Audit Report on the Department of Education’s Travel and Conference Expenses

Executive Summary

The New York City Department of Education (DOE) has established policies and procedures that govern its payment of expenses related to employees’ travel and participation in conferences, meetings, and training programs.  DOE processes employees’ travel requests in its centralized, electronic Travel Reimbursement and Approval Certification (TRAC) system and records its travel and conference expenditures, including those charged to its agency credit card, in DOE’s Financial Accounting Management Information System (FAMIS) and the City’s centralized Financial Management System (FMS).^[1]

DOE’s Standard Operating Procedures Manual (SOP) for Travel and Conferences stipulates that all travel expenses must be approved prior to travel.  DOE’s Department of Financial Operations is responsible for (1) verifying that each charge was approved by the responsible official at each individual school or administrative office; (2) reviewing the charges for budget purposes; and (3) approving the monthly payment to the credit card provider.  The approver is supposed to (1) validate the proposed travel as furthering an educational purpose and the professional enhancement of the staff members concerned; and (2) ensure that budgeted funds needed to pay for the proposed travel are available.  Further, according to DOE’s SOP for Other than Personal Services (OTPS) expenses, DOE employees must follow DOE’s procurement guidelines for acquiring goods and services related to training, meetings and conferences.  DOE is also expected to comply with the internal control and accountability requirements for travel expenses and fund-administration established by City Comptroller’s directives.  In Fiscal Years 2016 and 2017, DOE reported approximately $18 million and $20 million in travel expenditures, respectively.

In this audit we determined whether DOE complied with its SOPs and with the applicable Comptroller’s Directives regarding travel and conference expenses.

 Audit Findings and Conclusions

Our audit found that DOE did not fully comply with its SOPs or the applicable Comptroller’s Directives for travel and conference expenses.  Of the 136 sampled payments, 104 totaling $986,598 (93 percent of the $1,060,056 sampled amount), were not fully compliant with DOE’s SOPs and/or the applicable Comptroller’s Directives.  Specifically, we found among other instances of noncompliance, that DOE:

• approved and issued payments of $14,023 above the amounts allowed under two separate contracts, one for conference-space rental at a Brooklyn hotel, and the other for an out-of-State conference;
• expended $233,167 for DOE-sponsored meetings held at privately-operated sites without having sought alternative free or low-cost facilities as required by its own policy;
• paid $42,743 for employees to attend out-of-town conferences and training without written justification to show these expenses were necessary for the employees’ professional and educational enhancement;
• approved payment of $12,245 for out-of-town lodging and meals, which exceeded the maximum allowable rate of $9,315 by $2,930 (a 31 percent increase) without the required justification and approvals;
• failed to solicit required bids for 11 sampled payments, totaling $269,684, for purchases related to DOE events, such as educational conferences and staff retreats;
• approved 14 payments totaling $221,638 without the requisite prior approval by the appropriate DOE officials; and
• did not maintain and therefore was unable to provide one or more items of required supporting documentation for 43 travel expenses totaling $246,799.

In addition, DOE incorrectly recorded and reported travel expenses in FAMIS and consequently overstated its travel expenses by over $3 million for Fiscal Year 2017.

Finally, we identified over $60,000 in waste that resulted from an inconsistency between DOE policies governing international travel for, respectively, staff and students.  Specifically, while a third level of approval—by the Chancellor or the Chief Operating Officer or designee—is required for staff to travel internationally at DOE’s expense, such approval is not required for DOE-paid international travel by students, or seemingly for the DOE staff members who accompany them.  When the Chancellor’s office canceled one such trip based on security concerns, DOE lost $60,422 that it had paid out for services that were never used, and paid an additional $97,000 for a replacement trip for most of the same students and staff members.

Audit Recommendations

To address these issues, we make 16 recommendations to DOE, including that the agency implement the following measures:

• Recoup the overcharges of $14,023 that DOE paid to vendors as identified in this audit.
• Ensure that all invoice charges are compared with and matched to the applicable contract prices before payment is made.
• Explore the use of free or low-cost contracted facilities within the City for all business meetings and staff retreats.
• Ensure proper justification for staff’s out-of-town travel was obtained and documented in the appropriate records relating to the travel expense before approving payment.
• Obtain proper approval from DOE’s Division of Financial Operations (DFO) before approving or paying a lodging charge for an employee at a rate that exceeds the applicable United States General Services Administration (GSA) rate.
• Solicit the required number of bids or quotes in advance to obtain the best possible prices for necessary goods and services.
• Ensure that all required approvals are obtained before travel commences and before the agency incurs expenses for lodging, meals, and conference attendance.
• Ensure that supporting documentation for travel and related expenses is properly maintained and available for audit and other authorized purposes.
• Consider incorporating in Chancellor’s Regulation A-670 a requirement for Level 3 approval by the Chancellor or his/her designee for student trips that involve international or overnight travel and any trip for which a concern about security or safety is identified.

Agency Response

DOE agreed with 14 of the 16 recommendations and partially agreed with the 2 remaining recommendations.  DOE stated: “Overall, we agree with most of the audit recommendations and acknowledge the opportunity to reinforce adherence to the DOE’s policies and procedures. . . . [W]e will conduct additional trainings throughout the year to ensure all policies are followed. . . . We are also assessing the need for further changes and will continue to explore ways to improve our practices and procedures.”

[1] Each month DOE’s credit card payment encompasses numerous travel-related charges that DOE employees incurred with various vendors, such as travel agencies, airlines and hotels.