Overview
DLA did not properly administer its non-credit-card vendor payments for goods and services. As a result, DLA cannot be certain that these payments were for authorized school-related expenditures.
We selected a random sample of 60 vendor payments, totaling $73,914, from the DLA general ledger and identified the following problems:
- Fifty-six transactions did not have approved purchase orders and approved purchase requisitions.
- Twelve transactions did not have receiving reports (i.e., evidence of receipt of goods).
- Three transactions had no supporting documentation (approved purchase requisitions, packing lists, receiving reports, vendor bills, or other documentation to validate authorized accounts-payable transactions).
Authoritative Guidance
According to Section 408 of DLA’s Fiscal Policies and Procedures Guide, valid accounts-payable transactions include recurring bills, approved purchase orders and requisitions, approved contracts, and approved reimbursements. All approved purchase orders and requisitions require completed Purchase Requisition Forms that are approved by the executive director. Furthermore, the guide states that “only valid accounts payable transactions based on documented vendor bills, receiving reports, or other approved documentation are recorded as accounts payable.” According to Section 1601(B) of the guide,
Bills are forwarded to the Executive Director along with a completed Purchase Requisition form . . . and a packing list (when applicable). The bill and the Purchase Requisition form are reviewed for:
a) The nature, quality and quantity of goods ordered and the related price
b) Accuracy of all arithmetic calculations and extensions
c) Allowability of expenditure
Reasons for Noncompliance
DLA management could not explain why the purchases in question lacked the required documentation. The school had not established monitoring controls to ensure that it adhered to its established policies and procedures.
Recommendation
DLA management should develop monitoring controls to ensure that all vendor payments are processed in accordance with established policies and procedures.
Auditee’s Response
DLA management has developed monitoring controls to ensure that all vendor payments are processed according to established policies and procedures. These monitoring controls are aligned with the DESE Charter School Recommended Fiscal Policies and Procedures Guide for managing the accounts payable function.
Auditor’s Reply
Based on its response, DLA is taking measures to address our concerns in this area.
| Date published: | November 19, 2018 |
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