Audit Report Human Resources and Deve
Port of Seattle Internal Audit Report Human Resources and Development Department Audit Audit Period January 1, 2007 through December 31, 2008 Issue Date: November 3, 2009 Report No.: 2009-16 Internal Audit Report Human Resources and Development Audit Period: January 1, 2007 December 31, 2008 Table of Contents Audit Audit Internal Auditor's Report .............................................................................................................................................. 3 Compliance Audit Executive Summary ....................................................................................................................................................... 4 Compliance Audit Background ...................................................................................................................................................................... 5 Audit Objective ................................................................................................................................................................ 6 Scope of the Audit .......................................................................................................................................................... 6 Audit Approach ............................................................................................................................................................... 6 Conclusion ....................................................................................................................................................................... 6 2 of 6 Internal Audit Report Human Resources and Development Audit Period: January 1, 2007 December 31, 2008 Audit Audit Internal Auditor's Report We have completed an audit of the Human Resources and Development department. The purpose of the audit was to determine if Human Resources and Development: Compliance Audit Compliance Audit 1. Performs a regular risk assessment that adequately addresses the risks impacting their department, as well as the controls necessary to mitigate those risks to an acceptable level. 2. Effectively monitors and maintains data relied upon for the proper calculation and disclosure of other post-employment benefits in accordance with GASB 45 - Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. 3. Effectively monitors Pier 69 Flex Passes in accordance with the Port's Commute Trip Reduction policy and procedures. Management has the primary responsibility to establish and implement effective controls. Our audit objective was to assess and test those controls in order to establish whether the controls were adequate and operating effectively. We conducted the audit using due professional care. We planned and performed the audit to obtain reasonable assurance that department controls relating to risks, postemployment benefits, and Flex Passes are adequate and operating as intended. We found no significant issues during the review; however, we identified opportunities to strengthen existing controls over the department's risk assessment process, OPEB eligibility list, and Pier 69 Flex Passes, which have been communicated to management in a separate letter. We extend our appreciation to the Human Resources and Development department for their assistance and cooperation during the audit. Joyce Kirangi, CPA Director, Internal Audit 3 of 6 Internal Audit Report Human Resources and Development Audit Period: January 1, 2007 December 31, 2008 Executive Summary Audit Audit Audit Scope and Objective The purpose of the audit was to determine if Human Resources and Development: Compliance Audit Compliance Audit Performs a regular risk assessment that adequately addresses the risks impacting their department, as well as the controls necessary to mitigate those risks to an acceptable level. Effectively monitors and maintains data relied upon for the proper calculation and disclosure of other post-employment benefits in accordance with GASB 45 - Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Effectively monitors Pier 69 Flex Passes in accordance with the Port's Commute Trip Reduction policy and procedures. We reviewed information relating to fiscal years 2007 and 2008. Background HRD is part of the Port's Corporate Division and has offices located at both Pier 69 and the airport. Like any other organization HRD is primarily responsible for hiring employees. However, the Port's HRD department is rather large and responsible for many other functions at the Port including benefits and compensation, consulting, diversity, training, and communication. In respect to communication, HRD is responsible for educating employees on numerous issues affecting the Port and its staff; including changes to health insurance plans and wellness programs, furlough requirements and rules, the voluntary separation program, the telecommuting pilot program, the implementation of a new Human Capital Management System, and the creation of the Resource Center in response to the Port's reduction in workforce. Audit Result Summary We found no significant issues during the review; however, we identified opportunities to strengthen existing controls over the department's risk assessment process, OPEB eligibility list, and Pier 69 Flex Passes, which have been communicated to management in a separate letter. 4 of 6 Internal Audit Report Human Resources and Development Audit Period: January 1, 2007 December 31, 2008 Audit Audit Background The Human Resources & Development department engages and equips employees to achieve exceptional results thus sustaining the Port of SeattleCompliance Audit as a vital, high performing organization. With offices located both at the airport and Pier 69, this large department consists of 30 full time employeesCompliance Audit operating with a wide spectrum of responsibilities. Aside from HRD's primary responsibility of hiring employees, the department is also responsible for benefits and compensation, consulting, diversity, training, and communication. In regards to communication, HRD is responsible for educating employees on numerous issues affecting the Port and its staff such as changes to health insurance plans and wellness programs, furlough requirements and rules, the voluntary separation program, the telecommuting pilot program, the implementation of a new Human Capital Management System, and the creation of the Resource Center in response to the Port's reduction in workforce. The department does not generate revenue but is responsible for collecting funds from employees who choose to purchase Flex Passes. Department expenses for 2006 through 2008 are as follows: (in thousands) 2006 2007 2008 GL Category Expense % Expense % Expense % Salaries, Wages & Benefits $ 1,537 67% $ 2,652 73% $ 2,255 74% General Expenses 138 6% 161 4% 149 5% Outside Services 230 10% 510 14% 348 12% Supplies & Stock 48 2% 27 1% 31 1% Equipment Expense 69 3% 32 1% 25 1% Worker's Compensation 4 0% 6 0% 5 0% Telecommunications 9 0% 9 0% 9 0% Travel & Other Employee 266 12% 246 7% 209 7% Promotional Expense 1 0% 9 0% 1 0% Property Rentals 7 0% 0 0% 0 0% Grand Total $ 2,309 100% $ 3,652 100% $ 3,032 100% Source: PeopleSoft The department's top expense accounts at fiscal year-end (excluding those expenses associated with salaries and benefits) are as follows: Expense Account 2006 2007 2008 Non-Architectural & Engineering Services $ 121,133.70 $ 337,789.37 $ 206,668.70 Registration Fees/Tuition 148,310.52 124,133.79 102,819.04 Metro/Ferry Pass Expense * 61,647.76 56,472.10 77,459.74 Advertising 69,247.45 93,314.78 73,841.01 Source: PeopleSoft The year-end balance of the Metro/Ferry Pass Expense account is net of any adjustments and Flex Pass sales. The actual amount of Flex Pass Purchases was $77,406, $80,995 and $94,423for 2006, 2007 and 2008, respectively. 5 of 6 Internal Audit Report Human Resources and Development Audit Period: January 1, 2007 December 31, 2008 One of the department's employee benefit related responsibility involves compiling and maintaining aAudit Audit list of Other Post-Employment Benefits (OPEB) eligible employees. The Port is required by Government Accounting Standards Board (GASB) under statement 45 to compute and disclose financial liability associated with OPEB. Based on the list by Human Resources and Development,Compliance Audit Accounting and Financial Reporting (AFR) calculates and discloses the liability on its annual financialCompliance Audit statements. Below is the Port's OPEB liability as of December 31, 2008. Net OPEB # of Plan GASB 45 Plan Name Obligation Participants LEOFF Plan 1 Members' Medical Services Plan $ 6,919,000 33 Retiree Medical Insurance Plan $ 5,624,000 229 Retiree Life Insurance Plan $ 593,000 346 Source: Comprehensive Annual Financial Report for the Year Ended December 31, 2008 Audit Objective The audit objective was to determine if Human Resources and Development: 1) Performs a regular risk assessment that adequately addresses the risks impacting their department, as well as the controls necessary to mitigate those risks to an acceptable level, 2) Effectively monitors and maintains data relied upon for the proper calculation and disclosure of other post-employment benefits in accordance with GASB 45 - Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, and 3) Effectively monitors Pier 69 Flex Passes in accordance with the Port's Commute Trip Reduction policy and procedures. Scope of the Audit The scope of this audit included information relating to fiscal years 2007 and 2008. Audit Approach To achieve the audit objective, we performed the following procedures: Obtained an understanding of the department's operations and the significant compliance requirements. Reviewed department controls related to the audit areas. Obtained and analyzed relevant financial and non-financial data. Performed audit procedures to achieve the audit objective. Conclusion We found no significant issues during the review; however, we identified opportunities to strengthen existing controls over the department's risk assessment process, OPEB eligibility list, and Pier 69 Flex Passes, which have been communicated to management in a separate letter. 6 of 6
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