Controller: City's water billing needs better oversight

Philadelphia City Controller Alan Butkovitz is calling on the Water Revenue Bureau to increase oversight of its process for adjusting bills, arguing that its system invites abuse by employees.

Bureau employees made $110 million worth of adjustments to water bills in the 2014 fiscal year without authorization from a supervisor, according to a report Butkovitz's office released Tuesday. Those adjustments were not necessarily improper, as some employees are allowed to make some changes, including canceling and refunding, without formal approval from a superior. They can also make some changes without dollar amount limits.

To Butkovitz, that system is a problem. He said Tuesday that the lack of an authorization step could allow bureau employees to make improper changes without detection, costing the city revenue.

"It's highly likely that there are more adjustments than are valid when there is no supervisory review," he said.

Butkovitz's report found that bureau employees adjusted almost 130,000 bills without review from a supervisor or dollar amount restrictions in 2014. Just under 12,000 of those transactions, valued at $94 million, involved water accounts with balances of more than $1,000. More than half - 76,000, or $3.4 million worth - involved accounts with balances that totaled less than $100.

According to the Controller's Office, Water Revenue Bureau supervisors did not review those transactions because there is no electronic means to authorize them under the city's water billing system.

The bureau required a review of quarterly credit adjustment reports to check for irregularities, but the Controller's Office found no evidence that supervisors had examined reports for the third and fourth quarters.

In response to Butkovitz's report, Michael Zaccagni, the city's deputy revenue commissioner, wrote in an e-mail that only authorized bureau accounting division staff - not all billing system users - perform the adjustments referenced as lacking restrictions, and some are automatic. All adjustments, Zaccagni said, are audited daily by a department accounting unit and "contain an audit trail" including the name of the employee who processed them.

Still, Butkovitz, calling the $100 million in unauthorized adjustments "a lot of money," said the city needs to establish a process for reviewing all water bill transactions to prevent future abuse. He said shortcomings of the computer system are not an adequate excuse.

"They've got to fix it," he said. "The fact that it's difficult to document case by case ... does not make it less important."

215-854-2819@MadelineRConway