Audit Report on the Administration For Children’s Services Controls Over Payments to Transportation Vendors

AUDIT REPORT IN BRIEF

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This audit determined whether the Administration for Children’s Services (ACS) has adequate controls in place over payments to its five transportation service vendors. ACS was created in 1996 as the first New York City agency devoted solely to serving children and their families. ACS’s mission is to ensure the safety and well-being of City children. The Division of Transportation Services (Transportation Services) seeks to provide safe and efficient transportation for all children in its care and for all agency staff. Transportation Services provides vehicles and transportation resources as needed, 24 hours a day, seven days a week, including holidays. To meet additional transportation needs and to supplement its own fleet of vehicles and drivers, ACS uses five vendors. In Fiscal Year 2005, ACS paid $2.93 million for vehicular transportation services to these vendors.

Audit Findings and Conclusions

ACS has some controls in place over payments made to its transportation service vendors, such as prepayment audits of invoices, the segregation of the review and payment units, and procedures manuals that describe the request and authorization process for vehicle use.

However, there are a number of control weaknesses that may result in vendors being paid for transportation services not provided. ACS fails to make sure that drivers and their vehicles are at their designated sites as indicated in vendors’ daily shift schedules. Based on our unannounced observations and on our review of trip summary sheets and trip vouchers, we found that for 48 (49%) of the 98 shift-hours of field observation, the drivers and their vehicles were unaccounted for since they were not observed to be present at their designated sites and were not assigned to any trips.

Further, our review of ACS’s Transportation Voucher System (TVS) revealed that trip-data field information in TVS is either lacking or incorrect and that trip information from vendors rather than from ACS’s own field personnel is entered in TVS. Transportation Services manuals have not been updated to include the prepayment-audit process, and the Financial Services Unit (FSU) does not obtain backup documentation to confirm that trips using school buses and coaches actually took place when it conducts its prepayment audit of invoices.

Audit Recommendations

We make nine recommendations to ACS, among them that ACS should:

• Develop procedures to independently verify that all stand-by drivers are at the designated sites assigned by the vendor.

• Ensure that all completed trips provided by vendors are entered in TVS.

• Ensure the use of trip vouchers for all vendor-provided trips.

• Ensure that all field staff forward or fax to the ACS dispatchers the information from the trip vouchers as soon as possible so the dispatchers can then enter this information in TVS.

• Establish a procedure to periodically test the accuracy and reliability of data in TVS.

• Update its manuals to include procedures for prepayment audits. These procedures should then be communicated to appropriate agency staff.

• Require that when conducting its prepayment audits, FSU obtain backup documentation to confirm that trips took place for certain vendors.

ACS Response

In their response, ACS officials strongly disagreed with the audit’s methodology and conclusions and did not respond to seven of the nine audit recommendations. After carefully reviewing the response, we have concluded that ACS’s arguments are without merit. Their comments concerning our audit methodology are erroneous and appear to be based on a lack of understanding of our audit objective and audit testing. Accordingly, we stand by the audit’s findings.