Audit Report on the Use of Its Sub-Imprest Fund by the General Support Services Division of the Human Resources Administration

EXECUTIVE SUMMARY

The New York City Human Resources Administration (HRA) provides temporary economic and social service support to needy City residents and helps them, whenever possible, to achieve economic independence. HRA’s General Support Services Division (GSS) provides capital construction planning, architectural and engineering services, construction, repairs and maintenance, and technical support services to HRA programs. HRA established a sub-imprest fund (Fund) to allow GSS to make emergency purchases and other small purchases, such as carfare. For Fiscal Year 2001, GSS processed 480 purchases totaling $42,528 through the Fund. Normally, we would not have audited a fund with such small expenditures charged to it, but in this case we received allegations that the Fund was being used "for personal and non-city purchases."

The objective of this audit was to determine whether only appropriate expenses were paid from the Fund.

The audit covered the period July 1, 2000, to June 30, 2001. We reviewed Comptroller’s Directive 3, Procedures for the Administration of Imprest Funds, and the HRA Sub-Imprest Fund Procedures Manual (Procedures Manual). We obtained the Cash Receipts and Disbursements Journal that lists all Fund purchases for Fiscal Year 2001. We then requested supporting documentation for all Fund purchases made in Fiscal Year 2001. We reviewed each transaction’s supporting documentation to determine whether: there was evidence of split purchases; purchase documents were appropriately prepared and approved; authorized signatures appeared on all required documents; purchases were properly recorded; vouchers had sufficient documentation to support payments; and purchases were reasonable and appropriate. Finally, we verified that all major items purchased that included printers, scanners, and electronics were safeguarded and properly accounted for.

Purchases made from the Fund did not always comply with Comptroller’s Directive 3, Procedures for the Administration of Imprest Funds, or the HRA Sub-Imprest Fund Procedures Manual. Specifically:

• GSS intentionally split purchases (frequently on the same date) to circumvent the $250 limit on sub-imprest purchases. GSS purchased goods from six vendors by processing 33 requisitions, totaling $6,969, through the Fund. Individually, these purchases were at, or under, the $250 threshold established by Directive 3 for imprest fund purchases. However, when added together by vendor and date, these purchases exceeded the threshold.
• GSS made 30 unapproved purchases, totaling $3,592. In order to make a purchase, GSS completes a W-720 Requisition Form that lists the items to be purchased and submits it for approval. A comparison of the purchase invoices to the requisition forms revealed a number of inconsistencies. For example, some invoices revealed that GSS purchased fewer items than it requisitioned, or did not purchase some approved items at all. In these instances, GSS did not return the excess funds, but used them to purchase other, unapproved, items, including computer hard drives, printer cables, memory chips, ZIP drives, scanners, keyboards, CD towers and storage cases, and batteries.
• GSS made 23 purchases totaling $1,717 that were not in accordance with the Procedures Manual. The items purchased included filing fees paid to the New York City Department of Buildings, postage, flowers, gas, and tolls, none of which should be purchased through the Fund.
• GSS made 21 inappropriate purchases totaling $2,038. These inappropriate purchases were for various items, including washing and waxing City-owned vehicles, electronics, phone accessories, non-City maps, and picture frames. We do not understand why some of these purchases were processed through the Fund, nor do we understand why such items as car detailing and picture frames were purchased at all.
• GSS made 53 Fund purchases totaling $7,316 without proper approval. The Fund Administrator approved purchases in violation of the Procedures Manual, which states: "Expenditures may not be authorized by anyone involved with SIF [Sub-Imprest Fund] administration." In addition, other purchases were either not signed for approval, or were signed by individuals not authorized to do so.

Even though the individual items cited above total $21,632, our findings pertain only to $14,452 because certain purchases appear in more than one category.

We made unannounced visits to various HRA locations on May 20, 2002 and verified that the items purchased through the sub-imprest fund were properly safeguarded and accounted for. Therefore, we are reasonably assured that the improper use of the sub-imprest fund did not result in theft or fraud. However, weaknesses found in the operation of the sub-imprest fund could lead to this type of occurrence in the future. While we were conducting our unannounced visits, we reviewed sub-imprest fund purchases for Fiscal Year 2002, and found that GSS continued to: intentionally split purchases to circumvent the $250 limit; purchase items without proper approval; purchase items that were not in accordance with the agency procedures; and, make inappropriate purchases.

Consequently, our report recommends that GSS should:

• Discontinue its practice of splitting purchases to circumvent the $250 limit for Fund purchases in accordance with Comptroller’s Directive 3 and the HRA Procedures Manual.
• Discontinue its practice of using excess funds to purchase unapproved items.
• Ensure that it uses the Fund for only allowable purchases.
• Use the Fund as intended for emergency and small purchases only.
• Ensure that only authorized personnel approve Fund purchases.

The matters covered in this report were discussed with HRA officials during and at the conclusion of this audit. A preliminary draft of this report was sent to HRA officials and was discussed at an exit conference on June 12, 2002. On June 12, 2002, we submitted a draft report to HRA officials with a request for comments. On June 25, 2002, we received a written response from HRA officials in which they agreed with the report’s findings and stated that they will implement the recommendations.