In a pair of reports released last week, the Denver auditor’s office found that several recommendations from previous years remained unimplemented for how the city tracks capital assets and maintains transparency over special revenue funds, primarily in one critical monitoring agency.
During the first audit from 2018, auditors noted several deficiencies with Denver’s physical inventory, which includes real estate, equipment and software. There were incorrect locations listed for assets, inaccurate descriptions, blank or incorrect identification numbers and missing records. Auditors could not locate 15 of the assets from a sample of 124.
In the update, auditors found that all affected agencies have since implemented precise location tracking for assets. However, there was an unaddressed recommendation for the Controller’s Office, which is responsible for payroll and financial reporting, to sign an annual asset certification review form. The office believed that it would be more effective to perform random checks, rather than sign off each agency’s certifications.
Auditors found that protocol to be lacking, citing nine out of 50 instances in which there was not enough evidence to determine whether the asset pictured in a photograph was the same asset in the city’s database. Moreover, the Controller’s Office does not mandate agencies to report on which assets they performed their own random checks.
“By not requiring agencies to document on the certification form that they reviewed specific assets, the Controller’s Office does not hold agencies accountable for the accuracy of their inventory,” the report noted.
“The city needs to keep a close watch on how we are using taxpayer dollars,” said Auditor Timothy O’Brien. “The city’s money should be used transparently, and we should know what the city owns and where these items are at all times.”
In the second report, auditors reviewed the 2017 findings on the use of special revenue funds, in which the expenditure is restricted to a specific purpose. The initial recommendation that the city actually provide a public listing of such funds has been implemented: the mayor’s 2020 proposed budget included a table with an accounting of the funds, which amounted to over $681 million.
Once again, the auditors recommended that the Controller’s Office take a role in ensuring the accurate reporting of agencies’ special funds, which the office declined to pursue.
Controller’s officials “believed it was the responsibility of the agencies to reconcile their accounts,” the update noted. “Still, the Controller’s Office website states it establishes, maintains, and enforces the city’s accounting polices, practices, and procedures”.
While there were several recommendations that the city did address, the auditors found that there was no movement to require agencies to report gifts over $2,500 as originally suggested.
“Risks remain related to the transparency of donations to agencies,” O’Brien’s office warned. It reported that Mayor Michael Hancock anticipates a new donation reporting portal and accompanying rules later this year.
The Controller's Office said through a spokesperson said that it has multiple methods of overseeing special revenue funds. As for capital assets, the office relies on departments and agencies to provide accurate information.
Editor's note: This story has been updated.