Ifund Audit Report No Watermark 07.13.15.Xps
Total Page：16
File Type：pdf, Size：1020Kb
Innovation Fund Performance Audit July 2015 Office of the Auditor Audit Services Division City and County of Denver Dennis J. Gallagher Auditor The Auditor of the City and County of Denver is independently elected by the citizens of Denver. He is responsible for examining and evaluating the operations of City agencies for the purpose of ensuring the proper and efficient use of City resources and providing other audit services and information to City Council, the Mayor and the public to improve all aspects of Denver’s government. He also chairs the City’s Audit Committee. The Audit Committee is chaired by the Auditor and consists of seven members. The Audit Committee assists the Auditor in his oversight responsibilities of the integrity of the City’s finances and operations, including the integrity of the City’s financial statements. The Audit Committee is structured in a manner that ensures the independent oversight of City operations, thereby enhancing citizen confidence and avoiding any appearance of a conflict of interest. Audit Committee Dennis Gallagher, Chair Robert Bishop Maurice Goodgaine Jeffrey Hart Leslie Mitchell Timothy O’Brien, Vice-Chair Rudolfo Payan Audit Management Kip Memmott, Director, MA, CGAP, CRMA John Carlson, Deputy Director, JD, MBA, CIA, CGAP, CRMA Audit Staff Katja Freeman, Internal Audit Supervisor, MA, MELP Emily Owens, Lead Internal Auditor, MPA Martin Wehrli, Senior Internal Auditor, CIA You can obtain copies of this report by contacting us at: Office of the Auditor 201 West Colfax Avenue, Department 705 Denver CO, 80202 (720) 913-5000 Fax (720) 913-5247 Or download and view an electronic copy by visiting our website at: www.denvergov.org/auditor Report Number – A2015-001 City and County of Denver 201 West Colfax Avenue, Department 705 • Denver, Colorado 80202 • 720-913-5000 • FAX 720-913-5247 • www.denvergov.org/auditor Dennis J. Gallagher Auditor July 16, 2015 Honorable Michael Hancock, Mayor City and County of Denver Dear Mayor Hancock: Attached is the Auditor’s Office Audit Services Division’s report of their audit of the Innovation Fund (iFund). The purpose of the audit was to determine if the iFund has a transparent and equitable governance structure and whether the iFund’s financial tracking and reporting is accurate. We found that the iFund continues to support ongoing projects established under the iFund’s predecessor—the Information Technology Investment Council (ITIC)—as well as system replacement projects that are characteristic of projects funded by ITIC. In addition, the iFund’s decision-making process and record-keeping need increased transparency and accountability. Specifically, iFund Committee meetings should be documented along with member voting records to ensure the iFund’s processes and decisions can be analyzed for fairness and equitability. Additional improvements in key processes are needed such as the documentation and consistent application of the iFund’s project review and scoring process. Moreover, to ensure the iFund is a good steward of taxpayer funds, it should consistently conduct post- implementation reviews on closed projects to assess the implementation and results of each project and provide detailed financial reporting to iFund Committee members and relevant agencies on a regular basis. If you have any questions, please call Kip Memmott, Director of Audit Services, at 720-913-5000. Sincerely, Dennis J. Gallagher Auditor DJG/leo cc: Honorable Michael Hancock, Mayor Honorable Members of City Council Members of Audit Committee Ms. Cary Kennedy, Deputy Mayor, Chief Financial Officer Ms. Janice Sinden, Chief of Staff To promote open, accountable, efficient and effective government by performing impartial reviews and other audit services that provide objective and useful information to improve decision making by management and the people. We will monitor and report on recommendations and progress towards their implementation. Mr. David P. Edinger, Chief Performance Officer Ms. Beth Machann, Controller Mr. Scott Martinez, City Attorney Ms. Janna Young, City Council Executive Staff Director Mr. L. Michael Henry, Staff Director, Board of Ethics Mr. Brendan Hanlon, Budget Director Ms. Andrea Denis, Director of Technology Services’ Project Management Office To promote open, accountable, efficient and effective government by performing impartial reviews and other audit services that provide objective and useful information to improve decision making by management and the people. We will monitor and report on recommendations and progress towards their implementation. City and County of Denver 201 West Colfax Avenue, Department 705 • Denver, Colorado 80202 • 720-913-5000 FAX 720-913-5247 • www.denvergov.org/auditor Dennis J. Gallagher Auditor AUDITOR’S REPORT We have completed an audit of the City and County of Denver’s Innovation Fund (iFund). The purpose of the audit was to evaluate the iFund’s governance structure and financial tracking and reporting practices. This performance audit is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, General Powers and Duties of Auditor, and was conducted in accordance with generally accepted government auditing standards. 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. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We found that the iFund could improve the transparency and accountability of its governance structure by taking a variety of steps. First, the iFund Committee should reassess the purpose of the iFund and update its Charter accordingly. Next, the iFund should consistently document its Committee meetings and member votes to increase the transparency of its decision-making process. Further, the iFund should document and consistently follow its review and selection process—including its use of scorecards to assess each project against designated criteria. The iFund can improve the consistency of its review process by creating a standard business case template for agencies to use when presenting their proposed projects to the iFund Committee prior to the final selections. Additionally, the iFund should conduct post-implementation reviews for all implemented projects to ensure that taxpayer’s funds are being used to achieve the expected benefits from each approved project. Finally, regular financial reporting that highlights any differences between each project’s expected budget and actual spending, and the reasons for these differences, should be provided to iFund Committee members and agencies associated with each approved project. We extend our appreciation to David Edinger, Brendan Hanlon, Andrea Denis and all personnel who assisted and cooperated with us during the audit. Audit Services Division Kip Memmott, MA, CGAP, CRMA Director of Audit Services To promote open, accountable, efficient and effective government by performing impartial reviews and other audit services that provide objective and useful information to improve decision making by management and the people. We will monitor and report on recommendations and progress towards their implementation. City and County of Denver – Office of the Auditor Audit Services Division REPORT HIGHLIGHTS Innovation Fund July 2015 The audit assessed the Innovation Fund’s governance structure and its practices for tracking and reporting proje ct costs. Background Highlights The Innovation Fund (iFund) was The Innovation Fund’s (iFund’s) governance structure does not officially established in June 2012. It ensure that projects are selected and managed in a transparent replaced the Information Technology Investment Council (ITIC) created by and accountable manner. First, the iFund Charter does not clearly Mayor John Hickenlooper. The iFund describe the types of projects the iFund intends to support. This was designed to fund improvement has led to confusion among City agencies regarding the purpose of projects that would measurably the iFund. Additionally, the iFund has continued to support improve operations and service ongoing projects initially funded under the iFund’s predecessor, delivery within the City and County of the Information Technology Investment Council (ITIC), as well as Denver (City). Although the iFund is system replacement projects that are more consistent with the administered by Technology Services (TS), eleven standing Committee projects previously funded by ITIC. members are responsible for In addition, the iFund’s decision-making and record-keeping reviewing and approving proposed practices lack sufficient levels of transparency and accountability. projects. Members of the iFund We identified a variety of flaws in these processes including a lack include leadership from the Mayor’s Office, the Budget and Management of documentation of meeting minutes, no voting records regarding Office, the Departments of Finance, final decisions, and inconsistent post-implementation reviews. Technology Services, Human These gaps reduce the transparency of the iFund’s funding Resources, Community Planning and decisions. Also, without consistent post-implementation reviews, Development, Human Services, Parks the iFund cannot readily assess whether funding objectives and and Recreation, Public Works, and outcomes were met or identify lessons learned regarding project Safety, as well as the City Attorney’s