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Krym: Fuel audit report shows flaws within system

By Staff | Jun 20, 2011

City Auditor Margaret Krym said the much anticipated fuel audit report did not prove or disprove whether fuel was stolen or missing, and instead only spoke to the inherent flaws within the system of controls that the city has been relying on for over a decade.
The figure of $31,693, as identified within the report, does not represent missing fuel, only the difference between what was spent, and what was allocated for fuel between 2005 – 2010, she said.
“We removed the issue of who said what and looked only at control over the system and whether or not it was effective,” Krym said. “We found there was no control and the system was ineffective.”
The so-called “Towler Report,” which became the basis for Bill Towler’s report on the city’s fuel management procedures last year, identified the city’s fuel controls as being suspect. He wrote that security measures were easily circumvented, deliveries were not monitored and that management controls are “corrupted and ineffective,” as he wrote in the cover letter of his report.
Towler wrote that fuel usage in the city increased nearly 100 percent after FY 2006, representing 360,000 gallons.
He also wrote that over a million dollars can be saved each year if the city were to revert to FY 2006 levels, but Krym said those were assumptions made by Towler because of “gaps” in the data.
Those gaps, according to Krym, were painstakingly reconstructed by county auditors and revealed that information was simply removed from the database by the software itself and moved into a “Delete Log” that included items such as deleted PIN numbers, dates, gallons of fuel pumped into a vehicle and odometer readings. Over 76,000 such records were found in the delete log, she said.
Removal of that data by the software was unintentional, she said, and it was when auditors were trying to reconstruct that data that those anomalies were discovered.
“It was never the software manufacturer’s intent to have it function in that way,” Krym said.
City Manager Gary King said the media was responsible for saying that $5 million of fuel was missing and that Towler never once used that figure.
King said the audit highlights and validates the flaws of the system discovered by Towler and that the city was well on its way to correcting those risks.
Fuel deliveries are now being monitored, he said, and all PIN numbers used by city staff have been re-authorized.
“We’ve made a lot of progress. A number of things are already done,” King said.
The fuel audit report will make a return appearance when City Council returns from its summer hiatus. It will be formally presented the second time around, with both Krym and the county auditors available in chambers for a question and answers session.
Councilmember Marty Mc-Clain said the report only validated his belief that no fuel was missing and that the city spent $120,000 on both the audit and Towler’s salary, which he has collected over six months working for the city.
He said the report neither proved nor disproved anything and that the idea of missing fuel amounted to nothing more than “hoopla.”
If anything, McClain was left wanting more.
“There will be some explaining, I can assure you,” he said.
Councilmember Chris Chulakes-Leetz said Towler was able to accomplish more in 90 days worth of work than former City Manager Terry Stewart was able to do in four years by identifying the city’s fuel security issues.
Meanwhile, Councilmember Pete Brandt said Towler’s findings were “corroborated” with the audit report, and local media outlets “jumped to conclusions” about the report and created much of the misinformation surrounding the issue since last November, when Towler made his presentation to council.
“We’re beginning to get to the truth of the matter with this report,” Brandt said.