Audit of NC purchasing agency finds it failed to recover lost money

cmyers@newsobserver.comJuly 16, 2014 

— A state government agency’s failure to enact changes recommended by a 2008 audit has resulted in hundreds of thousands of taxpayer dollars wasted and more than $11 million spent without oversight, according to the state auditor.

The Division of Purchase and Contract is supposed to ensure that other state agencies spend tax dollars efficiently when buying supplies. But an audit of the department in September, 2008, found that it had been overcharged nearly $300,000 over a six-month period, and recommended that the money be recovered.

A follow-up report filed June 25 by State Auditor Beth Wood said the division failed to do so.

“What we found was that a lot of what we recommended never got put into place,” Wood said.

Wood will present the new findings to a legislative committee Wednesday.

Purchase and Contract claimed in a written response to the 2008 audit that “reimbursements have been completed so the net result is no harm to the taxpayers and the contract users.”

The most recent audit found no evidence to substantiate the agency’s claim.

“There is no documentation to support P&C’s statement,” the report says. “Therefore, we conclude no reimbursements occurred.”

Chris Mears, communications director for Purchase and Contract, said the amount in question – $294,413 – was relatively small, less than 1 percent of the contract.

One of the department’s duties is to monitor purchases of office supplies made by state agencies under a term contract. After the 2008 audit, Purchase and Contract was advised to switch from a manual monitoring system to an automated system to better keep tabs on vendor pricing.

In the five-year period from 2008 to 2013, however, the agency provided evidence of just one instance of manual spot check monitoring, according to the 2014 audit.

Because it did not make the switch to an automated system, $11.1 million – more than 40 percent of the purchases made – was spent without documented monitoring, according to the audit.

“It’s been five years, and we still don’t have monitoring in place of all the supplies that the state of North Carolina has been buying,” Wood said.

According to a response to the 2014 audit written by Bill Daughtridge, Jr., Secretary of the Department of Administration, of which Purchase and Contract is a part, the division is taking measures to improve efficiency.

“We welcome the continued dialog to further improve the services provided by the Purchasing and Contracts Division,” the response said.

“We have done an entire restructuring,” Mears says.

The agency has until the end of the fiscal year – June 30, 2015 – to resolve any issues with its process. Wood says after the end of this period, the division will be re-investigated.

Myers: 919-829-4696

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