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HomeMy WebLinkAbout2022-4107CONTRACT #2022-4107 COLUMBIA HEIGHTS POLICE DEPARTMENT MEMORANDUM To: Kelli Bourgeois, City Manager From: Lenny Austin, Chief of Police Subject: External Property Room Audit Date: October 14, 2022 Starting in 2020, the Police Department's Strategic Plan included an action item for conducting an external audit of our Property Room to be conducted every other year (in opposite years of the required Body Worn Camera audit). Early that year, we researched possible options for auditing firms and found that there were not many firms conducting audits of that nature. We were able to obtain two quotes, one from McGrath Consulting who conducted our staffing study, and another from Redpath and Company, the firm the City uses for its financial auditing. The quotes were similar, but we determined that Redpath offered a more complete review, and we ended up engaging with them for the audit. Redpath had quoted an estimate of $6,000 to $7,500 for the work and ended up charging us $7,500 once the audit was completed. For that, we received a comprehensive review of seven areas pertinent to the operation of the Property Room. This year, as we were preparing to schedule the external Property Room audit, we contacted Redpath for a quote. They originally quoted $9,000 for the same `agreed upon procedures' that they conducted in the 2020 audit, citing higher personnel costs. After some discussion and a review of the `agreed upon procedures,' they came back with a quote of $8,000 for the audit. The Police Department is recommending that we enter into an agreement with Redpath and Company for the 2022 Property Room Audit. Their quote is $500 higher than their fee from the 2020 audit, however, we feel the consistency of having the same auditing firm as last time offers a benefit. City of Columbia Heights The Police Property Room Contract for Agreed -Upon Procedures Page 3 We estimate that our fees for these services will be $8,000. You will also be billed for travel and other out-of-pocket costs such as courier fees. The fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the engagement. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. In accordance with our firm policies, work may be suspended if your account becomes 120 days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign this letter and return it to us. If the need for additional procedures arises, or the procedures need to be modified, our agreement with you will need to be revised. It is customary for us to enumerate these revisions in an addendum to this letter. If additional specified parties of the report are added, we may require that they acknowledge in writing their agreement with the procedures performed, or to be performed, and their acknowledgement that the procedures are appropriate for their purposes. Sincerely, REDPATH AND COMPANY Qjou� Qx,�� Rebecca M. Petersen, CPA RMP/ajf RESPONSE: This letter correctly sets forth the understanding of The City of Columbia Heights, MN. Signed: Title: ir'�dt Date:la ; -Z Signed: Title: Date: it) - a- ss. Exhibit A Property Room Agreed Upon Procedures 1. Obtain a copy of Property Room Policies and Procedures Manual. 2. Security of Property Room: a. Obtain understanding of access risks and the existing controls relating to access risks (i.e. key or access card controls, access logs documenting entry into the property room, after-hours access controls, alarms and surveillance cameras/videos, enhanced security area). b. Select a sample of days and perform test to determine access controls are being adhered to and functioning as designed including, inspecting the access log for compliance with access control procedures and conducting an inventory of keys and a review/audit of the key/access code log, and monitoring that keys/access codes were changed when warranted. 3. Packaging: a. Obtain an understanding of packaging requirements for the City's Property Room Policies and Procedures Manual. b. Perform tests to determine packaging requirements are adhered to, which may include the following: i. Is currency uniquely packaged and sealed? Do currency packages have a cash count listed by denomination and total, and specifically noting the presence of any suspected counterfeit bills or buy funds? Is there a two - person rule employed when counting, opening, or transferring currency? ii. Are drugs uniquely packaged and sealed? Is there a two -person rule employed when handling drugs? iii. Is evidence that is a potential biohazard plainly marked with a biohazard label? Are specific protocols for handling needles and syringes specified in the procedures? iv. Are firearms unloaded before they are submitted to the property and evidence room, and tagged as inspected and unloaded? 4. Documentation: a. Obtain an understanding of the documentation requirements per the City's Property Room Policies and Procedures Manual. b. Select a sample of case files and determine the following documentation is present: i. The case number and incident type (e.g., felony, gross misdemeanor, misdemeanor, juvenile), and whether the property is evidence, property subject to forfeiture, found property, or property held for safekeeping; ii. The date the property was seized, the date of the offense, and the date the property was received by the property and evidence room; iii. The investigating and/or booking officer's name and/or badge number; iv. The victim, the suspect, the owner of the property, and the finder of the property; v. A unique property and evidence room identification number; and Exhibit A vi. A detailed description of the property, including: • The make, model, and serial number of any firearms; and • A cash count of currency listing the denominations of the cash. c. Select a sample of items in the property room, trace items back to case files and determine the following documentation is present: i. The case number and incident type (e.g., felony, gross misdemeanor, misdemeanor, juvenile), and whether the property is evidence, property subject to forfeiture, found property, or property held for safekeeping; ii. The date the property was seized, the date of the offense, and the date the property was received by the property and evidence room; iii. The investigating and/or booking officer's name and/or badge number; iv. The victim, the suspect, the owner of the property, and the finder of the property; v. A unique property and evidence room identification number; and vi. A detailed description of the property, including: • The make, model, and serial number of any firearms; and • A cash count of currency listing the denominations of the cash. 5. Tracking Systems: a. Does documentation procedures describe how the property and evidence room is tracked? i. The location of the property/evidence within the property and evidence room; ii. The chain of custody of the property/evidence, including documentation about any time the property/evidence is released from the property and evidence room; iii. The legal status of the property, including the status of any legal proceedings related to the property or evidence; and iv. The disposition of all property and evidence, including who authorized the disposition of the property, the date the authorization was obtained, and verification that the disposition of the property occurred as authorized. 6. Disposition of Property: a. Obtain an understanding of the disposition requirements per the City's Property Room Policies and Procedures Manual. b. Selecting a sample of closed or inactive files, trace items from the file through the tracking system to the location of the property, or if final disposition of the property has occurred, verifying the documentation about the property's disposition. 7. Inventory Observation: a. Obtain a complete inventory of the items in the property room and select a sample of items for physical observation to determine accuracy of inventory list. AND COMRANY October 13, 2022 City of Columbia Heights 590 40th Avenue Northeast Columbia Heights, MN 55421-3878 We are pleased to confirm our understanding of the terms of our engagement and the nature and limitations of the services Redpath and Company, Ltd. and affiliated entities (herein referred to as Redpath and Company) are to provide for the City of Columbia Heights, Minnesota (City). We will apply the procedures listed in the attached schedule to assist the City in determining compliance with established internal controls for the Police Property Room. By signing this engagement letter, you agree to those procedures and acknowledge that the procedures to be performed are appropriate for the intended purpose of the engagement, which is to determine that the Police Property Room controls have been implemented. Our engagement to apply agreed - upon procedures will be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA). Those standards require that we obtain your written agreement to the procedures to be applied and your acknowledgment that those procedures are appropriate for the intended purpose of the engagement, as described in this letter. A refusal to provide such agreement and acknowledgment will result in our withdrawal from the engagement. We make no representation that the procedures we will perform are appropriate for the intended purpose of the engagement or for any other purpose. Because the agreed -upon procedures do not constitute an examination or review, we will not express an opinion on the Police Property Room controls. In addition, we have no obligation to perform any procedures beyond those to which you agree. We plan to begin our procedures on approximately November 1, 2022 and, unless unforeseeable problems are encountered, the engagement should be completed by December 31, 2022. We will issue a written report upon completion of our engagement that lists the procedures performed and our findings. Our report will be addressed to The City of Columbia Heights. If we encounter restrictions in performing our procedures, we will discuss the matter with you. If we determine the restrictions are appropriate, we will disclose the restrictions in our report. Our report will contain a paragraph indicating that had we performed additional procedures, other matters might have come to our attention that would have been reported to you. 55 5tn Street East, Suite 1400, St. Paul, MN, 55101 www.redpathcpas.com City of Columbia Heights The Police Property Room Contract for Agreed -Upon Procedures Page 2 There may exist circumstances that, in our professional judgment, will require we withdraw from the engagement. Such circumstances include the following: • You refuse to provide written agreement to the procedures and acknowledge that they are appropriate for the intended purpose of the engagement. • You fail to provide requested written representations, or we conclude that there is sufficient doubt about the competence, integrity, ethical values, or diligence of those providing the written representations, or we conclude that the written representations provided are otherwise not reliable. • We determine that the description of the procedures performed, or the corresponding findings are misleading in the circumstances of the engagement. • We determine that restrictions on the performance of procedures are not appropriate. An agreed -upon procedures engagement is not designed to detect instances of fraud or noncompliance with laws or regulations; however, should any such matters come to our attention, we will communicate them in accordance with professional standards and applicable law. In addition, if, in connection with this engagement, matters come to our attention that contradict the City's Police Property Room compliance with established controls, we will communicate such matters to you. You agree to the procedures to be performed and acknowledge that they are appropriate for the intended purpose of the engagement. You are responsible for establishing controls for the Police Property Room. In addition, you are responsible for providing us with (1) access to all information of which you or the appropriate party are aware that is relevant to the performance of the agreed upon procedures on the subject matter, (2) additional information that we may request from the appropriate party for the purpose of performing the agreed -upon procedures, and (3) unrestricted access to persons within the entity from whom we determine it necessary to obtain evidence relating to performing those procedures. At the conclusion of our engagement, we will require certain written representations in the form of a representation letter from management that, among other things, will confirm management's responsibility for establishing and complying with internal controls for the Police Property Room. Rebecca Petersen is the engagement director and is responsible for supervising the engagement and signing the report or authorizing another individual to sign it.