Internal Audit Follow-Up Report. Equipment Maintenance and Repair. TxDOT Office of Internal Audit. Jan J

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1 Internal Audit Follow-Up Report Equipment Maintenance and Repair TxDOT Office of Internal Audit Jan J

2 Objective Assess the status of corrective actions for high risk Management Action Plans (MAPs) previously communicated in the Equipment Maintenance and Repair Audit Report issued May 31, Summary Results Testing included an evaluation of 5 MAPs to determine if corrective actions were implemented as agreed. MAP Status 5 Open Comments Corrective actions that require completion to address identified risks from the original audit report. Scope The engagement was performed by Sonam Sohal, Azana Headspeth, Paloma Gante (UT student), Joanne Kung (UT student), Ashwin Kannan (UT student) and Lindsay Bibeau (Engagement Lead). The engagement was conducted during the period from January 13, 2014 to March 12, Methodology The engagement work included: Reviewing policies and procedures Interviewing process owners and key personnel Testing of deliverables Background This report was prepared for the Texas Transportation Commission, TxDOT Administration and Management. The report presents the results of the Equipment Maintenance and Repair Follow-Up Engagement Report which was conducted as part of the Fiscal Year 2014 Audit Plan. At the time of the original audit engagement, Regional Fleet Management oversaw capital equipment budgets, equipment purchasing, and equipment repairs. The Districts managed daily operations with assistance from the Regions, including conducting daily pre-trip inspections, preventive maintenance, and repairs. Since the original audit engagement, the regional structure no longer exists, and a new Fleet organization structure became responsible for capital equipment budgets, equipment purchasing, and equipment repairs. Fleet Operations Division, now its own division, is centrally comprised of 4 distinct groups, including Fleet Operations, Fleet Procurement, Strategy and Analytics, and Quality Control. Over the past year, Fleet Operations Division has focused its efforts on reducing TxDOT fleet to a more manageable and productive fleet. As that initiative matures, the focus will transition to Preventive Maintenance (PM) improvements, which will include the daily pre-trip inspections, preventive maintenance, and repairs. The Quality Control group will manage the PM Improvements. As the original MAPs were developed within the regional structure, the focus and risk associated with them will be reflected below the original MAPs in bold and italics. 2

3 We conducted this Follow-Up engagement in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our engagement objective(s). We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our engagement objective(s). Recommendations to mitigate risks identified were provided to management during the engagement to assist in the formulation of the management action plans included in this report. The Office of Internal Audit transitioned to Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework version 2013 in December

4 Detailed MAP Follow-Up Report and Status By performing additional testing, the Office of Internal Audit re-evaluated the risks identified within the original audit. Through this process it was determined that these risks remain relevant to the organization, and while no new MAPs were required, revisions were made to the language of the original MAPs to reflect the changes to the organizational structure. MAP Status: Open Corrective actions that require completion to address identified risks from the original audit report. Original Audit Finding Number 1: Completion and Documentation of Daily (Pre-Trip) Equipment/ Vehicle Inspections MAP Owner: Dalton Pratt, Fleet Operations Director MAP 1.1: Fleet Managers will work with the Districts and applicable Supervisors to remind the operators of the requirement and importance of conducting and documenting the daily inspections (remind each section once per quarter). Evidence of these actions (e.g. , meeting agenda or log) should be maintained. Complete and Documented Pre-Trip Checklists, which included working with the Districts to emphasize the importance of this inspection and establishing a compliance review of the Preventive Maintenance Program Original Completion Date: MAP 1.2: GSD will establish compliance reviews for the Preventive Maintenance Program to determine if the Districts are conducting and documenting the daily (Pre-Trip) inspections as required. These reviews will cover the daily (Pre-Trip) inspections, preventive maintenance, and repairs of equipment/vehicles. These reviews will be conducted on a quarterly basis and reported to the GSD Director, Chief Programs Officer, Chief Engineer, and the Deputy Executive Director. Complete and Documented Pre-Trip Checklists, which included working with the Districts to emphasize the importance of this inspection and establishing a compliance review of the Preventive Maintenance Program Original Completion Date: Revised Completion Date:

5 Original Audit Finding Number 2: Consistency of Region Preventive Maintenance (PM) Coordinator Inspections MAP Owner: Dalton Pratt, Fleet Operations Director MAP 2.1: West Region will post and hire seven PM Coordinator positions in the Equipment Shops in the Region to ensure compliance with the PM Coordinator inspections that are required two times per year. Consistency and coverage of Preventive Maintenance Inspections, which included ensuring the needed personnel is available and trained Original Completion Date: Original Audit Finding Number 3: Review/ Approval of Discrepancies on the Pre-Trip Inspection Checklist and Subsequent Equipment/ Vehicle Release MAP Owner: Dalton Pratt, Fleet Operations Director MAP 3.1: Fleet Managers will: Work with the Districts and applicable supervisors to remind them (once per quarter) to review any discrepancies for safety hazards or serviceability issues that were identified and reported on the checklists and document this review on the checklists Work with the Districts and applicable supervisors to remind the operators (once per quarter) of the requirement and importance of reporting any identified discrepancies for safety hazards or serviceability issues Work with GSD to review the checklist forms and SOPs to determine if any clarification is needed regarding the supervisor s authorization to use the equipment/ vehicle with identified discrepancies. Evidence of these actions (e.g. , meeting agenda or log) will be maintained. Consistent review process of the Pre-Trip Inspection Checklists and equipment/vehicle releases, which included working with the Districts to provide any necessary clarifications, as well as, establishing compliance reviews of the Preventive Maintenance Program. Original Completion Date:

6 MAP 3.2: GSD will establish compliance reviews for the Preventive Maintenance Program (as described in the MAP for Finding No. 1) to determine if the supervisors in the Districts are properly reviewing the discrepancies identified on the checklists and are properly authorizing the equipment/vehicles to be used. Consistent review process of the Pre-Trip Inspection Checklists and equipment/vehicle releases, which included working with the Districts to provide any necessary clarifications, as well as, establishing compliance reviews of the Preventive Maintenance Program. Original Completion Date: Closing Comments The results of this MAP Follow-Up engagement were discussed with to Fleet Operations Management and Administration on March 12, The Audit team appreciates the cooperation and assistance received from Fleet Operations during this audit. 6