Entries Tagged 'Audit' ↓

Sioux Falls City Council plans to deconstruct Internal Audit

Besides raising utility rates (Items #47-54) and hiring a new city clerk (Item #60) the council is also proposing this (Item #45);

The proposed ordinance removes any mention of an internal audit job title. The proposal also includes language that allows for a co-source internal audit function.

After a brief discussion with the Audit Committee they have decided to move forward with using outside services for Internal Audit. I am adamantly opposed to this. While other communities do this, it is rare. They either have NO internal audit or an actual internal auditing department.

I do understand that every community has to weigh their options when it comes to this department, but we are not making this change because of evidence of improving the system or to save the city money this is being done out of utter laziness of the council. They should do a national search to hire an Internal Audit manager with audit experience and 1-2 more internal auditors. Instead spending the council’s budget on monogram’s shirts (that they wear under their corporate monogram’s black sleeveless puffy vests) they should hire a consultant to provide them applicants. If we got around 200 applicants for city clerk, I would think a national search for auditors would be gang busters!

BTW, the word ‘Internal’ is in the department name!

I have no problem letting outside entities take a peak at the work the internal audit staff is doing, but we should not be jobbing out this important department out of laziness.

Minnehaha County Commission will cave on 1st Amendment case

As I predicted the policy banning petitioners from certain areas of the courthouse grounds was unconstitutional, and a Federal judge agrees for now;

A federal judge has temporarily blocked a policy recently approved by the Minnehaha County Commission that would have restricted where petition circulators could gather signatures near two county buildings in downtown Sioux Falls.

I also predict the commission will cave on the lawsuit and this will never make the light of day in a courtroom. Unlike the city, the county isn’t real keen on fighting lawsuits, especially ones that have the constitution on their side.

While I do know the name of the former Republican Legislator who pushed a petitioner, I am keeping that under wraps for now just in case it becomes an issue in court.

Maybe our new auditor needs to read Kristi Noem’s book, because she could use some help in her second rodeo.

UPDATE*II: City of Sioux Falls considering eliminating internal audit

UPDATE II: At their discussion today, Council Vice-Chair Alex Jensen said the reason audits have been down is because of staff turnover. They currently have only one full-time auditor. So why not hire more people! What a concept. As the city’s human resources department has been handing out hiring bonuses like candy maybe it is time to take that approach to finding more auditors. The city isn’t looking to hire a brain surgeon or a rocket scientist, if you hire a employment consultant to do a national search I can almost guarantee you would have qualified applicants within 30 days.

The committee voted to explore a hybrid model for the internal audit in which they would have internal staff and external auditors. I am adamantly opposed. It would make more sense to just hire a couple more auditors instead of fiddling around with private CPA companies auditing our departments. The name of the department is ‘internal audit’ and it should remain that way, internal.

If you look at the agenda for Wednesday’s Audit Committee meeting you will see this;

• Internal Audit Outsourcing

I was told today by a city hall mole that the council was unaware of this recommendation and that is likely coming from *COUNCIL LEADERSHIP.

While we do use some outside auditing for the city it is important to maintain an internal department that is a check on the administration and it’s financial systems. The council needs to be in control of this department. If we outsource internal audit there would no longer be an internal city government check on the mayor’s/department’s spending power.

Sioux Falls Internal Audit determines NON-RFP’s lack oversight and transparency


The recommendations of internal audit on NON-RFP’s shouldn’t surprise any of us;

Recommendation 1: We recommend updating EO 104 to reflect the current qualifications-based selection practices. We also recommend that updated verbiage provide significantly more detail outlining the procedural steps (soliciting proposals, vendor qualifications, staffing evaluation panels, documenting evaluation panel outcomes, and negotiating contract price/specifications) and documentation required to enhance internal controls, accountability, and consistency.

This applies to how the city hands out Architecture and Engineering design contracts (City spends about $10 million a year). When NOT using the tried and true system of RFP (Request for Proposal) things are kind of being done in the dark with NO paper trail;

Finding 1: EO 104 Language Out of Date.
• We found that Executive Order 104 lacked adequate, current detail to provide a uniform procedure for securing A/E professional services which is the purpose of the Executive Order. Additionally, some of the procedural language currently included is out of date with current practices. EO 104 refers to a guideline no longer available from the American Council of Engineering Companies of South Dakota.
Finding 2: Lack of Documentation for the Selection Process.
• We were unable to verify if several of the procedures for selecting A/E services were in compliance with EO 104, City policy, and best practices due to lack of supporting documentation stored with the contract in Munis. Documentation must be maintained to provide support and transparency for the QBS process to be in line with best practices.
Finding 3: Maintenance of Approved A/E Firms list does not comply with EO 104.
• Engineering currently does not maintain any qualification documents on the A/E firms selected for projects that don’t need to undergo an RFP. However, EO 104 states that, “It shall be the responsibility of the Engineering Department to establish and maintain an approved list of A/E firms that have submitted qualifications for each type of professional services that may be sought by the City of Sioux Falls. The selection of all services are to be limited to those firms on the approved qualified list.”

There is no list of NON-RFP qualified bidders, no paper trail (or at least one saved), no qualifications or requirements listed and no reference to the selection criteria. In other words this is entirely up to the administration as to who gets picked based on a secret process.

The council really needs to put their foot down and demand we eliminate the NON-RFP process for these contracts. It’s dark; figuratively and literally.

Sioux Falls City Council Agenda, Tuesday Oct 11


Informational Meeting • 4 PM

• Downtown Parking Ramp Update by Erica Beck, Chief of Staff

• Parks and Recreation – Ice Plex/Tennis Center Updates by Don Kearney, Director of Parks and Recreation

Regular Meeting • 6 PM

Item #6, Approval of Contracts, Sub-Item #16, Professional Services Agreement for Site Selection, Study for Sioux Area Metro Consultant will complete a site selection analysis of a maximum of five sites, including the existing site and planning-level cost estimate for a new transit office and garage facility for Sioux Area Metro. TSP, Inc., $94,600. (while the city may want to tell you that they are just considering moving the Bus Barn, it is pretty obvious that they plan to move it for a developer that wants the current location. There is absolutely nothing wrong with this site, it just needs to be remodeled and upgraded. I also find it a bit odd with the hundreds of city employees that work in engineering and public works that we can’t study a proposal internally.)

Item #12, 1st reading, Background & Objective: Ordinance supplements the Sales Tax Fund by an additional $2M for arterial street improvements resulting from platting fee projected revenues in excess of budget expectations and $70K for Police to purchase a vehicle using federal grant dollars; and supplements the General Fund by $100K for Fire due to high fuel costs; $500K for Parks and Recreation primarily due to high fuel costs and spring storm damage repairs; and $400K for the Planning Department based on higher than anticipated lodging at ESF BID tax revenues that are subsequently transmitted to Experience Sioux Falls. (The $500K for parks cleanup is kind of surprising since we are told all the time that the city keeps track of storm cleanup so they can get Federal reimbursement).

Item #13, 1st Reading, Background & Objective: This is the development agreement between the City and Nielson Development for TIF #26. This agreement is for up to $2,140,000, plus financing costs of eligible expenses to assist in funding the development activities required to create an accessible housing subdivision, which includes the site improvements infrastructure, utilities and professional services to develop the site. The end result will include 65 single-family housing units that will be priced below the South Dakota Housing First Time Homebuyer pricing. (this is a TIF that will NOT be passed on to the new homeowners. It is simply keeping the costs down for the developer and the banks that are funding the development. It has also been stated in the media that this will do nothing to provide affordable housing.)

Items #14-15, Resolutions, Background & Objective: Resolution to approve a new five-year facilities management agreement for the Events Center Complex with ASM Global Arena Management, LLC for the period of January 1, 2023 through December 31, 2027. ASM Global Arena Management, LLC is the current facility manager for the Events Center Complex.

Background & Objective: Resolution to approve a new five-year food and beverage services agreement with Ovations Food Services for the period of January 1, 2023 through December 31, 2027. Ovations Food Services is the current food and beverage service provider for the Events Center Complex.

(Notice in the audit meeting on Thursday below that they have audits of these facilities ready but are NOT releasing the information before the 1st reading tonight. I have also implored the council to pass a bond ticket fee of at least $5 per ticket to help pay down the bonds. Councilors and management have complained that promoters would not come here if that attached ticket fee applied. Hogwash. The fee doesn’t take profits away from the management company, the promoters or the artists, it is an additional fee paid for by the very people who use the facility. If you can afford a $150 dollar ticket fee and $9 Bud Lights, you can afford the extra $5 to help pay down the bonds.)

Audit Committee Meeting • Thursday, October 13, 2022 at 4:00 PM

I find it interesting that the Audit Committee is reviewing audits of the Denty 2 days AFTER the 1st Reading for Contract renewals for the Denty at the city council meeting. There is also NO attached documents in the meeting link letting the public know what is in those audits (I’m sure they will magically appear on Wednesday). Makes you wonder what is in the audits that they cannot show they to us before the meeting tonight.

UPDATE II: This is why the Sioux Falls City Council internal audit division is important

UPDATE II: It is interesting that someone can be PUBLICLY appointed but when they depart from their job it is all of a sudden a personnel issue;

Sioux Falls’ former internal audit manager, whose appointment drew controversy and conflict of interest claims from city councilors three years ago, has been serving in a different position since August, according to city officials.

But the reason for the move isn’t clear.

Asked whether she had applied for the position or been moved to it, and whether the move had anything to do with her spouse’s position in the city, O’Toole said that the city could not release confidential personnel information.

The city council publicly appointed her and they have a duty to tell the public why she decided to leave council to work for the mayor. It could be as simple as a press release.

But three years after her appointment divided the council, Nelson is now serving as a housing compliance manager for the city, according to Human Resources Director Bill O’Toole

The topic was raised in an informational meeting of the council on Tuesday, as the city’s internal audit program presented findings from several recent audits.

Starr asked about the lack of a statement from Nelson in a damage recovery billing audit, saying it needed to be more clear that she had not been involved in the audit.

During the discussion, Starr said, “the public doesn’t know she’s gone, so we can’t use that as an excuse.”

The hatefest towards transparency continues in city government.

You have to wonder why the mayor would hire Nelson while she was serving as the Internal Audit Manager? Did the council approve of this? It would be one thing if she quit to run her pet store or she was terminated, but if she quit on her own fruition why would the mayor promote her and take a council employee? Weird stuff.

UPDATE: During the informational meeting today, Councilor Starr did mention that the internal audit manager was no longer working for the city council. During public input I asked how long the council was going to wait before they told the public.

Even though it seems the department is without management (still waiting for the city council to tell us if a very publicly appointed ‘Rockstar’ internal audit manager has left us) the two internal auditors still working for the city council seem to be accomplishing the important work. They did two audits, one on using Lewis Drug for Falls Community Health pharmacy needs;

Finding 1: Lewis doesn’t implement any inventory optimization processes, such as product
minimum/maximum levels, which makes it hard to ensure sufficient inventory levels.
Finding 2: Lewis does not utilize a ‘tracking system’ to retrospectively review dispensing
reports and verify patient eligibility, which is a requirement of the agreement.
Finding 3: 20% of prescriptions tested did not have a designation that the patient was
eligible for 340B drugs. It is a requirement of the agreement that Lewis only dispenses
340B drugs when the prescription form designates the patient as 340B-eligible.
Finding 4: Lewis is not currently providing all of the required quarterly reports listed in the

The other audit was on how the city invoices damage repair to city property;

Finding 1: Materials invoiced with an overhead charge in one City department
Finding 2: Estimated labor rates utilized for invoicing in one City Department
Finding 3: Billing for damages to City property claims procedures not formally

Once you read the details of the audits (that reveal NO fraud) you can assess there are many operational issues that needed to be addressed. Besides the city pulling damage repair estimates from their butts you kind of wonder how Lewis manages their private clientele if they do this poor of a job with Falls Community Health?

Just looking at these two audits shows us why internal audits are important, with or without management.

UPDATE II: Sioux Falls City Council Audit Committee meets Thursday, August 25

Normally this wouldn’t be a blip on the radar, but there have been rumors swirling around city hall that the internal audit manager left, I guess we will find out on Thursday.

UPDATE: You will notice that the agenda is NOW posted, and while there is no mention of the internal audit manager leaving the position, most of the presentations are being done by two of the other existing auditors including the committee’s handbook. We will see if this will be brought up in the committee’s new business remarks at the end of the meeting.

UPDATE II: There was NO mention of the audit manager leaving during the meeting today though the two remaining auditors who had to do the presentations did touch on how the assignments are being ‘covered’. Audit board member Dean Buckenberg asked about being able to hit goals with being short staffed. Still no mention that the manager left.

Most people would wonder what that means?

Rumor has it not only did the audit manager quit, she went back to work for mayor, not sure if it is in the housing or finance department.

I wonder how long the City Council will continue to try to hide the audit manager leaving? Surprised she might be working for the mayor considering she may want to fulfill her life long dream of owning a pet store and being a ROCKSTAR! (Neitzert quote).

Is another City Manager bailing on us?

I remember when we were told how incredible our liquor cart boy Technology Manager was going to be and there was push back from concerned councilors. He got hired anyway. Then he left, and recently his replacement left. You know, all that ‘building a team’ bullsh!t Paul feeds us.

Remember when we were told how great this person would be as our internal auditor even with push back from city councilors.

Now I am not sure if Shana Nelson is quitting the position, but I find the above employment listing interesting since I thought they were fully staffed in the auditors office.

But I do know that while her and her husband Matt Nelson (parking director) are full-time paid directors with the city they are also owners of a very busy pet store franchise. So how is it that you can both work as full-time city managers and manage a retail business? At least we can’t accuse them of drinking at 3’O Clock in the afternoon at a DTSF bar on a weekday like two other directors were a couple of weeks ago (yeah, I saw you Ron Swanson).

Like I said, I am only speculating that there will be turnover in the Auditor’s office, again, but if it is true maybe this time they will actually do a national search for someone who is qualified to run an auditor’s office, or at least one that actually does audits.

City of Sioux Falls Meetings, Dec 6-8, 2021

Audit Committee • 4 PM • Monday 6th

• Update on External Audit of City’s 2021 Financial Statements by Eide Bailly, LLP

• Annual Risk Assessment

• 2022 Proposed Audit Plan

Sioux Falls City Council Informational • 4 PM • Tuesday 7th

• Engineering Design Standards Updates

• 2021 Crime Trends & Statistics by Police Chief Jonathan Thum (So now the City Council is finally getting a presentation yet still NO links to the Power Point presentation).

Sioux Falls City Council Regular Meetings • 6 PM • Tuesday 7th

Item #6, Approval of Contracts,

Sub Item #7, RR Crossing Improvements, $82K (I would assume this has to do with some of the development going on with the RR Redevelopment. I recently had a few beers with a business fellar who works closely in this industry that flat out told me any major changes to rail traffic through this area MUST go thru the FEDS.)

Sub Item #11, Zoo design for Lion exhibit, $482K (I find it curious this is going thru Parks and Rec. So now our parks budget is being used to ‘Design’ things for the Zoo. Just think of using this money for actual improvements to our FREE parks system?)

Sub Item #17, (you will notice this has to do with a payout to the Chamber for BID taxes since the separation from the CVB that NO ONE in the media wants to talk about. There is also NO mention of the dollar amount).

Item #40, 2nd Reading, the mysterious alcohol licensing fees.

Item #47, 2nd Reading, Fire sale for parking lot for UN-affordable housing DTSF.

Item #50, 1st Reading, approving new districts in Sioux Falls

Item #53, Resolution taking money from streets to the Facade Core Revitalization Program, $120K, but who is it going towards?

Sioux Falls Parks Board Meeting • 4 PM • Wednesday 8th

Ironically, this meeting is being held at the Overlook Cafe at the same time as the CRC meeting. How convenient? There is one item on the agenda that sparked my interest under ‘New Business’;

Sanford Parking Agreement – Don Kearney

Not sure what this is about, but maybe it has something to do with the soccer and ball fields they are building right now?

Charter Revision Commission • 4 PM • Wednesday 8th

Well, well, well. It seems the CRC has decided to move this meeting back to 4 PM instead of 3:30 PM like last month. I wonder why? There seems to be a lot more agenda items this time around . . . this will actually be a really interesting meeting. While I support Kirby’s ideas about the mayor, I don’t support rank choice. But it really doesn’t matter because the CRC will KILL all of these proposals anyway.

Sioux Falls City Council Agenda, Oct 4-6, 2021

The City Council and other boards have a full agenda this week;

• The Audit Committee has finally released some audits, been awhile. On Spectra (the people who provide concessions to several city owned entertainment facilities) they found a ton of non-compliance especially with insurance requirements. On the Midco Aquatic Center they have seen an over 50% drop in attendance since 2019 and around a 40% drop in revenue. They were also non-compliant on several fronts and like the Spectra Audit it seems our own Finance Department is not doing regular checks of compliance. For Travel expenses there was several instances of non-compliance. $137,000 travel reimbursements paid directly to travelers (city employees). Many of these results don’t surprise me. I have said the City Manager (The Mayor) is running a rudderless ship and when you have a poor city manager, it results in poor management under that person.

• The Planning Commission has decided to go full rogue by putting every single item on the consent agenda this month. Now items can be pulled for discussion by the Commission or Individuals from the public but I find this startling considering that all items are recommended for approval by the Planning Department and I am sure several Commission Members will recuse due to conflicts. Folks, this is what true cruise control government looks like. I am still puzzled why we even have a Planning Commission.

• The Charter Revision Commission will continue to review the Charter.

• City Council Informational will review building code changes.

• City Council Regular Meeting;

On the contracts and agreements (Item 6) in sub items 17-18 they are paying this consulting firm out of Florida to do this?

And of course sub item #38 where we are reviewing the Human Relations Commission.