Three follow-up reports released this month from the Denver Auditor’s Office, a watchdog for taxpayers, found that some city agencies have taken audit recommendations for improvement “more seriously than others.”
The office of Auditor Timothy M. O’Brien followed up on 2019 audits of Denver County Court’s operations, the management of Urban Area Security Initiative grant money and on-call construction with a city contractor.
O’Brien’s team found that the Denver County Court has not implemented two recommendations and only partially put in place another. However, five other suggestions from last year’s audit were fully adopted.
In a 2019 report, the audit team found incomplete documentation in case files and more than 4,000 case files closed in error. The Auditor’s Office also found several case files with missing documentation of key courtroom actions, including the suspension of fines and penalties, the cancellation and reinstatement of a protection order and defendants’ acknowledgements of their terms of probation.
O’Brien’s office notes that since then, improvements have been made to policies and procedures for quarterly case file reviews and reviews for closed case files, which he said should help confirm complete and accurate records.
“However, because the court does not yet perform and document reviews of individual transactions and end-of-shift deposit drops, misuse or errors by cashiers could still occur without detection,” the Auditor’s Office stated in a release this week. “Court administrators also failed to create audit logs for key systems. These logs could help identify unauthorized changes that would otherwise be missed due to a lack of segregation of duties. By not creating and reviewing audit logs, the court remains exposed to fraud or errors.”
Court administrators told the audit team that they plan to implement this recommendation, but had to delay the process this year due to the COVID-19 pandemic, which required them to prioritize other information technology projects instead, such as finding ways to conduct virtual trials.
“The pandemic has interrupted work all over Denver,” O’Brien said. “I applaud the court’s efforts to innovate, and I expect to see that same effort applied to avoiding errors and misuse in the future.”
The Office of Emergency Management and Homeland Security, however, did not receive such a favorable report card regarding its management of the Urban Area Security Initiative grant program, a federal initiative to assist urban areas in preventing and responding to terrorist attacks.
This year’s follow-up report showed that the agency “failed on almost every count to improve accounting and reporting on a grant from the state.”
Last year, the audit team found a risk for errors in spreadsheets, failures to effectively use the city’s accounting system of record, and a lack of comprehensive policies and procedures that prevent the loss of institutional knowledge in the event of key personnel turnover.
The emergency office previously disagreed with some of the auditor’s recommendations, but officials said they expected to complete the other recommendations by January or February of this year.
Although this year’s report showed that the office improved its on-time reporting to the state for the grant, it concluded the office remains at risk of introducing errors in its calculations and data entry and also lacks proper accounting of assets and installation costs.
“Tracking and accounting for assets correctly is a basic step for accountability,” O’Brien said. “I don’t think these recommendations were big challenges, and I am disappointed they have not yet been implemented. They should be completed by now.”
The Department of Transportation and Infrastructure’s follow-up audit was the most positive of the three, having implemented all recommendations from a 2019 examination that called for improvements to contract bidding competitiveness and controls on construction costs.
In 2019, the Auditor’s Office worked with CliftonLarsonAllen LLP to complete a third-party audit of the city’s on-call contract with Halcyon Construction. The team found the city needed to expand its pool of on-call contractors to foster a “more competitive environment” and for more opportunities for other vendors.
In the follow-up audit, O’Brien’s team found DOTI took steps to improve the process by working to increase the number of small businesses that can participate in mini-bids. The transportation department also updated on-call construction contract language, and it now tracks information to compare change orders for each project to their original work orders.
“These changes are good news for Denver,” O’Brien said. “The city is now doing more to ensure more small businesses can participate in bidding for city construction projects, and the city is keeping a closer eye on construction costs and extra charges.”
Last month, the Auditor’s Office revealed its 2021 Audit Plan that zeroes in on helping the city recover from the coronavirus pandemic and address systemic racism.
Racial justice and COVID-19 relief are the “two most important issues in Denver in the year ahead,” O’Brien’s office said, and for that reason will be made “key topics” in numerous audits.
Of note is a planned audit of Denver Police Department operations, which could include a review of officers’ compliance with department requirements and scrutiny of the Support Team Assisted Response Program, which diverts some low-level 911 calls to mental health specialists instead of police.
O'Brien also plans to examine how the city is spending millions in COVID-19 relief, as it also tries to bridge a $190 million budget gap next year.
Another key audit will review Denver City Council operations and spending. The last audit of the city council, which took place in 2003, “was a bloodbath,” according to Denver Councilman Kevin Flynn.
“The district attorney at the time, Bill Ritter, who later was governor, was considering felony charges against some council members for how they were spending their budget,” he said in a phone interview. “There was a lot of questionable spending.”
O’Brien’s team will also scrutinize the efficiency and effectiveness of Denver’s homeless shelters; how the city provides loans to small businesses; the city’s campaign finance processes and procedures; diversity, equity and inclusion practices citywide; and more.
The auditor’s 2021 roadmap was shaped with input from the mayor's office, the Denver City Council and community members, according to the Auditor’s Office.