Audit Report On The Procurement And Discretionary Grant Practices Of The Staten Island Borough President’s Office

Executive Summary

The Borough Presidents are the executive officials of New York City’s (City) five boroughs; each is elected to a four-year term.  The Staten Island Borough President’s Office (SIBPO) is responsible for advocating for Staten Island and its residents, and representing their interests in City government.

The SIBPO Procurement Department manages its Other Than Personal Services (OTPS) expenditures which include: (1) expenditures on operational items, such as office supplies, equipment, utilities, and contractual services; and (2) awards of discretionary grants to not-for-profit organizations.  For Fiscal Year 2018, the SIBPO reported OTPS expenditures totaling $977,211, of which $822,766 was for discretionary grants and $154,445 was for operating expenditures.

We conducted this audit to determine whether the SIBPO complied with applicable procurement and discretionary grant rules, regulations, and policies and procedures and whether its operating expenditures and discretionary grants were reasonable, appropriate, adequately supported, and properly approved.

Audit Findings and Conclusions

Based on our review of 25 sampled discretionary grants totaling $452,826, we found that the SIBPO did not fully comply with Comptroller’s Directives or its own informal policies and procedures applicable to discretionary grants.  The SIBPO did not ensure that discretionary grants were awarded properly because it did not obtain required documentation that would enable it to be alert to conflicts of interest from any sampled grantees, did not document the results of its pre-award vetting process for any sampled grantees, and did not properly vet three grantees.  Furthermore, the SIBPO did not ensure that sampled grantees expended City funds only for the intended purposes and delivered services to the intended recipients.  The SIBPO did not obtain or review supporting documentation before it issued 19 grants totaling $304,585, and did not conduct field visits to any sampled grantee sites.

With respect to the SIBPO’s own operating expenditures, based on our review of 37 sampled expenditures totaling $69,916, we found that the SIBPO did not fully comply with applicable procurement rules, regulations, and policies and procedures.  Specifically, we found that 17 expenditures totaling $43,342 were either not properly approved, not adequately supported, not appropriate, or were affected by a combination of those issues.

In addition, the SIBPO did not stamp invoices, receipts, or other supporting documentation as paid or vouchered, to provide an audit trail and prevent duplicate payments.  The SIBPO also charged some expenditures to the incorrect object codes in FMS, which hinders management’s ability to plan for future spending and prevents City agencies, oversight authorities, and the public from seeing how City agencies spend their money.

Audit Recommendations

To address these issues, we make a total of 17 recommendations, including that the SIBPO should:

• Obtain and review grant documentation including but not limited to invoices and receipts, event flyers or advertisements, and canceled checks, prior to authorizing payment;
• Conduct timely field visits to ensure that discretionary grant funds are used for their intended purposes;
• Properly conduct and document the grant vetting process and ensure that the results are reported to the appropriate personnel before decisions on grant-awards are made;
• Obtain complete lists of organizations’ directors, executives, and principals at the time of the grant and use those lists to identify potential conflicts of interest;
• Ensure that a Blue Slip^[1] is completed and approved for expenditures that require one prior to initiating a purchase;
• Ensure that receipts, invoices, and other documentation to show that expenditures were related to SIBPO operations are maintained on file at the SIBPO;
• Ensure that Blue Slip approvers review the descriptions and justifications for expenditures to ensure that Blue Slips adequately describe how the expenditure relates to SIBPO operations;
• Ensure that it charges expenditures to the correct object code in accordance with Comptroller’s Directive #24;
• Ensure that invoices, receipts or supporting documentation for Imprest Fund expenditures are stamped or annotated as follows: PAID, CHECK #, DATE; and
• Ensure that FMS payment documents are stamped as vouchered immediately after a voucher is prepared.

Auditee Response

In its response, the SIBPO disagreed with the auditors’ interpretation of several of the standards applied and thus, the audit report’s findings regarding: documenting the vetting process for organizations that request discretionary grant funding; obtaining and reviewing supporting documentation and conducting field visits to ensure that discretionary grant funds are used for their intended purposes; and operating expenditures.  Nevertheless, the SIBPO generally agreed with the audit’s 17 recommendations.

[1] A “Blue Slip” is the name used by the SIBPO for an internal purchase requisition.