1. Internal Audit Review For Small Projects Cyndi Fout Project Services Director October 26, 2009

2. 2 Internal Audit Review Small Construction Projects Under $50K –March/April 2009 –22 projects were selected –Assess the effectiveness of: Internal Controls University Policies and Procedures Applicable laws and regulations

3. 3 Internal Audit Review Improvement Area’s Identified 1.Oversight of Contractor Selection 2.Project Scope & Estimate Documentation 3.Project Scope & Estimate Approvals 4.Transferring Project Funds 5.Single Projects Conducted as Multiple Projects 6.Prevailing Wage 7.Administrative Fees

4. 4 Internal Audit Review Oversight of Contractor Selection –Findings Management does not formally monitor contractor selections or analyze which contractors a particular project manager may routinely use –Recommendation Establish procedures and controls to better monitor the selection of contractors for small projects that are not required to be competitively bid

5. 5 Internal Audit Review Oversight of Contractor Selection (cont’d) –Management Response Query in NetLink will be developed that will summarize the number of contracts held by each vendor by PM for improved monitoring of the work allocationsNetLink –Summary reports with drill down capabilities to be developed by end of yearSummary reports –MBE/EDGE information will be included Reviewed monthly by FDC Leadership

6. 6 Internal Audit Review Project Scope & Estimate Documentation –Findings 1 project did not have a documented project scope to support project estimate 1 project did not have an initial cost estimate documented 2 projects final costs were not reasonably reflective of the original estimate and no information was documented to explain the discrepancies

7. 7 Internal Audit Review Project Scope & Estimate Documentation (cont’d) –Recommendation Strengthen procedures and controls to ensure that all projects have documented scopes, cost estimates, and explanations if the estimates are not reasonably accurate –Management Response Review in Project Delivery Training –Initiate/Plan the Project Training in September

8. Internal Audit If the original project budget was $10,000 and there is an increase of $500 to bring the new total project cost to $10,500, which the customer is required to fund, what do you need to do? –Document Cost estimate template with explanation –Obtain customer approval Email –Save in project file as either a PDF or hard copy –Has to include chartfield information Revised estimate letter or cost estimate template –Place customer approval in project file (electronic or hard copy) In the above scenario if the increase was $2,000 what else would you need to do? –FIPA

9. Internal Audit T he original project scope that was submitted on the project intake request was to renovate a room in “Bldg A” into lab space. An estimate letter was completed, approved by the customer, and A/E selected. During the design phase it was determined that it would be more beneficial to renovate a room in “Bldg B”. No increase in cost. What steps need to be completed? –Customer Approval of revised scope –Revise scope provided to Teresa to update NetLink –Documentation placed in project file

10. 10 Internal Audit Review Project Scope and Estimate Approvals –Findings: 1 project did not have documentation to support management approval of the initial project scope and cost estimate 10 projects did not have documentation to support the project users acceptance of the initial project scopes and cost estimates –Recommendations Strengthen procedures and controls to ensure that all project scopes and cost estimates are approved and accepted by both FOD mgmt and customer

11. 11 Internal Audit Review Project Scope and Estimate Approvals (cont’d) –Management Response Review in Project Delivery Training –Initiate/Plan the Project training in September

12. 12 Internal Audit Review How do customers approve projects? –Estimate Letters –Emails (OSUMC)

13. 13 Internal Audit Review Transferring Project Funds –Findings: 2 projects did not have funding transferred prior to work being performed and billed –Recommendations Strengthen procedures and controls to ensure project funding is received prior to work commencing –Management Response Review in Project Delivery Training –Initiate/Plan the Project Training in September

14. 14 Internal Audit Review How can you tell if funds have been transferred in NetLink? NetLink What funding sources do not require funds to be transferred prior to expenses? –Bonds –OSUMC –Student Life (if we use their plant fund) –OSURF Grants –State Funds If a project was funded with one of the above funding sources would an IFA be required?

15. 15 Internal Audit Review Should the PM send a purchase request to the Contracts Administrator without funds being transferred if the customer is funding the project with general funds? –No with development funds? –No with OSURF grant funds? –Yes ….. verify with CA that they have rec’d a purchase order with department grant funds? –No Should the CA approve a purchase request without funds being transferred for any of the above scenarios?

16. 16 Internal Audit Review Single Projects Conducted as Multiple Projects –Findings: 4 individual projects that were created and conducted at the same time and location as another similar project already in progress –Recommendations Strengthen procedures and controls to ensure that new work requests are processed through the change order process rather than initiating a new project when an existing project is already in progress

17. 17 Internal Audit Review Single Projects Conducted as Multiple Projects (cont’d) –Management Response Implement parameters by which these scenarios will be monitored in the future –If work is being requested by the same customer, in the same building and same relative time frame the projects will be combined –This will be monitored through Project Services Group during the Project Intake Process (Diane) and Project Approval (Teresa)  If projects are identified they will be given to the DoP for review and decision on path forward

18. 18 Internal Audit Review If you have received 2 projects within a few weeks of each other that were requested by the same customer and in the same building what should you do? –Determine if work is going to start and complete fairly close together Yes – combine them No – they can be completed separately –Unsure….discuss with your DoP

19. 19 Internal Audit Review Prevailing Wage (PW) –Findings: 2 instances where projects exceed the PW threshold with no supporting documentation maintained to attest to the payment of PW 1 instance where a single project exceed the PW threshold but was split into 3 individual projects with documentation supporting the payment of PW for only 1 of the 3 projects. –Recommendations: Strengthen procedures and controls to ensure documentation verifying the payment of PW

20. 20 Internal Audit Review Prevailing Wage (PW) cont’d –Management Response Review PW limits during Project Delivery Training –Procure Construction Services training in August

21. 21 Internal Audit Review What are the current PW Thresholds? –Renovation$22,166 –New Construction$73,891 PW thresholds are based on _______ cost Total Project What do you need to do if your original project cost was $20,000 and an unforeseen condition causes an increase of $5,100 to the total project cost (revised total project cost is $25,100)? Obtain revised quote from contractors to include pw on original and change order work –FIPA (10% increase) –Customer approval Revised estimate letter Email –Documentation in project file

22. 22 Internal Audit Review 7. Administrative Fees –Findings: 2 projects did not appear to have the appropriate administrative fees assessed –Recommendations Strengthen procedures and controls to ensure that all administrative fees are properly assessed for each construction project –Management Response Project Accounting will recalculate/audit fees at project closeout to insure appropriate fees have been charged Review in Project Delivery Training

23. 23 Internal Audit Review Summary –Make sure you are placing documentation in the file for project estimates, scopes, approvals and changes –Convert emails to PDF’s if needed –Don’t break up projects –Spread the work among multiple vendors –Verify funds are transferred prior to procurement activities –Know the PW thresholds – get revised quotes if needed

24. 24 Internal Audit Review