Part I of this series of posts dealt with the details of the alleged purchasing fraud at Denver International Airport.
Part II of this series of posts dealt with applicable law, policy and procedure with regard to the procurement of goods and services by employees of the City and County of Denver which includes Denver International Airport.
Here are a few of the things a forensic accountant should ask when investigating this alleged fraud?
1) Was the employee allowed to order, receive and initiate payment for the items in question? If so, why? If so, why did the supervisor or Purchasing Contact Representative allow the same to occur when clearly the process was in direct opposition to all "Best Practices" protocols ?
2) Why was the employee allowed to order items from an out-of-state vendor when Central Purchasing had established Annual Contracts (with local vendors) for those items; contracts that had been competitively bid and were meant to be utilized citywide?
3) Due diligence processes and procedures are clearly outlined in Executive Order No. 33 with regard to the utilization of Delegated Purchasing Authority and, in addition, the use of the Procurement Card (a credit card issued for the sole purpose of procuring "small dollar" goods/services by agency representatives). Those Due Diligence requirements specifically identify the Purchasing Contact Representative at the agency as ultimately responsible for the proper utilization of the Delegated Purchasing Authority at their agency. Included in those Due Diligence (DPA) process/procedure requirements, is the explicit overview of purchases made utilizing DPA authority. To what degree did the Purchasing Contact Representative (PCR) at Denver International Airport follow those Due Diligence requirements? Was a random sampling of small dollar purchases made at the airport and faithfully, consistently executed by supervisory personnel? Did supervisory personnel review the readily available bank generated detail of small dollar purchases made by their subordinates? Did supervisory personnel consistently question the purchase of items from out-of-state vendors when the same items were available on Annual Contracts from local vendors?
4) If supervisory personnel questioned the out-of-state purchases, and the subordinate stated that he/she was purchasing those small dollar items at a greater discount than what was to be realized via the Annual Contract, did the supervisory personnel verify the same and, additionally, determine whether or not like items were being compared to like items?
5) How often did supervisory personnel make the effort to examine on-hand inventory and disbursements of that inventory to determine if receipts for shipments of those items were valid as to quantity and price?
6) To what degree did supervisory examine/investigate small dollar purchases prior to co-signing requests for payment generated by the employee in question?
There are, of course, a myriad of other questions a forensic accountant should ask with regard to this matter and, hopefully, he/she will do that.
A Part IV of this series of posts may or may not be forthcoming prior to any further information, findings, charges from the Denver District Attorney's Office or other sources.