02-06-2001 - Financial Audit of the West Covina Service Group• City A f IV41 cc viva
Memorandum
As
TO: Daniel G. Hobbs, City Manager���
and City Council ITEM NO. C-8 j
FROM: Frank J. Wills, Chief of Police. DATE FE BRUARY 6. 2001
® PRINTED ON RECYCLED PAPER
SUBJECT: FINANCIAL AUDIT OF THE WEST COVINA SERVICE GROUP
SUMMARY: The City Council has expressed an interest in having a comprehensive
financial audit conducted of the Police Department's computer enterprise
generally referred to as the West Covina Service Group. The work has
been completed and staff is preparing a report to be presented at a later
City Council meeting.
BACKGROUND:
For many years, the West Covina Police Department has managed a computer enterprise
which designs, distributes and. maintains computer software to assist police agencies and
government offices operate Computer Aided Dispatch/Records Management Systems
(CAD/RMS). That enterprise, known as the West Covina Service Group (WCSG),
currently provides computer support to 33 separate municipal agencies.
As part of ongoing management of the WCSG, staff hired Caporicci, Copper & Larson to
perform a comprehensive audit of its finances and accounting practices.
In 1997, pursuant to a Request for Proposal, the City Council approved a four-year
contract with Caporicci, Cropper and Larson to provide financial audit services to the
City. The work that Caporicci, Cropper & Larson completed for the Police Department
was similar to past audits performed by the firm under the supervision of the Finance
Department. The Police Department benefited from the firm's past experience in the City
and staff believes that a professional; expeditious and thorough audit was performed for
the Police Department.
Although the City Manager has the authority to authorize the WCSG audit, staff has
brought this item to the City Council as. a receive and file report, due to the City
Council's concern regarding extending several contracts to a particular vendor that may
exceed $10,000 in total. In addition to the audit services approved by the City Council,
the City will award the following amounts to Caporicci, Cropper & Larson, in Fiscal
Year 2000-2001:
1. Staff assistance for preparation of audit* .............. $ 8,115
2. West Covina Service Group Audit .................... 9.840
• $17,955
* Staff requested that Caporicci, Cropper & Larson provide an accountant to the City to
assist in closing. the books for the RDA and City. This assistance was needed, due to
vacancies and absences in several key Finance Department staff positions. There was no
conflict of interest created by using the accountant from Caporicci, Cropper & Larson,
because the accountant did not perform the City audit This activity does not financially
impact the Police Department, and is completely separate from the West Covina Service
Group audit, although it is performed by the same company.
DISCUSSION:
On December 12, 2001, during a closed session, members of the City Council expressed
an interest in having a .comprehensive audit done of the WCSG. Staff contacted the
accounting firm of Caporicci, Cropper_& Larson (CC&L) of Irvine to conduct the audit.
The key items considered in the audit were as follows:
• Review of the internal controls. over financial transactions
• Review of operational controls
• Evaluation of the WCSG's feasibility 'and profitability
• Determination of the genesis of the WCSG's start-up costs
• Determine whether the WCSG currently, or previously, has used City funds to
subsidize service to client agencies.
A full written report will be forthcoming describing the procedures performed and the
related results.
FISCAL IMPACT:
The CC&L services total $9,840. Sufficient funds currently exist within the WCSG
budget (account number 375-320-2141-7160). No additional appropriations will be
necessary.
RECOMMENDATION:
It is recommended that the City Council receive and file this report. ,
ZZZ
Frank J. Wills, Chi f of Police 4Fiefds., cting Finance Director