Audit criticizes state's deployment of COVID-19 funds, targets shared P-cards, advance payments
A state auditor raised concern Tuesday about the state’s use of procurement cards for pandemic-related purchases as well as the lack of emergency procurement policies that were in place ahead of the pandemic.
Contrary to best practice, some procurement cards were shared among employees, the state did not have proof of the receipt of all goods purchased with the cards and some payments were made before the actual product or service was in hand, according to a Tuesday report from Auditor General Doug Ringler.
Specifically, the Department of Technology, Management and Budget wired $96.9 million to 15 vendors before receiving the goods and services that it was purchasing, according to the report from Ringler's office. About $23.1 million was recalled after vendors pushed the state lower in their production schedules and delayed delivery.
In one such recalled transaction, the state wired $4.9 million to a vendor even after the transaction was flagged by the financial institution receiving it on behalf of the out-of-vendor. The financial institution flagged the state again and froze the funds when the vendor tried to pull large amounts of cash from the $4.9 million the next day.
The state recalled the funds but lost $24,896 that had already been pulled by the vendor.
As of Aug. 31, the Legislature had appropriated about $5.7 billion extra in COVID-19 supplemental budgets, with a large portion of that comprised of federal funds.
Tuesday’s audit — the third such review of the state’s COVID-19 expenditures — reviewed COVID-related purchases through Aug. 31. Overall, the audit report determined the state’s expenditures were “appropriate,” though the report noted issues with shared emergency procurement cards and emergency procurement policy.
In the audit period, shared cards accounted for roughly $35.2 million in purchases even though state rules require procurement card use be limited to the employee whose name is on the card, the report said.
Ringler’s office reviewed about $33.7 million of the $60.6 million in purchases made through emergency procurement cards, about $14.6 million made through shared cards. He suggested the Office of Internal Audit Services review the remaining $20.5 million in purchases made with the shared cards.
As of Oct. 2, the Department of Management and Budget still had “not taken action to ensure that all emergency procurement cards had been either eliminated or destroyed and that remaining procurement cards in use were assigned to one specific individual,” the report said.
Additionally, the department reviewed about $23.4 million in transaction and found $10.4 million lacked proper documentation.
The department disagreed with the findings, noting that immediate pre-payment was required when personal protective equipment was scarce at the start of the pandemic.
Additionally, the department “did not have the resource bandwidth to dedicate specific individuals to this task while ensuring other critical tasks were completed,” the department said in its response to the audit findings. “As a result, DTMB needed to have some shared procurement cards.”
To ensure appropriate use, each purchase had three levels of review, the department said.
But Ringler’s office defended its findings, noting months after the peak of the pandemic and shortages in PPE the department still had not adjusted its procurement card policy.
Additionally, DTMB’s delay in providing supporting documentation for some purchases and the lack of proof that some purchased goods were received merits additional review, the audit report said.