Internal Audit Report. Fuel Consumption Oversight and Coordination TxDOT Internal Audit Division

Transcription

1 Internal Audit Report Fuel Consumption Oversight and Coordination TxDOT Internal Audit Division

2 Objective To determine if a process exists to ensure retail fuel consumption is appropriately managed and monitored. Opinion Based on the audit scope areas reviewed, control mechanisms are effective and sustainable and substantially address risk factors and exposures considered significant relative to impacting reporting reliability, operational execution, and compliance. The organization's system of internal controls provides reasonable assurance that key goals and objectives will be achieved despite improvement opportunities identified. Improvement opportunities identified include minor enhancements that would improve achievement of business objectives but are not currently resulting in negative impacts to the organization. Overall Engagement Assessment Satisfactory Findings Title Control Design Operating Effectiveness Rating Finding 1 Voyager Card Usage x x Satisfactory Management concurs with the above finding and prepared management action plans to address the deficiency. Control Environment TxDOT has taken an active role in establishing policies and procedures and monitoring the Voyager cards to ensure accurate and appropriate use of retail fuel. To help with the monitoring, Fleet Operations Division (FOD), who is responsible for overseeing retail fuel, implemented a new information technology system called Fleet Navigator (FNAV) in 2014 that allows districts to monitor transactions through real-time statewide financial information and allows the districts to perform reconciliations, as needed. In addition, FOD monitors Retail Fuel Transaction data from Fleet Commander, a web-based system integrated with the financial institution that processes Voyager card transactions. Further, FOD updated their fuel card policies and procedures in 2015 to reflect the new monitoring processes associated with the FNAV implementation. August

3 Summary Results Finding Scope Area Evidence A review of the retail fuel usage for 6 districts, as reported in Fleet Commander, for September 1, 2014 October 31, 2014 identified the following: 17 of 327 (5%) non-fuel transactions at 5 of 6 districts reviewed exceeded the FOD Voyager card usage policy threshold of $150 per transaction 230 of 11,080 (2%) fuel transactions at the 6 districts were for a fuel type not designated for the equipment being fueled, which is against internal policy 1 Retail Fuel Additional review of statewide retail fuel usage, as reported in Fleet Commander, for March April 2016 identified the following: 9 of 396 (2%) non-fuel transactions statewide exceeded the FOD Voyager card usage policy threshold of $200 per transaction (threshold was increased as of February 2015) 314 of 12,319 (3%) fuel transactions statewide were for a fuel type not designated for the equipment being fueled, which is against internal policy Audit Scope Audit testing was completed on FOD s management and monitoring of retail Voyager card purchases for September 1, 2014 through October 31, 2014 and March 10, 2016 through April 13, Retail fuel usage was evaluated through a review of Voyager card transactions at commercial gas stations. Due to timing of the initial audit coinciding with the transition to PeopleSoft in October 2014, testing was conducted for procedures and controls that existed prior to that implementation. Fieldwork for this work was conducted at six districts including Houston, San Antonio, Corpus Christi, Tyler, Pharr and San Angelo. Two maintenance sections in each of those six districts were selected for testing. Further testing was completed statewide during the period March 10, 2016 through April 13, 2016 for post implementation changes to procedures and controls. The audit was originally conducted during the period from September 30, 2014 to November 21, 2014 and was performed by Jessica Esqueda, Milan Hawkins, David Kossa, and Raymond Martinez (Engagement Lead). The additional work was conducted during the period from March 10, 2016 to April 13, 2016 and was performed by Alma Alvarez, Azana Headspeth, and Casey Kopcho (Engagement Lead). Methodology The methodology used to determine if retail fuel usage was appropriately managed and monitored included: Identified how retail fuel bought through the Voyager card is managed. August

4 Reviewed 12 Voyager fuel card reconciliations between September 1, 2014 and October 1, 2014 to identify documentation supporting existence of transactions during the period. Reviewed current FOD Retail Fuel Card Policies and Procedures, Texas Administrative Code Rule Office of Vehicle Fleet Management, and other guidance on the FOD website including the TxDOT Purchasing Manual, Maintenance Management System (MMS) Manual, Materials Supply Management System (MSMS) Manual*, and the Equipment Operating System (EOS) Manual. Interviewed Fleet Operations Division Director, Fleet Program Coordinator and staff in districts and maintenance sections. Selected a sample of districts based on fuel usage data from Fiscal Year (FY) 2014 that took into consideration size of district (metro, urban, or rural), information from previous TxDOT investigations conducted, and the geographic location in the state (north, south, east, or west) to determine 1) if retail fuel usage is monitored, 2) if Voyager cards transactions were under transaction limits, and 3) transactions were for allowable items (e.g., fuel). Conducted on-site visits to the selected districts to review processes for managing and monitoring retail fuel usage. Reviewed fuel reports, the reconciliation of fuel card receipts, and the process for tracking fuel inventory at the selected districts. Reviewed 2014 statewide fuel transaction report data provided by FOD Fleet Coordinator to determine if the fuel transaction type met the corresponding equipment type recorded. Obtained and reviewed Fleet Commander Retail Transaction Report as of April 14, 2016 to determine transactions in excess of FOD $200 threshold policy. These procedures were applied as necessary to perform the audit fieldwork. Background This report is prepared for the Texas Transportation Commission and for the Administration and Management of TxDOT. The report presents the results of the Fuel Consumption Oversight and Coordination audit which was conducted as part of the Fiscal Year (FY) 2016 Audit Plan. The Fuel Consumption Oversight and Coordination audit was originally conducted as part of the FY 2015 audit plan and carried forward to the FY 2016 audit plan for completion. TxDOT utilizes retail fuel for fleet vehicles used to transport employees to and between work locations, as well as, equipment used directly on construction and maintenance projects around the state. FOD oversees the statewide utilization of retail fuel cards and districts manage their fuel card transactions per FOD policy and procedures. FOD implemented the new FNAV system in FY 2014 to improve the safety, productivity, and efficiency of the fleet. The FNAV system includes a sub-system called Fleet Focus which tracks retail fuel usage electronically. Retail fuel purchases are made by using a Voyager card at commercial gas stations and can include fuel, as well as, valid non-fuel items such as oil changes, parts, or vehicle August

5 inspections. Policy limits on card activity for passenger vehicles include 50 gallons of fuel per transaction with a daily limit of $1,000 per card and/or 4 transactions per day. During the audit testing period September 1, 2014 to October 31, 2014, the transaction limit for all non-fuel purchases was $150 transaction limit for all non-fuel purchases; however, during the additional audit testing period March 10, 2016 to April 13, 2016, the transaction limit had been increased to $200. Although specific circumstances, such as emergency maintenance on more expensive equipment, may merit the exceeding of the $200 threshold, no inappropriate activities were identified during the course of the audit. Retail fuel card spending (excluding aviation) was $11.2M, $21.9M, and $7.9M for FY 2015, FY 2014, and FY 2013, respectively. We conducted this performance audit in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. Recommendations to mitigate risks identified were provided to management during the engagement to assist in the formulation of the management action plans included in this report. The Internal Audit Division uses the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework version A defined set of control objectives was utilized to focus on reporting, operational, and compliance goals for the identified scope areas. Our audit opinion is an assessment of the health of the overall control environment based on (1) the effectiveness of the enterprise risk management activities throughout the audit period and (2) the degree to which the defined control objectives were being met. Our audit opinion is not a guarantee against reporting misstatement and reliability, operational sub-optimization, or non-compliance, particularly in areas not included in the scope of this audit. August

6 Detailed Findings and Management Action Plans (MAP) Finding No. 1: Voyager Card Usage Condition Monitoring of non-fuel transactions exceeding transaction limit amounts is not always performed over two separate testing periods. In addition, monitoring of fuel transactions for purchases of fuel that were different than the designated fuel requirement for that equipment was not always performed over two separate testing periods. District guidance is not available to help properly monitor Voyager card purchases that exceed transaction limits or for fuel types other than the designated fuel associated with that equipment. Effect/Potential Impact Without timely and accurate monitoring of retail fuel/non-fuel card purchases, violations of TxDOT policy may occur without corrective actions taking place to mitigate further misuse. For the testing period March 10, 2016 April 13, 2016, $14,774 in Voyager card transactions: $2,553 non-fuel transactions and $12,221 fuel transactions were outside of Fleet Operations Division (FOD) policy. Criteria In 2014, FOD Program Standards and Procedures for Retail Fuel Management limited nonfuel purchases, such as oil changes, parts, or vehicle inspections, to $150 per transaction; however, the non-fuel purchase limit was increased to $200 per transaction in 2015 in order to account for price increases for routine and emergency maintenance. Additionally, FOD Program Standards and Procedures for Retail Fuel Management Cards state that regular unleaded gasoline shall be used whenever available. Cause Although FOD has established policy requiring the districts to monitor Voyager card transactions, no additional controls, such as single-transaction limits, exist to prohibit fuel/non-fuel transactions occurring outside of established policy from taking place. In addition, training needs to be developed for district Voyager coordinators on the resources available to monitor Voyager transactions. Evidence A review of the retail fuel usage for 6 districts as reported in Fleet Commander for September October 2014 identified the following: 17 of 327 (5.2%) non-fuel transactions at 5 districts exceeded the FOD Voyager card usage policy threshold of $150 per transaction o By policy, certain circumstances, such as emergency maintenance on more expensive equipment, may merit exceeding of the $150 threshold; as a result, no inappropriate transactions were identified during the course of the audit 230 of 11,080 (2.1%) fuel transactions at 6 districts were for a fuel type not designated for the equipment being fueled August

7 A review of the retail fuel usage statewide as reported in Fleet Commander for March April 2016 identified the following: 9 of 396 (2.3%) non-fuel transactions statewide exceeded the FOD Voyager card usage policy threshold of $200 per transaction o By policy, certain circumstances, such as emergency maintenance on more expensive equipment, may merit exceeding of the $200 threshold; as a result, no inappropriate transactions were identified during the course of the audit 314 of 12,319 (2.5%) fuel transactions statewide were for a fuel type not designated for the equipment being fueled Management Action Plan (MAP): MAP Owner: Lee Christensen Voyager/Alternative Fuel Program Coordinator, Fleet Operations Division MAP 1.1: Fleet Operations Division (FOD) will develop and provide new Voyager card usage SOP to provide users a clear understanding of appropriate card usage and provide districts guidance on monitoring Voyager transactions. The new Voyager card SOP will include the following: The local Voyager coordinator will: Set up the employee in the Voyager system with a driver ID number that follows the 2 digit D/D number and the last 4 digits of the employee driver s license number Review the procedures for signing and submitting receipts Require the employee sign the usage agreement from and retain a copy for TxDOT records Explain the procedure for resolving issues while attempting to get fuel in the field Monitor the usage of the D/D drivers fueling activity via Fleet Commander and report any unresolved issues to the State Voyager Fuel Program manager Immediately disable any employee number for an employee who terminates employment and /or any vehicle card which is lost, stolen, or removed from service FOD will also develop and provide training to district Voyager coordinators on the resources available to monitor Voyager transactions, as well as, steps to take to resolve exceptions. The training will include at a minimum the following items: The use of regular fuel only. No premium or high octane fuel is allowed (also includes diesel, DEF, alternative fuels, or oils) Use only in State of Texas Department of Transportation vehicles and only at fuel sites within the state Car Wash limit of $25.00 Oil change service (in areas where no contract is in place) Minor repairs under Emergency tire repairs or repairs to TxDOT equipment State or commercial motor vehicle inspection August

8 In addition, FOD will provide additional statewide exception reporting through Fleet Commander to the district Voyager coordinators and document new exception reporting guidance. Completion Date: November 15, 2016 August

9 Summary Results Based on Enterprise Risk Management Framework Rating Assessment Grid Exemplary Satisfactory Needs Improvement Unsatisfactory Closing Comments The results of the initial audit were discussed with Fleet Operations Division and Support Services Division management on February 5, 2015, and the results of the continuation audit were discussed with Fleet Operations Division and Support Services Division management on August 1, We appreciate the assistance and cooperation received from the division and district employees contacted during this audit. August