01/14/09 06:39 AM

By Matthew Spina
NEWS STAFF REPORTER

Two years later, Erie County officials have asked their outside auctioneer for the long-forgotten proceeds from the sale of surplus county property in December 2006.

It involved about $8,000, according to both county auditors and the auction company — not a lot of money for a government that handles $1.4 billion a year.

But after examining the county’s Purchasing Division, county auditors found problems that go beyond the division’s failure to ask auctioneer Spandco, of Niagara County, for its money in 2006.

For example:

• Spandco, or Scott Perry and Co., routinely turned over auction proceeds days or weeks late, and the county’s purchasing officials did not assess penalties, as they could do after 10 days, the auditors said. They calculated the county lost $6,000 in late fees for the twoyear period they examined, from July 2006 through June 2008.

• The auctioneer charged commissions ranging from 4.15 percent to 4.85 percent when the contract allowed 4 percent. The overcharge during the twoyear period amounted to about $1,000, auditors said. The auction company believes it is less than that, probably around $700.

• In one episode the auctioneer charged the government $4,400 in advertising expenses, which the county allowed without a receipt.

“It’s fair to say that this auctioneer, during the period of the audit, was not following the terms of the contract,” said Comptroller Mark C. Poloncarz, who revealed his auditors’ findings Tuesday. Poloncarz recommended that Spandco’s contract not be renewed without a “corrective action plan.”

The auditors had sent the purchasing officials on a search for records and spurred a meeting with Spandco, which has acknowledged its mistake from 2006.

“We are in discussions with the county, and we are very close to a resolution,” said Norm Titterington, a company manager. “And there was a clerical error made, but it was for a very minuscule amount of money.”

He said the company, while switching its computer software between 2006 and 2007, failed to issue a check to Erie County for the mixed bag of surplus items — computers, generators, office furniture — sold for the government Dec. 16, 2006. He said the oversight involves less than $8,000.

Titterington said the county had let Spandco start turning over auction proceeds in 60 days, rather than 10. And while county auditors never found the written authorization for the change, Titterington said he can provide a copy.

But Titterington acknowledged that the county, in starting a new contract with Spandco in 2007, lowered the company’s commission from 4.2 to 4 percent, yet Spandco often charged 4.2 percent.

He said certain reimbursable expenses might have made it appear to auditors that commissions had been inflated beyond 4.2 percent. In one case, he said, Spandco charged for a battery that would prove to bidders that a piece of heavy equipment was operable. The purchase should have been recorded as an expense, not a commission, he said.

While Spandco, according to the auditors, was slow to turn over the county’s share of auction proceeds, the county’s staff was slow to deposit the proceeds from its sales of surplus property.

The government routinely sells scrap metal, paper and other excess by seeking bids from companies interested in handling those materials. But the county official involved — auditors found the post has changed hands a few times — often took weeks to deposit checks in the county’s accounts.

Joel A. Giambra was county executive for most of the years examined by auditors.

During that time, Vallie M. Ferraraccio was a high-ranking purchasing official but not the head of the division.

Ferraraccio, now director of the Division of Purchasing for County Executive Chris Collins, sent a letter to Poloncarz on Tuesday in which she did not dispute the findings. She acknowledged that Spandco will be sending payment for the auction in December 2006 and that she has either implemented or intends to implement other safeguards highlighted in the report.