State audit report finds roughly $900,000 of 'questionable' UB transactions
University says report 'overstates' findings’ impact
Roughly $900,000 of “questionable” UB transactions are the center of a new audit report issued by the Office of the State Comptroller (OSC) Friday.
The report focuses on roughly $368,000 in transactions between UB and the UB Foundation (UB Foundation Activities, Inc.) and roughly $338,000 in transactions between UB and Corr Distributors, Inc. (custodial equipment maintenance). The audit reviewed transactions from April 2016 and Sept. 2018. The report’s key findings criticize UB’s business services for “poor monitoring of spending and contracting practices” which “resulted in potential lost savings and cost avoidance,” among other things.
The report recommends UB follows procurement procedures, appropriately documents purchases and improves aspects of its contract-awarding/monitoring process. The report also criticizes UB for not getting “all information” to “ensure true lowest cost” in its contract-awarding process with Corr.
The OSC’s report on Friday comes after its 2018 report which identified “questionable” transactions and detailed UBF’s lack of “documented policies and procedures for obtaining contracted services.”
The university, in a statement updated on Saturday, said it appreciates the opportunity to review and respond to the OSC’s report and agrees with “some recommendations.”
However, the university has “raised concerns that the draft report overstates the impact of some of the OSC’s findings,” the statement read.
The university said while there “is an opportunity to improve documentation and internal processes, all identified purchases” indicated in the report “benefited UB and the UB community.”
“There is no evidence that the purchases were inappropriate or fraudulent,” the statement read.
The report reviews roughly $368,000 in UBF transactions and points to “internal control weakness” like “no formal agreement” being in place for purchases. The report states UB’s agreement with UBF did not cover “research-related administrative services.”
UB, in a statement, noted the school interpreted “research-related administrative services” as being in its agreement with UBF and “believed that the OSC shared a similar understanding” due to its OK of $368,622 in “research-related administrative transactions” without an additional agreement. UB, according to the report, categorized UBF as the “sole source” for research-related administrative services. It changed this to “single source,” following OSC’s report.
The report also highlights a “potential conflict of interest” with a UBF employee benefiting from “payments ... reimbursing the employee’s salary,” as well. The report states this employee is involved in internal UB “payment requests for UBF” and a “point of contact for any questions relating to payments and their support.”
Aside from UBF, the report identified “multiple issues” in roughly $338,000 in payments to Corr. This includes “potentially avoidable repair work and costs for parts and materials,” the report says.
The report concerns itself with UB’s failure “to obtain all information needed to ensure true lowest cost” through the contract-awarding process. It says Corr charged UB higher prices and “for a majority” of its review period, “more than 65% higher.”
A past UB contract with Corr lasted from Sept. 2013 to Aug. 2018, yet UB paid for services past the contract’s full $655,000 in expenses, the report says.
Aside from Corr, the report found nearly $189,000 in purchases which it could not determine a “reasonableness of price,” transactions which are unallowable by policy or “lacked a business need.”
UB, in a statement Saturday, said the OSC did not take shipping, handling and sourcing prices by Corr into consideration during its cost evaluation. UB said it rebid for a custodial maintenance services vendor this year and Corr won versus others.
The university noted a two-year rebidding delay regarding custodial services along with the upcoming procurement system Shop Blue, which UB hopes will “lead to significant savings by standardizing the procurement process.”
“The university is always cooperative when agencies review our programs and policies. UB will consider identified recommendations, and make any necessary improvements,” the statement read.