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Home My Public Portal AboutExhibit MSD 70J - Review of CMOM Program 2020This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater FY 2020 AUDIT PLAN Metropolitan St. Louis Sewer District Review of the Capacity, Management, Operations, and Maintenance (CMOM) Program – Wastewater Collection System Fiscal Year 2020 October 2020 Exhibit MSD 70J This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater I FY 2020 AUDIT PLAN The St. Louis Metropolitan Sewer District Review of the Capacity, Management, Operations, and Maintenance (CMOM) Program – Wastewater Collection System October 2020 Table of Contents Introduction and Scope .......................................................................... 1 Objectives and Methodology .................................................................. 2 Overall Conclusion and Results ............................................................. 3 Opportunities for Improvement ............................................................... 4 Acknowledgements ................................................................................ 7 INTRODUCTION AND SCOPE This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 1 FY 2020 AUDIT PLAN A Consent Decree between the United States of America, the Missouri Coalition for the Environment Foundation and Metropolitan St. Louis Sewer District (“MSD”) in the matter of The United States et al. v. The Metropolitan St. Louis Sewer District, No. 4:07-CV-01120 (E.D. Mo.) was entered with an Effective Date of April 27, 2012. Pursuant to sections V.G.31, 32, and 33 of the Consent Decree (the Decree), MSD was required to submit a Capacity, Management, Operations, and Maintenance (CMOM) Program Plan. The formal submission of the CMOM Program Plan was submitted on October 27, 2012, within six months of the Consent Decree Effective Date of April 27, 2012, as required by the Decree. The District’s CMOM Program Plan is designed to minimize service interruptions such as building backups and non-capacity sanitary sewer overflows (SSOs) resulting from blocked sewers or lines with capacity limitations or infiltration/inflow (I&I). Understanding capacity, and appropriately managing, operating, and maintaining the collection system is a central objective of this program. The program incorporates preventive and predictive maintenance processes to properly maintain the wastewater collection system, ensuring compliance with the requirements of the Consent Decree and assisting in the effort to meet service-level goals established by Management. The system consists of gravity sewers, pump stations, force mains, etc. MSD is the fourth largest sewer agency in the country based on sanitary and combined sewer system miles. The system addressed by the wastewater collection system CMOM consists of approximately 160,327 manholes, 277 pump stations and approximately 6,036 miles of gravity sewers and 136 miles of force mains. The current CMOM program was initially developed, documented and implemented during 2012. The procedures have continued to progress and mature in subsequent years. The program excludes storm water assets. (There is a separate CMOM program plan document for stormwater assets.) Scope The engagement was conducted during portions of May through August 2020. The scope of the engagement was comprised of a review of the various components of the District’s CMOM program. The process areas of focus were as follows: • Inspection of Gravity Sewers • Sewer Line Cleaning and Root Control • Manhole Inspections and Repairs • Repair, Rehabilitation, and Replacement (RRR) • Standard Asset Management Procedures • Pump Station Asset Management Standards and Procedures • Force Main Asset Management Performance Standards and Procedures The scope period for activities and transactions was 1/1/2017 through 5/1/20. OBJECTIVES AND METHODOLOGY This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 2 FY 2020 AUDIT PLAN Objectives The overall objectives of this engagement were to ensure:  Each CMOM-related requirement of the Consent Decree is identified and addressed by the District within the District CMOM Program Plan.  District CMOM procedures and controls are adequately designed: - Process risks are adequately mitigated. - No gaps in controls exist. - Duties are properly segregated. - Procedures are efficient. (i.e., there is no duplication of effort.)  District CMOM procedures and controls are operating effectively: - Controls are implemented and operating as intended.  The District is operating in a manner that complies with the CMOM requirements of the Consent Decree and the requirements of CMOM Program Plan document. Methodology To accomplish the above objectives, Internal Audit (IA):  Obtained a copy of the Consent Decree. IA reviewed and identified the specific requirements of the CMOM Program Plan, which are contained in sections G.31 through G.33 of the Decree.  Obtained a copy of the District’s CMOM Program Plan, which was submitted to the EPA in October of 2012. IA thoroughly reviewed the document in an effort to gain an adequate understanding of the District’s program.  Reconciled the District’s program plan with the requirements contained in the Consent Decree. IA identified any Consent Decree CMOM requirements not adequately addressed by the District’s program plan.  Reviewed the design of each process and identified the risks and controls within each process. IA reviewed for process and control design deficiencies by: - reviewing the plan document, which includes process flows that document the various process steps and the related controls, - performing interviews of process owners to gain a better understanding of each process and control design, and - reviewing the setup, design, and operation of the CMMS (Computerized Maintenance Management System, a.k.a. Maximo).  Performed tests of controls and substantive testing by: - making inquiries and performing interviews, - performing walkthrough procedures, - inspecting and reviewing supporting documentation, system screens, and system data, and - analyzing and testing system (CMMS, GIS) data. OVERALL CONCLUSION AND RESULTS This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 3 FY 2020 AUDIT PLAN In the opinion of Internal Audit, in all significant respects, the controls and procedures utilized for the CMOM program are effectively designed and implemented. However, IA did note a couple of items that are opportunities for strengthening and improving the program processes. These opportunities are discussed in detail in the Opportunities for Improvement section of this report. Initial Inherent Business Process Risk: Moderate Risk # Overall Assessment of Engagement Results: Satisfactory ** ____________________________________________________ DEFINITIONS How Results Are Assessed ** Engagement results are evaluated as Satisfactory, Generally Satisfactory or Unsatisfactory. • Satisfactory (clean opinion) – No significant engagement findings2 or material weaknesses3 were noted. Engagement findings1 may have been noted. • Generally Satisfactory (qualified opinion, i.e. “except for”) – Results contain significant engagement findings2. No material weaknesses3 were noted. • Unsatisfactory (adverse opinion, immediate Management attention required) – Significant engagement findings2 and/or material weaknesses3 were noted. Types of Findings 1. Engagement Finding (#Low Risk): An engagement finding is a condition that could adversely affect the organization but is less severe than a significant engagement finding or significant deficiency. Classification includes process or control deficiencies that are not significant deficiencies as well as includes other low risk or low impact conditions. 2. Significant Engagement Finding (# Moderate to High Risk): A significant engagement finding is a condition that could adversely affect the organization. Definition includes all types of findings, such as irregularities, waste, ineffectiveness, conflicts of interest, illegal acts, errors, and significant deficiencies in internal control over financial reporting as well as other significant internal control weaknesses. A significant deficiency is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 3. Material Weakness (# High Risk): A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected in a timely basis. For internal audit purposes, the definition also includes material and/or severe irregularities, waste, ineffectiveness, conflicts of interest, illegal acts, errors, and other material control weaknesses, etc. (The term “material weakness” should be thought of as a serious category of significant engagement findings and/or significant deficiencies. However, not all significant engagement findings and significant deficiencies are material weaknesses.) ^ - Definitions are based on guidance from the IIA Standards, GAAS, and the PCAOB. # - Risk is assessed at the District (Entity) Level. (Risk to the District as a whole) OPPORTUNITIES FOR IMPROVEMENT This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 4 FY 2020 AUDIT PLAN Issue 1 – Documenting Alternate Priority Coding of Customer Service Calls When customer service calls are received, priority codes are automatically populated by the system (CMMS) based on the service call classification (BFLSH, WBU, etc.). Classifications and the related priority codes are based on the specifications outlined in CMOM Program Plan document. However, Customer Service personnel do have the ability in the system to manually alter the priority code when appropriate. (based on additional information provided by the customer, in most cases) IA tested and reviewed a sample of twenty (20) of customer service call transactions. As a result of the testing, IA noted the following: • For seven (7) of the twenty (20) or thirty-five (35) percent of the transactions tested, the priority codes assigned in the system were lower than the standard priority code as prescribed by the CMOM Program Plan for the particular type of service request. o The reasoning for the lowering of the codes was not documented in the system.  As such, IA was unable to verify, through system review, the appropriateness of the lowering of the priority codes.  It should be noted that a new SOP (Standard Operating Procedure) document was published in July of 2020 (after the engagement scope period). This document provides additional guidance regarding “alternate” priority codes. Recommendation: IA recommends that Management: o Hold discussions with Customer Service personnel to ensure that all team members are aware of the newly published SOP procedures.  Following the newly published SOP will assist in improving the documentation issue identified above, as alternate priority codes are addressed within the new SOP. o Alter the process by requiring that an explanation be provided and documented within the system when alternate priority codes are utilized, especially for alternate codes not specifically addressed by the new SOP. Risk Rating at District (Entity) Level: Low Risk Rating at Business Process Level: Moderate OPPORTUNITIES FOR IMPROVEMENT This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 5 FY 2020 AUDIT PLAN Issue 1 – Documenting Alternate Priority Coding of Customer Service Calls (Cont’d) Process Owner Response: The CMOM plan and previous versions of the SOP have allowed for and provided guidance on use of alternate priorities. We will meet and discuss the following with the Customer Service Team: • Make sure customer service is familiar with the new SOP • Require documented explanation for the use of alternate codes – especially alternate codes not addressed specifically by the new SOP. Date of Implementation: October 31, 2020: OPPORTUNITIES FOR IMPROVEMENT This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 6 FY 2020 AUDIT PLAN Issue 2 – Engineering Referrals/Reviews - Manhole Assets Rated at ‘5’ Per the CMOM Program Plan, for manhole assets rated at a ‘5’, an engineering referral and review is required as part of the repair process. The objective is for an engineer to, prior to the performance of the work, review the proposed repair plan to ensure the adequacy of the planned work. Per the Program Plan, “assets are rated on a ‘1’ to ‘5’ scale with ‘1’ being like new and ‘5’ being near or at failure. Assets in poor condition are slated for replacement, rehabilitation or repair.” IA tested manhole assets rated at ‘5’ (and ‘4’). Through this testing, IA identified one (1) instance in which a manhole rated at ‘5’ was repaired prior to the engineer’s review of the repair plan. The following should be noted regarding this repair: • The System issuance of an engineering referral did occur as designed and required. o However, the assignment of the referral to an engineer occurred after the work was performed. Recommendation: IA recommends that Management: • Take steps to ensure the engineering referral assignment process occurs prior to the performance of the related manhole repair work. o Consider implementing a process control that prevents repair work from moving forward until the proper engineering reviews are performed. Risk Rating at District (Entity) Level: Low Risk Rating at Business Process Level: Moderate Process Owner Response: Sometimes emergency repairs will be made right away. We will communicate with the yard engineers to get engineering referrals assigned and non-emergency repairs reviewed prior to repair. Date of Implementation: October 31, 2020 ACKNOWLEDGEMENTS This report is intended solely for the use of The Metropolitan St. Louis Sewer District (“MSD”) and is not intended to be and should not be used by any other parties without the prior written consent of MSD. Review of the CMOM Program - Wastewater 7 FY 2020 AUDIT PLAN Internal Audit Engagement Team: MSD Internal Audit: Todd Loretta Brown Smith Wallace: Ron Steinkamp Bret Simmons Landon Turley Megan Cable We would like to thank District personnel for their excellent cooperation and assistance during this engagement. Specifically, we would like to express our gratitude to the following: Operations: Bret Berthold Ed Cope Nora Estopare Engineering: Jason Peterein Alverda Oppermann I.T.: Ginny Kienstra Julia Cole