audit of the lawa's management controls over its home-garaged & pool vehicles

7/28/2019 Audit of the LAWA's management controls over its home-garaged & pool vehicles

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June 21, 2013

Wendy Greuel

City Controller

City of Los Angeles

Office of the Controller

AUDIT OF LAWAS MANAGEMENTCONTROLS OVER ITS

HOME-GARAGED & POOL VEHICLES


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EXECUTIVE SUMMARY........................................................................................................ 1

CONTROLLERSACCOUNTABILITY PLAN.............................................................................. 8

BACKGROUND,OBJECTIVES,SCOPEAND METHODOLOGY ................................................. 12

AUDIT FINDINGS AND RECOMMENDATIONS ........................................................................ 14

SECTION I:HOME-GARAGED VEHICLES............................................................................. 14

SECTION II: VEHICLESASSIGNED TO CENTRAL POOLS AND LAWADIVISIONS .................... 21

SECTION III: CROSS-CUTTING ISSUES .............................................................................. 29

APPENDIXA .................................................................................................................... 32

TABLE OF CONTENTS


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AUDIT OF LAWAS MANAGEMENT CONTROLSOVER ITS HOME-GARAGEDAND POOL VEHICLES

EXECUTIVE SUMMARY

The Controllers Office conducted an audit of the Los Angeles World Airports (LAWA)Management Controls over its Home-Garaged and Pool Vehicles. The primaryobjective of this audit was to assess LAWAs management controls over theassignment, usage, and monitoring of fleet vehicles assigned to Central Pools andLAWA Divisions, as well as those assigned to specific individuals with authorization forhome-garaging. We also evaluated the Departments fleet management practices to

identify opportunities to improvement.

LAWA maintains a fleet of over 1,400 items including cars, trucks, motorcycles, andheavy equipment. This audit focused on light duty sedans, trucks, vans, andmotorcycles that are maintained by LAWA, as categorized below:

No. of VehiclesHome-Garaged Vehicles 84Central Pool Vehicles 81Vehicles Assigned to Divisions 651Vehicles Assigned to Airport Police 213

Total 1,029

We focused our review on LAWAs passenger vehicles (e.g., light duty sedans, trucksand vans) that are being used to perform critical functions and support services in theareas of administration, airport operations, grounds and facility maintenance,engineering and construction, and security and law enforcement.

This performance audit was performed in accordance with Generally AcceptedGovernment Auditing Standards and included the current control structure andprocesses used to manage LAWAs vehicle fleet, and sample transactions and activitiesfrom J uly 1, 2010 to October 31, 2012. Audit fieldwork was conducted between October2012 and J anuary 2013.

SUMMARY OFAUDIT RESULTS

Over the last two years LAWA has purchased light-duty vehicles totaling more than $2million. Additional costs are incurred for maintenance and fuel for the vehicle fleet.

1Includes all items classified as C or P based on records provided by LAWAs Facilities Management

Group as of October 18, 2012 sorted by assigned classification as noted in the fleet system. LAWAindicated these include 46 items that are not considered on-road vehicles.


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However, despite these significant expenditures, our audit found that LAWA lacks thenecessary management controls to ensure the appropriate and optimal use of itsvehicles. The Departments Facilities Management Group includes a FleetMaintenance Section, and while this section uses a robust software application to helpmanage LAWAs vehicle fleet, the groups primary focus is on maintenance and repair

activities and they have no oversight responsibility regarding the assignment or usageof LAWA vehicles. LAWA management has recognized the need for more centralizedcontrol over the vehicle fleet, and is pursuing hiring a Fleet Manager to fulfill thisfunction.

Overall, our audit found that there is inadequate centralized accountability or controlover the vehicles that are assigned to staff with authority for home-garaging and thoseallocated to LAWA Divisions and other pools. We noted that the inventory informationproduced by the fleet system was inaccurate, and LAWA has no utilization standard orprocess to evaluate the need for or best use of its existing vehicles. Divisional poolvehicles are routinely assigned to individuals, limiting their effective use by other staff,

and some employees who use their personal vehicle due to a shortage of available poolcars have been paid excessive mileage reimbursements. In addition, there isinadequate control over the vehicle replacement process.

LAWA should take immediate action to improve controls over its vehicle fleet, as well asmaximize the usage of those assets and reduce overall costs. The key findings of theaudit include the following:

HOME-GARAGED VEHICLES

o LAWA lacks centralized accountability and control over assigned take-homevehicles. Information is inadequately maintained in LAWAs centralizedlisting, and not all employees who had custody of a LAWA take-home vehiclewere properly authorized.

Though it maintains a master listing of all LAWA vehicles, the Facilities ManagementGroup, through its Fleet Maintenance Section, has little control or oversightregarding the assignment or location of vehicles; its attention has been focusedprimarily on vehicle maintenance. In addition, Airport Police Administrationmanages the assignment and location of vehicles designated as belonging to thepolice fleet.

According to the Assistant Chief of Airport Police, patrol officers drive take-homemotorcycles, officers at the rank of captain and above are assigned take-home cars,and others including K9 officers, task force members or officers in acting capacitiesmay also have home-garaged vehicles. However, our review of the existing list oftake-home authorities and interviews with several police units, demonstratedinconsistencies between what was listed, who was approved, and who actually hada take-home vehicle.


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By not having centralized control over the assignment of home-garaged vehicles,LAWA lacks assurance that all take-home cars are fully accounted for, and areactually being used for their intended purposes.

o LAWA does not have a process to ensure employees are formally approved

for the home-garaged vehicle program and that they meet the Departmentsestablished criteria.

No documentation supporting or justifying the home-garaged vehicle assignmentsfor our audit sample could be provided, either by LAWA Administration or theDivisions that requested/initiated the specific assignment. However, during ourreview the Chief Operating Officer issued a memo noting the current approved list ofemployees with home-garaging privileges (excluding Airport Police, who must beapproved by the Chief).

Management indicated that home-garaged vehicles are provided to designated

executive positions as a condition of employment. For other staff, if they areregularly subject to emergency calls at LAWA facilities, the authority for a home-garaged vehicle must be initiated and justified by the employees respective DivisionHead/Deputy Executive Director, and is subject to final approval by the COO.

Based on our evaluation of home-garaged vehicle assignments using theDepartments established criteria, we noted some exceptions. For example, a CityAttorney was assigned a take-home vehicle as a condition of employment; however,that individual is not actually a LAWA employee. Also, while some individuals havebeen called in after office hours, it has not been on a regular basis since they havefront-line supervisors positioned on-duty 24/7 and LAWA has an Airport ResponseCoordination Center that is adequately represented by staff from all key Divisions.

While it is LAWAs discretion to determine which positions are provided a home-garaged vehicle, such decisions should be supported by a consistent policy thatjustifies the assignment. LAWA should develop more clear and consistent criteriafor the home-garaged vehicle program that best meets the business needs in themost economical manner.

o Providing and maintaining home-garaged vehicles is more costly than otheralternatives.

Other than those assigned to Airport Police, LAWA provides 31 employees withtake-home vehicles, including 14 executives and 17 senior managers subject toregular emergency call. An additional eight vehicles are reserved by fleet servicesas loaners for executives when their assigned vehicle requires maintenance.

Management has indicated there is a shortage of vehicles available to Divisionpools, but there has been no formal assessment of vehicle utilization or currentassignments to Division pools or individuals with home garaging authority todetermine an appropriate allocation.


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We conducted an analysis of the costs incurred by LAWA for a sample of take-homevehicles, and found it would have been more cost effective to provide a carallowance to those employees. Applying the results of the analysis to all non-swornemployees currently approved for home-garaging results in potential annual savingsranging from $13,000 - $65,000 annually. It may also be appropriate to reduce the

number of home-garaging authorities based on the Departments criteria. LAWAhas an opportunity to reduce the costs of the program and make more cars availablefor Divisions pool use.

o The Departments home-garaging policy does not require permittees toprovide evidence of personal insurance to cover liability that may arise fromdriving a City vehicle outside of its intended use.

LAWAs current practices do not require staff with take-home vehicles to provideevidence of personal insurance that could cover their assigned City vehicle, thoughthe CAO requires this of Council-controlled City Departments.

The requirement to obtain and provide evidence of personal car insurance isintended to ensure coverage against liability that arises from driving a City vehicleoutside of its intended use for business or under circumstances where the drivercould be deemed grossly negligent. LAWAs Vehicle Policy and commercialinsurance provide coverage only for permitted persons driving a City vehicle duringthe course and scope of his/her duties. By not ensuring that employees who areassigned take home vehicles maintain appropriate personal insurance, LAWA isexposed to greater potential liability.

o LAWAs home-garaging vehicle policy should include specificity regarding theuse of the vehicles, and be formally approved by LAWAs Board.

LAWAs general vehicle policy provides that City cars are strictly for business useand cannot be used for personal purposes; however, the policy should more clearlyindicate expectations for home-garaged vehicles. In addition, the specifics ofLAWAs home-garaging program, including its purpose and benefits to theorganization, as well as who is eligible and how assignments are determined, maybe unknown to LAWAs Board.

Providing a comprehensive vehicle policy that includes specificity on the home-garaged vehicle program, as approved by LAWA Board, would help ensure thatactions by staff and management are consistent with expectations and that theprogram provides maximum benefit to the organization.

Vehicles Assigned to Central Pools and LAWA Divis ions

o LAWA does not maintain accurate and complete information of Divisional poolvehicles.


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We attempted to verify the information on LAWAs vehicle inventory listing generatedfrom their fleet system by requesting LAWA Divisions to conduct a physical count ofthe vehicles assigned to them and provide other pertinent information. We foundmultiple discrepancies; concluding that the centralized listing was not accurate orreliable regarding the location assignment or existence of LAWAs pool vehicles.

The Fleet Maintenance Section indicated that not all information related to vehicleinventory was generated by their automated system, which is primarily used to trackmaintenance work for the fleet, rather than inventory. However, a reliable inventorysystem that captures and reports accurate information is essential for effective fleetmanagement and control over moveable assets.

o Divisional pool vehicles are not utilized to maximize effectiveness, and themileage reimbursement program must be better control led.

We analyzed vehicles assigned to LAWA Divisions consisting of light duty sedans,

trucks and vans and found that a number of these vehicles are not being used tomaximize its usage and reduce overall costs.

In many Divisions, vehicles are assigned to specific individuals for their use ratherthan shared between staff working different shifts or as pool vehicles. These carsmay remain idle after the end of a shift, while some staff who are not assigned aLAWA vehicle drive their personal vehicle and claim mileage reimbursement. Overour audit period, LAWA paid $325,000 in mileage to inspection staff.

We noted that some inspection staff claimed between 30 to 70 reimbursable miles aday (equating to $300 to $700 per month) which appeared high given that staff driveno more than 15 miles a day related to their work assignments. We found that alarge portion of the reimbursed miles related to inspectors commuting miles,because they were permitted to change their headquarters location to the LAWAfacility nearest their home based on the existing practices used by the Bureau ofContract Administration of the Department of Public Works2. An employeesheadquarters should be determined by where s/he is assigned to work, consistentwith the Los Angeles Administrative Code (Article 1, Section 4.224).

We also found three employees received mileage reimbursements totaling over$27,000 during the time they were assigned a Divisional pool car that should havebeen used for their inspection activities.

o LAWA does not have adequate controls over the vehicle replacement process,or of the disposal of replaced vehicles.

The Department prioritizes replacing their aging and inoperable vehicles anddiscourages buying additional cars. Between 2010 and 2012, LAWA purchased

2The Controllers Audit of Citywide Mileage Reimbursements issued December 18, 2012 noted thisfinding at selected Council-controlled Departments, and recommended corrective action.


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approximately 47 replacement vehicles costing over $2 million and added only two.No additional justification is necessary for a vehicle replacement; which is generallydetermined based on the vehicles age, mileage, and condition.

Our audit noted purchases that should have been reported as additional and not

replacement cars, and lax controls over the replacement and disposal process, forexample:

Vehicles identified for replacement and recommended for salvage were usedmore than once to justify the purchase of a new vehicle;

Vehicles that were considered replaced by new vehicles were not salvaged,and were still being used in the Departments operations; and

The Fleet Management system did not identify whether some new vehicleswere purchased as replacement or additional vehicles.

o LAWA must strengthen procedures to ensure employees with suspendeddrivers li censes are prevented from driving vehicles on City business.

All employees who drive any vehicle on City business must possess a current andvalid drivers license. LAWA is enrolled in the DMV Employer Pull Notice (EPN)Program, which notifies the employer via email when a driver record is updated;LAWA can also request the current license status of any employee. However, theDepartment has not effectively utilized the EPN program, exposing LAWA tosignificant risk and potential liability.

From a sample of twenty, we identified two employees who drove vehicles on Citybusiness while their drivers license had been suspended. One drove a Divisionalpool vehicle and the other drove his personal vehicle for City business and receivedmileage reimbursement. While LAWAs Personnel section had been notified of bothinstances, one employee had already corrected the suspension within a few days,which was prior to Personnel becoming aware of the issue; while in the otherinstance, Personnel communicated to Division management within two weeks; but itwas not effectively or timely acted upon by the Division.

Cross-Cutting Issues

o LAWA does not assess the vehicle needs of Central pools and LAWADivisions or its home-garaged program.

The Facilities Management Division and other LAWA Divisions confirmed thatthere has been no utilization analysis done for either the home-garaged orpool/divisional vehicles, to measure the usage and efficiency of vehicles assigned.LAWA has not analyzed and therefore cannot ensure that an appropriate numberof vehicles are assigned among the Divisions, and to the home-garaged program.


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o LAWAs vehicle replacement practices do not adequately address currentneeds, reducing opportunities to purchase less expensive and fuel-efficientcars whenever feasible.

According to the Fleet Group, vehicle replacements are generally the same type

or model as the previous vehicle without consideration of a Divisions currentneeds.

Based on our review of vehicles purchased at prices up to $51,000, the majoritywere trucks assigned to the ADG-Inspection Division. The ADG-InspectionDivision has a total of 20 pool vehicles; and most of them are trucks, includingsports utility trucks, with some small sedans. ADG vehicles are assigned tospecific staff for use in their inspection activities, and half of the inspection staffdrive their private vehicles and receive mileage reimbursement.

As a variety of vehicle types could be adequate for a Divisions use, LAWA should

consider the most cost-effective options that will best meet operational needswhen buying and assigning replacement vehicles.

REVIEW OF REPORT

A draft of this report was provided to LAWA management on April 8, 2013. We held anexit conference with LAWA representatives on April 23, 2013 to discuss the contents ofthe audit report. LAWA management indicated general agreement with the reportsfindings and recommendations, and offered some clarifying information.

We considered the comments and additional documentation provided by LAWA as wefinalized this report. We would like to thank the LAWA management and staff for theirfull cooperation and assistance during the review.


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CONTROLLERSACCOUNTABILITY PLAN

Recommendations Page Mayor/CouncilAction Reqd

DepartmentAction Reqd

Section I. Home-Garaged Vehicles

1. Implement effective centralized control overthe administration of home-garagedvehicles to ensure full accountability andaccurate reporting.

15 LAWA

2. Require periodic verification of all home-garaged vehicle assignments to the centrallisting, to ensure appropriate control and

accurate reporting.

15 LAWA

3. Develop clear and consistent criteria forassigning home-garaged vehicles to ensurethat each assignment can be adequately

justified by the Citys business needs in themost economical manner.

18 LAWA

4. Ensure all home-garaged authorizations,including the recommendations for

assignments and executive managementapproval, are maintained in a centrallocation.

18 LAWA

5. Implement a process to periodically reviewhome-garaged vehicle permittees to ensurethat each permittee continues to have a

justified business need to take a LAWAvehicle home.

18 LAWA

6. Establish a process to eliminate or re-allocate vehicles that do not meet thecriteria for assigning a home-garagedvehicle.

18 LAWA


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7. Pursue options to lower the costsassociated with the home-garaged vehicleprogram, such as reducing the number oftake-home vehicles and making themavailable to Divisional pools; for selected

executives, consider providing a carallowance in lieu of a home-garagedvehicle.

19 LAWA

8. Revise the home-garaged vehicle programconsidering the potential liability to LAWAarising from driving a City vehicle outside ofits intended use for City business, or undercircumstances where a driver could bedeemed grossly negligent. This wouldinclude requiring employees with authority

for home-garaging to procure and provideverification of personal vehicle insurance, orknowingly assume the risk.

20 LAWA

9. Develop a comprehensive vehicle-usepolicy, approved by the LAWAs Board, forthe Departments home-garaged programthat includes specific standards on the useand assignment of take-home vehicles.

20 LAWA

Section II. Vehicles assigned to Central Poolsand LAWA Divisions

10. Ensure fleet management system providesreliable, complete, and accurate vehicleinformation for effective inventory control.

23 LAWA

11. Assess the needs and actual use of the fleetvehicles that are currently assigned toDivisions; and consider reallocation to

maximize usage and effectiveness. Also,ensure Divisional pool vehicles are utilizedto the fullest before approving staff to usetheir personal vehicles and receive mileagereimbursements.

25 LAWA


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12. Establish appropriate controls to ensureemployees are assigned headquarterslocation based on their work assignmentrather than their home address.

25 LAWA

13. Implement adequate controls to ensureemployees do not receive mileagereimbursement if they are also assigned apool vehicle. Supervisors must adequatelyreview mileage reports to identify potentialabuse.

25 LAWA

14. Establish sufficient controls to prohibit usingthe same vehicle to justify the purchase ofmore than one replacement vehicle.

27 LAWA

15. Ensure that replacement vehicles targetedfor salvage are surrendered to the fleetgroup for proper disposal.

27 LAWA

16. Ensure all vehicle purchases are properlyidentified as either Additional orReplacement vehicle in the fleet systemfor proper tracking and reporting.

27 LAWA

17. Implement sufficient procedures to ensureemployees with a suspended license areprevented from driving on City business,using either a City car or their personalvehicle and receiving mileagereimbursement.

28 LAWA

Section III. Cross-Cutting Issues

18. Assess the vehicle needs of LAWA divisionsand home-garaged vehicle permittees byperforming a utilization analysis. This willensure LAWA divisions and the home-garaged vehicle program are allocated theappropriate number of vehicles.

29 LAWA


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19. Establish specific criteria (e.g., expectedbusiness miles, minimum mileage, or daysof use) that can be used in measuring theefficiency of vehicle usage.

29 LAWA

20. Have a process in place to ensure vehiclesthat do not meet the expected criteria areeliminated or re-allocated to other Divisionswhere more vehicles are needed.

30 LAWA

21. Where material reductions in service levelsare observed, attempt fleet reduction toreduce costs.

30 LAWA

22. Consider current needs of divisions whenpurchasing replacement vehicles, andprocure less expensive, more efficientmodels whenever feasible.

30 LAWA

23. Adopt a maximum price and fuel efficiencyguidelines for all vehicle purchases (i.e.,replacements and additions) and requirethat any exceptions from those guidelinesbe justified in writing.

31 LAWA


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BACKGROUND,OBJECTIVES,SCOPE, AND METHODOLOGY

BACKGROUND

An entitys vehicle fleet supports its services by enabling the movement of employeesfrom one place to another in a cost-effective and reliable manner. Many governmentsare seeking ways to increase efficiency and provide improved service by ensuringappropriate fleet size and utilization. This audit specifically focused on LAWAs lightvehicle fleet (i.e., cars and light trucks) and three related processes: Assignment,Monitoring/Use, andReplacement/Disposal of fleet vehicles.

Fleet management is a function of LAWAs Facilities Management Group. While itsprocesses for procurement and disposal are guided by the Citys general purchasing

and salvage/disposal criteria, the replacement and assignment processes are guided byLAWAs internal policy.

LAWA developed a vehicle policy to provide staff with direction on vehicle procurement,management of vehicles assigned to Divisions and central pools, and protocols forvehicle use. Although policies regarding vehicles assigned to the Airport Police Divisionare separately defined in the Airport Police Divisions Administrative Manual, theguidelines are similar to those in LAWAs overall vehicle policy.

Per LAWAs vehicle policy, home-garaged vehicles are approved by the ChiefOperating Officer (COO) and are normally assigned to the Executive Director, the COO,

Deputy-Executive Directors, and to designated employees who are regularly subject toemergency call.

Vehicles assigned to Central Pools and LAWA Divisions are strictly for City business-use by LAWA employees during their workday and cannot be driven for personal use.Also, those vehicles must be returned to the pool at the end of the day, unless seniormanagement has authorized occasional garaging away from the airport. Occasionalgaraging is authorized when it is determined by management as essential, wouldprovide for economy and efficiency, and would serve the Citys best interest.Occasional garaging requires approval from a Deputy Executive Director.

The business-use only policy, which prohibits the use of City vehicles forprivate/personal use is defined in Section 63.106 of the Los Angeles Municipal Code.

LAWA currently has more than 1,400 vehicles in their fleet. This figure includes 945pool vehicles intended for shared use through Central or Divisional Pools, and anadditional 84 authorized as take-home vehicles for approved personnel.


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OBJECTIVES,SCOPE AND METHODOLOGY

The primary objective of this audit was to evaluate the management controls over theassignment, use and monitoring of LAWAs vehicles, including those assigned toCentral or Divisional pools and to specific employees who are authorized for home-

garaging. Our audit scope covered activities related to the assignment, use, andreplacement/disposal of LAWAs fleet vehicles, including cars, motorcycles and lighttrucks (we excluded heavy trucks/equipment) over the period J uly 2010 throughOctober 31, 2012.

We conducted this performance audit in accordance with Generally AcceptedGovernment Auditing Standards. Those standards require that we plan and perform theaudit to obtain sufficient, appropriate evidence to provide a reasonable basis for ourfindings and conclusions based on our audit objectives. We believe that the evidenceobtained provides a reasonable basis for our findings and conclusions based on ouraudit objectives. Audit fieldwork was conducted between October 2012 and J anuary

2013.

In conducting our audit, we interviewed management and staff involved in LAWAs fleetvehicle operations. We also reviewed the applicable City policies and departmentalprocedures related to assignment, usage and monitoring of LAWA vehicles, includingthose in the home-garaged program. We reviewed the Departments inventory listinggenerated by their fleet management system, vehicle assignment schedules asprovided by LAWA Divisions, inventory counts conducted by the Divisions as requestedby the auditors, samples of vehicle logs, reports submitted to the Controllers Office forfringe benefit reporting, reports showing costs of maintaining individual take-homevehicles, reports showing vehicles recommended for replacement, salvage vehicle

reports, mileage reimbursement reports, and DMV reports related to Employer PullNotice program.

We also obtained information from DWP and Harbor regarding their home-garagingpolicies and transportation allowances, if any.

The remainder of this report details our findings, comments, and recommendations.


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AUDIT FINDINGS AND RECOMMENDATIONS

SECTION I: HOME-GARAGED VEHICLES

Home-garaged vehicles must be approved by LAWAs COO and are normally assignedto the Executive Director, the COO, Deputy Executive Directors, and designatedemployees who are regularly subject to emergency call. The recommendation forassignment of a take-home vehicle to an employee who is not normally assigned a carbased on his/her position should be initiated by their respective Deputy ExecutiveDirector, subject to approval by the COO.

As of our review, there were 843 home-garaged vehicles, assigned as follows:

LAWA Executives - 14

LAWA Senior Managers - 17

Airport Police - 53

The Department does not currently provide an option for employees to receive atransportation allowance in lieu of a take-home vehicle.

Based on our interviews and review of reports and other documentation related toLAWAs home-garaged vehicles, we found the following issues.

Finding 1: LAWA lacks centralized accountability and control over assignedtake-home vehicles. Information is inadequately maintained inLAWAs centralized listing, and not all employees who had custodyof a LAWA take-home vehicle were properly authorized.

In order to adequately manage the home-garaging program, LAWA should have anaccurate and up-to-date record of the specific vehicles that are assigned to eachemployee. An accurate centralized listing would also help ensure all employees areappropriately authorized for the program. However, we found that the Department doesnot have an accurate listing or centralized control over take-home vehicles, as theadministrative oversight of these vehicles is split between LAWA and the Airport Police.

3As of the date of this report, LAWA reports there are 85 home-garaged vehicles, with 54 of these

allocated to Airport Police, though three of those were unassigned.


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Finding 2: LAWA does not have a process to ensure employees are formallyapproved for the home-garaged vehicle program and that they meetthe Departments established criteria.

LAWAs vehicle policy provides that home-garaged vehicles are normally assigned to

the Executive Director, the COO, Deputy Executive Directors, and designatedemployees regularly subject to emergency call. According to FMG, the assignment oftake-home vehicles to Executive level staff (Executive Director, COO and DeputyExecutive Directors) is a condition of employment, while for all other staff, theassignment of a take-home vehicle must be determined and initiated by the DivisionsDeputy Executive Director/Head, subject to final approval by the COO. Documentationof the justification and approved authorization should be maintained centrally to ensureappropriate authorization and reporting and for improved inventory control.

We noted that LAWA does not document the justification for the assignment of take-home vehicles to staff. Nor was there documented approval by the Departments Chief

Operating Officer (COO). For all six staff we sampled, LAWA had no formaldocumentation supporting or justifying the vehicle assignments.

Facilities Management Group (FMG) does not maintain home-garaged vehicleauthorizations centrally, but suggested that they may have been kept by the COOsOffice or the LAWA Divisions that had requested/initiated the specific assignments oftake-home vehicles. We requested the COOs Office and some LAWA Divisions toprovide documentation for a sample of home-garaged vehicle authorizations; however,neither was able to provide the justification/authorization for our sample.

During our review, the COO issued a memo noting the current approved list of LAWAemployees with home-garaging privileges (excluding Airport Police). The memo includesboth the executives and designated employees regularly subject to emergency call in toLAX, Ontario and/or Van Nuys Airports. The memo was to serve as the Departmentsdocumented approval for its take-home vehicle assignments to non-sworn personnel.

We also evaluated the staff positions assigned take-home vehicles based on theDepartments established criteria, namely, positions who are assigned a take-homevehicle as a condition of employment, and positions who are assigned a take-homevehicle because they are regularly subject to emergency calls. These include:

As a Condition of Employment (14 Executives):

Chief Executive Officer

Chief Operating Officer

City Attorney

Deputy Executive Directors

Regularly Subject to Emergency Calls (17 Senior Managers; 53 Airport Police):

Airport Manager

Director of Operations

Chief of Operations


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Chief Airports Engineer

Director of Construction and Maintenance

Assistant Director of Construction and Maintenance Services

Chief Construction Inspector

Airport Maintenance Supervisor

Chief of Airport Police (unmarked vehicle) Assistant Chief of Police (unmarked vehicle)

Captain (unmarked vehicle)

Lieutenant (unmarked vehicle)

Sergeant (unmarked vehicle)

Motor unit Police Officers (motorcycles)

Based on our evaluation of the above positions, some do not appear to meet LAWAscriteria for assigning home-garaged vehicles. For example, the City Attorney is not aLAWA employee, and as a City employee, his vehicle assignment is not a condition ofemployment. We also interviewed some positions in the Maintenance Services Division

assigned take-home vehicles to determine the extent to which they had been called in tothe Airports after their normal working hours for an emergency call. They each statedthat they had been called in after office hours, but not on a regular basis since they havefront-line supervisors positioned on-duty 24/7 at the airports that can cover for them.They also noted that LAWA has an Airport Response Coordination Center that isadequately represented by staff from each key Division of LAWA (e.g., AirportOperations, Maintenance Services and Airport Police) which enables an immediateresponse to urgent matters occurring at the Airports at all times. LAWA does not requirelogs for take-home vehicles, nor do individuals track the number of emergency calloutsthey had made in the past.

While it is LAWAs discretion to determine which positions are provided a home-garagedvehicle, such decisions should be supported by a consistent policy that justifies how theassignment best meets the business needs of LAWA in the most economical manner.Therefore, an assignment made as a condition of employment and approved bymanagement is considered an additional fringe benefit; however, for other employees,LAWA has defined the criteria as those who are regularly subject to emergency call,implying that the assignment is justified because they must regularly report in. Withoutbasis to affirm that these positions do, in fact, regularly report in for emergency calls,using this criteria can be questionable. LAWA should develop more clear and consistentcriteria for the home-garaged vehicle program that best meets the business needs in themost economical manner.

Lastly, LAWA does not have a process that requires an annual review of home-garagedvehicle authorizations to ensure that permittees continue to have a need for a take-homevehicle for business use. This process should be in place to ensure there are nounnecessary vehicle assignments.

Recommendations:

LAWA management should:


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3. Develop clear and consistent cri teria for assigning home-garaged vehiclesto ensure that each assignment can be adequately justified by the Citysbusiness needs in the most economical manner.

4. Ensure all home-garaged authorizations, including the recommendationsfor assignments and executive management approval, are maintained in acentral location.

5. Implement a process to periodically review home-garaged vehicleassignments to ensure that each permittee continues to have a justifiedbusiness need to take a LAWA vehicle home.

6. Establish a process to eliminate or re-allocate vehicles that do not meet thecriteria for assigning a home-garaged vehicle.

Finding 3: Providing and maintaining home-garaged vehicles is more costly thanother alternatives.

Excluding those assigned to Airport Police, LAWA provides 31 take-home vehicles toemployees. These vehicles are primarily used for employees to drive from home toLAWA during their regular work schedule or in case of a LAWA related emergency call-out. To be effective, the home-garaged vehicle program should meet the businessneeds of LAWA in the most cost-effective manner. However, the Department has notperformed an analysis of its home-garaged vehicle costs compared to other alternatives,such as paying a car allowance/stipend.

We compared the actual costs that were incurred for maintenance and fuel andestimated the annual costs for depreciation and liability for five sampled take-homevehicles. In four cases, LAWA costs were higher (ranging from 7% to 35%) than payingemployees a standard monthly car allowance. By applying the results of this analysis toall 31 non-sworn employees who currently have home-garaging authority, the potentialsavings ranges from $13,000 - $65,000 annually.

There are currently 14 vehicles assigned to executives for take-home use, and anadditional eight loaner cars reserved to serve as replacements when any of thoseassigned vehicles is undergoing maintenance. Additional home-garaged vehicles thatare assigned on the basis of regular emergency call out may not be justified, based onFinding #2. LAWA managers have indicated that there is a shortage of vehiclesavailable in Divisional pools, yet there has been no formal assessment of vehicleutilization or current assignments. We also noted that one individual with a take-homevehicle is also assigned a Divisional pool vehicle for his exclusive use during theworkday.

By reducing the number of take-home vehicles, LAWA could make more cars availablefor Divisions pool use. In addition, to continue providing a benefit to selected staff as a


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condition of their employment, payment of a car allowance appears to be a more costeffective option.

The car allowance amount used in our analysis was based on that currently paid byHarbor Department. It should be noted that LADWP no longer provides its executives

with either a City car or an allowance.

Recommendation:


7. Pursue options to lower the costs associated with the home-garagedvehicle program, such as reducing the number of take-home vehicles andmaking them available to Divisional pools; for selected executives,consider provid ing a car allowance in lieu of a home-garaged vehicle.

Finding 4: The Departments home-garaging policy does not require permittees toprovide evidence of personal car insurance to cover liability that mayarise from driving a City vehicle outside of its intended use for Citybusiness.

LAWAs current practices do not require employees who are authorized for home-garaging to obtain and provide evidence of personal insurance covering the City vehicle,though the CAO requires this practice for other City Departments.

Although LAWA is not under the jurisdiction of the CAO, this requirement is intended toensure coverage against liability that arises from driving a City vehicle outside of itsintended use for City business, or under circumstances where a driver could be deemedgrossly negligent.

LAWAs vehicle policy clearly states As long as a LAWA employee is operating avehicle in the course and scope of his/her duties, he/she is covered for liability underLAWAs insurance policy. The business auto coverage section of the specimen policyprovided states that anyone else while using with your permission a covered auto. . . isinsured. LAWAs insurance provider also indicated that any person who meets therequirements of the policy driving the vehicle with the permission of the Named Insuredis covered. However, because the coverage is contingent upon an employees vehicleuse with your permission, LAWA appears to be at risk when/if a liability occurs due topersonal use or gross negligence.

By not requiring LAWA employees assigned take-home vehicles to maintain appropriatepersonal car insurance, the Department is exposed to greater potential liability that wouldnot be covered by their existing commercial insurance.

Recommendation:



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8. Revise the home-garaged vehicle program considering the potentialliability to LAWA arising from driving a City vehicle outside of its intendeduse for City business, or under circumstances where a driver could bedeemed grossly negligent. This would include requiring employees with

authority for home-garaging to provide verification of personal vehicleinsurance, or knowingly assume the risk.

Finding 5: LAWAs home-garaging vehicle policy should include specifici tyregarding the use of the vehicles, and be formally approved byLAWAs Board.

Formal policies provide clarity for an organizations staff regarding the practices they areexpected to follow, in order to ensure they align with the expectations of managementand governing authorities. The LAWA vehicle policy is broad, and while it mentions

home-garaged vehicles which must be approved by the Chief Operating Officer, theterms of use for take-home vehicles are not specifically defined. We also found thatsome functions noted in the authorities and responsibilities were not adequatelyperformed, such as a Fleet Manager reviewing and reassigning vehicles as deemedappropriate.

While the broad policy provides that City cars are strictly for business use only andcannot be used for personal purposes, this requirement should be reiterated for thehome-garaged vehicles. Also, the Department was not able to provide evidence thattheir policy on take-home vehicles had been approved by LAWAs Board. Theparticulars of LAWAs home-garaging program, including its purpose and benefits to theorganization, as well as who is eligible and how assignments are determined, may beunknown to LAWAs Board.

Providing clarity through a comprehensive vehicle policy that includes specificity on thehome-garaged vehicle program, as approved by LAWA Board, would help ensure thatboth staff and management actions are consistent with expectations, and that theprogram provides maximum benefit to the organization.

Recommendation:


9. Develop a comprehensive vehicle-use policy, approved by the LAWAsBoard, for the Departments home-garaged program that includes specificstandards on the use and assignment of take-home vehicles.


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SECTION II: VEHICLES ASSIGNED TO CENTRAL POOLS AND LAWADIVISIONS

For purposes of facilitating the movement of employees at and around LAX, fleetvehicles are assigned to central pool locations (Administration West, Administration East,Skyview tower and Fleet Maintenance). In addition, most LAWA Divisions are assignedtheir own pool vehicles for their employees to use in carrying out their day-to-dayresponsibilities. For example, Airport Operations, Ground and Facility Maintenance,Engineering and Construction, and Airport Police and Security each have their ownDivisional pool vehicles to transport employees from one place to another within theairport, or from one airport location to another (e.g., from LAX to Van Nuys Airport).

As of our audit fieldwork, a total of 945 pool vehicles were assigned to Central poollocations (81) and Divisions (864). The breakdown of the assignment is as follows:

Central Pools:

Administration West 17

Administration East 11

Skyview 21

Fleet Maintenance- Loaner 32*

Total LAWA Central Pool Vehicles 81

*(eight loaner vehicles are reserved for Executives)

Divisional Pools:

ADG- Construction Inspection Division 22

Administration 4

Airport Development Group 28

Airport Operations- LAX 71

Airport Operations- Ontario 152

Airport Operations- Van Nuys 5

Airport & Facilities Planning Division 2

Commercial Development Group 3

Community Relations Division 2

Engineering & Facilities Mgt. Division 80Environmental Management Division 2

Fire Department- assigned to LAX 2

Government Affairs 2

Human Resources 4

Information Mgt. & Technology Group 27

Landside Operations Division 8

Maintenance Services Division- LAX 200


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Finding 6: LAWA does not maintain accurate and complete information onDivisional pool vehicles.

During our audit, we were provided a vehicle inventory list that was generated fromLAWAs fleet maintenance system, FASTER. We attempted to verify the information onthe inventory list by requesting LAWA Divisions to conduct a physical count of thevehicles assigned to them. We also requested they provide other pertinent informationsuch as a description of their processes in assigning the vehicles, copies of vehicle logs(if any), vehicle description, vehicle mileage, etc. We found discrepancies between theinformation shown in the inventory list and that provided to us by the LAWA Divisions.

Also, the listing of Divisional vehicle coordinators provided by LAWA Fleet Managementwas inaccurate.

For example, the Airport Development Group Division (ADG) provided auditors with theresult of their count, showing 47 vehicles assigned. This is different from the 52 vehiclesnoted as assigned to ADG per LAWA inventory list. According to ADGs vehiclecoordinator, it is possible that the cars were with another Division. We subsequentlyverified that these cars were under the control of the Engineering & Facilities Division,but the transfer had not been noted on the fleet inventory.

In another example, the physical count results submitted by Maintenance Division-

Custodial was higher by two cars as compared to LAWAs inventory list. We also notedsome missing information on the LAWAs inventory list. For example, several assignedvehicles to the Ontario Airport did not have vehicle descriptions and license identificationnumbers. Odometer readings for a number of vehicles were also not included in thereport.

LAWA Divisions do not regularly conduct an inventory count to ensure the vehiclesassigned to them are fully accounted for. Moreover, they do not inform or update

Maintenance Services Division- Ontario 2

Maintenance Services Division- Van Nuys 20

Media Relations 2

Procurement Services 2

Rideshare 3

Risk Management 5Warehousing & Record Retention 3

Total Division Pool Vehicles Excluding Police 651

Airport Police & Security-LAX 201

Airport Police & Security-Ontario 3

Airport Police & Security-Van Nuys 9

Total Airport Police Pool Vehicles 213

Total LAWA Divisional Pool Vehicles 864


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LAWAs Fleet Division of any changes (e.g., organizational changes like splitting up aformer Division into three) that may affect the vehicles assigned to them.

LAWAs Facilities Management Group (FMG) explained that it is possible that not allinformation related to the vehicle inventory was generated by their system. The primary

use of the Fleet Asset Management System (FASTER) is to track and monitor the workperformed and parts used for maintenance and repair of LAWA vehicles at LAX, Ontarioand Van Nuys airports; not activities related to vehicle additions, transfers and disposals.

They added that the system currently in use has limitations in capturing and generatingneeded vehicle inventory information. LAWA plans to upgrade its system to enable staffto properly record, track and report fleet vehicle information. Having a reliable inventorysystem that can capture and report accurate information is essential for effective fleetmanagement and control over moveable assets.

Recommendation:


10. Ensure the fleet management system provides reliable, complete andaccurate vehicle information for effective inventory control .

Finding 7: Divisional pool vehicles may not be ut ilized to maximizeeffectiveness, and the mileage reimbursement program must bebetter controlled.

We analyzed vehicles assigned to LAWA Divisions consisting of light duty sedans, trucksand vans and found that a number of these are not being used to the fullest in order tomaximize usage and reduce overall costs. For example, in many Divisions vehicles areassigned to specific individuals rather than shared between Division staff workingdifferent shifts or as shared pool vehicles. Usage logs are not maintained for mostDivisional pool vehicles.

ADG-Inspection is assigned a total of 20 Divisional pool vehicles. The Division has over100 staff consisting of approximately 40 regular LAWA employees, 60+ consultants, andemployees of the Citys Department of Public Works -Bureau of Contract Administration(BCA). The work schedule consists of three shifts.

The 20 Divisional cars are assigned to specific employees to use for inspection activitiesduring the workday. They are not allowed to take the cars home; and the vehicles mustbe left parked in the office lot after the assigned employees shift.

LAWA Inspection staff who are not assigned a specific LAWA vehicle use their personalvehicles for inspection activities and claim mileage. Our review noted that LAWAInspectors received approximately $325,000 in mileage reimbursements over our auditscope; some current inspection staff claimed mileage reimbursements of $300 to $700per month.


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This amount appears high given that staff are charged with inspecting construction workat LAX, and the ADG-Inspection Head estimated that they drive no more than 15 milesper day related to their work assignments.

We analyzed the average number of miles claimed by inspection staff on a daily basisand questioned why some staff were paid an average of 30 to 70 miles per workday.The ADG-Inspection Head explained that a large portion of the reimbursed miles areactually related to staffs commuting miles. Inspection staff were permitted to changetheir headquarters location to whatever LAWA facility was nearest to their home, basedon the existing practice used by the Bureau of Contract Administration of the Departmentof Public Works. As mentioned, there are BCA staff assigned in this LAWA Division andthey too submit claims for reimbursement for mileage through BCA, for doing inspectionsat LAX. However, by allowing LAWA staff to change their headquarters location, LAWAis unnecessarily paying employees for commuting miles.

For example, if a LAWA inspector lives in Van Nuys but works every day at LAX, and theemployee is allowed to designate his headquarters as the LAWA location nearest hishome, it would be LAWAs Van Nuys Airport. In this case, the inspector would bereimbursed for the 21 miles between Van Nuys Airport and LAX (essentially commutingeach way) as well as the actual miles driven for his inspection activities while at LAX.This would effectively increase his daily claim from 15 to almost 60 miles per day.

This issue was previously reported in the Controllers Audit of Citywide MileageReimbursements issued on December 18, 2012. We noted several City Departments(including the Department of Public Works) lacked controls to ensure that theiremployees assigned headquarters were appropriate and that employees wereaccurately reporting their home to headquarters miles. The Los Angeles AdministrativeCode Section 4.224 provides that If any officer or employee who is eligible for paymentfor travel under the provisions of this article continues to report directly from his home toa temporary assignment for more than 30 days, such assignment shall be deemedthereafter to be permanent and no further payment for travel shall be allowed to himwhile he was working on such assignment. Also, the Internal Revenue ServicesPublication 463 indicates that the miles driven by employees between home and regularwork location are considered to be commuting miles.

An employees headquarters should be determined by where he/she is assigned to work,which is consistent with the Los Angeles Administrative Code, and staff should only bereimbursed for their business miles and not for commuting.

Subsequent to our fieldwork, LAWAs Personnel issued a directive to management of theInspection Division to ensure all staff comply with City requirements and that LAWA hasan accurate home-to-headquarters designation on file for mileage reimbursementpurposes.

Employees who are assigned a Divisional pool vehicle to perform their duties at LAWAshould not also be receiving mileage reimbursement for using their personal vehicle forthe same purpose. However, this appears to have occurred.


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We selected a Division where pool vehicles are assigned to specific staff, and requestedthe Division to provide the actual dates of staffs vehicle assignments. We then reviewedmileage payments over the last fiscal year to determine whether any of the employeesidentified as having been assigned a pool vehicle also received mileage payments.

We noted three staff received mileage reimbursements totaling over $27,000 during thetime they were assigned pool cars. LAWA supervisors should review mileage reports toensure employees who are assigned a Divisional pool car are not also receiving mileagereimbursements during the same time.

LAWA should maximize the use of every vehicle. While many LAWA vehicles have lowannual mileage, the frequency of trips and/or documented continuous use of eachvehicle would be a better measure of full utilization. However, many Divisions assign thevehicles to individuals rather than making them available as a shared pool car, and theDivisions we reviewed did not maintain logs that would document actual use. Through

assessing the actual vehicle usage and needs of Divisions, LAWA could reallocate fleetvehicles to maximize their utilization and/or reduce the amount mileage reimbursementspaid.

Recommendations:


11. Assess the needs and actual use of the fleet vehicles that are currentlyassigned to Divisions; and consider reallocation to maximize usage andeffectiveness. Also, ensure Divisional pool vehicles are util ized to thefullest before approving staff to use their personal vehicles and receivemileage reimbursements.

12. Establish appropriate controls to ensure employees are assignedheadquarters location based on their work assignment rather than theirhome address.

13. Implement adequate controls to ensure employees do not receive mileagereimbursement if they are also assigned a pool vehicle. Supervisors mustadequately review mileage reports to identify potential abuse.

Finding 8: LAWA does not have adequate controls over the vehicle replacementprocess, or of the disposal of replaced vehicles.

Periodically and during the budget period LAWA management, in coordination with theFacilities Management Group (FMG), determines the number of cars to be purchased forthe coming fiscal year.

Rather than buying an additional car the Department prioritizes replacing their agingand inoperable vehicles in order to maintain a stable fleet. Between 2010 and 2012,


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LAWA purchased approximately 47 replacement vehicles and added only two cars.When requesting an additional vehicle FMG requires the initiating Division to submit awritten justification; however, when a vehicle is simply being replaced, no additionaljustification is required. Rather, FMG follows the following criteria (or a combination) forvehicle replacement:

The Divisions operational needs; Age of vehicle (vehicles over 10 years old are evaluated for possible

replacement);

Mileage of vehicle (vehicles with over 100,000 miles are evaluated for possiblereplacement);

Condition of vehicle (vehicles in traffic accidents or requiring major repair); and,

Vehicle rating from LAWAs fleet management system

Based on our review, we noted that vehicles are not always replaced and disposedaccording to the Departments established criteria. We also found purchases that shouldhave been reported as additional and not replacement cars, and some purchases that

were coded as neither. The following are specific weaknesses related to theDepartments replacement and disposal processes:

Vehicles identified for replacement and recommended for salvage were usedmore than once to justify the purchase of new vehicles

LAWA used the same vehicle number to justify purchasing more than onevehicle as its replacement. We found that LAWA purchased vehicle C-2922as replacement for C-2872; however, C-2872 was also used to justify thepurchase of C-2932.

Also, when we reviewed LAWAs most recent report of vehicles beingrecommended for replacement (as generated by FASTERs 15-pointreplacement program), we noted seven had already been used as justificationfor previous purchases. Specifically, these vehicles had already beensubmitted to management prior to 2012 for replacement and had alreadybeen replaced; yet the same vehicles were again being recommended forreplacement, and were approved in FY2012-13 budget. These included:

C-2395 which was already used in 2005 to purchase C-5100








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Because LAWA has restricted buying additional cars and prioritizes buyingcars as replacements, it appears that staff had been reporting somepurchases as replacements to avoid scrutiny.

Vehicles that were considered replaced by new vehicles were not salvaged,

and were still being used in the Departments operations

We noted a number of vehicles that had already been replaced by purchasingnew vehicles were actually still in use by Divisions, rather than surrenderedfor salvaging. In addition, due to lax controls over these assets, it could bequestioned if these cars were still safe since FASTER had recommendedthem for salvage. Shortly after we brought this matter to LAWAs attention,the Fleet Maintenance Group indicated that some of these vehicles weresurrendered by the Divisions, and they were processing them for salvage.

The Fleet Management System does not identify whether some new vehicles

were purchased as replacement or additional vehicles

Lastly, we noted that there are purchases in the system identified neither asreplacement nor additional vehicles. Therefore, there is no way to verify ifthe same vehicle was used to justify the purchase of more than onereplacement vehicle.

Recommendations:


14. Establish suf ficient contro ls to prohibit us ing the same vehicle to just ifythe purchase of more than one replacement vehicle.

15. Ensure that replacement vehic les targeted for salvage are surrendered tothe fleet group for proper disposal.

16. Ensure all vehicle purchases are properly identified as either Addit ionalor Replacement vehicle in the fleet system for proper tracking andreporting.

Finding 9: LAWA must strengthen procedures to ensure employees withsuspended drivers licenses are prevented from driving vehicles onCity business.

All employees who are required or authorized to drive a vehicle on City business mustpossess a current and valid drivers license. The California DMV has a program calledEmployer Pull Notice (EPN) that was established to provide employers and regulatoryagencies with a means of promoting driver safety through their ongoing review of driverrecords. The EPN Program automatically generates a notice when there is any update


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on the employees DMV record. DMV notifies the employer via e-mail that DMV hasupdated the driver record, and the employer can request DMV to provide theiremployees license status whenever needed. According to management, all LAWAemployees are enrolled in the DMVs EPN Program, and LAWA Personnel receivesstatus reports from DMV on a regular basis. Upon notification of a change in license

status, LAWA Personnel is to inform the respective Divisions management to takeappropriate action.

We requested LAWA Personnel to provide current DMV status reports for twentyselected employees. From that sample, we identified two employees (10%) who drovevehicles on City business while their license was suspended. One drove his personalvehicle on City business and received mileage reimbursement for one day while hislicense was suspended, while the other drove a Divisional pool vehicle as part of hisregular duties repeatedly while his license was suspended with special restrictions. Ouraudit found that Personnel had received a DMV notice for both employees. Oneemployee corrected the suspension within three business days of the notice, which was

before Personnel was able to contact the Division; however, after learning of theviolation, Personnel should have communicated this matter to the Division manager forappropriate action, such as admonishment or discipline for driving on City business witha suspended license. For the other instance, Personnel communicated the issue toDivision management with a response required; however due to poor internalcommunication and inadequate follow-up, timely action was not taken and the employeecontinued to drive a City vehicle.

The Department does not sufficiently act on notices received through the EPN programto ensure employees with a suspended driver license are prevented from driving on Citybusiness. This practice exposes LAWA to significant risk and liability. This issue wasalso noted in the Controllers recent report Audit of Citywide Mileage Reimbursements.

Recommendation:


17. Implement suf ficient procedures to ensure employees wi th a suspendedlicense are prevented from driv ing on City business, using either a City caror their personal vehicle and receiving mileage reimbursement.


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SECTION III: CROSS-CUTTING ISSUES

We found some issues that are common to vehicles assigned to individual employeesand to Central pool locations and LAWA Divisions. These include the following:

Finding 10: LAWA does not assess the vehicle needs of Central pools and LAWADivisions, or its home-garaged vehicle program.

The Facilities Management Division and other LAWA Divisions confirmed that there hasbeen no utilization analysis done for either the home-garaged and pool/divisionalvehicles to measure the usage and efficiency of vehicles assigned. LAWA has notanalyzed and therefore cannot ensure that an appropriate number of vehicles are

assigned among the Divisions, or to the home-garaged program.

Utilization analysis includes developing and establishing criteria (e.g., minimum mileage,trips, or days of use) that can be used to measure the vehicles efficiency. It could alsoinclude tracking actual business miles incurred and comparing results with previouslyestablished criteria. For example, if the miles (or other measure) do not meet thecriteria, LAWA may consider eliminating or re-allocating the cars to maximize usage.Such an analysis would help LAWA balance the distribution of existing vehicles amongthe Divisions, and/or reduce the number of fleet vehicles to lower its overall costs.

For example, we observed that there may be excess vehicles reserved for Executives in

the Fleet Maintenance section. Out of 32 loaner cars maintained, eight cars arereserved for Executives to serve as replacement loaners if/when their assigned home-garaged vehicle is undergoing maintenance. According to Fleet Maintenance, they donot allow other staff or Divisions to use the loaner cars that are reserved for Executives.This is an area where results of a utilization analysis can be useful; helping managementdetermine if some cars can be eliminated from this section, and re-allocated to otherDivisions where there is a greater need.

Recommendations:


18. Assess the vehicle needs of LAWA Divis ions and home-garaged vehiclepermittees by performing a utilization analysis. This will ensure LAWADivisions and the home-garaged vehicle program are allocated theappropriate number of vehicles.

19. Establish specific criteria (e.g., expected business miles, minimummileage, or days of use) that can be used in measuring the efficiency ofvehicle usage.


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20. Have a process in place to ensure vehicles that do not meet the expectedcriteria are eliminated or re-allocated to other Divisions where morevehicles are needed.

21. Where material reductions in service levels are observed, attempt fleetreduction to reduce costs

Finding 11: LAWAs vehicle replacement practices do not adequately addresscurrent needs; reducing opportunities to purchase less expensiveand fuel-effic ient cars whenever feasible.

According to Fleet Maintenance staff, in most cases the replacement vehicle purchasedis the same type (make/model of car or truck) as the old one being replaced. Forexample, LAWAs Information Technology Division stated that they were not consulted

when their vehicles were replaced by LAWAs Fleet Group to determine their currentneeds. They needed a box-truck type but found out they were getting the same type oftruck (with bed) as the replaced vehicle.

As previously mentioned, replacing a vehicle does not require a new justification from thereceiving Division. However, the Divisions current operational needs should beconsidered for purchasing decisions related to replacement vehicles, along with ananalysis if a less expensive, more fuel-efficient option would be feasible.

We reviewed a sample of vehicles with a purchase price of up to $51,000, noting that amajority of these were trucks assigned to the ADG-Inspection Division. Of the 20 poolvehicles assigned to the ADG-Inspection Division, most are trucks including some sportsutility vehicles. All are assigned to specific employees for their use in inspectionactivities during the workday; and many of the Divisions inspection staff drive theirprivate vehicles for inspection activities and receive mileage reimbursement.

Within the Inspection Division, a variety of vehicle types is used to perform their work.The Division pool includes small sedans fueled by CNG, pickup trucks, and SUVs, whileseveral Inspectors utilize their personal vehicles of various makes/models. As a varietyof vehicle types could be adequate for this Divisions use, LAWA should consider themost cost effective options that will best meet operational needs when buying futurereplacement vehicles.

Recommendations:


22. Consider current needs of Divisions when purchasing replacementvehicles, and procure less expensive, more efficient models wheneverfeasible.


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AUDIT OF LAWAS MANAGEMENT CONTROLSOVER ITS HOME-GARAGED AND POOL VEHICLES

APPENDIX A

Ranking of Recommendations

Description of Finding RankingCode

Recommendations

Section I: Home-Garaged Vehicles

1 LAWA lacks centralized accountability andcontrol over assigned take-home vehicles.Information is inadequately maintained inLAWAs centralized listing, and not all employeeswho had custody of a LAWA take-home vehiclewere properly authorized.

U

U


1. Implement effectivecentralized control over theadministration of home-garaged vehicles to ensurefull accountability andaccurate reporting.

2. Require periodic verificationof all home-garaged vehicleassignments to the centrallisting, to ensureappropriate control andaccurate reporting.

2 LAWA does not have a process to ensureemployees are formally approved for the home-garaged vehicle program and that they meet the

Departments established criteria.

U

U

N

N

3. Develop clear andconsistent criteria forassigning home-garaged

vehicles to ensure that eachassignment can beadequately justified by theCitys business needs in themost economical manner.

4. Ensure all home-garagedauthorizations, including therecommendations forassignments and executivemanagement approval, aremaintained in a centrallocation.

5. Implement a process toperiodically review home-garaged vehicleassignments to ensure thateach permittee continues tohave a justified businessneed to take a LAWAvehicle home.

6. Establish a process to


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eliminate or re-allocatevehicles that do not meetthe criteria for assigning ahome-garaged vehicle.

3 .Providing and maintaining home-garagedvehicles is more costly than other alternatives.

N 7. Pursue options to lower thecosts associated with thehome-garaged vehicleprogram, such as reducingthe number of take-homevehicles and making themavailable to Divisional pools;for selected executives,consider providing a carallowance in lieu of a home-garaged vehicle.

4 The Departments home-garaging policy doesnot require permittees to obtain additionalpersonal car insurance to cover liability that mayarise from driving a City vehicle outside of itsintended use for City business.

N 8. Revise the home-garagedvehicle program consideringthe potential liability toLAWA arising from driving aCity vehicle outside of itsintended use for Citybusiness, or undercircumstances where adriver could be deemedgrossly negligent. Thiswould include requiringemployees with authority forhome-garaging to provide

verification of personalvehicle insurance, orknowingly assume the risk.

5 LAWAs home-garaging vehicle policy shouldinclude specificity regarding the use of thevehicles, and be formally approved by LAWAsBoard.

U 9. Develop a comprehensivevehicle-use policy,approved by the LAWAsBoard, for the Departmentshome-garaged program thatincludes specific standardson the use and assignment

of take-home vehicles.

Section II: Vehicles Assigned to CentralPools and LAWA Divisions

6 LAWA does not maintain accurate and completeinformation on Divisional pool vehicles.

U 10. Ensure the fleetmanagement systemprovides reliable, completeand accurate vehicle


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information for effectiveinventory control.

7 Divisional pool vehicles may not be utilized tomaximize effectiveness, and the mileage

reimbursement program must be bettercontrolled.

N

U

N

11. Assess the needs andactual use of the fleet

vehicles that are currentlyassigned to Divisions; andconsider reallocation tomaximize usage andeffectiveness. Also, ensurepool vehicles are utilized tothe fullest before approvingstaff to use their personalvehicles and receivemileage reimbursements.

12. Establish appropriatecontrols to ensureemployees are assigned

headquarters locationbased on their workassignment rather than theirhome address.

13. Implement adequatecontrols to ensureemployees do not receivemileage reimbursement ifthey are also assigned apool vehicle. Supervisorsmust adequately reviewmileage reports to identify

potential abuse.

8 LAWA does not have adequate controls over thevehicle replacement process, or of the disposalof replaced vehicles.

U

U

N

14. Establish sufficient controlsto prohibit using the samevehicle to justify thepurchase of more than onereplacement vehicle.

15. Ensure that replacementvehicles targeted forreplacement aresurrendered to the fleet

group for proper disposal.

16. Ensure all vehiclepurchases are properlyidentified as eitherAdditional orReplacement vehicle inthe fleet system for propertracking and reporting.


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9 LAWA must strengthen procedures to ensureemployees with suspended drivers licenses areprevented from driving vehicles on City business.

U 17. Implement sufficientprocedures to ensureemployees with asuspended license areprevented from driving onCity business, using either aCity car or their personalvehicle, and receivingmileage reimbursement.

Section III: Cross-Cutting Issues

10 LAWA does not assess the vehicle needs ofCentral pools and LAWA Divisions, or its home-garaged vehicle program.

N

N

N

N

18. Assess the vehicle needs ofLAWA Divisions and home-garaged vehicle permitteesby performing a utilizationanalysis. This will ensureLAWA Divisions and thehome-garaged vehicleprogram are allocated theappropriate number ofvehicles.

19. Establish specific criteria(e.g., expected businessmiles, minimum mileage, ordays of use) that can beused in measuring theefficiency of vehicle usage.

20. Have a process in place toensure vehicles that do notmeet the expected criteriaare eliminated or re-allocated to other Divisionswhere more vehicles areneeded.

21. Where material reductionsin service levels areobserved, attempt fleetreduction to reduce costs.

11 LAWAs vehicle replacement practices do notadequately address current needs; reducingopportunities to purchase less expensive andfuel-efficient cars whenever feasible.

N

N

22. Consider current needs ofDivisions when purchasingreplacement vehicles, andprocure less expensive,more efficient modelswhenever feasible.

23. Adopt a maximum price andfuel efficiency guidelines forall vehicle purchases (i.e.,


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replacements and additions)and require that anyexceptions from thoseguidelines be justified inwriting.

Description of Recommendation Ranking Codes

U- Urgent-The recommendation pertains to a serious or materially significant audit finding or controlweakness. Due to the seriousness or significance of the matter, immediate management attention andappropriate corrective action is warranted.

N- Necessary- The recommendation pertains to a moderately significant or potentially serious auditfinding or control weakness. Reasonably prompt corrective action should be taken by management toaddress the matter. The recommendation should be implemented within six months.

D- Desirable- The recommendation pertains to an audit finding or control weakness of relatively minorsignificance or concern. The timing of any corrective action is left to managements discretion.

N/A- Not Applicable

audit of the lawa's management controls over its home-garaged & pool vehicles

Documents