Water Department Audit FY2009 & Division of Aviation Audit FY2008-09 – Butkovitz Finds Water Shut-Of


Audit Date: December 4, 2012
Controller: Alan Butkovitz

Executive Summary


For Immediate Release:
December 4, 2012

Contact: Harvey Rice
215-686-6696

Butkovitz Finds Water Shut-Off Policy Cuts Collections by $1.7 Million
City Controller’s Water Department audit indicates City ordinance
restricting shut-offs negatively impacts collections

Water Department Audit FY2009

Division of Aviation Audit FY2008-09

PHILADELPHIA – City Controller Alan Butkovitz today released the latest audit of the Philadelphia Water Department (PWD) that found a $1.7 million reduction in water bill collections as a result of the City’s ordinance restricting additional water shut-offs days.

In March 2008, the City enacted legislation, which prohibits the PWD from shutting off the water service of any residential property on Fridays, Saturdays, Sundays, legal holidays, and any day immediately preceding a legal holiday. The shut-off restrictions have resulted in 113 less days for bill collections and are in addition to the 121-day winter moratorium.

In the fiscal year after the ordinance passed, collections by PWD’s Delinquency and Restoration Services (DRS) Unit declined, from the previous year, by 31 percent, or $1.7 million. The DRS collects payments directly from delinquent customers in lieu of shutting off their service.

In the three years before the implementation of the ordinance, 34 percent of DRS’ revenue receipts were collected on days where shut-off is now prohibited.

“The City should revisit the ordinance and determine whether the additional shut-off restrictions can be eliminated or modified. It cannot afford revenue reductions for a service that’s costing our City more money every year to properly provide. Since 2002, water and sewer rates have risen almost 50 percent,” said Butkovitz.

The Controller’s audit also found that DRS crews do not issue receipts for all payments received from customers. The lack of issuing and accounting for pre-numbered receipt forms along with an inadequate reconciliation of collections, increases the risk that crews could be collecting payments from customers and not remitting them.

“These crews need to retain a copy of all collection receipts issued and designate someone independent of the collection process to reconcile the receipt totals to the funds collected,” said Butkovitz.

Other findings from the Controller’s audit include the following:
-The duties of the employees handling the department’s $13 million material and supplies inventory were not properly segregated, which could lead to the theft of inventory items.
-The department was still not consistently enforcing the city’s sick leave policy.
– An employee charged with administering the department’s $30,000 Consent Decree Account performed incompatible duties, which could result in the misappropriation of funds and the manipulation of amounts on the bank reconciliations.

In addition to the Water Department audit, the Controller released the latest Division of Aviation audit that found $77,500 in undeposited checks from businesses that were interested in obtaining contracts with the Department.

The three checks were payable to the City of Philadelphia, but none of them were endorsed on the back, which protects the city’s interest in the event the checks were lost, stolen, or misappropriated. One check in the amount of $50,000 was held for eight years and never cashed. Another undeposited check for $25,000 was held for two years.

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