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BOSTON DISTRICT OFFICE

Limited Audit of Financial and Administrative Controls

INTRODUCTION

The Office of Inspector General conducted a limited audit of the financial and administrative controls of the Boston District Office (BDO). The audit procedures were limited to interviewing BDO staff, reviewing supporting documentation, and conducting limited tests of transactions. The purpose of the audit was to provide the Commission with negative assurance that the internal controls were adequate, implemented economically and efficiently, and in compliance with Commission policies and procedures. The audit was performed in accordance with generally accepted government auditing standards during August and September 1998.

The BDO and the Office of Administrative and Personnel Management (OAPM) generally concurred with our findings and recommendations. OAPM's comments are attached.

BACKGROUND

The Boston District Office assists the Northeast Regional Office in administering Commission programs in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, New Hampshire, and the District of Columbia. In carrying out its responsibilities, the BDO exercises a broad range of financial and administrative functions, including maintaining time and attendance records; procuring supplies and services; arranging for staff travel; maintaining an inventory of property; and recording budgeted and actual expenditures of the office.

AUDIT RESULTS

During the limited audit described above, we identified several material issues, as explained below. These issues are material because they generally apply to other Commission offices.

Otherwise, our limited review indicated that the BDO's controls were adequate, implemented economically and efficiently, and in compliance with Commission policies and procedures. Besides the material issues in this report, we verbally discussed some non-material findings and informal recommendations with BDO management. BDO generally concurred with our findings and agreed to implement the recommendations. For example, during the audit BDO issued two messages to its staff about time and attendance and travel procedures.

Court Reporter Services

BDO enforcement attorneys sometimes directly order court reporter services from various firms when a case is in litigation. The attorneys and the BDO Administrative Contact approve the invoice after the services are provided.

The attorneys do not have contracting authority, and a purchase order is not issued. In addition, we identified a few invoices which exceeded $2,500, the limit for purchases without competition.

Court reporter services should be ordered through a purchase order signed by a contracting officer (unless an existing contract is being utilized). Alternatively, the BDO administrative officer could use a government credit card to order the services, or use a blanket purchase agreement (BPA).

This issue was identified in a prior OIG audit of the San Francisco District Office (No. 278), and may occur in other regions and the Division of Enforcement. One way to address it Commission-wide would be the issuance of a national multiple award contract, which would include many court reporter firms. Then, attorneys could hire any firm listed in the contract while still complying with contracting regulations.

Recommendation A

The BDO should use purchase orders signed by an official with contracting authority, a BPA, or the government credit card for court reporter services for litigation.

Recommendation B

In consultation with the regions and the Division of Enforcement, the Office of Administrative and Personnel Management (OAPM) should consider the issuance of a multiple award contract for court reporter services.

Blotter Records

The BDO maintains blotter records (simplified records like a check register) for a few accounts, but generally relies on the Comptroller's records (know as BETA 93) to track its expenditures. The BDO indicated that the BETA 93 records are up-to-date and available on-line to the regions, making blotter records unnecessary. Instead, it verifies the accuracy of the BETA 93 records by comparing them to supporting documentation (such as purchase orders and invoices).

A representative of the Comptroller's Office agreed that the requirement to maintain blotter records (in SECR 14-1) is outdated. Eliminating this requirement could save substantial time for offices and divisions and prevent duplicate data entry.

Recommendation C

The Office of the Comptroller should issue guidance eliminating the requirement to maintain blotter records. However, it should make clear that offices and divisions are still required to periodically verify the BETA 93 expenditure records.

Reimbursement of telephone calls

The Commission's policy on reimbursement of telephone calls may be unclear to some BDO staff. These staff claimed $5 a day on their travel voucher for phone calls without providing receipts.

The $5 average allowance per day is a maximum, not an entitlement. While a receipt for phone charges under $75 is not required, the amount of the charges must be determined before making a claim. Staff in other regions may also be confused.

Several staff indicated that they used calling cards to make calls while on travel. Use of these cards is not addressed in current Commission guidance. The cards have a defined rate per minute, so a caller could calculate the amount of charges by multiplying this rate by the minutes of the call.

The BDO indicated that written guidance on reimbursement of cell phone expenses has not yet been issued.

Recommendation D

The Office of Administrative and Personnel Management should issue additional guidance on reimbursement of telephone calls, including use of calling cards, and reimbursement procedures for cell phone charges. The guidance should be included in an administrative regulation, with brief but relevant information in the telephone directory.

Property tracking system

The BDO maintains its own property tracking system, in addition to the Commission's approved automated property system (known as TRAQ). In a memorandum dated April 15, 1997, the Associate Executive Directors in OAPM and the Office of Information Technology (OIT) stated that offices must use only the approved property system.

The BDO stated that TRAQ used to be inaccurate, and still takes a long time to generate reports. Also, a team from OAPM which recently took an inventory at the BDO did not check for BDO's use of an internal tracking system.

Recommendation E

The BDO should discontinue use of its internal property tracking system.

Recommendation F

The Office of Administrative and Personnel Management, in consultation with OIT, should consider how to provide faster property reports to the regions (e.g., by putting TRAQ on the local server). OAPM should ask its property staff to check for duplicate internal systems when they perform inventories.

Use of government credit card

The BDO used its government credit card to pay for lodging expenses for expert witnesses. The Commission's regulations exclude lodging as an approved expense for the card.

An OAPM official stated that the intent of the regulations was to exclude use of the card only for employee travel, since employees can use their American Express card. The official agreed that the regulation needs to be modified.

Recommendation G

OAPM should issue guidance clarifying that the government credit card can be used to pay lodging expenses for witnesses. When the credit card regulation is reissued, this modification should be included in it.