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TAO recommends "smart cards" for new government fuel station

$15K in gasoline lost per quarter without explanation
fili@samoanews.com

To properly track and better monitor fuel usage of the government’s fleet of vehicles, the Territorial Audit Office late last year recommended to top political leaders in the government to look at implementing “smart cards,” similar to those used by the federal government.

TAO made the same recommendation in its report released last week, following a limited scope performance audit of the internal controls at the ASG fuel station, overseen by the Department of Public Works.

In a Sept. 21, 2011 two-page “management advisory letter” to Gov. Togiola Tulafono and the Fono leaders, Territorial Auditor Robert Dantini noted that DPW was in the process of “purchasing a new fuel management control management system” and according to the project overview included in the contract file, there is currently $15,000 worth of gasoline lost per quarter that cannot be accounted for or explained.

Based on TAO’s review of documentation kept on fuel distribution, “we conclude that better management information and monitoring processes need to be implemented to reduce the risk of fuel theft and losses,” wrote Dantini.

For example, in the past 12 months, TAO was charged for fuel that it did not consume, he pointed out and noted the fuel was inaccurately recorded or misappropriated in this case.

Samoa News should point out that at the time this letter was sent, the new fueling station was not yet completed, and Dantini said in his letter that DPW told TAO that gas coupons will continue to be used when the new fueling stations opens.

“Use of coupons will result in imprecise fuel usage information that cannot be reconciled,” the letter says. “This is due to the fact that gallons actually pumped will likely be less than the stated value of coupons redeemed resulting in fuel inventory that is not accounted for.

“TAO recommends that the new [fuel] system incorporate the use of smart cards which will electronically track fuel use,” said Dantini. “Well designed management information reports need to be used in conjunction with the smart cards to enable effective monitoring of all fuel purchased by ASG.”

Dantini also pointed out that the federal government tracks spending by using fuel smart cards and provided a website link to the U.S. General Service Administration smart card program.

TAO also recommend that DPW solicit help from Treasury Department’s Comptroller to obtain specific guidance about how to set up a thorough internal control structure to safeguard against waste, fraud and abuse.

The advisory letter is included in the TAO scope of performance audit of the internal controls at the ASG fuel station.

The audit report states that the review identified a number of exceptions with DPWs daily reconciliation of fuel authorized to be dispensed (coupons) to the amount of fuel actually dispensed (pump meter readings). “We found exceptions with the Fuel Pump Logs and the Daily Fuel Consumption Report in 22 out of 25 days we sampled,” the report says.

Some examples the report cited include:

• Daily fuel consumption report did not reconcile with the amount of coupons authorizing fuel usage. “In absolute terms, we found a difference of 123 coupons between the pump log and the consumption reports, with 300 gallons of gas not properly accounted for.”

• Absence of proper sign offs on the Daily Fuel consumption Report.

• Missing information (date elements) on the Fuel Pump Log.

BACKGROUND

The current audit was carried out during 2011 and at the time of the audit, DPW replaced its old fueling station with the new one to better monitor fuel distribution, replace aging fuel pumps and tanks, and increase capacity of tanks.

The new fueling station—which was to provide cost savings from fuel purchases and from a reduction in the number of fuel deliveries— was completed in Oct. 2011 and is now operational, the report says.

FINDINGS

TAO found that DPW “lacks an adequate system of collecting management information to effectively ensure that fuel is properly accounted for and used only for authorized purposes," according to the report.

Among the interesting issues raised in the TAO findings is that the ASG Budget Office issues IOU’s instead of coupons when departments need fuel but have exceeded their monthly fuel allocation, according to a supervisor at the fuel station.

Additionally, DPW director issues IOUs for DPW vehicles when they need fuel but have exceeded their monthly fuel allocation.

TAO did acknowledge that the new system at the new fueling station has provided improvements. For example, the new system measures the remaining fuel in the tanks electronically, compared to the previous system in which staff measured fuel levels with a dipstick.

TAO says this new system also allows staff at the fuel station to preset the amount of the fuel to be dispensed into each vehicle, compared to the previous system which required staff to manually turn the fuel pumps on and off for each fueling.

ADDITIONAL RECOMMENDATIONS

Among the TAO recommendations is for DPW to actively monitor fuel usage reports and at least monthly reconcile fuel quantities on hand with purchase and usage, and collaborate with Treasury Department to develop internal controls including written policies and procedures aimed at effectively controlling and monitoring purchase, distribution, consumption, and inventory of fuel.

DPW RESPONSE

In response, DPW says this audit covered many of the issues with the old fueling station. DPW also pointed out that when departments would IOU the fuel, the Budget Office—who issues coupons—would reconcile the amount owed when the following month’s fuel allocation would be distributed.

Also, said DPW, its staff at the fueling station also provide detailed monthly reports listing department vehicles fueled, odometer readings, MPG per vehicle, and coupons per vehicle. This information is then provided to each department so they can manage their fuel consumption.

As for the new fuel station, DPW said, it now provides among other things, exact fuel pumped into each car and the coupon dollar amount is punched into the pump. The new tanks have been equipped with new meters that can print out the exact amount of gallons in each tank.

As for the smart card program, DPW has reviewed the smart card information provided. However, DPW says some of the vehicle data would still be manually entered into the new fuel system. “So although this removes the coupons entirely it still does not address the other important data, the same data that we manually enter now [which is] vital to the records and controls as advised by TAO,” said DPW.



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