----- EMAIL ONE: ----- From: Fraser, Roger Sent: Wed 12/24/2008 11:36 AM To: *City Council Members (All) Cc: Lancaster, Karen; Crawford, Tom; Jones, Barnett; McCormick, Sue; Miller, Jayne; Wilkerson, Robyn Subject: Audit Committee Letter Council: The Council Audit Committee has been working with staff and the auditors as they review the results of the annual audit and prepare the Annual Financial Report. During their review, the Audit Committee focused some effort on a finding of the auditors regarding certain purchases that were made that did not comply with City purchasing procedures. The Audit Committee asked that staff prepare a report on this incident that would be shared with all of Council. That report is attached, below. Roger ----- EMAIL TWO: ----- From: "Briere, Sabra" Date: Fri, 2 Jan 2009 16:49:01 -0500 To: "Crawford, Tom" Cc: "Anglin, Mike" , "Rapundalo, Stephen" , "Derezinski, Tony" , "Hohnke, Carsten" , "Hieftje, John" , "Fraser, Roger" Conversation: FY 2008 audit letter Subject: FY 2008 audit letter Dear Tom, I appreciate your memo of December 22 about the FY2008 audit report, and your willingness to take additional questions. At the Audit Committee meeting I attended on December 17 (the one with only Stephen and me), I did not get a detailed picture of the costs of all the questionable purchases. Part of this was due to the circumstances; part was due to not being able to examine the actual audit. How much did each of the eleven flat-screen televisions cost? Also, how many DVD players were purchased, and how much did each cost? Ditto the HDMI cables and the custom installation services. What was the total cost of these purchases? I heard several figures, but did not record the final amount in my notes. Were any of these purchases returned to the vendor? I heard you mention that 2 sets were boxed up for return; were those returns made? If so, which ones, and what was the total amount we received in return? I believe that the money for these unauthorized purchases came from the left-over money for the Wheeler Center. Is my memory correct? How much was left over prior to these purchases? What was the disposition of the left-over funds after these purchases had been made? Did they roll over into another account as of July 1 or stay in the Wheeler Center building account? Was there a reason (an incentive) for the staff members to try to spend out the account? Who was the Service Area Administrator who was away on leave when these purchases were made? What is the ***current*** procedure for reviewing purchases on purchasing cards? Is it done each month? By whom (I'm looking for the role, not the name)? Under the current rules, if a supervisor is away, who reviews/approves purchases? If a purchase is NOT approved, what happens? Had anyone determined that any of these purchases had a legitimate business purpose prior to the purchases being made? I'm still not happy with the decision to retain 7 sets at the Wheeler Center. I don't buy the idea that they are needed for classroom training. This is not my call, however. I'm looking for procedures and policies. Those are still quite unclear to me. Thanks, Sabra Briere First Ward Councilmember ----- EMAIL THREE: ----- From: Rapundalo, Stephen Sent: Sun 1/4/2009 1:07 PM To: Briere, Sabra; Crawford, Tom Cc: Fraser, Roger; *City Council Members (All) Subject: RE: FY 2008 audit letter Tom, Since the meetings of the Audit Committee (first with Sabra and I present, and then again two days later with the other committee members) I've had several discussions with other non-Committee councilmembers regarding the matter of the plasma screen procurements. There has been general agreement that perhaps the employees who violated known procedures regarding use of the P-Card have not been penalized sufficiently. During the second Audit Committee discussion you noted that the manager and direct reports have lost their P-Card privileges for a probationary period. The fact is that the plasma screen procurement was not only grand in its scale, but one clearly premeditated if not also one of demonstrated collusion. These are serious and flagrant violations and the temporary loss in priviliges is simply not sufficient. Instead, the manager should lose that right permanently. Additionally, I hope that the "higher up" acting in place of the administrator on leave who normally would approve such procurement has been dutifully reprimanded at a level comensurate with the severity of the violation. I too, like Sabra would like to know who was in charge and acting in charge when the procurement violation took place. I still am quite stunned by the overall incident and the temerity of those who violated known procedures, especially a new process that had just been instituted in the months leading up to the violation. Upon further reflection I don't believe (as Sabra has noted too) that leaving 7 of the screens at the Wheeler Center is appropriate. I would ask that staff perform a system-wide review of all the possible venues for relocating the screens whether for conference meeting use or for other purposes. For instance, can screens be used at Vet's, Eberbach, Bryant, police/fire, etc.? Furthermore, I believe that staff at the Wheeler Center should be apprised of the Audit Committee and Council's concerns/actions over this procedural breach and insure their understanding of why screens are being relocated and privileges revoked. As Chair of the Audit Committee I would be happy to attend any such employee meeting(s) and explain Council's perspectives and decisions. Lastly, I agree that the Audit Committee and Council should receive answers to the questions posed by Sabra. I'm particularly keen on learning about the disposition of funds from the Wheeler construction account that went toward the purchase of the unauthorized screens. It might be reasonable to suggest that if there is a balance remaining than that amount (to a maximum of the total expense of any relocated screens) should be forfeited to the General Fund. It would be useful for all of Council to have a memorandum describing the incident and all organizational and operational outcomes in detail. You could also include the current procedures for P-Card use as a separate attachment. Sadly, the description in the Audit Report still falls short of full disclosure. Sincerely, Stephen Stephen Rapundalo Councilmember - Ward 2 City of Ann Arbor -----