Audit of Water Service Account Inventory and Revenue

Executive Summary

OIG examined DWM’s practices related to water service installation, account setup, and billing for temporary usage of water from fire hydrants. In addition, we reviewed the Department of Finance’s (DOF) account maintenance and classification practices.

OIG concluded that DWM maintained a complete inventory of the properties receiving water service and uploaded 100% of data from meter reads to its billing system in a timely manner.

However, the audit also found that,

• DWM failed to charge for water used during construction of new privately-owned buildings from June 2008 through December 2014, resulting in lost revenue of an estimated $3.9 million;
• DWM provided non-metered water service to non-residential buildings and residential buildings with three or more units in violation of Municipal Code of Chicago (MCC) § 11-12-210;
• DOF failed to bill and/or collect payment from 26 accounts that were incorrectly coded as inactive or permanently removed, resulting in an undercollection of $330,981;
• Gaps in DWM’s account verification process could allow future customers to receive water without being billed; and
• DWM charged a fee for hydrant permits that is approximately one-third the rate prescribed in the MCC and issued fee waivers that are not expressly authorized by the MCC.

DWM and DOF have committed to important system and process improvements in response to these findings and OIG’s recommendations.