Penalties for Late Phone Bills Cost City $800,000

Auditors have discovered that the city of Los Angeles has paid $800,000 in penalties for late payment of telephone bills, double the amount previously disclosed.

City auditors also concluded Tuesday that managers still are not properly monitoring city phones to guard against misuse.

The city controller’s office cited one example of a phone, left behind when City Hall was vacated for renovation two years ago, that was billed for $900 in collect phone calls from England, Florida and other distant locales.

Auditors also found that the city pays $7,000 each month for directory assistance.

Faulting the city’s Information Technology Agency, which oversees phone service, Deputy Controller Jim Armstrong said his audit found dozens of “mystery” phones that were never authorized.

“Our review disclosed a significant lack of internal controls by the ITA and many city departments over the payment process and the control of telephone costs paid by the city,” the audit said.

“The city needlessly spent hundreds of thousands of dollars for the payment of late fees because telephone bills were not paid on time.”

The Times disclosed last month that auditors had found that at least $400,000 in late fees were paid last year on delinquent phone bills. But the audit released Tuesday fixed the total at $517,000 in 1998.

Armstrong said his auditors confirmed at least $178,000 in late fees in 1997 and $105,000 in late fees in 1996, bringing the total to $800,000.

“Incurring any late fees at all is a scandalous waste of taxpayer money,” said Councilman Mike Feuer.

Mayor Richard Riordan, who has called the fees “appalling,” still is considering the agency’s request for $5 million to catch up on delinquencies, an aide said.

The information agency is trying to better control its phone expenses, said Joe Mozingo, an assistant general manager of the agency.

The agency was budgeted $18 million per year for phone services, but costs have been more than $20 million. So managers have been paying what they can and incurring the 1.5% penalty on payments past due by more than 30 days.

Mozingo said the agency took immediate action last month to pay off the late fees owed, but that used up money needed for the rest of the year.

“Right now, we have money to carry us through mid-March at the latest,” Mozingo said.

He said the agency has asked the City Council for $5.9 million to pay phone bills for the last five months of the fiscal year.

“If we don’t get our budget request, we will be accruing late fees again,” Mozingo said.

The audit found that the agency was at fault for not pressing for adequate funding.

The controller also said the agency cannot provide accurate information on how phone lines are being used.

Departments are supposed to review their own bills, but ITA often does not send the bills to departments until months after they are paid.

The agency plans to centralize and improve monitoring of the 700 separate phone bills that it gets each month, including a new system of code numbers that will allow the agency to identify all long distance calls.

The audit found that the city spends about $700,000 annually for long distance calls.

Auditors also blamed the city agency for the $7,000 spent monthly in calls to local directory assistance, despite policies limiting access to 411 to top managers and elected officials.

Lower level workers can make better use of phone books and city directories, auditors said.

Collect calls also cost the city thousands of dollars, the audit found.

Armstrong said the audit directs the agency to cancel all mystery telephone lines that are not authorized or accounted for.

Mozingo said his office is investigating the issue. He said sometimes lines are lost in the shuffle when city workers are transferred.