UCLA AUDIT & ADVISORY SERVICES

CONFIDENTIAL
10920 Wilshire Boulevard, Suite 700
CONFIDENTIAL
Los Angeles, California 90024-1366

Edwin D. Pierce, CPA, CFE

Director

310 794-6110
Fax: 310 794-8536

January 30, 2012

VICE CHANCELLOR STEVEN A. OLSEN
SENIOR VICE PRESIDENT/CHIEF COMPLIANCE & AUDIT OFFICER SHERYL VACCA:
Re:

Facilities Management Maintenance & Alterations General Operations Audit Report

#12-2002

Enclosed is the report for our audit of the Maintenance & Alterations (M&A) divisions general
operations functions within the Facilities Management (FM) department. Managements responses are
incorporated in the report. The purpose of the audit was to review and evaluate M&A division practices
related to employee time and attendance reporting, purchasing process, employee training and
documentation.
The scope of the audit included evaluations of division practices and procedures for monitoring and
documenting employee attendance, approving and recording employee leave, and ensuring the accuracy
of employee attendance data in the departmental automated system (Kronos). Purchasing procedures
were reviewed to evaluate authorization controls and documentation practices. Invoice and purchase
order aging reports were examined to evaluate monitoring effectiveness. Training records and practices
were reviewed to evaluate procedures for determining the adequacy of the training provided, and how
training participation is documented.
Based on the results of the work performed within the scope of the audit, the M&A division's systems of
internal controls over employee time and attendance reporting, purchasing, and employee training are
generally adequate and conducive to achieving its business objectives. There are, however, some
procedures that should be implemented or amended to ensure that controls consistently function as
intended. Specifically, management should review and strengthen existing procedures that relate to
monitoring purchase invoice status so that any items placed on hold or incomplete can be addressed
promptly and resolved; enhance oversight capabilities of staff through enabling or expanding access to
university Online Financial System Reports (OFSRs) and other online tools; coordinate with Facilities
Management Purchasing staff to review all open and unresolved orders and determine whether the goods
were ever received and, if so, whether or not the vendor was paid; and reinforce to supervisors the
importance of completely and consistently documenting employee training received by staff.
The corrective actions implemented or planned by management are satisfactory. In accordance with our
follow-up audit policy, we will conduct a review to assess implementation of the audit recommendations
approximately three months from the date of this letter.
Please contact us if we can be of further assistance.

Edwin D. Pierce, CPA, CFE

Director
cc:

J. Powazek
G. Cowling

120130-1
COR

700 Wi l sh ir e Cent er Ma i l code 136648

CONFIDENTIAL

FACILITIES MANAGEMENT
MAINTENANCE & ALTERATIONS
GENERAL OPERATIONS
AUDIT REPORT #12-2002

Audit & Advisory Services

January 2012

FACILITIES MANAGEMENT
MAINTENANCE & ALTERATIONS
GENERAL OPERATIONS
AUDIT REPORT #12-2002

Background

In accordance with the Administration audit plan, Audit & Advisory Services (A&AS)
conducted an audit of internal controls and related procedures over employee time and
attendance reporting, purchasing process, and employee training within the
Maintenance & Alterations (M&A) division of the Facilities Management department.

M&A is comprised of the Custodial Services unit (north and south zones), 11 trade
shops consisting of skilled and semi-skilled trades-people responsible for the
maintenance and repair of University facilities, Hospital Zone crew, night crew, and an
Administrative unit. Custodial Services provides support for the campus 12 million
square feet and maintains all areas of the university, including specialized areas such
as vivaria, recreational facilities, wet and dry laboratories and patient care areas.
Support is also provided for special events and emergency response. On a recharge
basis, M&A also provides a variety of trades-related services. These include minor
construction, refurbishment and alterations up to $50,000, key and sign production,
custom furniture making and refinishing, and repair and maintenance of University
Health Science medical facilities.

For fiscal year 2010-11, the M&A division had expenditures of about $6 million and
recharge activity of about $5.5 million. As of August 2011, M&A reported 739.5 filled
positions, the majority of which are allocated to the Custodial Services unit (356
positions or 48.1%). (See Table 1)

Allocation of Filled Positions by Unit

As of August 2011
Table 1
# of
Positions

Unit / Shop

% of
Positions

Custodial Services

356.0

48.1%

Electrical / Elevator

111.0

15.0%

Carpentry / Sheet Metal

69.0

9.3%

Paint / Mason / Roofing / Sign

67.1

9.2%

Plumbing

55.0

7.4%

Hospital Zone

28.0

3.8%

Flooring / Night Crew

22.0

3.0%

Administrative Unit

20.2

2.7%

Hardware

11.3

1.5%

739.5

100.0%

Total

Purpose and Scope

The purpose of the audit was to review and evaluate M&A division practices related to
employee time and attendance reporting, purchasing process, employee training and
documentation.

The scope of the audit included evaluations of division practices and procedures for
monitoring and documenting employee attendance, approving and recording employee
leave, and ensuring the accuracy of employee attendance data in the departmental
automated system (Kronos).

Purchasing procedures were reviewed to evaluate

authorization controls and documentation practices. Invoice and purchase order aging
reports were examined to evaluate monitoring effectiveness.

Training records and

practices were reviewed to evaluate procedures for determining the adequacy of the
training provided, and how training participation is documented.

The review was performed in accordance with generally accepted auditing standards
and included tests of records and other auditing procedures considered necessary to
achieve the audit purpose.

Summary Opinion

Based on the results of the work performed within the scope of the audit, the M&A
division's systems of internal controls over employee time and attendance reporting,
purchasing, and employee training are generally adequate and conducive to achieving
its business objectives.

There are, however, some procedures that should be

implemented or amended to ensure that controls consistently function as intended.

Specifically, management should review and strengthen existing procedures that relate
to monitoring purchase invoice status so that any items placed on hold or incomplete
can be addressed promptly and resolved; enhance oversight capabilities of staff through
enabling or expanding access to university Online Financial System Reports (OFSRs)
and other online tools; coordinate with Facilities Management Purchasing staff to review
all open and unresolved orders and determine whether the goods were ever received
and, if so, whether or not the vendor was paid; and reinforce to supervisors the
importance of completely and consistently documenting employee training received by
staff.

The results of the audit and corresponding recommendations follow.

Audit Results and Recommendations

Time and Attendance Controls

Discussions were conducted with M&A personnel and other Facilities Management
managers and staff to identify the procedures used to monitor their employees' time and
attendance, including approval process and documentation requirements for vacation
and sick leave. Staffing reports were reviewed to determine the employee composition
of the division and assess supervisory coverage; employee leave documents were
reviewed and tested, on a sample basis; and Kronos access and edit controls were
reviewed to evaluate their adequacy for ensuring that employee time data is complete
and accurate.

No significant control concerns were found in this area.

Purchasing Process and Controls

M&A and Materiel Management unit personnel were interviewed and purchasing
records were reviewed to evaluate purchasing authorization controls, and to identify
purchase volume, vendor, and types of items being purchased. This included analysis
of university Online Financial System Reports (OFSRs) to identify any unresolved,
unpaid, or pending M&A division purchase invoices or orders. In addition, a review of
Post-Authorization Notification (PAN) activity was performed to identify outstanding
notifications and evaluate the timeliness of reviewer response.

A. Procedures for monitoring invoice processing need improvement

Using the UCLA OFSRs, A&AS generated Invoice Status reports for the two
department codes used by the M&A division 3415 (Maintenance & Alterations) and
3425 (Custodial Services) to identify and review possible open and unresolved
invoices on hold or incomplete (H or I) status. The transactions on H or I status
represent unresolved items or payments and reimbursements that are being delayed
4

for a variety of reasons, such as the purchase order was incorrect or already closed,
the order was not posted properly or at all, receiving was not completed on the
order, etc.

As of September 13, 2011, the M&A division had 149 unpaid invoices for a total of
$109,175.

Of these, department code 3415 had 111 (74%) of the invoices for

$85,138, and department code 3425 had 38 invoices (26%) for $24,037 of
unresolved payments.

For Maintenance & Alterations (dept. 3415), the average open invoice amount was
$767 per invoice. The number of days that invoices have been in H or I status (the
invoice creation date counting up to our review date) varied from a low of 4 days to a
high of 2,830 days (nearly 8 years). The average number of days that invoices have
been in an open status is 410 days (about 13 months).

For Custodial Services (dept. 3425), the average open invoice amount was $633 per
invoice. The number of days that invoices have been in H or I status varied from a
low of 286 days to a high of 2,681 days (about 7.5 years). The average number of
days that invoices have been in open status is 1,425 days (nearly 4 years).

Recommendation: Management should review and strengthen existing procedures

that relate to monitoring purchase invoice status so that any items placed on hold
or incomplete can be addressed promptly and university vendors and suppliers can
be paid timely. In addition, if key M&A personnel do not currently have access to
view OFSRs for invoice monitoring purposes, management should consider enabling
access to pertinent OFSRs, and expanding access to other relevant online tools, to
enhance the oversight capabilities of staff.

Response:

We concur.

M&A Management will work closely with Facilities

Management Accounting Department to resolve unpaid invoices in particular those

that are on H&I status. They will meet on a monthly basis (or sooner) to address
unresolved issues regarding invoices. Currently, Chief Operating Officer is working
5

with Facilities Management Finance and Information Systems Director and

Principal Administrative Analyst - Accounting to improve invoice processing and
communication between both departments. Additionally, we look forward to the final
roll-out of the Bruin Buy interface which will aid in resolving H& I issues on a more
timely basis.

B. Purchase orders not closed timely

Using the UCLA OFSRs, A&AS generated hold or in-progress (H or I)
Order Status reports for department codes 3415 (M&A) and 3425 (Custodial
Services), as of September 13, 2011, to identify and review possible open and
unresolved purchase orders. Purchase orders are placed on H or I status generally
due to a mismatch that is created when a vendor invoices the university following a
purchase transaction, but because the purchase order has not yet been posted to
BruinBuy, the invoice and purchase cannot be paired together to allow the vendor
payment to be made.
From the OFSRs, we reviewed each department codes activity and identified nine
open orders for department code 3415 and 13 open orders for department code
3425. The amount of time elapsed for "in-progress" orders for department code
3415 varied from a low of 49 days to a high of 3,107 days (about 8.5 years). The
average time elapsed for these nine open orders is 751 days (about 2 years). For
department code 3425, the average number of days elapsed in an open status
varied from a low of 816 (2-years, 3-months) days to a high of 6,265 days (about 17
years). The average elapsed time for these 13 open orders is 3,950 days (nearly 11
years).

Recommendation:

Management should coordinate with Facilities Management

Purchasing staff to review all open and unresolved orders and determine whether
the goods were ever received and, if so, whether or not the vendor was paid. For
those especially dated orders (more than 6 months old), M&A personnel should
request that Facilities Purchasing staff close out the orders so they no longer appear
6

on university financial records in "open" status. Going forward, management should

determine the best method to ensure that adequate attention and oversight is given
to M&A-initiated purchase orders throughout their life cycle, up to and including
payment and timely closure.

Response: We concur. M&A administration will run an H & I Invoice Report on a

monthly basis and will work proactively with Facilities Management Purchasing to
monitor M&A initiated purchase orders throughout their life cycle and to ensure
timely invoice payment.

Additionally, Chief Operating Officer will meet on a bi-

weekly basis with Purchasing staff to resolve issues. The current process is being
evaluated to improve communication between both departments. Supervisors and
superintendents will work with Purchasing to close and/or clear pending POs on an
ongoing basis.

Employee Training

Training practices were discussed with M&A personnel to assess procedures for
ensuring that training needs are being met and that training is adequately documented.
In addition, a sample of training documents from 10 training classes from fiscal year
2010-11 were reviewed to identify training topics provided, employee attendance, and
whether documentation was completed.

A. Training documentation not consistently completed

M&A supervisors are not ensuring that employee attendance for training sessions is
completely and consistently documented. As a general procedure prescribed for all
Facilities Management divisions, each employee scheduled to attend a training
session is listed on the sessions training roster and is required to sign the roster to
document their attendance.

Division supervisors are expected to verify that

attendees sign in and also to note explanations on the roster for any scheduled
attendees who did not participate.

A&AS obtained and tested a sample of 10 employee training class documents from
the following periods: January 4, 2011 (two classes); January 13, 2011; February 2,
2011; March 5, 2011; April 6, 2011; May 25, 2011; June 8, 2011; June 20, 2011; and
June 22, 2011.

Based on our review, we noted that of the 295 possible

opportunities for employees to sign-in (indicating either present or absent with an

explanation), 38 separate instances (13%) were identified where the employee's
attendance was not clearly documented. For the 10 training documents, exception
percentages varied from 0% (all sign-ins completed) in three classes, to another four
classes that exceeded 20% of their sign-ins without proper notations. The highest
exception level was noted in one class with 9 of 27 (33%) sign-ins left blank.

Without an employee signature or clear explanation of absence, proof of whether a

particular training course was attended would become increasingly questionable
over time. As a prerequisite to additional or changing job responsibilities, possible
use in a workers compensation claim or legal proceeding, management should have
a comfort level that training documents are completely and consistently filled out by
their staff.

Recommendation: Management should take appropriate measures to ensure that

all supervisory staff, and those with training responsibilities, fully understand and
consistently comply with Facilities Management department practice to have
attendees sign the training session roster and/or annotate the roster with an
explanation for those employees who were scheduled to attend, but missed the
session.

Response: We concur. Director and Chief Operating Officer will work with
supervisory staff and outline their responsibilities in regards to completing paperwork
including having staff sign-in to the trainings and fill in the blanks left when
employees are not at the training. For example, if an employee is on vacation, the
sign-in sheet will include a note specifying it. Additionally, when possible, copies of
materials will be kept with the signatures to reference as necessary.

Maintenance Kb02

111123-3
REP