...In
September 2021, MCPS’ Procurement Department identified
questionable purchases
through its normal review of credit card activity, which was referred
to MCPS’
Internal Audit Unit in accordance with MCPS’ Policy for Reporting
and Handling
Fraudulent Actions by MCPS Employees, Agents, or Contractors.
MCPS’
Internal Audit Unit conducted a limited review in October 2021 of a
transportation
management employee’s credit card activity. The Internal Audit
Unit
issued a report dated November 17, 2021, which identified
questionable
purchases
(such as gift cards, furniture, and purchases shipped to the
employee’s
home)
made by the management employee.
MCPS further discovered the
existence of an account maintained by a transportation vendor outside
the control of MCPS’ Office of Finance that was funded with amounts
owed to MCPS. This “off the books” account was used to make
payments to several MCPS employees and to purchase goods and services
circumventing MCPS’ established policies and procedures.
Specifically, the account was funded with amounts due to MCPS for
liquidated damages resulting from the transportation vendor failing
to deliver goods timely and credits for certain items included in the
original bus procurement contract and paid for that were subsequently
cancelled.
Based on the results of the internal audit and the
discovery of the account maintained by the vendor, MCPS reported the
questionable activity to the Montgomery County Police Department.
Additionally, MCPS hired an accounting and advisory firm in December
2021 to conduct an independent forensic investigation of the
aforementioned account and certain transactions during the period
from July 2016 to January 2022.
In February 2022, the firm issued a
report which identified that approximately $1.2 million had been
deposited in the account and that payments totaling approximately
$649,000 were made either directly to MCPS employees or for purchases
of goods and services purportedly on behalf of MCPS during the period
from October 2017 to November 2021. As of November 16, 2021, the
account had a balance totaling $535,036. The firm also reviewed MCPS
credit card purchases during the period July 2016 to January 2022 and
identified purchases totaling approximately $572,000 made by
transportation department employees that were considered questionable
or required additional review. The firm stated in the report that
additional work would be necessary to fully investigate the
aforementioned activity.
On November 15, 2021, MPCS placed two
transportation management employees on administrative leave pending
investigation into the questionable purchases. One of the employees
was subsequently terminated in February 2022 and the other employee
resigned in March 2022.
As of April 7, 2022, we were advised by MCPS
management that MCPS, the Montgomery County Police and State’s
Attorney Office, were still conducting investigations related to
these issues. Specifically, MCPS was pursuing collection of the
credit balance totaling $535,036 with the transportation vendor, was
modifying its process for purchasing buses, and developing procedures
for how it accounts for changes to bus specifications; including
ensuring that credits from 13 vendors are handled properly.
Furthermore, MCPS management advised us that it provided training on
proper credit card usage, decreased credit card purchasing limits as
necessary, and eliminated credit cards based on limited or no
purchasing activity. Finally, MCPS was planning to further review
certain questionable credit card purchases identified by the firm...
