Report 2011-131 Recommendation 18 Responses

Report 2011-131: City of Vernon: Although Reform Is Ongoing, Past Poor Decision Making Threatens Its Financial Stability (Release Date: June 2012)

Recommendation #18 To: Vernon, City of

To better control contract expenditures and ensure that it receives the best value for the services it purchases, the city should also require the finance department to review invoices to identify those that lack sufficient detail and return such invoices to the appropriate contract manager to obtain a revised invoice that is sufficiently detailed.

Annual Follow-Up Agency Response From July 2014

The Finance Department and City Attorneys Office are currently developing scope of work guidelines for each type of contract that a sufficiently detailed invoice can be measured against. The guidelines will be used when preparing contracts, requests for proposals, bid notices, etc. and will be consistent with the Citys Purchasing Ordinance, Purchasing Manual, Budget Policies and Procedures Manual, and Accounts Payable Invoice and Check Processing Procedures. The City is currently in the process of hiring a new City Attorney and expects said person to be onboard by late July or early August 2014. The guidelines will be finalized with the new City Attorney shortly thereafter and hopefully no later than October 1, 2014.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Annual Follow-Up Agency Response From July 2014

On February 4, 2014, the City Council adopted a formal Accounts Payable Invoice and Check Processing Procedures. As invoices arrive, they are stamped by the Accounts Payable Clerk as received then they are forwarded to the appropriate department for review, coding, and payment approval. After departmental approval is obtained, invoices are then forwarded back to Finance for processing. Step 9 of the Invoice Processing Procedures specifically requires the Deputy City Treasurer to review each invoice to ensure that it contains sufficient detail that can be measured against the scope of work, proper departmental approval, and proper account coding. If any of these elements are missing or deficient, the invoice is returned to the contracting/approving department and the invoice is not paid until the missing or deficient information is obtained or corrected.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

On February 25, 2013, the City Council adopted Resolution No. 2013-23, approving the general forms of personal service contract, types of insurance and indemnity, purchase order contracts, requests for proposals, and attorney services contracts. All forms of contract contain the recommended good governance provisions, including specific requirements respecting invoice detail, supporting documentation, and methods of billing. The appropriate form of contract is attached as an exhibit to the RFP and, ultimately, the RFP and selected proposal are attached in their entirety as exhibits to the final contract. Since the adoption of the Competitive Bidding and Purchasing Ordinance (Ordinance No. 1200) in December 2013, ten RFPs have been issued. On June 25, 2013, the Finance Department issued the City of Vernon Purchasing Manual to all City departments, as adopted by the City Administrator pursuant to the City's Competitive Bidding and Purchasing Ordinance (Ordinance No. 1200). The Purchasing Manual was prepared by the Finance Department, with significant input from the City Attorney's Office and all City departments. The Purchasing Manual sets forth all of the requirements of the Purchasing Ordinance as they apply in a practical manner to the day to day operation of the purchasing system. It requires invoices to be measured against the scope of work and deliverables in the respective contract.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

In a follow-up response the city indicated that its finance director is drafting a separate updated cash disbursement policy to present to the city council for adoption by January 2014. The proposed policy will detail the invoice review and approval process.

6-Month Agency Response

In December 2012 the city council adopted a competitive bidding and purchasing ordinance. By the end of June 2013, the city expects to adopt a purchasing manual, which will set forth requirements of the ordinance and will include a method of contract and invoice routing that will ensure every affected department receives information about each contract and invoice before payment.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The city states that a top priority for its recently appointed city attorney will be to develop a comprehensive contracting policy resolution for city council approval, but it did not give a time frame for completion. (See 2013-406, p. 193)

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2011-131

Agency responses received after June 2013 are posted verbatim.