Office of Emergency Management and Communications Disbursements Audit

Executive Summary

The purpose of the audit was to review, test, and evaluate procedures related to payment disbursements and contract management to determine whether OEMC had effective and efficient operations and internal controls, as well as adequate policies and procedures in place.

Based upon the results of our audit, we determined that internal controls were not adequate to prevent waste and misconduct and, therefore, resulted in substandard disbursement and contract management processes.

More specifically, the audit found deficiencies in internal controls resulting in the following negative consequences:

• Voucher Manipulation: OEMC’s non-payroll disbursements between January 1,2008 and September 30, 2009 totaled $72,880,188. The sample reviewed during the audit included $38,633,405, or 53% of the total amount disbursed. We found that at least $13,678,786, which equates to an extraordinarily high 35% of the commodities purchased in the sample, did not match the goods and services of the original invoices and/or that the actual commodities purchased were not related to the contracts from which they were paid.
• Missing Inventory: During the review of vouchers, we identified a sample of goods received totaling $134,583. We met with OEMC representatives to validate the existence of these goods. Of the sample, 38 LaserJet printers, 10 computer carrying cases, seven notebook computers and a digital camera could not be located. These missing goods were valued at $19,001, or 15% of the sample.
• Common Law Employees: During the audit period, the auditors identified 50 individuals contracted through seven different vendors who were identified as contractors/consultants. Based upon initial discussions with OEMC personnel, the auditors suspected some of these contractors/consultants to be common law employees in violation of the Shakman Accord. A parallel IGO disciplinary investigation focused on one of the seven vendors and subsequently determined that eleven of the contractors/consultants associated with that one vendor alone were, in fact, common law employees. The investigative findings essentially substantiated the existence of the broader common law employee/Shakman violations within OEMC that were preliminarily identified by the IGO auditors.

During performance of IGO audit fieldwork, OEMC began formulating and implementing policy and procedural changes responsive to the broad scale, systemic deficiencies revealed by the audit. Accordingly, the IGO credits OEMC officials with acknowledging the audit findings and promptly moving to address them through remedial measures, the nature and effectiveness of which we will evaluate in a future public follow-up report.