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Resolution No. 2015-006RESOLUTION NO. 2015-06 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND ADOPTING AN UPDATED WHISTLEBLOWER POLICY AND REPEALING ALL RESOLUTIONS IN CONFLICT THEREWITH WHEREAS, on May 1, 2012, the City Council of the City of Vernon adopted Resolution No. 2012-59, adopting a Whistleblower Policy; and WHEREAS, by memorandum dated February 3, 2015, the City Administrator and Finance Director have recommended the adoption of an updated Whistleblower Policy; and WHEREAS, the City Council desires to adopt the updated Whistleblower Policy. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds that this action is exempt under the California Environmental Quality Act (CEQA), in accordance with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on the environment. SECTION 3: The City Council of the City of Vernon hereby approves the updated Whistleblower Policy, a copy which is attached hereto as Exhibit A. SECTION 4: All resolutions or parts of resolutions, specifically Resolution No. 2012-59, not consistent with or in conflict with this resolution are hereby repealed. SECTION 5: The City Clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk, or Deputy City Clerk, of the City of Vernon shall cause this resolution and the City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 3rd day of February, 2015. ATTEST: /71---) Ana rcia Deputy City Clerk APPROVED AS TO FORM: 00001 Name: W. Michael McCormick Title: Mayor / o- e Moussa, Deputy City Attorney - 2 - STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) Deputy City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 2015-06, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, February 3, 2015, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this 5 day of February, 2015, at Vernon, California. (SEAL) A Bar ' / Deputy City Clerk - 3 - EXHIBIT A Whistleblower Policy & Fraud Hotline WHISTLEBLOWER POLICY & FRAUD HOTLINE ADMINISTRATIVE POLICY MANUAL Section 1.3 —Miscellaneous Approval: City Administrator Effective Date: Responsible Department: Finance Dept. PURPOSE The City of Vernon requires employees to observe the highest standard of business and personal ethics in the conduct of their duties and responsibilities. As representatives of the City, all employees must practice honesty and integrity in the fulfillment of their responsibilities and compliance with all applicable laws and regulations. Further, the City must protect its assets and resources from fraudulent, illegal, and dishonest activities by maintaining effective internal controls and by identifying and investigating any possibility of fraud or other improper activities. To that end, this Whistleblower Policy establishes procedures for City employees to report alleged financial fraud, waste or abuse by City employees and/or contractors, and to assure that such reports do not result in retaliation. POLICY City employees are encouraged to report good faith suspicions of financial misconduct by City employees or contractors, and any misuse of City property or resources. Any City employee who makes such a good faith report is protected against adverse employment actions by the City for raising such allegations, and shall not suffer any reprisals or retaliation by the City for making the report, whether or not the allegations are sustained. REPORTABLE ACTIVITIES Employees should report information related to financial fraud, waste, or abuse, including the following prohibited activities: 1. Violation of any law, regulation, ordinance. 2. Conflict of interest. 3. Fraud, waste, or misuse of City property, resources, or time. 4. Theft, misuse of, or misappropriation of City resources, property, information, assets or funds, or an attempt to do any of the same. 5. Intentional falsification of records (including failure to disclose material facts or making of false or misleading entries or statements with the intent to deceive on any City document or other official document, report, or form, including but not limited to, City financial records and environmental regulatory reporting), or the willful and unauthorized destruction and/or mutilation of any City document or other official document, report, or form, including City financial records. 6. Intentionally submitting false claims for payment or reimbursement. 7. Knowingly submitting and/or signing a timesheet that contains false information. 8. Forgery or intentional unauthorized alteration of a City document or other official document, application, report, or form, including but not limited to, City financial documents. 9. Improprieties in the handling or reporting of financial transactions for the City. 10. Authorizing or receiving payment by the City for goods not received or services not performed. 11. Computer -related activity involving unauthorized access, destruction of data, forgery, or manipulation of data or misappropriation of City -owned data or software. HOW TO REPORT City employees who have specific information that other City employees or contractors have engaged in fraud, waste or abuse are encouraged to report such information through the normal chain of command, which includes their immediate superior, department head, Human Resources, and the City Administrator's or City Attorney's Office. Face to face reporting through the chain of command is always the best form of communication; however, there may be certain circumstances where an employee wishes to remain anonymous. Recognizing that employees are not always comfortable going through the chain of command, the Fraud Hotline is another way to report fraud, waste, or abuse. The Fraud Hotline is hosted by an independent, third -party provider contracted by the City. The Fraud Hotline provides an anonymous method of reporting such incidents over the phone to a third -party interviewer, or via an anonymous web form. To contact the Fraud Hotline, employees should call 1-844-864-6371 or report online via www.reportonlineweb.com/citvofvernon. All reports regarding fraud, waste, or abuse should be made seriously and with due professional care. The Fraud Hotline should not be used for employment -related grievances or appeals, as existing City policy and procedures provide channels for resolution of these issues. All reports will be reviewed and analyzed. Appropriate corrective action will be taken, if necessary, and findings will be communicated to the reporting person. Investigations may warrant involvement of independent persons such as auditors and/or outside attorneys. For reports made through the Fraud Hotline, the third -party provider will complete an incident report and send the report to the City Attorney's Office. The City Attorney's Office will coordinate the investigation of all complaints related to fraud, waste, and abuse. EMPLOYEE PROTECTION The Whistleblower Policy is intended to encourage and enable employees to raise concerns. No City officer or employee shall use or threaten to use any official authority to cause any adverse employment action as retaliation against any employee who acts as a whistleblower in good faith and with reasonable belief that improper conduct has occurred, even if the report is mistaken. However, this Policy does not prohibit the City from taking an adverse action for legitimate or non-discriminatory reason due to a mere causal connection to the protected Whistleblower activity. TRANSMITTAL COMMUNICATION CITY CLERK'S OFFICE INTEROFFICE MEMORANDUM DATE: February 5, 2015 TO: Maria Ayala, City Clerk Daniel Calleros, Police Chief Kristen Enomoto, Deputy City Administrator Carlos Fandino, Director of Gas & Electric William Fox, Finance Director/City Treasurer Leonard Grossberg, Director of Health & Environmental Control Masami Higa, Assistant Finance Director Alex Kung, Economic Development Manager Joaquin Leon, Deputy City Treasurer Teresa McAllister, Director of Human Resources Lisette Michel, Sr. Human Resources Analyst Hema Patel, City Attorney Mark Whitworth, City Administrator Michael Wilson, Fire Chief S. Kevin Wilson, Director of Public Works, Water & Development Services FROM: Deborah Juarez, Records Management Assistant% RE: Resolution No. 2015-06 — A Resolution of the City Council of the City of Vernon Approving and Adopting an Updated Whistleblower Policy and Repealing All Resolutions in Conflict Therewith Transmitted herewith is a copy of Resolution No. 2015-06 referenced above, which was approved by City Council on February 3, 2015. Thank you. Attachment c: Resolution No. 2015-06 STAFF REPORT RECEIVED Ah JAN 2 7 2015 CITY RDMINlSTRRT JOINT STAFF REPORT CITY ADMINISTRATION & FINANCE DEPARTMENT DATE: February 3, 2015 TO: Honorable Mayor and City Council FROM: Mark Whitworth, City Administrator William Fox, Director of Finance RE: A Resolution of the City Council of the City of Vernon approving and adopting an updated Whistleblower Policy Recommendation It is recommended that the City Council: 1. Find the adoption of the resolution proposed in this staff report is exempt under the California Environmental Quality Act (CEQA) in accordance with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on the environment. 2. Approve the attached resolution adopting an updated Whistleblower Policy which provides for the enactment of the City's updated Whistleblower Policy & Fraud Hotline. Such approval will allow the City to further strengthen its Whistleblower policy including the launching of a Fraud Hotline. Background On May 1, 2012, the City Council adopted Resolution 2012-59 adopting a Whistleblower Policy ("Policy"). This Policy was adopted as part of the Good Governance Reforms. The policy was implemented with the guidance and assistance of the City's Independent Reform Monitor, Mr. John Van de Kamp. Various authoritative sources were researched including the California League of Cities, Institute of Local Government, and the LA Conservation Corps to ensure that all the elements following best practices were incorporated. The outside independent accounting firm of Vasquez and Company, LLP ("Vasquez"), performed the audits of the City's financial statements for the fiscal years 2012-13 & 2013-14, and a special fraud risk assessment in 2014. They observed a need for a Fraud Hotline to be in line with best practices. An excerpt from Vasquez's most recent management letter dated December 3, 2014, addressing the Fraud Hotline is included herein: Fraud Prevention, Detection and Reporting (Source: Dec. 3, 2014, Management Letter) Comments: While conducting the City's fraud risk assessment we noted that, although the City currently has a fraud/whistle-blowing policy in place, the current policy does not specify a set protocol to follow regarding reporting and resolution of fraud. There is no formal fraud education program in place which could provide fraud awareness and training to City employees. Recommendation: We suggest the City consider implementing the following recommendations to further improve the City's internal controls over fraud prevention, detection and reporting: - Hire an independent third party for reporting and tracking of fraud cases. - Update City's existing fraud policy and review it regularly for compliance. - Formalize a structured fraud prevention training program for City employees. Management Action Plan: The City Agrees with the recommendation and has begun implementation. The City has investigated various third party service providers that provide the initial reporting of and tracking for the fraud cases. A determination has been made to enter into an agreement with The Network, Inc. The Network, Inc. develops integrated governance, risk, and compliance solutions that help organizations mitigate risk and achieve compliance. They provide 2417 live coverage and online access capability for reporting offraud. The Fraud Hotline will be administered by the City Attorney's Office, who will be notified offraudulent reporting. The City Attorney in cooperation with the City Administrator will determine the appropriate follow up actions required to investigate allegations. City Council will be briefed on material fraudulent activities. Training of employees will be done as part of the employee meetings that are periodically held. Management Actions In December 2014 the City of Vernon entered into a purchase contract with The Network, Inc. to be a third party service provider for the initial intake and tracking of whistleblower and fraud reports. The first year cost was approved for a total amount not -to -exceed $1,860, which included an initial start-up costs of $710 for system setup and educational/awareness materials. Going forward, the annual fee is expected to be $1,150. The system implementation is currently being set up. Once the setup has been completed, employee awareness and education will be initiated as part of an upcoming employee meeting. A revised Whistleblower and Fraud Hotline Policy has been developed and we are seeking City Council approval. This updated policy incorporates the addition of the Fraud Hotline to address fraudulent activities. It also follows best practices providing a framework for employee reporting of fraudulent activities without the fear of retaliation. Employee awareness and education will be done through employee meetings, promotional materials, and an email distribution of the new policy. Fiscal Impact There is no fiscal impact to adopt the updated Policy. Conclusion Based upon the recommendation of Vasquez and Company, LLP, the City of Vernon is making a concerted effort to strengthen its internal controls through the proposed updated Whistleblower and Fraud Hotline Policy, and staff recommends that the City Council approve and adopt the updated Policy. Whistleblower Policy & Fraud Hotline WHISTLEBLOWER I* POLICY & FRAUD HOTLINE ADMINISTRATIVE POLICY MANUAL Section 1.3—Miscellaneous Approval: City Administrator Effective Date: Responsible Department: Finance Dept. PURPOSE The City of Vernon requires employees to observe the highest standard of business and personal ethics in the conduct of their duties and responsibilities. As representatives of the City, all employees must practice honesty and integrity in the fulfillment of their responsibilities and compliance with all applicable laws and regulations. Further, the City must protect its assets and resources from fraudulent, illegal, and dishonest activities by maintaining effective internal controls and by identifying and investigating any possibility of fraud or other improper activities. To that end, this Whistleblower Policy establishes procedures for City employees to report alleged financial fraud, waste or abuse by City employees and/or contractors, and to assure that such reports do not result in retaliation. POLICY City employees are encouraged to report good faith suspicions of financial misconduct by City employees or contractors, and any misuse of City property or resources. Any City employee who makes such a good faith report is protected against adverse employment actions by the City for raising such allegations, and shall not suffer any reprisals or retaliation by the City for making the report, whether or not the allegations are sustained. REPORTABLE ACTIVITIES Employees should report information related to financial fraud, waste, or abuse, including the following prohibited activities: 1. Violation of any law, regulation, ordinance. 2. Conflict of interest. 3. Fraud, waste, or misuse of City property, resources, or time. 4. Theft, misuse of, or misappropriation of City resources, property, information, assets or funds, or an attempt to do any of the same. 5. Intentional falsification of records (including failure to disclose material facts or making of false or misleading entries or statements with the intent to deceive on any City document or other official document, report, or form, including but not limited to, City financial records and environmental regulatory reporting), or the willful and unauthorized destruction and/or mutilation of any City document or other official document, report, or form, including City financial records. 6. Intentionally submitting false claims for payment or reimbursement. 7. Knowingly submitting and/or signing a timesheet that contains false information. 8. Forgery or intentional unauthorized alteration of a City document or other official document, application, report, or form, including but not limited to, City financial documents. 9. Improprieties in the handling or reporting of financial transactions for the City. 10. Authorizing or receiving payment by the City for goods not received or services not performed. 11. Computer -related activity involving unauthorized access, destruction of data, forgery, or manipulation of data or misappropriation of City -owned data or software. HOW TO REPORT City employees who have specific information that other City employees or contractors have engaged in fraud, waste or abuse are encouraged to report such information through the normal chain of command, which includes their immediate superior, department head, Human Resources, and the City Administrator's or City Attorney's Office. Face to face reporting through the chain of command is always the best form of communication; however, there may be certain circumstances where an employee wishes to remain anonymous. Recognizing that employees are not always comfortable going through the chain of command, the Fraud Hotline is another way to report fraud, waste, or abuse. The Fraud Hotline is hosted by an independent, third -party provider contracted by the City. The Fraud Hotline provides an anonymous method of reporting such incidents over the phone to a third -party interviewer, or via an anonymous web form. To contact the Fraud Hotline, employees should call 1-844-864-6371 or report online via www.reportonlineweb.com/cityofvernon. All reports regarding fraud, waste, or abuse should be made seriously and with due professional care. The Fraud Hotline should not be used for employment -related grievances or appeals, as existing City policy and procedures provide channels for resolution of these issues. All reports will be reviewed and analyzed. Appropriate corrective action will be taken, if necessary, and findings will be communicated to the reporting person. Investigations may warrant involvement of independent persons such as auditors and/or outside attorneys. For reports made through the Fraud Hotline, the third -party provider will complete an incident report and send the report to the City Attorney's Office. The City Attorney's Office will coordinate the investigation of all complaints related to fraud, waste, and abuse. EMPLOYEE PROTECTION The Whistleblower Policy is intended to encourage and enable employees to raise concerns. No City officer or employee shall use or threaten to use any official authority to cause any adverse employment action as retaliation against any employee who acts as a whistleblower in good faith and with reasonable belief that improper conduct has occurred, even if the report is mistaken. However, this Policy does not prohibit the City from taking an adverse action for legitimate or non-discriminatory reason due to a mere causal connection to the protected Whistleblower activity. 2 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND ADOPTING AN UPDATED WHISTLEBLOWER POLICY AND REPEALING ALL RESOLUTIONS IN CONFLICT THEREWITH WHEREAS, on May 1, 2012, the City Council of the City of Vernon adopted Resolution No. 2012-59, adopting a Whistleblower Policy; and WHEREAS, by memorandum dated February 3, 2015, the City Administrator and Finance Director have recommended the adoption of an updated Whistleblower Policy; and WHEREAS, the City Council desires to adopt the updated Whistleblower Policy. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds that this action is exempt under the California Environmental Quality Act (CEQA), in accordance with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on the environment. SECTION 3: The City Council of the City of Vernon hereby approves the updated Whistleblower Policy, a copy which is attached hereto as Exhibit A. SECTION 4: All resolutions or parts of resolutions, specifically Resolution No. 2012-59, not consistent with or in conflict with this resolution are hereby repealed. SECTION 5: The City Clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk, or Deputy City Clerk, of the City of Vernon shall cause this resolution and the City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 3rd day of February, 2015. ATTEST: City Clerk / Deputy City Clerk APPROVED AS TO FORM: Name: Title: Mayor / Mayor Pro-Tem Moussa, Deputy City Attorney - 2 - STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, , City Clerk / Deputy City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. , was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, February 3, 2015, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this day of February, 2015, at Vernon, California. (SEAL) City Clerk / Deputy City Clerk - 3 - EXHIBIT A ff%istleblower Policy & Fraud Hotline WHISTLEBLOWER POLICY & FRAUD HOTLINE Effective Date: PURPOSE ADMINISTRATIVE POLICY Section 1.3 — Miscellaneous Approval: Citv Administrator The City of Vernon requires employees to observe the highest standard of business and personal ethics in the conduct of their duties and responsibilities. As representatives of the City, all employees must practice honesty and integrity in the fulfillment of their responsibilities and compliance with all applicable laws and regulations. Further, the City must protect its assets and resources from fraudulent, illegal, and dishonest activities by maintaining effective internal controls and by identifying and investigating any possibility of fraud or other improper activities. To that end, this Whistleblower Policy establishes procedures for City employees to report alleged financial fraud, waste or abuse by City employees and/or contractors, and to assure that such reports do not result in retaliation. POLICY City employees are encouraged to report good faith suspicions of financial misconduct by City employees or contractors, and any misuse of City property or resources. Any City employee who makes such a good faith report is protected against adverse employment actions by the City for raising such allegations, and shall not suffer any reprisals or retaliation by the City for making the report, whether or not the allegations are sustained. REPORTABLE ACTIVITIES Employees should report information related to financial fraud, waste, or abuse, including the following prohibited activities: 1. Violation of any law, regulation, ordinance. 2. Conflict of interest. 3. Fraud, waste, or misuse of City property, resources, or time. 4. Theft, misuse of, or misappropriation of City resources, property, information, assets or funds, or an attempt to do any of the same. 5. Intentional falsification of records (including failure to disclose material facts or making of false or misleading entries or statements with the intent to deceive on any City document or other official document, report, or form, including but not limited to, City financial records and environmental regulatory reporting), or the willful and unauthorized destruction and/or mutilation of any City document or other official document, report, or form, including City financial records. 6. Intentionally submitting false claims for payment or reimbursement. 7. Knowingly submitting and/or signing a timesheet that contains false information. 6. Forgery or intentional unauthorized alteration of a City document or other official document, application, report, or form, including but not limited to, City financial documents. 9. Improprieties in the handling or reporting of financial transactions for the City. 10. Authorizing or receiving payment by the City for goods not received or services not performed. 11. Computer -related activity involving unauthorized access, destruction of data, forgery, or manipulation of data or misappropriation of City -owned data or software. .10P1 910 *061a] City employees who have specific information that other City employees or contractors have engaged in fraud, waste or abuse are encouraged to report such information through the normal chain of command, which includes their immediate superior, department head, Human Resources, and the City Administrator's or City Attorney's Office. Face to face reporting through the chain of command is always the best form of communication; however, there may be certain circumstances where an employee wishes to remain anonymous. Recognizing that employees are not always comfortable going through the chain of command, the Fraud Hotline is another way to report fraud, waste, or abuse. The Fraud Hotline is hosted by an independent, third -party provider contracted by the City. The Fraud Hotline provides an anonymous method of reporting such incidents over the phone to a third -party interviewer, or via an anonymous web form. To contact the Fraud Hotline, employees should call 1-844-864-6371 or report online via www.reportonlineweb.com/citvofvernon. All reports regarding fraud, waste, or abuse should be made seriously and with due professional care. The Fraud Hotline should not be used for employment -related grievances or appeals, as existing City policy and procedures provide channels for resolution of these issues. INVESTIGATION All reports will be reviewed and analyzed. Appropriate corrective action will be taken, if necessary, and findings will be communicated to the reporting person. Investigations may warrant involvement of independent persons such as auditors and/or outside attorneys. For reports made through the Fraud Hotline, the third -party provider will complete an incident report and send the report to the City Attorney's Office. The City Attorney's Office will coordinate the investigation of all complaints related to fraud, waste, and abuse. EMPLOYEE PROTECTION The Whistleblower Policy is intended to encourage and enable employees to raise concerns. No City officer or employee shall use or threaten to use any official authority to cause any adverse employment action as retaliation against any employee who acts as a whistleblower in good faith and with reasonable belief that improper conduct has occurred, even if the report is mistaken. However, this Policy does not prohibit the City from taking an adverse action for legitimate or non-discriminatory reason due to a mere causal connection to the protected Whistleblower activity. 2