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Citywide Fuel Expenditures (Part 1 of 4) - Fleet Services Complete Report

Citywide Fuel Expenditures (Part 1 of 4) - Fleet Services Complete Report

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Published by Long Beach Post
City Auditor Laura Doud's first report of four examining the City's fuel consumption. This report focuses specifically on Fleet Services, which include all City Departments minus the Water and Harbor Departments.
City Auditor Laura Doud's first report of four examining the City's fuel consumption. This report focuses specifically on Fleet Services, which include all City Departments minus the Water and Harbor Departments.

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Published by: Long Beach Post on Jul 11, 2013
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08/27/2013

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Office of the City Auditor 
Citywide Fuel Expenditures
Fleet Services
Report 1 of 4
 July 2013
 Audit Staff 
City Auditor: Laura L. DoudAssistant City Auditor: Deborah K. EllisDeputy City Auditor: Terra Van AndelSenior Auditor: Hannah MorganStaff Auditor: Katie Boman
 
Staff Auditor: Marcos Chagollan
 
 
 
Table of Contents
Executive Summary ...................................................................................................... 1
 
Background ................................................................................................................... 2
 
Fleet Service’s Fuel Operations ................................................................................................ 3
 
Fueling Methods ........................................................................................................................ 4
 
Fuel Management System ........................................................................................................ 6
 
Objective & Methodology ............................................................................................. 6
 
Results ........................................................................................................................... 7
 
Fuel Keys Provide Limited Controls When Accessing Fuel....................................................... 8
 
System Parameters Do Not Necessarily Restrict Fuel Usage................................................. 12
 
Fuel Expenditures Are Not Reconciled Prior to Billing ............................................................ 15
 
Recommendation ........................................................................................................ 16
 
 Appendix
 Management’s Response……………………………………...…………...……………..A-1
 
 
1
Executive Summary
We have conducted an audit of Citywide fuel expenditures. The City currently has threefueling operations overseen by the Fleet Services Bureau (Fleet Services), the HarborDepartment and the Water Department. Due to the use of multiple fuel systems and thesize and complexity of the fuel operations, the results of our audit will be communicatedin a series of four reports. This is the first report of the four and focuses on the City’slargest fuel operation, which is overseen by Fleet Services. Reports two and three willdiscuss results relating to the Harbor and Water Departments’ fuel operations,respectively. The final report will explore the possibility of consolidating fuelingoperations Citywide. Therefore, numbers and examples discussed throughout thisreport pertain to the Fleet Services’ fuel operation only, which encompasses the entireCity’s fuel use with the exception of the Water and Harbor Departments.Fleet Services purchased 1.8 million gallons of fuel at a cost of approximately $5 millionin fiscal year (FY) 2012. Fleet Services has used the EJ Ward fuel managementsystem since 1997 to capture fueling transactions. Unfortunately, the current systemconfiguration provides limited controls over the dispersal of fuel. Combined with a lackof adequate reporting and transactional review, the City is vulnerable to possible fraudand abuse.Fleet Services uses fuel keys to control fuel access and register how fuel is distributed.However, multiple key types, inconsistent use of key status, and the ability to exceedparameter controls allows employees to fuel any vehicle, whether it is owned by the Cityor not. Both Fleet Services and User Departments recognize the importance of monitoring fuel operations, but they do not appear to have adequate staffing resourcesto ensure controls are sufficient or to consistently review fueling transactional data.Instead, they monitor their fuel cost from a budget perspective, identifying anysignificant fluctuations in each year. While the User Departments may remain withinbudget, they have no assurance the fueling charges are correct.We understand Fleet Services is exploring a fuel system upgrade. For the upgrade toprovide significant improvements over fueling operations, the City must first determinethe most effective way to disperse fuel, whether that be through reconfigured use of fuelkeys or other means, such as vehicle fuel rings, such as those used by the HarborDepartment’s fuel operation. Converting this same data and system structure to a newversion of the software will likely only further exacerbate the issues. The City must alsoexamine its policies and procedures to ensure there is adequate monitoring andanalysis of the data.

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