While this Matrix is associated with the Port's investigation into inappropriate expense practices conducted by Arnold and Porter LLP, dated 12/7/12., it sets forth a plan of action that will continue into next year providing sound policy, and best practices that will affect the values and culture of the Port of Oakland ('Port') for years to come. This document will be maintained publically and will be updated quarterly. The future actions and their related plans and schedule may change as we implement our recommendations and assess areas of risk or concern. We are an organization that values continuous change and improvement. While the findings of the investigation reveal limited problems, the vulnerability is one that we must address across the entire organization.
Summary of Current Actions Schedule
Conduct Board of Port Commissioners ("Board") discussion on governance to set intentions and expectations of how the Board conveys its values to the public and the staff.
December 10th and December 20th 2012 Board meetings
Report Commissioner travel expenses annually and publicly beginning with CY 12 report March 2013 Update three existing policies and adopt best practices from the public and private sector.
Remove redundancies and confusion by consolidating the three policies for travel related expenses, purchase card use, and training, seminars and conferences. The Port retained a Big Four professional services firm to assist in reviewing the policies.
Cross organizational team to assess and recommend policy revisions by January 31, 2013; meet and confer with labor in February 2013. Report to Board for adoption in March 2013.
Ethics training is required by the State under Government code sec 53235 for specified local government officials. This training is scheduled as part of the Port's annual training program for this Fiscal Year. The port's training will be mandatory for all supervisors, managers and
directors. The training is also mandatory for Commissioners who receive the training every two years.
Training is scheduled for January and February of 2013 at various Port locations
Evaluate the number of Purchase cards (PCard) in accordance with best practices and identified need. Purchase cards can be an important tool for business purposes if used properly. Best practice research revealed that it's prudent to continually assess cardholders' needs for the card and reduce the number of cards, where practical. All Directors will evaluate the need for
existing cards.
(Summary - cont.)
To carry out changes and improvements to expense practices the Port will utilize a cross section of employees, industry experts and best practices. The ultimate solutions may vary from the suggestions on the following pages, but it is our intent to solve the root of the issues that we know about today or that we find as we further assess our current practices
.
Recommended Action Schedule
Report quarterly on Purchase card use. To reinforce transparency, staff will report to the Board on the Purchase card use and its evaluation of the effectiveness of the cards, needed improvements, or concerns on a routine basis.
First report will be one quarter after revalidation of cards
Enhance communication with employees about expenses practices, reinforcing prudence and accountability.
Underway Communicate clearly and comprehensively with employees regarding cultural
change resulting from the inappropriate expenses. Special Departmental Meetings with the Acting Executive Director
Category: Update Policy #AP406 Reimbursement Policy for Travel, Entertainment and Business Expenses
Responsible Party: Deputy Executive Director
Timetable: November 2012 – April 2013
Issue to be Addressed Recommended Action
1. Overlap of Topics with the AP405 policy: Employee Training, Seminar and Conference, and AP511 Policy for Purchase Card Use
Consolidate and clarify three policies (#AP406, #AP511, and #AP405) into two policies for travel related expenses and purchase card use procedures. Create a new policy for “hosting” expenses. Policies reviewed from other similar agencies separated policies that governed hosting expenses
2. Policy refers to "Reasonable" expenses and "Necessary" without defining what they mean
Establish and utilize ethics and value related practices to affect cultural change. Emphasize the policy's requirement that both the individual making the expense and the supervisor approving the expense to exercise good judgment in the appraisal of the reasonableness. Establish reasonable and necessary expense language.
3. Lack of definition or expenditure limits for promotional and business hosting Develop a new hosting policy to guide business conduct. Hosting policies are common industry practice and many similar organizations have separate policies governing these activities.
4. Policy does not give guidance on giving and receiving of gifts. Promotional items are not addressed in the policy
Develop policy with clear rules covering gifts and promotional items. Require disclosure as appropriate. Centralize the coordination and control of
promotional items.
5. Policy needs to enhance guidance on meals and spending limits Establish spending guidelines, possibly per diem. Address qualifying meal and food purchases in the policy
6. Policy allows business class flights for anything over two hours Adjust policy to reflect current best practices across the industry.
7. Policy needs to enhance guidance on hotel expenses and spending limits Establish spending guidelines, possibly per diem and be specific about what approval levels are able to grant exceptions.
Schedule of Actions:
¾ Establish employee work group to revise policy and manage internal reviews December 2012/January 2013 ¾ Review by unions – Meet/Confer Process – February 2013
¾ Board report and finalization – March 2013 ¾ Training for new policies – April 2013
Category: Update Policy #AP511 Purchase Card Use
Responsible Party: Chief Financial Officer
Timetable: November 2012 – March 2013
Issue to be Addressed Recommended Action
1. Employee and their approving official need to be held accountable for violations of the PCard policy. Need to enforce three-strike violation rule to revoke cards.
'Enforce three-strike rule. When policy is updated and rules and approval levels clearly delineated, hold PCard holders and approving officials accountable, i.e. consider imposing discipline on approving officials who review and approve expenses in violation of the updated policy. Training for all P-card holders and expense report personnel will be mandatory and senior management's values and expectations will be developed. In addition, the Port will ask for Cal-Card's assistance in providing mandatory training for Port Staff.
2. Some employees have failed to adhere to the required monthly submission of paperwork and receiving necessary approvals in a timely fashion.
Enforce the rule without exceptions and take away the purchase card of the violator. Periodic reporting of violations and "questionable" items to the Board. 3. Quality of expense justification and documentation has not been consistent Accounts payable staff will confirm that IRS rules of justification are met and will
be empowered to deny expenses that lack that basic justification. Fully utilize technology to improve consistency of documentation.
4. No justification for use of PCard has been required; no established criteria for determining per transaction and monthly spending limits
Establish specific criteria for employees who should receive purchase cards and establish spending limits.
5. Purchase cards can be an important tool for business purposes if used properly. Best practice research revealed that it is prudent to continually assess cardholders needs for the card and to reduce the number of cards where practical.
Evaluate number of P-cards necessary and ensure adequate resources are provided/available to match oversight needs. Re-establish executive level values and expectations.
Schedule of Actions:
¾ Establish employee work group to revise policy and manage internal reviews - December 2012 – January 2013 ¾ Division Directors to evaluate the number of PCards issued - January 2013
¾ Review by unions – Meet/Confer Process – February 2013 ¾ Board report and finalization – March 2013
¾ Reauthorize PCards based on updated policy – April 2013
Category: Update Policy #AP405 Employee Training, Seminar and Conference Policy
Responsible Party: Deputy Executive Director in collaboration with the Director of Corporate Administrative Services
Timetable: November 2012 – March 2013
Issue to be Addressed Recommended Action
1. Overlap of topics with AP406 Merge policies AP406 with AP405 and clearly define procedures and policies for each type of activity
2. There are multiple forms and approvals for travel for business, training, seminars, or conferences - too much bureaucracy and not consistent compliance
Streamline the forms and approval process to make compliance and approval process easier and transparent
Schedule of Actions:
¾ Establish employee work group to revise policy and manage internal reviews December 2012/January 2013 ¾ Review by unions – Meet/Confer Process – February 2013
¾ Board report and finalization – March 2013 ¾ Training for new policies – April 2013
Category: Training
Responsible Party: Director of Corporate Administrative Services
Timetable: November 2012 – March 2013
Issue to be Addressed Recommended Action
1. Lack of regular training on policies #405 #406 and #511 to employees and approvers
Corporate Administrative Services to include regular and consistent training or all employees and commissioners in their annual training.
2. Lack of consistent training on Ethical Business Conduct (AP 17) Corporate Administrative Services to include regular and consistent training for all employees and Commissioners in their annual training schedule.
3. Mandatory State Ethics Training for Elected and Government Officials All Port supervisors, managers, and directors will be required to attend Ethics class for State Government Officials scheduled for sessions in January and February 2013.
Schedule of Actions:
¾ Establish employee work group to develop curriculum for new policies- January 2013 ¾ Establish annual training schedule - Jan 2013
Category: Assessment of Compliance Issues and Risk
Responsible Party: Deputy Executive Director in collaboration with Port Auditor, Port Attorney, and Chief Financial Officer
Timetable: December 2012- June 2013
Issue to be Addressed Recommended Action
1. The Port will benefit from improving its compliance programs and its approach to expense policies and procedures.
Hire a consulting firm to assess the Port’s current compliance environment around expenditures and approvals and have them develop a road map to improvement. The review would include an update of the Port's code of conduct, and modernization of our policies and processes to improve effectiveness.
2. Revise existing document retention policies #AP404 Retention and Handling of Official Files and #AP554 Electronic Communications
Legal Division will work with all other Divisions to revise and update document retention policies for implementation. Each Division will administer hard copy retention and IT will administer electronic records retention.
Schedule of Actions:
¾ RFP for consultant services considered release in January 2013 with March contract consideration. ¾ Assessment to take two months and roadmap to take 2 months.
¾ Final report re compliance to Board in July 2013.
¾ Establish employee work group to revise policies AP404, AP554 and manage internal reviews; January 2013. ¾ Meet and confer with unions by April 2013.
Category: Cultural Change to further Strategic Plan Principles for a high performing workforce; improve the Port’s financial
position, and to create sustainable economic growth
Responsible Party: Executive Director
Timetable: Immediate and Ongoing
Issue to be Addressed Recommended Action
1. The Port wants to improve its value of accountability and wants to use best practices for its expense practices
1. Set expectations for code of conduct and Port values that set a standard above and beyond established policies. Set proper values and expectation from the Executive level consistent with values expressed in the Strategic Plan regarding organizational culture.
2. Reporting of progress and performance of the Matrix items will be public 3. Employees will be part of solutioning, engaged in open dialogue concerning ethics and compliance.
Schedule of Actions:
¾ Draw from best practices to develop a set of values and robust communication plan to reinforce organizational values. ¾ Send regular surveys to employees to understand this plan's effectiveness and to gauge the success in cultural change
