Audit of Richmond’s fuel program reveals at least $44,000 in ‘questionable transactions’

RICHMOND, Va. (WRIC) -- At least $44,000 in Richmond taxpayer money was spent on "questionable transactions" through the city's employee fleet fuel program, an audit revealed, which also uncovered inconsistent oversight and inadequate policies and procedures.

On Tuesday, July 1, the Office of the City Auditor (OCA) released a 42-page audit of the fleet fuel program, which comes a week after it released a separate audit in late June of the city's employee purchasing card program, which also found similar issues in oversight.

To perform the audit, the OCA reviewed the city's fuel program policies and procedures, interviewed nine fuel custodians across multiple departments and divisions, analyzed fuel card transaction data from FY 2023 to FY 2025 and reviewed footage of fueling stations.

What is the fleet fuel program?

The fleet fuel program is managed by the Fleet Management Division and supports vehicle and equipment fueling through contracts with a vendor. It includes access to 15 fueling stations throughout the city.

Fuel payment cards -- used to pay for fuel for equipment and vehicles -- and employee PINs are issued by the division. Fuel cards are assigned to vehicles or equipment, and PINs are assigned to individual employees and are to be used exclusively by whom it was assigned.

As of July 3, 2024, the city had 1,960 active fuel cards. In addition, as of Aug. 14, 2024, the city reportedly maintained 2,535 active PINs across 23 departments.

In addition to fuel cards and PINs, the division also provides management and policy guidance. Forty-nine departmental fleet custodians review transactions, manage PINs and enforce compliance at the departmental level.

As well as fuel stations, the city maintains one fuel tank truck managed by the Department of Public Works, and two stationary fuel tanks, which are owned and operated by the Department of Parks and Recreation. These tanks are filled by a bulk fuel vendor through a contract separate from the city's main fuel program. PINs or fuel cards are not required for these tanks.

In fiscal years 2023 and 2024, the City purchased fuel totaling roughly $3.15 million and $3.4 million, respectively.

At least $44,000 in 'questionable transactions' due to ineffective policies and poor oversight

Through the audit, the OCA discovered at least $44,000 in "questionable transactions" due to ineffective internal controls over the program and inconsistent oversight.

The OCA found that the city did not have a well-functioning internal control system for fuel usage and oversight. Further, the audit said oversight of both the fuel administrator in the Fleet Division and the fuel custodians at the department level was ineffective.

Specifically, the audit said existing policies did not prevent misuse, detect irregularities promptly or keep cardholders and approving officials accountable.

Inaccurate odometer readings reported by city employees

At each fueling station, employees are prompted to enter their vehicle's current odometer reading. This is not required at the city's two fuel tanks or the fuel tank truck. The following are examples of discrepancies noted in the audit:

• According to the audit, one employee entered the number "1" as the odometer reading for 266 separate transactions.
• In addition, the OCA said another employee entered "12345" as the odometer reading for 130 transactions.
• Another employee entered their vehicle number, which is "144220," as their odometer reading in 48 transactions.

Fuel truck discrepancies

In March 2023, fuel truck logs showed that 120.2 more gallons were purchased than recorded. Additionally, 50.1 gallons were recorded on the log but not found in the vendor data. This is the largest of four other fuel truck log discrepancies noted in 2023.

Discrepancies in fuel truck usage stemmed from the fuel truck operator not recording some transactions, the fuel administrator not receiving fuel truck logs, and thus, not being able to compare to actual usage, and the lack of oversight or enforcement of policies, according to the OCA.

PIN mismanagement

According to the OCA, the city did not effectively manage PINs, which caused employees to have multiple PINs, unused PINs and allowed former employees to have active PINs. The following instances were highlighted by the audit regarding PINs:

• PIN sharing was common across departments and contributed to questionable transactions identified by the OCA. For example, 26 transactions were reviewed for a single PIN and only one was performed by the supervisor.
• Employees shared PINs with each other and with temporary workers.
• The active PIN list included at least 50 former employees, according to the audit.
• Some departments were unable to confirm whether individuals with active PINs were current or former employees.
• The audit found that at least nine PINs were used after the associated employee separated, totaling roughly $10,000.
• A total of 712 PINs were not used at all during FY 2023 or FY 2024, according to the audit.
• The OCA said at least 10 employees had multiple active PINs.

Ineffective guidance for departments

The OCA said the division's policy lacked enough detail, leaving important policies undefined, unclear or inconsistently applied.

"Key processes, including how rental fuel cards should be used, how fuel transactions should be reviewed, and how usage limits should be monitored, were vague or missing altogether," the audit said. "As a result, departments interpreted policies differently and applied inconsistent practices across the City."

Although the policy for supervisor cards requires them to be used for fuel cans and small equipment, and prohibits them from being used to fuel the same vehicle or equipment repeatedly, the OCA said they were observed being used for "high-volume transactions."

As an example, the audit said one card was used for 10 transactions in one day, with each exceeding 38 gallons.

Some departments reused rental fuel cards across different rental vehicles, against policy. The policy does not specify what to do with the card once the rental ends. Others deactivated and reordered cards.

Fuel contracts not adequately managed

The OCA found Fleet’s oversight of the fuel vendor contracts, pricing verification and invoice review was inadequate.

Of 30 vendor invoices from January 2023 through March 2024, the audit said six invoices did not match corresponding transaction reports, totaling $10,813. This was due to transaction reports being run before all transactions were posted and were not reviewed by fuel custodians.

Although the city's contract with a vendor only allows it to sell three fuel types, the OCA said it found recurring purchases of non-contracted fuel types, including premium and mid-grade gasoline, in FYs 2023 and 2024, totaling approximately $101,721.

In addition, the audit said the vendor charged incorrect fees for fuel in three of the five months reviewed. For example, in September 2023, the contracted fee for regular gas was $0.008929 per gallon, but the City was charged $0.012439. The vendor acknowledged updating fees without amending the contract, which prevented the fuel administrative administrator from seeing an amended price.

The OCA also noted price fluctuations of fuel prices within a single day. For example, on Oct. 16, 2023, the price per gallon for regular fuel was listed at $2.36, $2.38 and $2.41. Although the vendor attributed this to a system glitch, the OCA said it noted similar discrepancies on other dates.

In addition to retail fuel, the city buys fuel through bulk delivery. The division is responsible for paying these invoices, but did not review or reconcile them during the period included in the audit.

Ultimately, the audit found that the division did not adequately oversee its fuel vendor contracts or the associated invoicing process.

Recommendations

As a result of the audit, the OCA recommended nine improvements to policies and oversight.

Specifically, it recommended that the Director of General Services should update, improve and implement a formal fuel policy that defines review criteria, documentation standards, escalation procedures and responsibilities across departments, including adequate oversight of the program.

The OCA also recommended that the Director of General Services evaluate the city's current tools and whether they are currently sufficient in effectively overseeing the program.

The adoption of a data-driven oversight process and a formal fuel training program for those involved in the fleet was also recommended.

Additionally, the director was recommended to redesign the PIN management process, enforce policy compliance to improve card oversight and implement a formal invoice reconciliation process.

Another recommendation was for the Director of General Services to collaborate with the Director of Parks and Recreation to periodically compare the fuel tanks and fuel tank truck to fuel logs.

Office of Inspector General investigating

Multiple people were referred by the OCA to the Office of the Inspector General for further review, according to the audit.

To view the audit, visit the OCA's webpage on the city of Richmond's website.