Audit Report on the Compliance of Vanguard High School With Department of Education Procurement Guidelines For Small Dollar Purchases

This audit determined whether New York City Department of Education (DOE) officials properly administered the small dollar purchases made through SIPP for Vanguard High School (Vanguard) and whether Vanguard made purchases in accordance with DOE rules and regulations.

DOE provides primary and secondary education to more than a million students between pre-kindergarten and the twelfth grade in approximately 1,400 schools. Its Standard Operating Procedures (SOPs) allow the use of the Small Item Payment Process (SIPP) to facilitate small dollar purchases of Other Than Personal Services (OTPS). SIPP payments can be made directly to vendors or to reimburse employees who have already made small purchases.

There are two levels of authorization for SIPP transactions. According to the SOPs for OTPS purchases, revised in March 2006, the maximum amount allowed for a SIPP purchase at the school level is $500. In emergencies, expenditures that are more than $500 and below $2,500 can be processed through SIPP. However, these emergency purchases must be approved by the appropriate Integrated Service Center (ISC), the regional office that provides support services for the public schools within the district.¹

Vanguard is one of 425 high schools in the system and serves approximately 380 students in grades 9-12. Vanguard’s Principal is the person authorized to approve all SIPP transactions at the school level. However, reimbursements made to the Principal must be approved by the Superintendent of the district. For Fiscal Year 2007 (July 1, 2006, to June 30, 2007), Vanguard expended $131,452 through SIPP that consisted of 381 payments.

Audit Findings and Conclusions

We could not determine whether Vanguard complied with DOE SOPs because of Vanguard’s inability to provide sufficient documentation for a significant portion of our audit population. However, based on the documents provided, we determined that Vanguard officials circumvented the procedures set forth in the SOPs. Vanguard officials paid a minimum of $18,431 in questionable expenditures, processed payments without proper authorizations, circumvented the $500 expenditure threshold, failed to maintain supporting documentation, paid for prior year purchases, and used incorrect object codes to record SIPP expenditures.

In addition, Vanguard officials improperly processed SIPPs by using a former school secretary’s user ID for the DOE Financial Accounting Management Information System, FAMIS. Lastly, Vanguard’s Principal did not safeguard his user ID and passwords for access to FAMIS and approve SIPP transactions.

Audit Recommendations

We recommend that DOE:

• Investigate the validity of the questionable expenditures mentioned in this report and determine whether the school officials misappropriated and misused the school funds.
• Recoup the duplicate payments and any other funds that were misused.
• Provide additional training to ensure that school officials follow DOE SOPs including,
• obtaining proper authorizations.
• complying with the $500 expenditure threshold.
• maintaining supporting payment documents for six years.
• properly recording the expenses in each fiscal year.
• using the correct object codes to record SIPP expenditures.

• Require the ISC to perform periodic reviews of Vanguard’s SIPP expenditures to ensure compliance with SOPs.
• Promptly deactivate the FAMIS user ID for any staff members who have left DOE.
• Notify staff members on ways of properly safeguarding user IDs, passwords, and approval codes.