goods and services of the District government for their personal benefit. The memo should state that remedial action will be taken against any employee who is found to engage in such actions. That employees be reminded of their responsibility to the District government as stated in D.C. Personnel Regulations, Part I, Chapter 18, section 1806.1. EMPLOYEES. USED GOODS AND SERVICES OF THE DISTRICT GOVERNMENT FOR PERSONAL BENEFIT IN VIOLATION OF D.C. PERSONNEL REGULATIONSThe Auditor did not find any evidence of payments made by the District government for courier services used by the accused employee. However, the Auditor did discover that some of the deliveries made by Federal Express were not related to the business of the District government. The Auditor's inquiries regarding the destinations of package deliveries as shown on vendor invoices disclosed that the courier service was sometimes used by employees for personal deliveries unrelated to the business of the District government. Although the Auditor noted in these instances that the D.C. Treasury was reimbursed by employees for the costs of the deliveries, the use of the courier service by employees for personal benefit and during working hours represents a use of the funds and time of the District government for reasons unrelated to the business of the government. This is a violation of D.C. Personnel Regulations, Part I, Chapter 18, sections 1800.1, 1803.1, and 1806.1. See full text of regulation at the finding entitled "District Government Property Misused by an Employee". The management of the Office of the Mayor should put a stop to this practice and take remedial action, if necessary, against any employee who engages in such actions. The management should also remind each employee of their responsibility to the District government as written in D.C. Personnel Regulations, Part I, Chapter 18, section 1800.1 which states:
RECOMMENDATIONThat management issue a memorandum to staff members stating that employees are not to use the courier services or any other goods and services of the District government for their personal benefit. The memo should state that remedial action will be taken against any employee who is found to engage in such actions. That employees be reminded of their responsibility to the District government as stated in D.C. Personnel Regulations, Part I, Chapter 18, section 1800.1. LACK OF INTERNAL CONTROLS OVER THE PROCUREMENT OF COURIER SERVICESThe Auditor's examination of payment vouchers in the Office of the Mayor found that internal controls over the requisition and authorization process relating to courier services were deficient. For example, payment vouchers were not supported by any documents indicating the source of the request, the reason for the request, and the authorized signature of a responsible person on the executive staff. Further inquiry revealed that these internal control procedures are not required by management for the purchase of courier services, yet they are required by the of fice for expenditures on other goods and services. When requests are made for all other goods and services the Office of the Mayor requires the head of each unit to prepare a written memorandum. This memorandum must be approved by someone on the executive staff. This is not the case for courier services. Approval of payments for courier services are made by the controller and the procurement officer by signing the invoice, purchase order, or voucher. However, there are no attached documents indicating that the controller, procurement of ficer, the executive staff are aware of who is making these requests, whether the requests relate to the business of the District government, and whether the executive staff approves of the requests. The lack of these internal controls over payments made for courier services represent a deficiency in the authorization of and use of District government funds within the Office of the Mayor. The lack of proper authorization in the procurement process can lead to the unauthorized disbursement or misappropriation of government funds. Internal controls should be established to safeguard these funds by requiring that: (1) all requests for the purchase of goods and services be documented in writing, (2) all requests be authorized by a duly selected member of the executive staff, or other employee(s) so designated by the executive staff, and (3) the purpose for all requests be stated in writing including its relationship to the business of the District government. These internal control procedures should be carried out before any other procedures in the procurement process are executed. RECOMMENDATIONThat the Office of the Mayor require all requests for the purchase of courier services and other goods and services be documented in writing. That requests for all goods and services be authorized by a duly selected member of the executive staff, or other employee(s) so designated by the executive staff. That the purpose of each request and its relationship to the business of the District government be stated in writing. These internal control procedures should be carried out before any other procedures in the procurement process are executed. CONCLUSIONIn the Auditor's examination of expense records, and interviews with employees of the Office of the Mayor regarding the misuse of certain property and funds of the District government, the Auditor found: that an employee violated certain D.C. Personnel regulations by engaging in actions that adversely affects the confidence of the public in the integrity of the District government; and that other employees were allowed to use government property for their personnel benefit unrelated to the business of the District government. These acts by District employees are prohibited by D.C. Personnel Regulations Part I, Chapter 18, Sections 1800.1, 1803.1, and 1806.1. See text of regulations on page 4 of the report. The Auditor also found that the internal controls over expenditures for courier services were deficient, and does not provide reasonable assurance that the expenditures are protected from misuse and abuse by employees. The Auditor recommends: that the Office of the Mayor issue an office memorandum to remind employees of their responsibility to the District government as stated in D.C. Personnel Regulations, Part I, Chapter 18, section 1806.1. That additional internal controls be established to require the proper documentation and authorization for the purchase of all goods and services; and that remedial action be taken against any employee who engages in any action which would adversely affect the confidence of the public in the integrity of the District government. Respectfully AGENCY COMMENTSOn April 11 , 1 997, the Office of the District of Columbia Auditor transmitted this report, in draft, to the Chief of Staff in the Of fice of the Mayor. Comments were received from the Chief of Staff on May 1, 1997. Where appropriate, changes to the final report were made to reflect the comments. The comments in their entirety are included with this report. GOVERNMENT OF THE DISTRICT OF COLUMBIA CHIEF OF STAFF May 1, 1997 Anthony S. Cooper Dear Mr. Cooper: This is in response to your draft report entitled "Audit of Certain Expenditures and Events in the Executive Of fice of the Mayor for the Period October 1, 1995 through January 31, 1997" (the Report). Your audit raised several concerns about the use of D.C. government property in the Executive Office of the Mayor (EOM). Enclosed is EOM's response to the Report. If you have any questions, please contact me at 727-2643. Sincerely, Barry K. Campbell EXECUTIVE OFFICE OF THE MAYOR RESPONSE TO THE DRAFT D.C. AUDITOR'S REPORT "AUDIT OF CERTAIN EXPENDITURES AND EVENTS IN THE EXECUTIVE OFFICE OF THE MAYOR FOR THE PERIOD OCTOBER 1, 1995 THROUGH JANUARY 31, 1997"APRIL 30, 1997 BACKGROUNDThe Auditor's report appears to use the terms Executive Office of the Mayor (EOM) and Office of the Mayor interchangeably. There is a difference. The EOM is separated into four budget areas: the Office of the Mayor, the Office of the Secretary of the District of Columbia, the Office of Intergovernmental Relations and the Office of Communications. The Office of the Mayor includes the Office of the Chief of Staff, the Office of Diversity, the Office of Boards and Commissions, Office of Religious Affairs and the Office of the Ombudsman. The Mayor's Office does not include a special office to monitor executive agencies, programs, or a legal counsel as described in the Report. The Office of the Chief of Staff is responsible for providing direction and oversight of the activities in the offices in the EOM. The Report states that the revised FY 1996 budget of $1,548,275 with 25 full-time equivalent positions is the budget for the Executive Office of the Mayor. In fact, it is the budget for the Office of the Mayor. AUDIT FINDINGThat an employee violated certain D.C. Personnel regulations by engaging in actions that adversely affect the confidence of the public in the integrity of the District of Columbia; and that another employee used government property for personal benefit unrelated to the business of the District government. EOM RESPONSEAn employee used envelopes printed with the name of the Government of the District of Columbia for personal business on only a few occasions. The envelopes were delivered by courier service. The employee paid the courier service in cash. The Auditor's report indicates that no District funds were used to pay the courier service. Courier service was used for personal business on only a few occasions. The Auditor's report states that the D.C. Treasury was reimbursed for the costs of the deliveries. AUDIT FINDINGThat internal controls over expenditures for courier services were deficient, and do not provide reasonable assurance that the expenditures are protected from misuse and abuse of employees. EOM RESPONSEThe Office of the Controller follows established accounting and procurement procedures. This office does not approve payments without supporting documentation and the requisite approvals. If employees make unauthorized requests for goods and services, the Controller's Office will not approve payment. Thus, expenditures are protected from misuse and abuse of employees who procure goods and services with proper approvals. Nevertheless, the EOM recognizes a need to establish additional controls concerning courier services. The EOM will implement the following:
AUDIT RECOMMENDATIONThat the Executive Office of the Mayor issue an Office Memorandum to remind employees of their responsibility to the District government as stated in D.C. Personnel Regulations Part 1, chapter 18, section 1806.1. EOM RESPONSEAttached is a Mayor's Memorandum to all employees in the EOM concerning Guidelines for the Use of Government Resources. This Memorandum addresses the concerns raised in the report and reflects the Chief of Staff's position on this matter. It also put the employees on notice that use of DC government goods and services for personal benefit may result in disciplinary action. In addition, the Chief of Staff recently appointed the Deputy Chief of Staff to serve as the Ethics Counselor for the EOM. She has been directed to conduct sessions with the staff in the EOM to sensitize them to ethical requirements for D.C. government employees. AUDIT RECOMMENDATIONThat additional internal controls be established to require the proper documentation and authorization for the purchase of all goods and services EOM RESPONSEThe Office of the Controller follows established accounting and procurement procedures. Nevertheless, the EOM recognizes a need to establish additional controls concerning courier services. The EOM will implement the following:
In this case, government goods and services were used without appropriate approvals. Consequently, the attached Memorandum from the Chief of Staff includes information concerning the process for acquiring goods and services. It also puts the employees on notice that failure to comply with procurement procedures may result in disciplinary action. AUDIT RECOMMENDATIONThat remedial action be taken against any employee who engages in any official action that would adversely affect the confidence of the public in the integrity of the district government. EOM RESPONSEThe Chief of Staff met with and took appropriate action relative to all involved employees of the EOM. CONCLUSIONThe Barry Administration requires a high standard of ethical conduct for its employees. Those who work in the Executive Office of the Mayor should serve as examples for the rest of the government. The Office of the Chief of Staff is committed to training all EOM employees concerning ethical behavior and to ensuring that all staffs are familiar with employee rules of conduct, with special emphasis on use of government property and procurement of goods and services. GOVERNMENT OF THE DISTRICT OF COLUMBIA
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