Follow-Up Audit Report On Other Than Personal Services Expenditures Of Schools Within The Department Of Education Regional Operations Center For Regions 9 And 10

AUDIT REPORT IN BRIEF

This is a follow-up audit to determine whether the Department of Education (DOE) has implemented the 10 recommendations made in a previous audit entitled Audit Report on Other Than Personal Service (OTPS) Expenditures of Schools Within Regional Operations Center for Regions 9 and 10 (Audit No.FP05-076A, issued May 4, 2005). In this report, we discuss the 10 recommendations from the prior audit in detail, as well as the implementation status of each recommendation.

The earlier audit determined whether DOE procurement policies and procedures were followed for purchases of goods and services made by schools in Regions 9 and 10 that required Regional Operations Center (ROC) approval. In that audit, the auditors determined that the officials of the ROC and schools in Regions 9 and 10 generally did not follow DOE’s procurement policies and procedures for purchases that required ROC approval. Specifically, purchase files lacked evidence of competitive bidding when required; vendor invoices were not always on file; files lacked justification for purchases made using the sole-source method of procurement rather than obtaining bids; and, files did not always contain documentation showing that the goods and services paid for were actually received.

In addition, the previous audit cited Park West High School for using funds in its budget to purchase equipment on behalf of another school––Seward Park High School—which is a violation of the New York City Department of Education’s Standard Operating Procedures Memorandum No. 2-06, “OTPS Purchases” (SOP).

Audit Findings and Conclusions

Of the 10 recommendations made in the previous audit, the current audit determined that DOE implemented four recommendations, partially implemented four recommendations, and did not implement two recommendations. The recommendations that have not been addressed by DOE include: ensuring that all goods are delivered and services are rendered before payment of invoices; providing written justification for all sole-source purchases; reviewing specific documentation before approving such purchases; and obtaining the approval of the Executive Director of the Division of Contracts and Purchasing (DCP)¹ for sole-source purchases, as prescribed by the SOP.

In the current audit, we found that weaknesses still exist in the ROC’s compliance with the requirements of the SOP pertaining to exception from competitive bidding procedures. Specifically, schools and the ROC are not ensuring that purchases made using the “sole-vendor” and “exception to bid” purchase method are adequately supported and appropriately approved. We also noted weaknesses in the internal controls over purchases at the school level that resulted in schools splitting purchases in order to circumvent the approval requirements for purchases exceeding a monetary threshold and in schools reporting inaccurate certification of delivery information.

Audit Recommendations

To address the issues that still exist, we recommend that DOE officials in conjunction with the district representatives:

• Adequately review purchase orders and their related documentation prior to approving purchases on DOE’s FAMIS² to ensure that schools comply with the procurement requirements of the SOP governing exception to competitive bidding; that schools do not circumvent the approval process; and that the purchase method indicated on the purchase order is adequately supported.

• Ensure that schools accurately certify the receipt of goods or services before payment.

• Implement procedures to ensure that the above recommendations are implemented.