An Audit Report on Two Cost-Recovery Programs at the Department of Information Resources
September 2004
Report Number 05-001
Overall Conclusion
During the planning phase of our audit, we identified that the Department of Information Resources (Department) has not operated its Cooperative Contracts Program (CCP) as a cost-recovery program, despite expectations that it do so. In fiscal years 2002 and 2003, customers of the CCP paid $6 million more than it cost the Department to provide the contracted goods and services. The Department's customers have paid higher prices because (1) the Department has charged more than needed to recover its costs, and (2) it has not implemented sufficient procedures to ensure that its contracts with vendors for information technology commodities are at the best price. The Department voluntarily transferred $3 million of the $6 million to the State's general revenue fund at the end of fiscal year 2003.
Management has agreed that it needs to address the issues identified in CCP and has developed a corrective action plan. Because these issues were identified as having the highest risk, we believe further audit work is not necessary at this time.
We also followed up on recommendations we made in May 2002 regarding the State's internal telecommunications systems. The Department has substantially implemented these recommendations. The improvements include making progress toward operating telecommunications services as a cost-recovery program and addressing weaknesses in accounting controls.
Contact the SAO about this report.
Download the Acrobat version of this report. (.pdf) (Generate HTML Equivalent)*
*HTML equivalents for PDF documents are generated utilizing Adobe's PDF Conversion by Simple Form.