supervisor was. when her partner came up, saying things like, "i hope i am not causing a problem drinking a starbucks coffee year because it was a corporation," he did know who the supervisor was. a lieutenant has on its own initiative done this more than once. today's breaking of the agreement to work together should be addressed by this august commission, and i hope that you will take appropriate steps immediately. thank you. president mazzucco: thank you. any further public comment on line items 3 a, b, c, and d? seeing none, item number four. secretary falvey: public comment

on the minot -- items in a closed session. president mazzucco: today we are discussing an item that is confidential. there will be no comment on that. secretary secretary falvey: ok, we are back from a closed session. these are the members we have. president mazzucco: do i have a motion to disclose? any comment? next item. secretary falvey: the next item

is adjournment. president mazzucco: all in favor? adjourned.

ken supervisor campos: good morning, everyone. welcome to the meeting of the board of supervisors government audit and oversight committee. my name is david campos. i am chair of this committee. i am joined today by supervisors farrell and chiu. do we have announcements? >> yes, we do. i would like to ask observers to turn off cell phones. documents submitted will be included as part of the file. items acted upon today will appear on the november 8 board of supervisors agenda unless otherwise stated. supervisor campos: thank you. another announcement is we do have an overflow room, so if you are looking for a seat, there is more space in a room to 15. please call item 1. >> item 1, hearing on city

departments progress on implementation of audit recommendations by the controller and city services auditor. supervisor campos: colleagues, this is an item i requested. as we go through specific artists, we want to come back subsequently to find out what progress has been made with respect to the numbers and recommendations that were made with respect to these audits. with that, i will turn it over to the controller's office. >> we are here to talk about the audit follow-up process that we manage. real quickly, the benefits of following up on august are the actual implementation of those recommendations rather than the findings. one of the reasons for the audit

follow-up process is it helps us to ensure that departments are apt -- actually implementing the recommendations through the correct action -- corrective action process. it also enhances accountability by our city agencies and city management. it also provides an opportunity to determine the value of our work. an audit follow-up process is in three stages -- six months, one year, and two years. our office generally sends out a list asking for a response from the responsible department, and we generally required apartments to determine what they are doing in that process, what their recourse is, and there are times that they will note thatat they have closed the recommendations. our form tracks open, close, and in-progress recommendations.

during the course of the process, we might determine we would like to look at additional audits, and we will follow up on that work. we primarily consider four questions of audits the level of risk, such as -- or their large dollar findings? we look at significant weaknesses within the control structure of that particular department or that process that we are reviewing, and we also look at significant safety considerations and high risk of fraud. the follow-up status and recommendations status goes as this -- this is the status of our request for a follow-up from the department. that simply means that we have requested a response from the department and have not received that response from the department. open means that we have received a response, but yet the finding remains outstanding. either the department is currently working on that particular finding and

recommendation, or they contested it. closed means cfa have reviewed department recommendations of what actions they have taken, and it has been determined by the audit staff that the action taken is appropriate to resolve the issue. even though we might close a particular recommendation finding, it does not necessarily mean that we have done actual field work to attest to it or to validate its validity. for the following status for the third quarter, there are several departments there. there are 14 audits which might have multiple departments involved that we did some follow-up activity within the third quarter. we had eight that remain closed. six are open. three audits we have not yet received the request from, but they are here, and they will be

able to talk about where they are in the process. on the audit's open summary, we have five that are open, and we have received responses to follow-up requests on these audits, but there is still one or more recommendations that has not been fully implemented that we will be discussing the status of today in this meeting. this table represents the three active audits. as a reminder, active audits are audits where the department has not responded to our request. as i noted, these are three audits at the puc, and they are here to discuss the status of those. this table represents the eight audits that we have determined to be close. for these audits, the department has responded to our follow-up request. we have reviewed the department's response and determined that their response was enough to resolve the

current findings or recommendations. we will not be conducting any more regular survey follow-up with these particular organizations on these particular items. we have the upcoming follow-up reviews for the office of the citizen's complaints and for san francisco municipal transportation agency. for the office of citizen complaints, we have done a prior follow-up in june 2007. during that time, we did a follow-up in 2009 for that particular audit. we did that audit -- when we did that audit, we did a sample of eight recommendations and found that occ had implemented four and there were still four that had been partially implemented. as a result of our continued

follow-up process, we found that they had not completely closed all total findings. we have decided to go back and do another follow-up audit. they're here today to discuss the items that the department has determined that they would not be implementing. of the recommendations that have been implemented, we will be selecting a sample based on risk to review in our follow-up with occ. our first audit we will speak to is the fire department payroll audit. there were 20 recommendations that remained open. six are close on that particular audit. four are contested, and those will be address on the following slides.

-- six are closed on that particular audit. in our original report, these recommendations were numbers three and four, and they were both closely related. these recommendations in our mind remained -- are considered high risk. we tested 13 of the 63 retiree payouts for the year and found one instance where a retiree was paid out for more sick leave than was permitted by the sick leave cap. the department stated that the exception could be explained by federal mandates related to the mou provision of 1995, which resulted in certain employees being permitted to exceed their 6-week cap due to previous -- previously permitted accruals. they were unable to provide settlement to the records not being available for the city attorney -- due to the records

not being available for the city attorney that dealt with it was not available. the retiree was paid a bonus that was increase in excess hours. we determine the department did not consistently applied the sick leave cap while calculating the wellness incentives. for this particular retiree, the department chose to apply the cap at a different portion in the calculation. we found that when the department calculated that retiree's cash out, if that were applied to all employees, it would result in a different amount distributed. a lack of clarity in the mou needs to be address. to address recommendation 3, the department must either produce the settlement, which we know they are not able to, or establish a consistent document and procedure for managing retiree payout for all

employees. there is a set of employees that will be governed under that ruling. for the remaining employees, we are asking the department to have a clear documentation of how those employees should be paid out to ensure it is properly done in the future. as we all know, we have departments -- we have changes in our departments as it relates to personnel, so we want proper documentation in the files as it relates to those employees. to address recommendation four, the department must ensure it is clear as to what point in the sick leave payout calculation, including the wellness incentives, the cap should be applied. recommendation 14, in our original report, was specifically directed at the payroll department in relation to how it tracked and accounted for pay for acting assignments. the department of originally stated it agreed to document

policies for short-term acting assignments, but its response to the six-month follow-up indicate it does not intend to. the risk is that the mou outlines policies around making short trashed -- short-term acting assignments but does not detail how the assignments will be tracked, monitored, or accounted for. it is a high-level document, versus a document that in our mind an employee can use to go through certain steps and ensure that those steps are down. staff should have access to an easy-to-use desk reference that provides guidance for how to perform the task required for their job. recommendation 17 -- the department originally stated that it agreed with the recommendation and proposed an acceptable solution to resolve the issue. however, in his response to the six-month follow-up request, it indicated it would not implement the recommendation, indicating

it did not agree with the findings and recommendations. the risk -- we found that the process in place made it difficult to track whether an officer was receiving the correct pay for acting assignments. from an audit perspective, the department needs stronger controls to ensure acting assignment pay is accurate. that is it for the fire department. we will move on to the police department. the police department had four open, one contested, and 23 close. of the four open, one is in progress. the remaining open recommendations related to control weaknesses that could result in overpaying officers. so the contested recommendation is this -- the department's

response is insufficient to address the problem. first of all, a vendor is not a city employee, but is contracting with the city's work service. the city should be managing the service internally, meaning that it should manage its employees when they are reporting that, documenting reporting from the beginning to the end. supervisor campos: if i may, i would ask members of the public to please keep it quiet so that we can hear the presentation. thank you. >> officers working a special event should report to the station or unit coordinator and not a vendor. the actual start and end time should be recorded to make sure officers work all recorded hours and are paid for only the hours worked. as we move on, we are moving to the public utilities commission. there were five audits that have follow-ups this courted.

we had our franchise fee audit, which is mandated by admen code, and we conducted on behalf of the board of supervisors every two years -- which is mandated by admin code, and we conduct it on behalf of the board of supervisors every two years. as a reminder, as i stated earlier, puc did not provide us with their response for wastewater enterprise, hanson, and crystal springs. they are here and will speak to it, and i will speak to what we have currently. for the utilities commission for the audit of sunol valley recreation company, we have six open recommendations, one contested, and four close. of the six open, three are related to unpaid rent and fees. the matter is being handled by

the city attorney. we believe that the risk is low. while some of the recommendations related to the 11,000 identified as past and and late fees, puc is working with the city attorney, and this is why we believe it is low, because they are in the process of filing -- identified as pass rent and late fees. supervisor campos: may i ask you something about that? do you have a sense of what the underpayment may have been as a result of this? >> $11,000. that is what we identified currently. as it relates to wastewater enterprise, there are 20 open recommendations, one contested,

and nine close. we are waiting for pc -- puc 1- year follow-up request. we find currently that the risk is medium. we have control over inventory, which we believe increased the risk that they would not detect it tools and other inventory items went missing. the audit team did not identify any instances of missing inventory at the time of our audit, and the recommendations are aimed at improving the control so there is less risk of not detecting missing inventory. we are asking for certain controls to be in place from a proactive standpoint to ensure we are adequately mitigating the risk of loss. many recommendations were directed at or will be implemented in place of the department's inventory system.

that inventory system will have the mechanism to track all of their inventory. for hanson, we have 48 open recommendations. none were contested. one was closed. the 48 open include two in process and 5 potentially being contested. we find that this is high risk for this particular audit, and we acknowledge that puc has recovered $40,000 in rent by the report issued today, but it has not yet collected $120,000 of other funds do that were identified by the audit team. -- of other funds due. some reports indicate the potential of other revenue loss. supervisor campos: so that i understand on this one, the report came out in august 2010, where you basically say that not all the lease payments were made

and that the puc was not properly managing leases. in the report, you say there was no follow-up response received from the puc? >> we received a six-month follow-up. we have not received our 1-year -- i apologize. we did not receive our six-month period -- six-month. they are here and will be able to answer to what they have done thus far. then, finally, we have the audit of crystal springs golf partner. we have 22 open recommendations. we have not received our request for follow-up. we consider it high risk, and the audit identified weaknesses that resulted in $72,000 in late

charges that puc failed to collect from crystal springs golf partners. the high risk of that is if they are unable to recover those dollars, there is that loss. generally, the longer it takes us to do that work, the potential becomes greater. supervisor campos: great. thank you. colleagues, before we hear from the department, do you have any questions? ok, thank you very much. why don't i call first on the san francisco fire department? if anyone from the fire department is here. >> good morning. deputy chief monica fields. supervisor campos: i was just wondering if you have any

initial statements or response to the controller's report. >> only to say that a majority of the items that we have yet to resolve require the union and dhr to have a meet and confer. we are certainly willing to sit down with them and to resolve those issues. issues that we could address immediately we did, such as tracking our hazmat pay, tracking our like work like pay assignments. we have been tracking our revenue system, and that is going well. we continue to work with the controller's office, and that is going well. supervisor campos: thank you for being here, first of all. welcome to the government audit committee. on the issue of how sick hours are paid, i understand that you have an mou that dictates how

that payment is made, but there are deviations in some of the payments that were made because of presumed settlements that were entered into between the department and individual employees. yet, those settlements have not been made available to the controller's office. do you have copies of those settlements? >> we do not have copies of the settlements. we have made attempts through our contact with the city attorney's office to get those. what we do have is a list of eligible members and the exact award hours that they received, and we can provide that to the controller's office. supervisor campos: that is disturbing because unless you have the settlements and actually know what the settlement say, how do you know that you are in fact complying with the settlements? how do you know that you are not in a situation where you are

overpaying or perhaps even underpaying? what is the process you have in place when a settlement is entered into to make sure there is compliance with that settlement? >> well, we have the accrual of the members' hours. we base all of that on the number of hours that they have and the settlement document that we do have in place of a list of numbers and hours -- the payroll division, they use that. supervisor campos: when you enter into a settlement, does your lawyer give you a copy of the settlement you agreed to? >> yes, they do. supervisor campos: do you have those settlements? >> in reference to this, we do not. supervisor campos: is it a document retention issue? what do you believe is going on? >> i believe in this case, it is. we are not in possession of that

document. supervisor campos: what does your document retention policy say about the way you retain settlements? >> there is no time frame on our retention of settlements. most documents, sir, we do have in our possession, and this is not an excuse -- this predates me by several years. we have made every effort to locate it. we have been unsuccessful thus far. supervisor campos: ok. i think this is one of those situations where we have to come back. in the short term, we can ask you to come back and maybe ask the city attorney to come back as well. it is just a case of finding a agreements that you signed and agreed to. you would think you would have copies of those. on recommendation 17, the controller was saying that at first, the department agreed with the recommendation but then changed its position, and it

deals with the monitoring of the total payment of employees on acting assignments. i wonder if you could just comment on that. >> in regards to recommendation 17, we have, prior to the audit -- we did not have in place a means by which we did documents or acting assignments. since that time, we have resurrected a document, and we have been keeping track of that. supervisor campos: it is not that you disagree with the finding, but it is that you are implementing a solution to that finding? >> yes. supervisor campos: ok, great. colleagues, any other questions? thank you, deputy chief. we will be following up on the other issue and scheduling a hearing shortly for that. >> we will contact the city attorney's office. supervisor campos: thank you very much. why don't we now hear from the police department?

good morning, captain. >> good morning, supervisors. i also have our director of human resources in case there are any questions that go into a depth beyond my ability to answer for you. the issue at hand on this recommendation from the controller's office was to have officers working off-duty privately funded over time respond to the station and sign in and out. the current procedure is there is a sign in sheet that the officer has when they report to the job site where the private party client has deposited money with the police department to cover the officer working a given shift at that site. at the end of the day, the client signs the form that says they have received the services and it is akin to pay the officer. the department feels that that is sufficient for the first part

of the process. it still goes through the hands of the supervisor later on when the request for compensation goes through. the sticking point is if we require the officer to go in the station and sign in before they started working and after they finished working, we would be requiring them a daily task outside of the 10b area. the only compensation they get when working 10b is from the minute they show up to the job site at the scheduled time until the minute they finish. we start making a go from the job site to the station to check in, we are now directing our employees to do something and the same thing in reverse. at this point, we have the client signing off that the employee has provided the services they requested. it is reviewed by a supervisor after the fact. the important thing is the person requesting the services is signing off at the end of the