Erie County Comptroller Mark Poloncarz today released an audit of Erie County's (the "County") Division of Purchase ("Purchasing") for the period July 1, 2006 to June 30, 2008 (the "Audit"). Among various areas examined, the Audit reviewed internal controls over purchase orders, the sale of scrap materials and auction of surplus items, including vehicles.

In general, the Audit noted that most purchase order transactions are being handled appropriately. However, the Audit identified a number of significant findings of concern at Purchasing.

First, the Audit found serious internal control deficiencies in Purchasing's process for the disposal of surplus equipment during a period in which the auction and scrap sale proceeds totaled $584,000. These deficiencies included (1) the proceeds from one auction conducted by Purchasing's auctioneer vendor potentially totaling $8,720 could not be located; (2) the lack of segregation of duties in that one employee controlled and administered the surplus disposal process; and (3) proceeds from sales were deposited very late: on average, proceeds were not deposited until 38 days after the check date.

"While I am pleased that my auditors noted that most areas of the Division of Purchase are being run properly, I am astonished that Purchasing's auctioneer failed to remit the proceeds from a sale for over two years, and Purchasing either did nothing to pursue this matter or worse, was unaware of the vendor's failure to pay," said Poloncarz. He added, "This is just one example that shows that internal controls in Purchasing related to auctions and the sale of scrap materials are inadequate and require corrective action."

Additionally, the Audit found that the vendor providing auctioneer services overcharged the County for consignment fees, did not pay penalties for continually remitting auction proceeds late, and charged expenses to the County without proper receipts. Record-keeping was spotty and poor and certain documentation was missing. The vendor routinely did not comply with its contract with the County and no action whatsoever was taken by Purchasing to enforce the contract terms. Lack of oversight by Purchasing prevented these issues from being detected or prevented

The Audit also found a serious control deficiency associated with purchase orders. Due to the seriousness of the deficiency, the Comptroller's Office communicated the finding to Purchasing prior to the issuance of the Audit for immediate remediation and agreed at the request of the administration not to announce the finding for security reasons. Purchasing has agreed with the finding and is addressing the matter.

A copy of the Audit can be found at: http://www.erie.gov/comptroller/county_audits.asp.