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City of Laguna Niguel News

Posted on: August 11, 2017

Press Release: Final Agreed-Upon Procedures

Final Agreed-Upon Procedures Review of City Purchase Orders and Contracts Process Offers Recommendations to Improve Purchasing Process

Laguna Niguel, CA – The final Agreed-Upon Procedures report reviewing the City’s purchase orders and contracts process has been finalized. The City’s independent auditor, The Pun Group, was hired to perform a detailed review of these two areas (purchase orders and contracts process) identified by Laguna Niguel Mayor Jerry Slusiewicz and Mayor Pro Tem Fred Minagar. The review covered a two-year period from July 1, 2015 to June 30, 2017. 

The auditors reviewed the City’s Municipal Code and Administrative Policy on Purchasing. The auditors also conducted a thorough review of 21 vendors. They did not report any illegal activity. The auditors also provided recommendations for best practices that generally include: 

(1) Entering into contracts or multi-year agreements to better budget for programs and services.

(2) Consider that the City Manager limits his delegation of purchasing authority to a department director rather than a purchasing manager. The Municipal Code provides for the City Manager to delegate his $25,000 purchasing authority. 

(3) Improving monitoring processes to ensure: purchasing dollar limits are not exceeded when multiple purchase orders are issued to the same vendor for different projects; contracts are used for maintenance and repair services; purchase orders are issued prior to ordering goods from vendors; and, change orders to multi-year contracts are approved prior to commencing additional work.

Management staff reviewed the auditor’s report and found that many of their suggestions have already been implemented. To enhance compliance with the City’s purchasing process, employees received a copy of the purchasing policy in December 2016, followed by two purchasing training opportunities in June and July 2017 where 57 employees attended. Additionally, every department is in the process of reviewing their internal procedures to strengthen controls, thereby reducing the possibilities of errors. 

One of the most significant investments is the purchase of a new finance software system to better monitor contracts and purchases. The software is expected to be fully operational in late summer 2018. The current manual system of four-part hard copy paper purchase orders will be upgraded to an electronic system to strengthen monitoring capabilities.

With regards to delegation of purchase authority, the new City Manager can choose to retain the purchasing authority of up to $25,000 or delegate it to a department director. Currently, the Interim City Manager who also serves as the City’s Finance Director holds the purchasing authority. 

The auditors did not report any illegal or malicious intent but rather suggested that purchasing could be improved by stronger monitoring practices, improved automated systems, additional approval procedures, and continued employee training and education. With new and improved practices in place, the City’s finances will continue to be fiscally sound. 

The auditors will present their findings at the City Council meeting on September 5, 2017 at 7:00 p.m. at Laguna Niguel City Hall. 

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Contact
City of Laguna Niguel
30111 Crown Valley Parkway
Laguna Niguel, CA 92677
Tel: (949) 362-4300
Fax: (949) 362-4340

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