Holding Fleet to the Fire

City releases audit of Fleet Services department in wake of scrap-tire fiasco

At long last, the city has released the results of an outside audit of "selected internal control review procedures" of the Fleet Services department, including a review of controls over inventory, purchasing, accounts payable and receivable, interdepartmental billing, information technology, and general accounting. Conducted by San Antonio firm Padgett Strate­mann & Co. LLP, the audit cost just less than $51,000 and was submitted to the city on July 31. According to the document, released last week, the company received "full and complete cooperation" from Fleet Services. Notably, however, the scope of the audit "did not include reviewing management's performance or the economy or efficiency of operations."

Fleet Services has been caught up in controversy since at least last year when the Chronicle first reported that the department was responsible for dumping thousands of scrapped tires at a property in Southeast Austin. Records we obtained showed that the department had failed to properly track tire disposal, as required by state environmental regulations, since at least 2006. The city subsequently cleaned up its scrap-tire tracking and has contracted with a major tire recycler to handle the scrapped rubber. Further, two Fleet whistle-blowers told us that the city for years had ignored concerns not only about the scrap-tire system but also about other departmental functions – like the tracking of inventory. One whistle-blower told us that at one point Fleet employees tossed into a Dumpster some $250,000 worth of usable parts. The department is responsible for management of the city's entire fleet of more than 5,000 vehicles – everything from police cars and ambulances to garbage and recycling trucks to construction equipment.

At a July 8 meeting with the Chronicle at City Hall, several key officials – including Fleet Officer Gerry Calk, Chief Finan­cial Officer Leslie Brow­der, and Deputy CFO Jeff Knodel – said the city had engaged the outside auditors to review Fleet operations and that the report would likely be ready for review within a month. Yet it wasn't until last week, some four months later, that the city finally released the document.

In the report, the accountants make several recommendations related to tracking used tires and 37 recommendations for beefing up internal controls – including ensuring that only current employees have computer access, that all time sheets are "correct and approved by a supervisor," and that the department better monitor fuel consumption at city fueling locations. In all, says Knodel, the audit was a "good assessment" of the department's "internal controls. We felt these areas needed to be looked at because of some of the things that have gone on."

The audit did not cover economy or efficiency, says Calk, in part because the department already performs that kind of market assessment each year, and it has consistently demonstrated that the city's Fleet operations are more "cost effective" than if the same functions of the more than $40 million-a-year operation were performed by the private sector. Calk says that it's always "good to have an independent set of eyes" review a "complex" operation like Fleet Services. "It is a very good assessment," he says, and "very positive, all told."


See the audit report here.

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KEYWORDS FOR THIS STORY

Fleet Services Department, Gerry Calk, Leslie Browder, Jeff Knodel, Padgett Stratemann & Co.

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