Lax accounting and documentation potentially cost taxpayers millions of dollars in lost revenue at state facilities and in unapproved change orders on construction projects, according to a recent state audit.
“Without sufficient documentation and evidence of authorization, there is less assurance that transactions are completed in accordance with state policies and procedures,” auditors wrote in the report released Thursday.
An initial review of the state Public Works Department of construction services revealed that 20 randomly selected change orders totaling $1.3 million were incomplete and lacked proper approval.
Further review showed that 11 change orders totaling $537,394, or 31 percent of those examined, didn’t have required signatures, and that obsolete forms lacking accountability controls were used in 13 instances. That indicates that work commenced before actual approval was given, auditors say in the report.
In addition, authorization signatures were often indecipherable with no corresponding printed name for identification purposes on a sample of 35 change orders totaling $1.82 million for eight construction projects between March 3, 2012, and Aug. 14, 2014.
Change orders are common to most construction projects, particularly large jobs in which some design element is either added or deleted from the original scope of work.
Lack of legible signatures granting approval indicates a loss of control or management oversight, auditors noted. Auditors also found problems with how the agency keeps track of rental fees for its facilities.
Some state-owned land, buildings, and facilities can be leased for municipal or private use, producing income, or providing a service that’s in the public’s interest.
However, the agency doesn’t maintain a comprehensive database of the wide variety of leases or revenues, causing potential loss of funds to the state, the report states.
This is the second time auditors have recommended designing and maintaining a spreadsheet database with that information.
Issues also were found in the department’s personnel documents of staff who left service, as the files didn’t always indicate the date of departure. And when the date was available, documents weren’t fully complete in some cases, lacking reports for vacation time, overtime, and the required note from a doctor for those out sick for more than five consecutive days. Agency officials said that changes to staff and office locations were mostly responsible for the problem.
Other issues found in the audit, which covered the fiscal years ending June 30, 2010, 2011, and 2012, include the absence of a formal policies and procedures manual, which would require a routine review of project records to see if there’s a likely basis for a potential claim against a construction consultant or contractor.
One should be implemented, auditors say, as now it appears that claims management isn’t given “sufficiently high priority.”
Moreover the agency is not compliant with statutory regulations to review general contractors’ subcontracts, and also doesn’t provide detailed cost information in a timely manner for maintenance or rehabilitative work done to other state agency facilities.
The state Public Works Department agreed with most of the auditors’ recommendations, which include some of the 17 from the previous audit that covered the years 2007, 2008, and 2009 that have yet to be remedied.
