Columbus - A performance audit requested by the Northeast Ohio Regional Sewer District released today by Auditor of State Dave Yost provides seven recommendations related to the District’s internal control system.

“Strong financial controls are the foundation of strong organizations and build safety for public money,” Auditor Yost said.  “I commend the leadership of the Northeast Ohio Regional Sewer District for requesting this review.”

Performance audits provide an objective analysis for management to improve program performance and operations, reduce costs, facilitate decision-making by parties with responsibility to oversee or initiate corrective action, and contribute to public accountability.  Typically, performance audits identify cost savings for entities and find ways to more efficiently use the scarce resources available.  However, the performance audit of the Northeast Ohio Regional Sewer District was specifically tailored and limited in scope to analyze internal controls that prevent fraud and abuse of taxpayer dollars.
 
In October 2010, the Northeast Ohio Regional Sewer District contacted the Auditor of State’s office in an effort to gauge improvement efforts following the departure of a former general counsel, who was subsequently convicted of crimes related to the district’s capital project procurement process. District leaders requested that the auditor’s office review and analyze internal controls over the procurement and contracting process for capital projects, and offer recommended or leading practices.
 
During the course of the performance audit, a sample of the district’s contracts was reviewed.  AOS staff recommend that the district specify allowable per-diem costs related to travel, unallowable costs, and implement a requirement for the submission of itemized receipts in its contracts. When closing out projects, the district should evaluate the performance of its contractors and consultants, and ensure that inspections and material testing are completed when required by contracts.  Additionally, AOS staff recommend that the Northeast Ohio Regional Sewer District develop policies and procedures for the consultant selection process, as well as a policy that addresses best value procurement.  

While the performance audit offered seven recommendations, it also concluded that the district’s controls and related processes were adequate in several areas. Most notably, the audit identified no significant issues involving change orders in the sample of 53 contracts. Further, the district has established a formal and competitive process for selecting contractors to perform emergency repairs that enables it to respond to emergencies in a timely manner.

The Northeast Ohio Regional Sewer District, located in Cuyahoga County, was budgeted to spend approximately $27.2 million in contractual and professional services in 2010.
 
A full copy of this performance audit can be found online.