Audit - City and County of Denver

Personnel from the City’s Technology Services Department, who are in charge ofmaintaining Production, informed our team that all historical payment data is stored inthe system. However, based on the general business needs defined by the Departmentprior to the MM licensing program, the system was customized to allow users to only viewthe most recent payment made for a license.Payment information is an important component of the Department’s control over theMM licensing processes. However, based on MM business information currently viewablein Production, or review of the reports generated from the system, the Departmentcannot readily ensure that all required payments were made by an MM business. TheDepartment should request assistance from Technology Services to make historicalpayment data available in the system user interface, or develop queries that allow thegeneration of a report that would capture all historical payments.Department Personnel Can Adjust Licensing Fees without Second-level Review andApproval – Audit review of data in Production revealed that Department personnel attimes adjust and prorate MM licensing fees, mainly to reissue a City MM license such thatthe expiration date of the City license aligns with the expiration date of the state licensefor a business. For example, when the state issues a one-year license with an expirationdate of December 31, 2013 for an MMC that already has a City business license validthrough March 31, 2013, the Department will reissue a new City two-year business licensefor the business in question with an expiration date of December 31, 2014. 25 However, insuch a case, Department personnel will only assess licensing fees for the period April 1,2013, through December 31, 2014, in effect giving the business credit for the first threemonths in 2013 for which the business already paid licensing fees when the previous Citylicense was issued.According to Technology Services personnel, all required fees had been initiallyprogrammed into the system based on City rules, which prohibited fee adjustmentswithout a higher level review and approval. However, based on a Department decision,this approval requirement was removed from the system.The Department should consider resuming this oversight requirement because reviewand approval of a calculated fee adjustment provide a critical control to ensure that feeadjustments are calculated properly and accurately.Medical Marijuana Application Status Codes in Production Are Not Accurate –Production provides for fifteen status codes for the Department’s general licensing needsthat can be also utilized for MM licensing. These codes include, but are not limited to, “N”for new, “C” for current, “X” for Deny, “A” for archive, “H” for hold, “V” for revoke, “I” forinactive, and “R” for renew. However, personnel processing MM applications andentering licensing information into the system only use “N,” “C,” and “A,” and in manyinstances these three codes used do not reflect the accurate status of the application.For example, auditors identified an MMD application that was first filed in early 2010. Thelatest licensing activity recorded in the comment box indicated that the license wasrenewed for six months on October 17, 2011; such an application should have expired in25 D.R.M.C., §24-513 provides for a two-year City MM business license.City and County of DenverP a g e 18