Audit Report on Purchasing Practices of the Office of the Public Advocate

Executive Summary

The Public Advocate is an elected official of the City, chosen in a City-wide election for a four-year term.  The Public Advocate is responsible for reviewing and investigating complaints about City services; assessing whether agencies are responsive to the public; recommending improvements in agency programs and complaint-handling procedures; and serving as an intermediary for individuals who have encountered difficulties in obtaining assistance from City agencies.  The Public Advocate also monitors the effectiveness of the City’s public information and education efforts and the compliance of City officers and agencies with the New York City Charter. ^[1]

To carry out the responsibilities of the office, the Public Advocate is provided with City office space and a budget appropriation to support staff and to cover the expenses of operating the office.  For Fiscal Year 2017, the Public Advocate’s Office (PAO) reported total expenditures of $3.5 million, consisting of $3.3 million for Personal Service (PS) expenses for the salaries, wages, and fringe benefits for the PAO’s 45 full-time City employees, and $248,563 for Other Than Personal Service (OTPS) expenses, which covered the procurement of supplies, materials, and services necessary to support agency operations.

We conducted this audit to determine whether the PAO maintains adequate financial controls over purchasing practices for the OTPS expenditures as required by the City’s Procurement Policy Board (PPB) rules and the Comptroller’s Directives.

Audit Findings and Conclusion

The PAO has generally implemented financial controls over many aspects of its purchasing practices, as required by the PPB rules and applicable Comptroller’s Directives.  However, the audit revealed instances of the PAO’s noncompliance with certain aspects of those requirements.  Specifically, for six of the seven out-of-town trips we reviewed, the PAO did not require its staff to submit requests for travel approval prior to making the travel arrangements; for five of the trips, the PAO also processed payments for hotel lodging that exceeded the maximum allowable General Services Administration (GSA) rates; and for one trip, the PAO incorrectly paid hotel occupancy and sales tax for its staff’s lodging within New York State, all of which was contrary to  Comptroller Directive #6, Travel, Meals, Lodging, and Miscellaneous Agency Expenses.  In addition, in reviewing the PAO’s records of certain expenses incurred for the Public Advocate’s individual travel and lodging, we found no evidence that Comptroller’s Directive #6 had been used as a guide, which is the use the directive prescribes for certain elected officials, including the Public Advocate, who are not personally restricted by its requirements.  We also found that the PAO charged the incorrect budget object code for 38 purchases totaling $26,774 and did not always record Imprest Fund account transactions or maintain the account checkbook in accordance with the standards established by Comptroller’s Directive #3, Administration of Imprest Funds.

Audit Recommendations

The audit resulted in 11 recommendations, specifically, that the PAO should:

• Ensure that properly- and timely-completed Requests for Approval for staff’s out-of-town travel are obtained prior to travel commencing and that the approvals are documented in the appropriate travel expense records before approving payment of staff’s expenses related to travel and conference-attendance.
• Obtain proper approval from PAO management before approving or paying a lodging charge for an employee at a rate that exceeds the applicable United States General Services Administration (GSA) rate.
• Ensure that the Tax Exemption Certificates are prepared and provided for the PAO’s staff lodging within New York State.
• Use Comptroller’s Directive #6 as a guide on the travel expenses related to the Public Advocate.
• Ensure that OTPS purchases are charged to the correct object code in accordance with Comptroller’s Directive #24, Agency Purchasing Procedures and Controls.
• Use a Reimbursement Voucher only to reimburse (replenish) an Imprest Fund account.
• Ensure that all Imprest Fund purchases are made and recorded in accordance with Comptroller’s Directive #3 and have adequate supporting documentation.
• Ensure that the next order of check stock states on the face of the checks that they are void after a specified period of time. This time period should not extend more than 180 days from the date of issue according to Directive #3.
• Follow up on the checks that remain outstanding more than 60 days.
• Ensure that all invoices and supporting documentation in the Imprest Fund account are appropriately marked as paid in accordance with Comptroller’s Directive #3, §4.5 to prevent duplicate payments.
• Perform and record monthly bank reconciliations and ensure that the reconciliations disclose the voided checks, include the first and last check numbers issued during the month, and age outstanding checks showing the date issued in accordance with Comptroller’s Directive #3, §4.1.

Agency Response

The PAO agreed with the report’s findings and recommendations and has adopted necessary procedures to implement the recommendations.

[1] NYC Charter §24 establishes the term of office and sets forth the duties of the Public Advocate.  The section also establishes election procedures to fill any vacancy in the office that occurs before the expiration of the elected Public Advocate’s four-year term.