May 9, 2006

SUBJECT:      Transmittal of Solid Waste Program Results Audit FY 2004/2005

REPORT IN BRIEF

This report presents the results of the performance audit of the Solid Waste Program for FY 2004/2005.  The Solid Waste Program is located in the Public Works Department.  Its primary function is to provide Sunnyvale residents with reliable, competitively priced, and environmentally sound solid waste collection, disposal, and recycling services. In addition, the program administers the operation of the Sunnyvale Materials Recovery and Transfer (SMaRT) Station for Sunnyvale and the cities of Palo Alto and Mountain View. In FY 2004/2005, the Solid Waste Program had a budget of $43,237,828 and 20,202 work hours to achieve its goals.

Auditors were able to verify as accurate 24 (96%) of the 25 unique Program measures and activities audited.  Overall, the audit found the Solid Waste Program’s data management, recordkeeping and calculation methodologies to be well designed and maintained.  Auditors identified two issues for the Program to address which are summarized below:

• Five measures (20%) had data entry or calculation errors.  While only one of these errors was significant enough to affect the reported results, steps should be taken to eliminate their occurrence as they can render results meaningless if large enough.
• Four measures (16%) had data integrity issues such as logs not being detailed enough for auditors to confirm reported results.  While only one measure had data integrity issues significant enough to affect the reported results, steps should be taken to minimize such issues as once source data is compromised little can often be done to reproduce Program efforts.  

BACKGROUND

Fieldwork for the performance audit of the Solid Waste Program for FY 2004/2005 commenced in October 2005 and was completed in February 2006. Audit staff completed a draft report, which the Solid Waste Program reviewed for factual accuracy. The final report was released on March 24, 2006 for Departmental review and formal response. The Departmental response to the audit was issued on April 4, 2006 and is included as Appendix A of the report.

Following Council’s receipt of the audit report, the Public Works Department will have 60 days to prepare a plan for implementation of the recommendations. Audit staff will monitor the Department’s implementation progress during FY 2006/2007.

EXISTING POLICY

This report is issued to the Council and the public in accordance with the City of Sunnyvale Audit Charter and the FY 2005/2006 Performance Audit Work Plan, as adopted in May 2005.

DISCUSSION

The purpose of the performance audit of the Solid Waste Program was to review the program results as reported by staff for FY 2004/2005.  As mentioned in the introduction, the Solid Waste Program’s data management systems and procedures were found to be well designed and maintained.

To verify accuracy of the reported results, auditors review the source documentation that is used to develop the product numbers.  The audit examined twenty-five unique, active measures and activities.  Three activities were not audited because they were comprised of work hours, which do not require/generate source documentation other than timecards.  Auditors were able to verify reported results as accurate for twenty-four (96%) of the measures and activities.

Five measures (20%) had data entry and calculation errors.  In all but one instance, these instances were not significant enough to affect the reported results.  Four measures (16%) had data issues, but only one measure had issues significant enough to affect the reported result.  Data issues included missing supporting documentation and logs that were not detailed enough to support reported results. In addition to these issues, the auditor recommends the Program reword one measure so it better reflects the data being reported.

Detailed findings and recommendations can be found in Sections 1, 2 and 3 of the Audit Report, beginning on Page 6. 

FISCAL IMPACT

Funds associated with conducting the performance audits are included in the Finance Department operating budget.

The audit verified that 96% of the Solid Waste Program’s reported performance results were accurate in FY 2004/2005.  The majority of the audit recommendations pertain to strengthening calculation and reporting procedures and instructing staff to check formulas and data entries to ensure results are captured and reported accurately.  As stated above, audit staff will follow-up on the Program’s implementation plan on a quarterly basis.

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES

1. Receive the audit report and concur with management’s acceptance of recommendations.

2. Receive the audit report and direct staff to hold a study session to discuss the audit findings and recommendations.

3. Receive the audit report and give alternative direction regarding specific recommendations.

RECOMMENDATION

Staff recommends alternative #1.

Prepared by:

Kate Murdock

Internal Auditor

Reviewed by:

Mary J. Bradley

Director of Finance

Reviewed by:

Marvin Rose

Director of Public Works

Approved by:

Amy Chan

City Manager

Attachments

1.  Solid Waste Program Results Audit FY 2004/2005 (.pdf)