An audit conducted by the office of the New York State Comptroller Thomas P. DiNapoli, the results of which were released on March 16, has found that the New York Racing Association (NYRA) does not have adequate monitoring and oversight over its purchasing and procurement process; consequently, sufficient competition is not fully promoted, and overspending may have occurred.
In addition, a deviation between NYRA's procurement practices and the requirements in its Purchasing Policy and Procedures Manual (Manual) allowed a NYRA employee to select his company to do business with NYRA and receive payments totaling almost $200,000.
The audit, directed by Kenrick Sifontes, covered the period from January of 2018 through December of 2020, with expenditures of over $250 million for goods and services. According to Section 208 of the Racing, Pari-Mutuel Wagering and Breeding Law, all contracts entered into by NYRA for the procurement of goods or services are required to be pursuant to a competitive bidding purchasing policy approved by the New York State Franchise Oversight Board (FOB).
NYRA's Manual, approved by the FOB in 2010, specifically states: “Company employees who are entrusted to purchase goods and services are expected to spend the Company's money in a prudent manner.”
Specifically, the audit found that NYRA made a significant number of purchases without competitive bidding, instead using Bid Exception Memos (BEMs) for purchases using single or sole source exceptions. Documentation to justify NYRA's use of BEMs and the circumvention of competitive bidding was generally very limited.
Contrary to Manual requirements, over 15,000 transactions under $1,000 each, totaling approximately $4.79 million, were made to purchase goods or services from suppliers outside of the approved vendor list without the Purchasing Department questioning why the approved vendors could not supply the goods or services.
NYRA could not provide copies of change orders to support the payment of $787,517 to a construction contractor. As a result, the comptroller's office could not determine whether the additional payments were justified.
The comptroller's office also found weaknesses in NYRA's purchasing system and processes, a lack of segregation of duties, and a lack of risk assessment and analysis.
Four recommendations followed the results of the comptroller's audit:
- Strengthen the integrity of the purchasing and procurement process by updating the Manual and obtaining FOB approval, and adhere to the approved policy when procuring goods and services.
- Monitor purchases and analyze historical purchasing data to identify categories of items that, in the aggregate, are budgeted for greater than $50,000 and obtain competitive bids.
- Conduct periodic risk assessments of procurement operations to identify vulnerabilities and take action to address, as necessary.
- Conduct periodic audits of NYRA's purchasing and procurement process.
The full audit results are available here.
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