Item - 2022.AU13.7

The Audit Committee recommends that:

1. City Council request the General Manager, Transportation Services to ensure the following for the upcoming contract:

a. the vendor is required to document streets patrolled for non-site travel time; and

b. the vendor is required to submit a daily log of activities to be performed.

2. City Council request the General Manager, Transportation Services to ensure that all areas of improvement identified through the complaints are incorporated into the upcoming contract.

3. City Council request the General Manager, Transportation Services to report back to the Audit Committee by the end of third quarter of 2023 on the outcome of the review by the Corporate Compliance Unit in Transportation Services on the initial Internal Audit recommendations.

The purpose of this report is to provide an update on a fraud and waste complaint received, the subsequent action taken on the allegations and that management continues to work on the matters raised.

In mid-2016, the City's Fraud and Waste Hotline (operated by the Auditor General's

Office) received a complaint alleging a utility contracting services vendor ("the Vendor") of overbilling and a lack of oversight by Division management for not taking action against the Vendor. The Vendor provides installation and maintenance services regarding traffic signs. The Auditor General’s Office conducted preliminary inquiries and determined that it was appropriate to refer the complaint to the Transportation Services Division ("the Division") for review and suggested leveraging the Internal Audit ("IA") Division to conduct an analysis to help address the allegations.

In 2017, the IA Division issued a report of their analysis and outlined four recommendations for the Division to consider. They noted input errors by the Vendor, and credits for those amounts were received by the Division but no intentional overbilling was found. Divisional management agreed to implement the IA Division's recommendations by Q3 of 2018. IA Division's recommendations are outlined below, and the full report is attached.

In December 2021, the Auditor General received another complaint that there were still concerns with the same vendor with additional allegations. The Auditor General’s Office conducted preliminary inquiries, referred the complaint to the Division to review and followed up on the status of the IA Division’s recommendations from 2017.

The Division reviewed the new allegations and concluded one of the allegations was substantiated. The Auditor General’s Office also met with the Division and were informed that some of the IA recommendations from 2017 were not implemented due to extenuating circumstances. The Division is continuing to work on the recommendations and future follow up may be required.

This report presents an overview of the complaints received, actions taken and current status of the past recommendations and potential new recommendations in advance of the contract for installation and maintenance of traffic signs being procured for January 1, 2023.

The Auditor General's Office is summarizing the information and has not audited the results presented. This report does not constitute an audit conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS).