City Needs to Improve Oversight, Consistency in Use of Travel Expenses
Published on October 28, 2020
Haga clic para español
DENVER – When city employees travel on city business, some employees are not following correct expense procedures and some may have been reimbursed too much or too little, according to an audit this month from Denver Auditor Timothy M. O’Brien, CPA.
“Although we did not find evidence of intentional wrongdoing, we need to ensure the city’s Fiscal Accountability Rules are updated and followed to avoid the misuse of public funds,” Auditor O’Brien said.
Traveling on official business means travel required to fulfill an employee’s job responsibilities or to improve performance of city operations. From January 2018 through March 2020, the City and County of Denver spent more than $13.7 million on employee travel. In March 2020, employee travel dropped off significantly due to the COVID-19 pandemic.
Our audit team found errors in expense reporting, outdated and inefficient use of paper forms, a lack of training for expense procedures for employees who travel, and inconsistent application of reimbursement policies.
When we reviewed a sample of transactions, we found issues involving missing supporting documentation and instances of noncompliance with the travel process. We found invalid expenses for noncity employees, missing conference brochures and supporting documentation, late expense reports, insufficient explanations for the reason for travel, and missing evidence that the travel was preapproved.
We found the Denver Fire Department does not use the city’s financial management system of record, Workday, to calculate per diem amounts. Denver firefighters travel to other cities and states to help fight wildfires. We found the inconsistent application of per diem rates led to some firefighters being underpaid for reimbursements. In one example we looked at, a firefighter on a wildland firefighting operation was reimbursed $342.50 less than another city employee would have been for staying in the Phoenix area.
This happened because per diem rates are typically calculated based on national standards that depend on the trip destination. More expensive cities have higher per diem rates than less expensive cities. There is also a standard rate for cities without specific rates. This standard rate will always be lower than the rate for a city with its own rate calculation.
The fire department has its own internal policy to always use the standard rate for fire fighters that are sent out to fight wildfires, and staff were manually entering that rate into Workday as actual expenses without receipts, instead of using the system’s ability to automatically calculate per diem rates. No city agency should circumvent automatic controls, which tend to be more reliable and efficient.
We also found the city does not have a comprehensive communications strategy to train and update employees who travel, so employees have a complete understanding of expense policies and how to enter expenses into Workday. Without a comprehensive communications strategy, the city cannot ensure employees are aware of travel rules and requirements.
“The city must apply expense policies and procedures equitably across the city, and employees who travel should know the rules before they leave town,” Auditor O’Brien said.
The city could also improve its process for canceling travel credit cards after employees leave employment with the city. Travel cards are city-issued credit cards for individual employees that can be used instead of using personal cash or an employee’s personal credit card. Travel cards can provide discounts to the city for airlines, as well as hotels and rental car companies.
We found instances when travel cards had not been canceled two years or more after an employee left. We did not find evidence of inappropriate purchases on the cards, but leaving cards open increases the risk taxpayer funds could be misused.
Overall, the city needs to update the outdated Fiscal Accountability Rule that governs travel. The rule has not been updated since 2013, and current practice does not match the rule. We also found evidence of agencies continuing to use outdated paper forms and manual spreadsheets, and they are inconsistently using automated functions for expense and travel approvals. The city uses Workday for these functions, and city leaders say they plan to take old forms off the city website.
The city needs to better monitor compliance with the travel rules. By failing to systematically monitor compliance, agencies may fail to preapprove travel, process improper travel expenditures and reimburse employees for them, misclassify expenses, and for fail to submit and reimburse expenses in a timely manner.
“Travel for the city is low right now,” Auditor O’Brien said. “So now is a good time to do some housekeeping and make sure employees are informed and ready to use the city’s expense policies and procedures correctly when COVID-related travel restrictions end.”
The Department of Finance agreed to all 11 of our recommendations to improve financial accountability and monitoring of employee travel expenses.
Read the Audit(PDF, 3MB)