DENVER - City employees may have made up to $3.7 million in "unauthorized purchases" last year, according to a new report released by the Denver Auditor.
The purchases may be legitimate, but were listed as "unauthorized" if an employee made them before getting approval.
"They did not go through proper procedures and controls," said Denis Berckefeldt, a spokesman for Denver Auditor Dennis J. Gallagher. "So if you don't go through procedures and controls, you do have the risk of fraud."
Berckefeldt said they don't currently have a reason to believe fraud has been committed, but the auditor doesn't know.
"It's very concerning. It's a significant number," he said.
The biggest offenders last year were the Parks and Recreation Department, which made 251 unauthorized purchases, and the Police Department, which made 31.
Berckefeldt explains that the city adopted a new purchasing system in September of 2010. It consolidated and centralized the former purchasing system.
"There's always growing pains with any new system that you put in, people will make mistakes," he acknowledged. "What we wanted to do is give it time to say, 'Okay, you've had a year and a half now that's time to learn how to use the system.'"
Despite the concern about unauthorized purchases, the audit found that the new system has bettered the city's purchasing.
The audit found that while the new system has bettered the city’s purchasing there are still areas for improvement including enhanced controls to reduce the number of unauthorized purchases and hold repeat offenders accountable.
The Mayor's office pointed out that the dollar amount in this report is an estimate based on sampling and not a complete accounting.
The audit projected that more than 2,000 purchases may have been made during 2012 prior to authorization, but found only 372 that were never authorized.
"We received the final audit today and thank the Office of the Denver Auditor for what we anticipate is another thoughtful report on the city’s processes," a spokeswoman for the Mayor's office said in a written statement. "We were pleased to be recognized for the improved controls and transparency under the new purchasing system. Further, the city is constantly working to find opportunities to improve our processes. We will review this audit in its entirety and look for even more opportunities to sharpen this fairly new system."
-- Read the audit: http://ch7ne.ws/149edfx