Yorba Linda City Council examines results of city's 'deep dive' audits on credit cards, surplus property

Results from the first of Yorba Linda's new “deep dive” special audit programs adopted by the City Council late last year were presented to council members at the governing body's April 3 meeting.

The first two audits focused on policies and procedures related to the use of the city's credit cards, including charges incurred by the 37 city employees authorized to use the cards, and procedures regarding the disposal of surplus property.

The special audits are now a part of the city's regular, annual financial review conducted by a contracted outside, independent auditing firm. The first special audits were handled by Moss, Levy & Hartzheim of Beverly Hills and cost an extra $3,650.

All future auditing will be conducted by a new contracted company, Macias, Gini & O'Connell, with offices in Newport Beach, chosen from nine firms who submitted proposals for the three-year contract, with two one-year options, for a total up to $353,260, plus special audit costs.

Previously scheduled as the next two “deep dive” audits – formally known as “agreed-upon procedures engagements” – are citywide contract administration practices and use of over-time by city departments.

Under consideration for special audits in future years are fixed asset inventory procedures and fuel usage from the storage tank at the Eureka Avenue city yard, with topics picked by Finance Committee members, currently council members Peggy Huang Beth Haney.

Only minor problems were reported by the auditing firm in the credit card review, including what the auditors considered three “missing receipts,” under conditions the city refuted for two of the cases. An employee eventually found the third receipt.

Also, the auditor reported four missing purchasing card contracts, the one-page agreement signed by employees outlining strict rules for using the cards. One was for an individual no longer employed by the city and three were issued cards prior to creation of the agreement.

The surplus property disposal audit resulted in two recommendations, one of which was accepted by the city, while the other was deemed not needed due to current city policies.

Accepted was the recommendation that the city “establish formal procedures for asset disposals at the Black Gold Golf Course.” The city “learned that the contractor at Black Gold was independently disposing of surplus property.”

Since the city now has a written policy for surplus property disposal applying to all funds, including Black Gold, “on a go-forward basis,” Black Gold disposals will follow the policy.

However, a recommendation that council “approve the disposal of all assets” wasn't seen as necessary by the city: “We are aware of no comparably sized cities that require City Council approval of asset disposals.”

Rather, the city relies on a formal written policy that establishes a framework by which staff is authorized by council to oversee such disposals.