Item - 2015.AU1.18
Tracking Status
- City Council adopted this item on March 31, 2015 without amendments and without debate.
- This item was considered by the Audit Committee on February 27, 2015 and adopted without amendment. It will be considered by City Council on March 31, 2015.
AU1.18 - Review of Divisional Purchase Orders
- Decision Type:
- ACTION
- Status:
- Adopted on Consent
- Wards:
- All
City Council Decision
City Council on March 31, April 1 and 2, 2015, adopted the following:
1. City Council request the City Manager to expedite implementation of the outstanding recommendation, below, which is contained in the Auditor General’s 2010 report “City Purchasing Card (PCard) Program – Improving Controls Before Expanding the Program”:
“The Treasurer develop and implement strategies to promote and expand the use of PCards by City divisions. Such strategies should include, but not be limited to:
a. analyzing divisional purchasing patterns to identify potential areas for expansion;
b. developing and implementing measures to increase the use of PCards by divisions; and
c. detting performance goals for the City based on the number of participating divisions and yearly PCard purchase volume.”
2. City Council request the Director, Purchasing and Materials Management review and revise quality assurance procedures including:
a. taking a risk-based approach to selecting Departmental Purchase Order files for review;
b. adjusting sample sizes to a manageable level, to allow for a balance between the sufficiency and timeliness of file reviews; and
c. tracking and monitoring the progress and compliance of divisions.
3. City Council request the Director, Purchasing and Materials Management expand the analysis of quarterly Divisional Purchase Order activity to include the identification of:
a. instances of invoice splitting;
b. purchases being completed prior to creation of Divisional Purchase Order;
c. excessive, repetitive purchases from the same vendor, regardless of value; and
d. opportunities for efficiencies through use of City’s purchasing cards or blanket contracts.
4. City Council request the Director, Purchasing and Materials Management to require staff be re-trained on the use of Divisional Purchase Orders in instances where consistently significant non-compliance is detected through quality assurance procedures.
Background Information (Committee)
https://www.toronto.ca/legdocs/mmis/2015/au/bgrd/backgroundfile-76331.pdf
AU1.18 - Review of Divisional Purchase Orders
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
Committee Recommendations
The Audit Committee recommends that:
1. City Council request the City Manager to expedite implementation of the outstanding recommendation, below, which is contained in the Auditor General’s 2010 report “City Purchasing Card (PCard) Program – Improving Controls Before Expanding the Program”:
“The Treasurer develop and implement strategies to promote and expand the use of PCards by City divisions. Such strategies should include, but not be limited to:
a. Analyzing divisional purchasing patterns to identify potential areas for expansion.
b. Developing and implementing measures to increase the use of PCards by divisions.
c. Setting performance goals for the City based on the number of participating divisions and yearly PCard purchase volume.”
2. City Council request the Director, Purchasing and Materials Management review and revise quality assurance procedures including:
a. Taking a risk-based approach to selecting Departmental Purchase Order files for review.
b. Adjusting sample sizes to a manageable level, to allow for a balance between the sufficiency and timeliness of file reviews.
c. Tracking and monitoring the progress and compliance of divisions.
3. City Council request the Director, Purchasing and Materials Management expand the analysis of quarterly Divisional Purchase Order activity to include the identification of:
a. Instances of invoice splitting.
b. Purchases being completed prior to creation of Divisional Purchase Order.
c. Excessive, repetitive purchases from the same vendor, regardless of value.
d. Opportunities for efficiencies through use of City’s purchasing cards or blanket contracts.
4. City Council request the Director, Purchasing and Materials Management to require staff be re-trained on the use of Divisional Purchase Orders in instances where consistently significant non-compliance is detected through quality assurance procedures.
Origin
Summary
This review was initiated because of the increase in the Divisional Purchase Order (DPO) limit to $50,000, the potential for a further increase in this limit, and instances of non-compliance with City purchasing policies and procedures that were identified in the past.
Although controls over DPOs have improved, there is an opportunity for the City to improve the efficiency and cost-effectiveness of DPOs as one of the City’s purchasing methodologies. This report contains four recommendations to improve cost-effectiveness, efficiency and management controls.
A separate letter has been issued to management outlining recommendations for minor administrative improvements that came to our attention during the audit.
Background Information
https://www.toronto.ca/legdocs/mmis/2015/au/bgrd/backgroundfile-76331.pdf