Audit Blasts DWP Accounting, Spending

City Controller Rick Tuttle on Thursday blasted the Department of Water and Power for sloppy accounting and deliberately ignoring his rulings on expenses.

In a report released Thursday, Tuttle listed of 11 findings in which his auditors detailed misuse of travel and expense accounts.

Deputy Controller Tim Lynch described the team’s findings as “unusual and not routine.”

“There are serious problems of internal controls,” Lynch said.

In his report, Tuttle concluded, “the internal control policies and procedures . . . have weaknesses that could affect the security of DWP assets.”

The audit grows out of Tuttle’s longstanding scrutiny of DWP spending practices. In 1989 he refused reimbursement of $879 in expenses for six top DWP officials and their spouses for dinner at the Sheraton Grand Hotel. A year later he denied a $2,800 bill for a charter jet trip for then-DWP General Manager Norm Nichols.

In the current audit, the controller’s office, which acts as a watchdog of the city’s finances, reviewed three trust accounts maintained by the DWP for petty cash and travel expenses.

Tuttle found that cash balances in the various accounts were poorly managed. For example, the controller said that the failure to invest excess cash in one account cost the department $16,900 in lost interest last year.

Overall, Tuttle wrote, “the reliability and integrity of reported information is not adequate because of a lack of compliance with existing policies, procedures and regulations.”

A DWP spokesman said that most of the violations were of a technical nature and involved no criminal wrongdoing. DWP spokesman Ed Freudenberg said that virtually all of the recommendations made by the controller during the course of the audit have already been implemented over the past few months.

But one area of continuing disagreement involves reimbursement of expenses that Tuttle found to be excessive.

In one case, Tuttle had denied reimbursement of expenses at a Denver restaurant for a party of DWP employees. But on the same day that Tuttle refused to authorize reimbursement for the expenses, the DWP issued a check to the employee for the full amount.

“The actions of the DWP ignored the authority of the controller to approve or deny the expenditure of public funds,” said Tuttle in the report.

Lynch said the DWP action was not a mistake, but “was conscious and deliberate.”

The tab for the Denver outing was not immediately available. DWP officials have defended the restaurant party as a legitimate expenditure. The matter is to go before the City Council for a determination sometime in the next few weeks.

In another case, an employee was given a $2,274 advance for travel expenses, and was then paid an equal amount again when he filed his accounting. Tuttle’s auditors uncovered the double payment and the funds have now been returned by the employee.

The audit also found lax monitoring of outstanding advances. More than 63% of the cases checked were more than 120 days old, even though DWP policy requires for advances to be accounted for within 10 days. In two cases, Tuttle found that former employees had left the agency with outstanding advances totaling $281.