2009-01-AU Follow-up Review of the 2006 Audit of the Department of Environmental Management's Recycling and Diversion Grants Program

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Conclusion Fundamental to any meaningful assessment of the County's recycling and diversion efforts is the basic ability to accurately measure waste flows by type and track costs related to their specific modes of diversion. DEM managers indicate that they feel implementing adequate controls would make the programs too costly, therefore they have been willing to accept the risks of fraud and /or abuse related to inadequate controls in order to gain the benefits of diverting solid waste commodities from our landfills. While the Auditor agrees that there are significant environmental, social, and operational benefits to diverting these commodities from the County's waste stream, County government is not relieved of its responsibility to provide public programs and services in a fiscally prudent and accountable manner. The Auditor recommends that the County perform cost - benefit analyses to assess whether it would be more cost - effective to conduct hauling from transfer stations and possibly subsequent diversion or recycling activities with County personnel, thereby reducing verification and control requirements associated with private contractors. Should the County decide to continue outsourcing components of its recycling and diversion programs, it should implement proper controls to reduce the risk of abuse and /or fraud or the perception of impropriety by requiring proper disclosure of contractor relationships and independent third -party verification of contractor tonnage claims. The County should also pursue alternate State and Federal funding and directly administer its recycling and diversion programs whenever possible to minimize excessive loss of funds to multiple layers of contractors and subcontractors for administrative rather than program activities. The Mayor and his cabinet can assist DEM and other County departments by providing information management systems that can efficiently gather data and report outcomes, so they may better exercise managerial and fiscal controls and improve their delivery of services to the public. The Finance Department and Corporation Counsel can assist by developing and implementing standardized policies and procedures to ensure that all contracts clearly delineate contractor performance expectations as well as remedies for failure to deliver goods and services, and by providing training on contract formulation and documentation of contractor performance. The Council can assist DEM by participating in the Update to the County's Integrated Solid Waste Management Plan and committing to its adoption and funding of its implementation, and by requiring regular detailed reports on program status and operational activities to provide greater accountability and transparency to the public. Most importantly, the "Tone at the Top" set by the Administration and the Council needs to communicate that the County's commitment to source reduction, recycling, and diversion of its waste stream is balanced with the County's commitment to monitor and deliver cost effectiveness and expense reconciliation. Only through the implementation of internal controls, performance measures, reliable data systems, and regular public reporting by newly elected officials and new managers at the Department of Environmental Management can their governmental responsibilities for public accountability and transparency be achieved. Colleen Schrandt Legislative Auditor March 2009