Audit Report on the Procurement Practices of the Office of Payroll Administration

EXECUTIVE SUMMARY

This audit determined whether the Office of Payroll Administration (OPA) procurement practices relating to non-capital expenditures complied with applicable Procurement Policy Board (PPB) rules and Comptroller’s Directives, and its own procedures.

The Office of Payroll Administration is responsible for ensuring prompt and accurate payment of City employees’ wages and salaries. OPA is also responsible for coordinating payroll policies and procedures among City agencies; ensuring City compliance with applicable Federal, State, and City employment tax regulations; distributing and accounting for the City’s payroll; and ensuring the integrity, accuracy, and operational effectiveness of the City’s payroll system.

For Fiscal Year 2006, the Office of Payroll Administration had a modified budget of $4,028,835 for Other Than Personal Services (OTPS) costs, of which OPA spent $2,905,432.

Audit Findings and Conclusions

Our review of OPA’s procurement practices indicated that the agency has established an adequate segregation of duties for its procurement practices. In addition, OPA registered all its contracts with the Comptroller’s Office and adequately documented its receipt of goods and services.

However, OPA needs to address several deficiencies in order to improve its internal controls and fully comply with PPB rules, Comptroller’s Directives, and its own procedures. These deficiencies include the lack of supporting documentation for purchases, the inappropriate use of miscellaneous vouchers, the use of incorrect object codes, the late payment of vendor invoices, and weak inventory controls relative to its computer assets.

Audit Recommendations

To address these issues, the audit recommends, among other things, that OPA:

• Ensure that request-for-purchase forms are completed and approved, in accordance with OPA procedures, before funds are committed.

• Ensure that increases in purchase-order amounts are properly justified and authorized.

• Ensure that miscellaneous payment vouchers are used in accordance with Comptroller’s Directive #24.

• Require that invoices are date-stamped upon receipt and/or that the dates of the certification of the receipt of goods or services are recorded.

• Ensure that all invoices are paid within 30 days of receipt of the invoice or of the certified receipt of the goods or services provided.

• Maintain an independent inventory list that will show key information on all its computer assets, such as the purchase date, date equipment was placed in service, location, staff assignment, date equipment was taken out of service, and the date and manner in which equipment was discarded. The list should be regularly updated to include additions, transfers, and disposals of equipment. Periodic physical inventories should be performed for all assets.

Agency Response

In its response, OPA generally agreed with the audit’s findings and recommendations.