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Federation of Community Councils Municipal Clerk P.O.Rox 196650 Municipality Anchoraqe,Alaska 99519-6650 of I'elephonc: (907) 343-4438 Anchoragc Rick Mgstrom, Magor June30, 1995 Internal Audit Report 95-10 Federation of Community Councils Municipal Clerk Introduction. The Federationof CommunityCouncils was organizedto provide technicaland supportiveservices to communitycouncils. Theseservices include layout,printing and mailing services as well as supplies.To accomplishthese tasks, the Municipality of Anchorage(Municipality) initially awardedthe Federationof CommunityCouncils $115,000 through a grant agreementinL994. An additional $10,000was awarded,resulting in a total of $125,000for L994. The Federationof CommunityCouncils also receives other sourcesof firnding. The Municipal Clerk's Office is responsiblefor the administrationof the grant. Scope. Our audit objectiveswere to determinewhether the grant agreementwas properly written, the grant was properly administeredby the Municipality, and to obtaininformation regarding expenditures of Municipal grant funds. The audit was requestedby the Assembly. Intemal Audit Report 95-10 Federationof CommunitvCouncils Municipal Clerk June30, 1995 OveraII Evaluation. The wording of the grant agreementwas not clear, graut administrationcould be improvedand, in our opinion, servicescould be provided to the community councils at less cost than through the current contract. FINDINGS AI.{D RECOMMENDATIONS 1. The Grant AgreementRequired Revision. L. Finding. The grant agree,mentdid not clearly communicatethe method of paymentnor the use of grant firnds. Our review of the agreement revealedthe following areasrequiring revision: 1) Part I Secfion6, ComFensation:Method of Payment. This section specifiedtwo forms of payment-- reimbursementof actualexpenses and advancedfunding. "A. ...Paymentshall be in the form of a reimbursementfor expendituresas describedin B of this section. '8. The Municipality shall reimbursethe Granteeonly for the Grantee'sexpenditures which conformto Section6. "C. Subjectto the Grantee'ssatisfactory performance of all its obligationsunder this grant, the Mr:nicipalityshall advancefunds to the Granteein accordancewith the following schedule: $1151000.00On or about the date this grant is executed." -L-^ IntemalAudit Report 95-10 Federationof CommuniWCouncils MunicipalClerk June30, 1995 Basedon this wording, the full amountof the grant was paid in advancewithout regardto performanceor wheftrerexpenditures were allowable. 2) Ffendi- Section 7 of the grant agreementrestricted expenditure of grant funds to line items in the grant budget at Appendix A. However, AppendixA was not includedin the grant agree,mentresulting in no restrictionon how the Federation of CommunityCouncils could spendthe grant funds. 3) Part II Section1, Relationshipof Parties.This sectionwas alreadyincluded in Part I Section4. 4) PartII Section10 Inspectronand Retentron of Records. Portions of this sectionwere alreadyincluded in Part I Section11. b. Recommendation. The Municipal Clerk should ensure that grant agreementsare clear, concise and complete. Specifically, the agreementshould clearly communicatethe methodof paymentand the intendeduse of Municipal funds. -3- Internal Audit Report95-10 Federationof CommunitvCouncils Municipal Clerk June30. 1995 ManagementComments. Managementstated, "While the wording of Part I, Section6, may have becomecurnbersome over the years, it createsa clearpicture of how the granteeis to be paid andhow those fundsare to be applied. It is clearthe total amountof the grant is to be disbursedin advanceof grantperformance to provide working capital and is to be appliedto allowableexpenses. If the granteemisapplies fimds, the municipalitymay seekreturn of the misappliedmonies. "Although AppendixA (1994 FCC Budget)was not attachedto the agreement,a copy of the Federationof CommunifyCouncil's 1994 budgetwas includedin the grant file. Additionally, preliminary budget requests,which were submittedto the Assembly as part of the municipal budget process, were included in the file. The FCC submitted its budget in compliancewith Part I, Section7 thereby restricting use of grant funds. The audit makesno indicationgrant firndshave been misspent. "The grant agreementmay be rewrittento eliminateredundancies. The assignmentof the duty to "...ensurethat grant agreementsare clear, concise...." belongsto Deparhent of Law not the Clerk. However, the method of payment is determined by the Assembly and that directionwill be followed." -4- Internal Audit Report 95-10 Federationof CommunitvCouncils Municipal Clerk June30. 1995 d. Evaluation of ManagementComments. Managementcofirments were not totally responsiveto the audit finding and recoilrmendation. Municipal contractsshould clearly communicatethe servicesrequired, the amountand methodof paymentfor the services,and include all requiredappendixes. 2. Grant Not hoperly Administered. B. Flnding. The grant wasnot properly administered. Our review of the grant file maintainedby the Municipal Clerk's Office disclosedno evidencethat all required serviceshad beenperfonned nor that the work performanceof the Federationof CommunifyCouncils had been monitored. Per discussionwith the individualassigned to administer the grant, the only dutiesassigned to her were the processingof the grant agreementand the payments. Our selectedreview of work performancen1994 revealedthat at least2 of the 13 serviceslisted in the scopeof serviceshad not beenperformed. In addition,not all of the require,mentsin the properly managementsection of the grant agreementwere performed. b. Recommendation. The Municipal Clerk should monitor the performance of the Federation of Community Councils to ensure -)- IntemalAudit Report 95-10 Federationof CommunitvCouncils trdunicipalClerk June30, 1995 compliancewith the grant requirements. All grant administration actions shouldbe documentedand maintained in the grant file. c. ManagementComments. Managementstated, "Better files will be maintained so monitoring can be verified by anyoneseeking such information." d. F'valuationof ManagementComments. Managerrentcornurents were not totally responsive to the audit finding and recommendation. Maintaining better files is only a portion of grant administration. Monitoring the performanceof the Federationof Communify Councils to ensure compliancewith the grant requirementsshould also be performed. 3. Performanceof Services. Finding. In our opinion,the requiredservices to community councils could be provided less costly than through the current contract. Althoughthe Municipalityhas been dealing with budgetdecreases, the amormtof annualfunding to the Federationof Commnity Cor:ncilshas increasedftom $106,860in 1989to $125,000nL994. Per information provided by the Federationof CommunityCouncils regarding their 1994expenditures, salaries comprised 62% of their total expenditures, -6- lrtemal Audit Report95-10 Federationof Commrnitv Councils Municipal Clerk June30. 1995 (seeSchedule A for the fulI breakdownof the expendituresfor t994). One alternative could be through a Municipal position to provide supportservices to the commlxdtycouncils. For example,a Range10N would cost approximately$35,000 per year includingbenefits. b. Recommendation. Less costly alternativemethods for providing supportservices to the communitycouncils should be considered. ManagementComments. Managementstated, "This finding misses themark andgoes beyond the scopeof the auditstated on page 1,. The audit report doesnot evaluatewhether FCC is perforrring services efficient$ but rather statesan opinion and makes an assumptionof inefficiency. "Whenthe Assemblybecomes dissatisfied with delivery of servicesby the FCC and directs the Clerk to investigatealternative methods, the Clerk will do so." d. Evaluation of ManagementComments. Managementcomments were not totally responsiveto the audit finding and recommendation.In our opinion, the Municipal Clerk shouldconsider alternative methods for providing the servicesrequired in the grant agreementat the least cost to the Municipality. - t- .-. IntemalAudit Report 95-10 Federationof Conmnity Councils MunicipalClerk June30, 1995 DiscussionsWith ResponsihleOflicials. The resultsof this audit were discussed with appropriateMunicipal Officials on May 23, 1995. m-LPeterRaiskums, CIA Director,Internal Audit Audit Staff: SusanColligan Attachment -8- Intemal Audit Report95-10 Federationof CommunityCouncils Municipal Clerk June30. 1995 L994EXPENDITTJRES Salaries& Benefits $81,103.14 ProfessionalServices $1.900.00 Insurance $1.06s.00 Rent $11.420.00 Equipment $5.522.25 Maintenance $2,134.95 Telephone $2,105.35 Supplies $23.372.53 Publications s801.10 ComputerSoftware/Supplies $406.82 Miscellaneous s216.92 Total $130,048.06 SCHEDULEA .
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