Non-payroll expenditures by school districts involve tens of thousands of individual contracts, totaling over 15 billion dollars in the aggregate per year. Well-defined procurement specifications, professional vendor relationships, ongoing active contract management, and following ethical standards adopted by the district, in addition to doing business with vendors that have a performance excellence track record are what school districts should aspire for in every vendor procurement. However, even in the best of circumstances, things may happen, as a result of employee turnover in addition to various kinds of changes that may impact an organizational unit. Periodically, management should assess risk factors related to purchasing management. Risk factors in purchasing management that may indicate your school district has a problem include:
- Increased levels or frequencies in campuses or organizational units of:
- Employee turnover of staff involved in campuses’ or organizational units’ procurement processes
- Returned items
- Complaints about products or service
- Purchased inventory but no increase in activities or services
- Inventory shrinkage
- Charges without supporting documentation, including shipping documents
- Purchases from vendors who aren’t on an approved vendor list
- Purchases from new vendors not on the approved vendor list
- Inadequate physical security over assets/inventory
- Bypassing normal purchasing procedures and processes
- Items delivered that do not meet specifications
- Apparent lack of delivered professional or nonprofessional services
- Apparent lack of delivered materials and supplies
- Insufficient details on vendor invoices
- Purchases from vendors that are difficult to locate by physical address
- Purchases from multiple vendors with the same address
- Purchases from one or more vendors matching employee addresses
- Excessive inventory levels
- Incomplete inventories
- Lack of vendors’ competition in submitting quotes, proposals or bids
- Favoritism towards select vendors
- Continuous extension of contracts without competitive procurement
- Lack of serial numbered documents for receipts or invoices
- Lack of supervisor’s review and approval of procurement documents
It is to be expected that there may be one or more apparent issues or ”not sure” answers to certain risk factors, which should be evaluated in the context of potential low, medium or high internal control impacts. An assessment of risk factors may evidence issues that include: performance issues that range from employees’ basic skills to management issues; insufficient written documentation of processes, procedures and workflows; and/or insufficient process control alerts. Executive management should promptly address emerging issues while they are more readily remediated. Where there are indications of more serious potential issues, management should consult with their district’s attorney about potential next steps where significant employee performance issues may be involved.