NYC Officials Look to Single-Audit Approach

NYC Officials Look to Single-Audit Approach
Procurement Reform Hinges on Streamlining

By Tom Morris, Managing Editor, The CPA Journal

Streamlining is the “touchstone concept” in New York City Mayor Michael Bloomberg’s procurement reform initiative, city officials told members of the New York State Society of CPAs.

A part of that effort is a commitment to the single-audit approach for nonprofit contractors, representatives from the Mayor’s Office of Contracts said.

The comments came during a Feb. 4 meeting between officials and members of the Society’s Not-for-Profit and Government Accounting and Auditing committees.

Marla G. Simpson, director and chief procurement officer, and Ezra Polonsky, staff liaison to the Mayor’s Office workgroup that is focusing on the single-audit initiative, gave a thorough overview of the procurement reform effort.

Simpson said the streamlining effort includes looking closely at functions to ensure that they add value. Agencies often receive funding from various human services agencies, which on average fall two to three months behind in payments, forcing nonprofits to “rob Peter to pay Paul” in order to continue operations. Simpson said that while some city agencies function effectively with little oversight, others require a “shorter leash.”

Simpson said the single-audit concept—which was initially included in the discussions about charter revision last October, but did not pass—could be advanced by changing city contracts by mayoral order, rather than by altering the law.

The city would hope to use the Federal OMB A-133 audit as a uniform model for all agencies that fund nonprofit contractors. Simpson said they have been surveying the audit departments of the different agencies about why they think the agencies are performing audits. She found that sometimes employees in large bureaucracies forget why tasks are performed, or that “lore” is passed down that audits are required to monitor contracts, even though agency audits are not automatically required but are left to the discretion of each commissioner. Simpson said she hopes that a comprehensive compliance supplement could be created to address the needs of the city agencies. The best solution, she said, would be to put the audit in the context of a performance evaluation, similar to the city’s vendor integrity data system (VENDEX) system.

Meanwhile, the mayor’s single-audit workgroup held a meeting in January and is still in the fact-finding stage, Polonsky said. The survey of city agencies showed that some agencies audit all vendors while others audit vendors based on contract size or require quarterly audits of all vendors.

Not-for-Profit Organizations Committee Chairman David Ashenfarb asked whether the commissioners will be required to accept the “single audit” that comes out of this project, thus reducing the need for agencies to conduct their own audits. He suggested that the comptroller’s office and the agencies could reserve the right to conduct their own audit but that this right would be used only as an exception, not the rule. Simpson stated that the goal is to have the single audit be comprehensive enough for commissioners to feel comfortable accepting it and opting not to require their own audits. She emphasized, however, that they have no authority to actually limit an agency’s right to continue performing its own audit.

Ashenfarb, Julie Floch and other members of the Not-for-Profit Organizations Committee and NYSSCPA staff are participants in the Mayor’s Office single-audit workgroup.