«Annual Assessment of Market Orders for 2012, 2013, and 2014 Department of Agriculture and Markets Report 2014-S-58 May 2015 2014-S-58 Executive ...»
the entire cost of the employees’ personal use of the vehicles as a fringe benefit because the expenses for this category were within the acceptable budget limitations for all three years as laid out in the Apple Market Order contract.
The Department has not ensured that NYAA follows the Market Order contract requirement to solicit a minimum of three written bids for purchases of $5,000 or more or to document and justify in writing any instances where goods and services are not purchased from the lowest responsible bidder.
We identified several contractors who were paid in excess of the $5,000 limit but whose work was not bid. Nor were the reasons for not bidding justified as required by the NYAA contract. One of these contractors has been used since 1994 and another since 2013. Both provide merchandising services in the Metropolitan and Tri-State area and were paid $114,100 and $14,400, respectively, for the three years ending June 30, 2014. This occurred because the Department has not enforced the contract criteria to ensure that expenses are reasonable and appropriate. As a result of our discussions, Department officials pledged to further review the questionable costs noted during our audit.
1. Follow up on the questionable expenses identified in this report and seek repayment for any inappropriate or ineligible costs.
2. Strengthen policies and enforce provisions of the Apple Market Order contract by:
• Developing written guidelines for reimbursement of contract expenses that the Department deems necessary for NYAA’s performance under its contract, such as travel reimbursement in excess of State rates and business entertainment expenses; and
• Enforcing contract criteria for maintaining documentation to support expenses, such as vehicle cost allocations, contractor bidding records, and sole source justifications.
Audit Scope and Methodology We audited whether the Department has adequate procedures in place to accurately report its assessable expenses related to its administration of Article 25 of the Agriculture and Markets Law. Our audit covered the three-year period ending March 31, 2014 for the Apple, Cabbage, and Onion Research and Development Programs and for the three-year period ending June 30, 2014 for the Apple and Sour Cherry Market Orders.
To achieve our audit objective, we reviewed relevant laws and regulations, policies, and procedures and interviewed Department officials. We also examined the Department’s internal controls related
to preparing the appropriate cost reports. We applied audit procedures to market order financial reports and records maintained by the Department. These audit procedures included analytical reviews to identify areas of risk and unique expenses that warrant additional consideration. Based on our analytical review, we chose a judgmental sample of transactions representing $1,324,531 of $6,584,446 in expenses reimbursed by the Department for the Apple and Sour Cherry Market Orders as well as the Apple, Cabbage, and Onion Research and Development Programs. We performed site visits to the New York Apple Association, Inc. and the Cornell University College of Agriculture and Life Sciences to further review applicable expense records associated with our judgmental sample. We also substantiated the assessable costs presented in these statements by tracing them to the financial records maintained by the Department and by the State Comptroller.
We conducted our performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective.
In addition to being the State Auditor, the Comptroller performs certain other constitutionally and statutorily mandated duties as the chief fiscal officer of New York State. These include operating the State’s accounting system; preparing the State’s financial statements; and approving State contracts, refunds, and other payments. In addition, the Comptroller appoints members to certain boards, commissions, and public authorities, some of whom have minority voting rights. These duties may therefore be considered management functions for purposes of evaluating threats to organizational independence under generally accepted government auditing standards. In our opinion, these threats and functions do not affect our ability to conduct independent audits of program performance.
Authority The audit was performed pursuant to the State Comptroller’s authority as set forth in Article V, Section 1 of the State Constitution and Article II, Section 8 of the State Finance Law and the legislative mandates included in Article 25, Section 294(8) of the Agriculture and Markets Law.
Reporting Requirements We provided a draft version of this report to Department officials for their review and comment.
Officials agreed with our recommendations and reported that steps have already been taken to implement each one. The Department’s response is attached in its entirety at the end of this report.
Within 90 days after final release of this report, as required by Section 170 of the Executive Law, the Commissioner of the Department of Agriculture and Markets shall report to the Governor, the State Comptroller, and the leaders of the Legislature and fiscal committees, advising what steps
Agency Comments Division of State Government Accountability 16