INSTALLATION REPORT OF AUDIT

Transcription

1 . INSTALLATION REPORT OF AUDIT F FBS000 Privatized Housing Fire and Police Services 17th Training Wing Goodfellow AFB TX Southwest Area Audit Office 16 September 2009

2 Executive Summary INTRODUCTION OBJECTIVES The Military Housing Privatization Initiative gave the Air Force authority to establish long-term business relationships with private sector property managers to build, renovate, and maintain on and off-base military family housing communities. Lease agreements require the property manager to purchase Air Force fire and police services for the on-base privatized housing areas. Services to off-base housing are determined by local jurisdictional laws. As of 1 June 2009, the 17th Training Wing had 98 on-base units currently being occupied or renovated and another 143 units under construction both on and off-base. This review was part of a centrally directed audit to determine whether Air Force personnel effectively managed privatized housing fire and police services. Specifically, at the 17th Training Wing, we determined whether wing personnel: Performed services in accordance with laws, provisions, and requirements. Accurately computed reimbursements. Effectively processed, billed, and collected appropriate reimbursements. CONCLUSIONS Wing personnel can improve the management over privatized housing fire and police services. Although fire and police services were provided in accordance with lease provisions and requirements, other problems were identified. Specifically, wing personnel did not: Accurately compute or substantiate fire and police reimbursements. For example, computational errors included incorrect usage of personnel pay scales and mileage discrepancies. Inaccurate or unsupported reimbursement calculations could lead to incorrect billing to the property manager and expose the Air Force to legal ramifications. (Tab A, page 1) Effectively process, bill and collect reimbursements totaling $957. Improper billing, collection, and recording of reimbursements violates lease provisions and fiscal law. (Tab B, page 3) i

3 Executive Summary RECOMMENDATIONS MANAGEMENT CORRECTIVE ACTIONS MANAGEMENT S RESPONSE We made four recommendations to improve the management over privatized housing fire and police services reimbursements. (Reference the individual tabs for specific recommendations.) During the audit, wing personnel established an asset management team to coordinate the privatized housing management process. (Tab A, page 2) Management officials agreed with the audit results and concurred with the issues as presented in the report. CURTIS W. BIRDSONG Team Chief, Dyess AFB STEPHEN D. PAGE Chief, Southwest Area Audit Office ii

4 Table of Contents Page EXECUTIVE SUMMARY i TAB A Reimbursement Calculations 1 B Financial Reimbursement Process 3 APPENDIX I Audit Scope and Prior Audit Coverage 6 II Points of Contact and Final Report Distribution 8

5 Tab A Reimbursement Calculations BACKGROUND Private sector property managers must reimburse the Air Force for fire and police services provided for on-base, privatized housing. These reimbursement amounts are calculated from methodologies or formulas provided by the Air Force Center for Engineering and the Environment (AFCEE). Wing personnel are required to gather installation specific information and update reimbursement costs annually. The housing asset manager is responsible for providing oversight of this calculation process which includes the formation of an asset management team 1 and retention of supporting documentation to validate the calculation source information. AUDIT RESULTS 1 FIRE AND POLICE COST CALCULATIONS Condition. Installation personnel did not compute reimbursements in accordance with approved methodologies. For example: Fire Reimbursement: The Fiscal Year (FY) 2008 and 2009 fire calculations used incorrect personnel cost in the reimbursement formula. As a result, the property manager was overcharged $148 and $295 respectively. Additionally, fire personnel could not validate the source information used for both FY 2008 and FY 2009 calculations. Police Reimbursement: The FY 2009 police computation contained an error using an incorrect mileage calculation. Also, security forces personnel could not validate the source information used in the FY 2008 and FY 2009 reimbursement calculations. Cause. This condition occurred because: The installation housing asset manager did not provide adequate oversight over the reimbursement process. Specifically, wing personnel did not: o Establish an asset management team which included all the departments responsible for the police and fire reimbursement process. o Properly review police and fire reimbursements for accuracy. o Maintain supporting documentation to validate source information used for the annual fire and police reimbursements. 1 The asset management team is comprised of fire and security forces staff who calculate the annual reimbursements, financial personnel who bill and collect the reimbursements, and housing personnel who provide oversight of the reimbursement program. 1

6 Tab A Reimbursement Calculations AFCEE did not supply adequate guidance and training to address the methodology for calculating fire and police reimbursements Impact. Incorrect or unsupported reimbursement calculations lead to property manager billing errors and could expose the Air Force to legal ramifications. Audit Comment. The need for AFCEE to provide more guidance and training was forwarded to the audit control point for possible inclusion in the Air Force report of audit. Accordingly, no recommendations regarding this issue were necessary. Corrective Action. During the audit, wing personnel established an asset management team to coordinate the privatized housing fire and police reimbursement process. Recommendations. The 17th Civil Engineering Squadron Commander should direct the housing asset manager: Recommendation A.1. Review all future fire and police calculations prior to notifying the property manager of the annual calculated reimbursements. Recommendation A.2. Maintain supporting documentation for the annual fire and police calculations. Management Comments. The 17th Training Wing Vice Commander concurred with the audit results and recommendations, and stated, Recommendation A.1. Concur. The housing office established an asset management team to coordinate the privatized housing fire and police reimbursement. Team members include housing, fire, and security forces personnel, as well as 17th Mission Support Group Resource Advisors. The housing asset manager leads the team and will review the calculations. (CLOSED) Recommendation A.2. Concur. The housing manager now maintains hard and soft copies of supporting documentation for the annual fire and police calculations. (CLOSED) Evaluation of Management Comments. Management comments addressed the issues presented in the audit results and actions taken should correct the problems identified. 2

7 Tab B Financial Reimbursement Process BACKGROUND Installation housing personnel manage the privatized housing financial reimbursement process and notify property managers annually of revised fire and police cost as required by the lease provisions. Once the revised reimbursement notifications are made, fiscal law requires financial personnel establish respective reimbursements in the financial system. This action is accomplished by creating Miscellaneous Obligation Reimbursement Documents (MORDS), invoicing the property manager, and applying the collected funds to the correct appropriation accounts. Finally, housing personnel ensure reimbursements are timely and payments are received in accordance with the contractual agreement. AUDIT RESULTS 2 FINANCIAL REIMBURSEMENTS Condition. Installation personnel did not timely process reimbursements in accordance with lease provisions and fiscal law. Specifically, wing personnel did not: Timely bill the property manager for FY 2008 and FY 2009 fire and police reimbursements. For example; wing personnel did not bill: o Fiscal Year 2008 fire and police reimbursements until June 2008 which was 9 months after the required billing date. 2 Additionally, wing personnel did not bill and collect 4 months of FY 2008 fire service reimbursements totaling $957. o Fiscal Year 2009 reimbursements amounts until after 1 June 2009 when auditors identified the problem. Additionally, financial personnel were using the FY 2008 reimbursement amounts which would have resulted in an annual overpayment $1203, if not corrected. Provide written notice to the property manager regarding the FY 2009 reimbursement amounts. Complete the annual FY 2008 reimbursement MORDS in a timely manner which coincide with the late billing mentioned above. Did not apply reimbursements to the proper appropriation fund that originally provided the service or material. Track reimbursements which resulted in FY 2008 payments being 8 to 381 days past their due date. 2 Fiscal Year 2008 was the first year of privatized housing at Goodfellow Air Force Base. The reimbursement billing was to begin immediately after the contract was signed on 5 October

8 Tab B Financial Reimbursement Process Cause. This condition occurred because: Installation housing personnel did not provide effective oversight of the reimbursement process to ensure fire and police billings were executed in accordance with lease provisions and Air Force guidance. AFCEE did not supply adequate guidance and training to installation personnel on lease provisions or reimbursement billing process to include items such as: o Standardizing project management billing procedures. o Identifying correct appropriation accounts to properly apply reimbursement payments. o Managing late payments. Impact. Improperly billing, collection, and recording of reimbursements violates contractual agreements, fiscal law, and reduces funds payable for police and fire services rendered. Audit Comment. The need for AFCEE to provide additional guidance and training, which was addressed in Tab A, will be forwarded to the audit control point for possible inclusion in the Air Force report of audit. Recommendations. The 17th Civil Engineering Squadron Commander should direct the housing asset manager to: Recommendation B.1. Coordinate with financial personnel to collect the remaining FY 2008 fire reimbursement and correct the FY 2009 fire and police billing amounts. Recommendation B.2. Develop and implement procedures to provide oversight of the reimbursement process. Management Comments. The 17th Training Wing Vice Commander concurred with the audit results and recommendations, and stated, Recommendation B.1. Concur. The housing asset manager has coordinated with all financial personnel to collect the remaining FY 2008 reimbursements. In addition, the housing manager and financial personnel are working with the Defense Finance and Accounting Service to correct and collect the FY 2009 reimbursements. Estimated completion date: 30 September

9 Tab B Financial Reimbursement Process Recommendation B.2. Concur. The housing manager has developed and implemented procedures for oversight of the reimbursement process. Once the asset management team completes annual calculations, they are forwarded to AFCEE for review. On 1 September 2009, the FY 2010 billing amounts were forwarded to the property manager, fire, security forces, and the 17th Civil Engineering Resource Advisor. The Resource Advisor processes billings on the first of each month with copies provided to housing and the property manager. The Resource Advisor will check the daily reports to ensure payments are made. (CLOSED) Evaluation of Management Comments. Management comments addressed the issues presented in the audit results and actions taken or planned should correct the problems identified. 5

10 Audit Scope and Prior Audit Coverage AUDIT SCOPE Audit Coverage. To evaluate the privatized housing fire and police reimbursement program, we reviewed documentation dated from October 2007 to July To obtain an understanding of the management control structure, we reviewed regulatory guidance and interviewed installation personnel. We conducted audit fieldwork from June to July 2009 and issued management a draft report on 18 August To determine whether personnel accurately calculated fire and police reimbursements, we obtained the 5 October 2007 Goodfellow Lease of Property agreement and verified if fire and police services were provided to privatized housing. We then compared the installation FY 2008 and FY 2009 fire and police reimbursement calculations to approved methodologies. We interviewed installation personnel to determine how they formulated the calculations and if they had supporting documentation to substantiate the calculated amounts. To determine whether personnel managed the financial aspect of the reimbursement process, we examined records to determine if the property manager was notified of the annual reimbursement amounts. We reviewed records and interviewed financial personnel to determine if proper financial records were established, the property manager was billed the correct reimbursement amounts, and payments were applied to the correct appropriations accounts. We interviewed housing personnel to determine if they were tracking payments to ensure the property manager was paying according to the lease agreement. To determine whether personnel performed fire and police services in accordance with requirements, we examined the 5 October 2007 Goodfellow Lease of Property agreement to determine the levels of fire and police services required. We interviewed fire and police security forces personnel to determine if they had been involved in the initial privatization process and were aware of the services they were required to provide to privatized housing. Through discussions with personnel and an examination of documents, we determined if fire and security forces had agreements with local government to determine jurisdictional responsibilities for privatized housing. We interviewed personnel to determine if they were aware of an installation privatized housing asset management team, and if so, did they have members on the team. Sampling and Computer-Assisted Auditing Tools and Techniques. We did not use statistical or judgmental samples or computer-assisted auditing tools and techniques to analyze data or project results in this audit. Data Reliability. During the audit we relied on information from the Commander s Resource Integration System. We did not evaluate the system s general and application controls; however, we did establish the data s reliability by comparing the data to available manual records. We determined the data was sufficiently reliable to support the audit conclusions. 6 Appendix I

11 Audit Scope and Prior Audit Coverage Auditing Standards. We conducted this audit in accordance with generally accepted government auditing standards. We included tests of key internal controls over the privatized housing fire and police reimbursement program to include oversight, data validation, and record keeping. These tests were concentrated on reimbursement calculations, financial aspects of the reimbursement process, and jurisdictional coordination of fire and police services provided to off-base privatized housing. Discussion with Responsible Officials. We discussed/coordinated this report with 17th Training Wing Vice Commander, 17th Civil Engineering Squadron Commander, and other interested officials. We advised management this audit was part of an Air Force-wide evaluation on Privatized Housing Fire and Police Reimbursements (Project F2009-FD ). Therefore, selected data not reflected in this report, as well as data contained herein, may be included in a related Air Force report of audit. Management s formal comments were received on 11 September 2009 and are included in this report. PRIOR AUDIT COVERAGE A review of audit files and contact with the base focal point disclosed no other audit report issued to the 17th Training Wing within the last 5 years by any audit agency that related to this audit objective. 7 Appendix I

12 Points of Contact and Final Report Distribution POINTS OF CONTACT Southwest Area Audit Office 4475 England Ave, Bldg 20, Ste 150 Nellis AFB NV Mr. Stephen D. Page DSN Commercial (702) Mr. Curtis Birdsong, Team Chief Mr. Kevin W. Cooper, Auditor-in-Charge FINAL REPORT DISTRIBUTION AETC/CC/IGIX/FMP 17 TRSS/TSRM 17 CPTS/FMA AFOSI, Det 408 PROJECT NUMBER We accomplished this audit under project number F2009-FD FREEDOM OF INFORMATION ACT The disclosure/denial authority prescribed in AFPD 65-3 will make all decisions relative to the release of this report to the public. 8 Appendix II