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Committee recommends council accept utility billing audit; auditors find accurate billing but urge improved documentation and segregation of duties
Summary
The FY24 utility billing audit found bills and adjustments are generally accurate and compliant, but flagged insufficient documentation and approval for a subset of adjustments and write-offs and recommended improved segregation of duties, formal review processes, and additional performance metrics.
The Policy and Services Committee on Feb. 11 voted to recommend the full City Council accept the FY24 utility billing audit, which found that utility bills and adjustments are generally accurate and in compliance with city policy but identified control weaknesses in documentation and approval practices.
City Auditor Kate Murdoch presented the audit, noting that Palo Alto Utilities bills electricity, natural gas, water, wastewater and fiber services and also invoices for some Public Works services. The audit team tested adjustments and write-offs and found 10 of 60 adjustments lacked proper documentation and/or approval, and 4 of 25 write-offs tested were not properly approved.
"We found that utility bills and adjustments are accurately calculated and in compliance with city policy," Murdoch said, while also recommending improved documentation and controls for adjustments and write-offs to protect the city from potential financial loss or fraud. The audit noted the city's advanced metering infrastructure project (AMI) was approximately 80% installed by mid-January and that smart meters will likely reduce future billing adjustments.
Audit recommendations included: automating approval workflows where feasible, clarifying segregation of duties (so the person processing an adjustment is not the same person approving it), establishing a formal periodic review of outstanding billing investigations, creating a standardized list of approved adjustment reasons/codes, and formally tracking additional performance indicators. Utilities management (Assistant Director Tom Auzen) said the department agreed with findings and was already implementing recommendations; he noted utility billing processes handle high transaction volumes and the department is shifting toward advisory services for customers.
Committee members asked about whether the audit was prompted by specific complaints (it was not) and about plans to track additional metrics; staff said some metrics already are tracked and others would be added, possibly manually, and could be incorporated into regular reporting to the Utilities Advisory Commission. The committee voted unanimously to recommend council acceptance; the item will proceed to full council for final acceptance.
