Kansas City Council Business Session: Audit Findings and Mask Mandate Discussion - 2022-01-06
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Kansas City Council Business Session: Audit Findings and Mask Mandate Discussion - 2022-01-06
The Kansas City Council held a business session on January 6, 2022, to receive two audit presentations from the City Auditor, discuss the reinstitution of a mask mandate with a presentation from the interim public health director, and honor a departing police captain. The meeting highlighted significant weaknesses in the city's purchasing card program, with findings of noncompliance and potential fraud, and concluded with a robust debate over the necessity and efficacy of a new mask mandate amid a surge in COVID-19 cases.
Consent Calendar
- Approved the minutes from the previous business session by unanimous voice vote.
Public Comments & Testimony
- No public comments were made during this session.
Discussion Items
1. Purchasing Card Program Audit Presentation
- Audit Findings: City Auditor Doug Jones presented the December 2021 audit of the purchasing card program. Between December 29, 2019, and January 27, 2021, city employees made approximately 7,800 purchases totaling about $3.3 million. The audit identified 216 transactions resulting in 256 violations, including potential ethics violations, payment splitting, lack of receipts, and disregard for contracting policies. These violations accounted for approximately $385,000 in unapproved expenditures.
- Program Weaknesses: The audit found that transaction approvers failed to identify violations, 670 transactions were not reviewed before payment, and two approvers were unaware that buying from family members was an ethics violation. Additionally, about one-third of sampled transactions had receipt problems, and the finance department's review process did not target high-risk departments.
- Management Response: Director of Finance Ms. Quinn presented a joint response. Management agreed with all nine recommendations, including enhancing training, reinstating card suspension for non-compliance, requiring receipt uploads, targeting reviews to high-risk areas, developing policies for third-party platforms, and reducing the number of underused cards. The city manager noted immediate steps: drafting a revised administrative regulation within the month and conducting a card census.
- Council Concerns: Councilmembers expressed concern over the lack of disciplinary action and the financial impact. Councilwoman Hall called for immediate removal of cards from violators, and Councilman O'Neill questioned the lack of penalties. Councilwoman Parkshaw urged incorporating conflict-of-interest training and documentation. The auditor agreed to provide dollar amounts and a follow-up report in six months, though councilmembers pushed for faster action.
2. Annual Audit Plan FY 2023
- Presentation: City Auditor Doug Jones presented the annual audit plan for fiscal year 2023, which includes six performance audits covering topics such as the Central City Economic Development Sales Tax, water services, public improvements advisory committee, police workforce diversity, short-term rentals, and urban forestry. He also provided an update on the current year's audits, noting that two of six planned audits have been issued, with the rest expected between March and April 2022.
- Council Feedback: The plan was accepted without question.
3. Go KC Sidewalk Program Follow-up Audit Scope
- Presentation: The auditor presented the scope for a follow-up audit of the Go KC Sidewalk Program, funded by a voter-approved tax increase in April 2017 with a minimum of $150 million over 20 years. The audit will evaluate warranty enforcement and construction specifications. Public Works reports completing repairs to about 77% (270 of 352 blocks) of the backlog, with an expected completion by 2025.
- Council Discussion: Councilman Barnes and Councilman O'Neill raised concerns about a recent ordinance prioritizing sidewalk installation near schools, questioning whether it diverted from voter-approved repair priorities. Councilmembers requested the auditor to investigate the legal constraints and performance against ordinances. The auditor agreed to review the referenced ordinances.
4. COVID-19 Mask Mandate Discussion
- Health Department Presentation: Interim Director of Public Health Frank Thompson presented data showing a surge in cases, with over 5,000 new cases in one week (about 1% of the city's population), zero ICU beds available in Kansas City hospitals, and 48% of ICU beds occupied by COVID-19 patients. He recommended universal masking for all ages, or at least for preschool through college.
- Council Debate: The discussion was divided. Some councilmembers, including Councilman Bunch and Councilman Fowler, supported a universal mask mandate, citing the need to protect healthcare workers and the public. Others, like Councilwoman Hall and Councilman Ellington, opposed mandates, questioning the effectiveness and data interpretation, and emphasizing personal freedom. Councilman O'Neill questioned the ongoing cycle of mandates given flat vaccination rates. Mayor Lucas defended the public health approach, noting the city's role in protecting residents.
5. Recognition of Departing Police Captain
- The council recognized Captain Martin Kavanaugh on his promotion to Major in the Kansas City Police Department, thanking him for his service at City Hall.
Key Outcomes
- Approved the meeting minutes unanimously.
- Management agreed to implement all nine recommendations from the purchasing card audit, including immediate steps to reduce card misuse and improve oversight.
- The city manager committed to drafting a revised administrative regulation addressing audit recommendations within the month (January 2022).
- The council discussed but did not vote on a new mask mandate; the item was brought up for discussion, and further action was deferred.
- The auditor agreed to investigate the school sidewalk ordinance and report back to the council.
Meeting Transcript
Welcome to today's business session. Our first item is approval of minutes from our previous business session. Is there a motion? So moved. Second. All in favor indicate by saying aye. Aye. Aye. Aye. All opposed. The motion is approved. The city auditor has a series of presentations for us today. Mr. Jones. Good afternoon, Mayor Lucas, members of City Council, Doug Jones, City Auditor's Office. I'm here to present our December 2021 audit of the city's purchasing card program and purchases. I will discuss the audit objective, provide some background, and summarize our findings and recommendations. In front of you are copies of the audit report, highlights page and presentation slides. The team for the audit was Kara Jorgensen, Jonathan Lequeur, and Sue Paulis. Our audit focused on determining whether purchasing cards are used as intended and identifying program improvements needed to reduce the risk of card misuse. We also evaluated the effectiveness of the city's checks and balances to ensure adherence to city policies. We conducted the audit in accordance with government auditing standards. Purchasing card programs are established to provide efficient and cost effective methods for paying for small dollar purchases. While this type of program is meant to be cost effective and efficient, there are also opportunities for noncompliance with the city's policies and procedures, as well as opportunities for fraud and abuse. The city has had a purchasing card program since 2001. Between December 29th, 2019 and January 27, 2021, city employees made about 7,800 purchases from over 3,000 vendors, totaling about $3.3 million. The top 10 city purchasing card vendors are shown on this slide. Amazon was the top vendor by amount during our time frame. Water, fire, and aviation departments have the most purchasing cards, have the greatest number of transactions, and spend the most money using these cards. We concluded that some staff did not use purchasing cards as intended. The finance department has implemented rules and guidelines to prevent card misuse. While many transactions did follow established rules, we found some cardholders did not always follow these rules and contracting procedures meant to prevent card misuse. Some transactions violated several policies and procedures. Using our data analytics software, we analyzed about 7800 purchasing card transactions and selected a judgmental sample of 583 transactions we flagged as potential violations. From our judgmental sample, we identified 216 transactions that resulted in 256 purchasing card or city program procurement rule violations that included a potential ethics violation, payment split to avoid card transaction limits, lack of transaction receipts and required written approvals, disregard for contracting policies, basically not obtaining three bids or proposals for purchases over $5,000, and repeatedly purchasing near the transaction limit to avoid procurement rules. We found transaction approvers did not identify the violations we found, and in some cases were not aware the transaction should be considered a violation of city policy. Are supposed to verify the purchase validity and detect and correct violations. The review process relies on approvers understanding policies and procedures so they may detect violations. Some cardholders and approvers ignored or forgot the city requirements or did not approve transactions at all. 670 transactions were not reviewed before payment. Two approvers said they were not aware that buying products from a family member was a potential ethics violation. So these purchasing card training manual administrative regulation do not address contracting policies in detail. Both the training and written guidelines should cover conflicts of interest and ethics. Procurement rules requiring bids on proposals or purchases over $5,000, and prohibition on making monthly purchases for the same item just below the card limits to avoid the procurement rules. About one-third of our judgmental sample had receipt problems. Frequently, the problem was locating the receipt. Rather than requiring cardholders to upload purchasing card receipts to the work's purchasing card systems, finance department requires departments to maintain hard copies. Uploading receipts would help ensure purchasing record receipts are retained in one location, making storage and review easier. Since 2018, the department has reviewed card transactions in six of 20 departments by reviewing all transactions in the selected departments during a time period. The review method takes longer than a targeted risk-based review and did not include the two departments with the most purchasing card use.
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