The term "marginal," rarely a compliment, is especially disquieting when it’s found in a report describing the controls a government department exercises over how it transacts business. It leaps off the page of a Department of Education internal audit recently released about the way the agency handles procurement and contracting processes. DOE officials need to follow scrupulously the corrective actions the auditors recommend.
Failure to do so, according to the report, could cause a continued deterioration in accountability leading to an "unacceptable" status. Even though operations haven’t hit that rock-bottom level yet, "a marginal rating indicates that there may be a potential for loss to the auditable area and ultimately to the DOE" — already quite compelling as an alarm bell.
Some of the vulnerabilities opened in initiatives aimed at giving faculty and staff more flexibility in meeting educational needs — buying supplies on short notice, for example — an allowance with good intent, one that most employees fulfill responsibly.
There is plainly too much flexibility built in the system overall, however. Just for starters, "small purchases," which can be approved at the school and office level, are defined as those costing under $25,000. In all, the DOE spent $789 million on such purchases over the period of the audit, July 1, 2010, to Dec. 31, 2011. Those are purchases, individually and certainly in the aggregate, that are too large to escape careful scrutiny.
Further, the imperative for improvements in oversight is obvious in news headlines. Recent episodes include multiple thefts by department staff, such as the case of a Fern Elementary School secretary who pleaded guilty to charges of stealing nearly $15,000 from various accounts over a two-year period. Even more startling was the story of a former business manager at Waipahu High School, now serving a 10-year sentence for stealing nearly $500,000 over the course of five years.
The auditors did not suggest that having better protocols in place would have prevented these losses, but they couldn’t have hurt.
A few of the weaknesses auditors noted, along with the prescription:
» Lack of oversight and monitoring of the "P-Card" program, a kind of credit card for purchasing items needed in tøhe short term, must be addressed. For example, cards issued to employees who transfer to another school or office, retire or resign should be disabled, which hasn’t always been the case.
» No consequences have been imposed for violation of procurement procedures at the school or office level. The auditor does not make specific recommendations on penalties — administrators should do that — but mandates that they be issued, and that staff should be trained on procurement rules.
» In general, a lack of monitoring was observed at the school and DOE office levels, with missing requisition documents. Obviously, a record of this kind is essential to enforcement of proper procedures.
The Board of Education is asking for follow-up reports, as it must do. It should ensure that any new processes put in place not be so stifling that it defeats the whole purpose of making transactions more efficient and flexible.
But the primary goal must be to telegraph a strong message that these things will be watched very carefully, going forward. Flexibility is a good thing, but there’s no reason basic sound accounting has to be sacrificed in order to get it.
