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HomeMy WebLinkAbout2002-10-22; City Council; 16943; Budget Amendment Add Position In Finance DeptCITY OF CARLSBAD -AGENDA BILL &b AB# 16, 943 TITLE: AMEND THE BUDGET TO ADD ONE DEPT HD.t&%& MTG. 10/22/02 DEPT. FIN CITY ATTY. POSITION IN THE FINANCE DEPARTMENT RECOMMENDED ACTION: Adopt Resolution No. 2002-314 amending the 2002/03 budget to add one Management Analyst position in the Finance Department. ITEM DESCRIPTION: Staff is requesting the addition of a Management Analyst position in the Finance Department to accommodate workload increases as well as to implement a new program that will strengthen the financial health of the City. The position will provide support for budget analysis and preparation during approximately five to six months of the year and will perform internal audits during the remaining portion of the year. Internal Audit Needs Last year, a risk analysis was performed to determine the need for internal audits and to determine the areas most at risk. The decentralization of many decisions and responsibilities for financial transactions has placed a greater reliance on internal controls to identify any irregularities in the transactions. The requested position will establish a program whereby these controls are tested to ensure that they are working, and will create awareness throughout the City of the importance of the controls and the responsibilities of the managers. Without doing any internal audit work, we run the risk of failing to identify ineffective internal controls that would put the City at a higher risk of inaccurate data and possible fraud. Another benefit from the internal audit function is the identification of process improvements that may either strengthen the internal controls and/or save time and money for the City. The table in Exhibit 2 identifies the key areas in which the internal audit program would initially focus. Workload Increase As the City has grown, the Finance Department has found it more difficult to complete the preparation and analysis of the budget on time. During the period from 1991 to the present, the City's operating budget has increased loo%, and the total capital budget has increased 60%. In the same time period, City staff has grown by 40%. In contrast, there has been no increase in the number of positions allocated for budget review and analysis in the Finance Department. This has been possible by implementing technology solutions, contracting out certain tasks, and reorganizing work. We have now reached the point where fewer opportunities to use these types of solutions exist. Additional assistance is needed in the budget development area to ensure that an adequate level of review and analysis is performed. More information on the needs for this position can be found in the attached Exhibit 2. FISCAL IMPACT: Normally this request would have been included in next year's (2003104) budget. However, the Senior Accountant responsible for the Operating Budget will begin maternity leave toward the end of this calendar year and is expected to be away for about 4% months. In addition, one other Finance manager (Revenue Manager) will also be on maternity leave at approximately the same time. Thus, adding this position now would provide the added benefit of having an additional position available while two of the Finance managers are on maternity leave. Page 2 of Agenda Bill # 16,943 A Management Analyst position falls within Range 4 of the Management Compensation Plan, with a salary range of $53,700 to $73,700. Including benefits, the total annual cost for the position is estimated at $73,000 (mid-range). Funding for the position will come from the Finance Department budget. No additional appropriations are required. 1. Resolution N02002-314 amending the budget to add one Management Analyst position in the .2. Exhibit 2 - Memorandum from the Finance Director to the Administrative Services Director dated Finance Department. September 26,2002. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 2002-314 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, TO AMEND THE BUDGET TO ADD ONE MANAGEMENT ANALYST POSITION IN THE FINANCE DEPARTMENT WHEREAS, the Finance Department has reviewed its personnel needs based on current workload; and WHEREAS, staff recommends adding one Management Analyst position to the Finance Department’s allocation to match workload needs and to enhance the internal controls of the City of Carlsbad. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Council hereby amends the 2002/03 budget to add one additional position in the Finance Department. PASSED, APPROVED, AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 22nd day of OCTOBER ,2002, by the following vote: AYES: Council Members Lewis, Kulchin, Finnila, Nygaard, Hall NOES: None ATTEST: (SEAL) September 26, 2002 TO: ADMINISTRATIVE SERVI FROM: FINANCE DIRECTOR CES DIRE CT OR RE: POSITION REQUEST - MANAGEMENT ANALYST I am requesting approval of a new position in the Finance department. The position is for a management analyst that will provide additional support for the budget analysis and preparation during approximately 5 to 6 months of the year and will perform internal audits during the remaining portion of the year. Thus, the position is being requested partly to accommodate the normal workload increases of a growing city as well as to implement a new program that we believe will strengthen the financial health of the City Normally this request would have come in with next year's (03-04's) budget. However, the Senior Accountant responsible for the Operating Budget will begin maternity leave some time near the end of this calendar year and is expected to be gone for about 4% months. In addition, one other Finance manager (Revenue Manager) will also be on maternity leave at approximately the same time. Thus, adding this position now would provide the added benefit of having an additional position available while two of our staff are out on maternity leave. Internal Audit Needs Last year, a risk analysis was performed to determine the need for internal audits and to determine the areas that were most at risk. The decentralization of many of the decisions and responsibilities for financial transactions has placed a greater reliance on internal controls to identify any irregularities in the transactions. The requested position will establish a program whereby these controls are tested to insure that they are working and to create awareness throughout the City of the importance of the controls and the responsibilities of the managers. Without doing any internal audit work, we run the risk of not identifying ineffective internal controls which would put the City at a higher risk of inaccurate data and possible fraud. Another benefit from the internal audit function is the identification of process improvements that may either strengthen the internal controls and/or save time and money for the City. The table to the right identifies the key areas in which the internal audit program would focus initially. POTENTIAL AUDIT AREAS Indudes estimate of hours HOURS ACCOUNTS PAYABLE 1. Verify and test controls over payments 0 Authorizations 0 Duplicate payments 2. Credit Card usage and authorization 3. Travel Claims 4. Tuition Reimbursement PAYROLL CYCLE 1. Review of controls over payroll cycle 0 Housekeeping 0 Benefits 0 Timecard authorizations 0 Overpayments and underpayments 2. Existence of part time workers 3. Review of administration of Flex spending accounts 4. Overtime 5. Leave of absence payments 6. Analysis of sick leave used CASH RECEIPTS/DEPOSITS PURCHASING CYCLE DEVELOPMENT PERMIT PAYMENTS AND REFUNDS VEHICLE MAINTENANCE (usage of fuel and equipment) SURPLUS PROPERTY AFFORDABLE HOUSING PROJECTS FACILITY RENTAL CONTRACTS DONATION ACCOUNTS RECREATION CASH TRANSACTIONS VERIFICATION OF FIXED ASSETS (2 depts per year) CAPITAL PROJECT EXPENSE REVIEW (per project) OTHER AREAS 0 Cash losses/thefts (as they come up) 80 40 40 40 80 25 80 80 40 40 80 80 120* 80 25 105 25 25 20 80 tbd ao 4 Contracting Option If the position is not approved, we may still be able to do some audits with contract personnel; although, the costs will be higher and we will not have the benefit of someone to assist in the budget work as described below. In addition, unless the same person in the contracting firm is available year after year, we would lose the knowledge gained and need to re-train each year. Internal auditing requires a better understanding of the entity than financial auditing (such as our independent auditors do) in that the individual performing the audit must first document and understand the systems before they are able to audit that system. Workload Increase During the period from 1991 to today, the City's operating budget* has increased 100% and the total capital budget* has increased 60%. In the same time, the City staff has grown by 40%. In contrast, the number of positions in the Finance department has remained stable throughout the same time period. We have managed this by implementing technology solutions, contracting out certain tasks, and reorganizing work. However, there are now fewer opportunities left to use these types of solutions. As the City has grown, we have found it more difficult to complete the preparation and analysis of the budget in the time given. Without additional assistance in the budget development area, the level of review and analysis on the operating budget will decline. As a result, other options that may need to be considered include beginning the budget process sooner and requiring the departments to turn in their budgets earlier, doing less analysis, having the Finance director do more of the analysis, (in which case other responsibilities would need to be reassigned or dropped) and/or cutting down the review time for the LT. Contracting for budget analysis is difficult due to the need to have an individual who is familiar with the city structure and processes as well as with basic accounting and analysis techniques. Contracting from CPA firms (who may have the skills) is also very expensive. Part time and temporary workers with the skills needed for these types of assignments are difficult to find and difficult to hold on to. Re-training each year is an issue. We have tried "borrowing" staff over the past few years and have found that they typically increase the workload due to training requirements rather than decreasing it. More information can be found in the attached staffing analysis. Thank you for considering our request. Lisa Hildabrand *Budget dollars are an indication of workload impacts as they correlate with number of accounts payable and accounting transactions as well as a loose correlation to the amount of budgets submitted for analysis and compilation. Positions indicate payroll transactions and internal customers.