Purpose

To determine whether the Capital District Transportation Authority’s discretionary spending complied with its guidelines and was reasonable, adequately supported, and properly approved. Our audit period was April 1, 2011 to March 31, 2013.

Background

The Capital District Transportation Authority (Authority) was created in 1970 as a public benefit corporation, to provide transportation services in the Capital District and surrounding areas. The Authority’s mission statement is to provide “transit services that are safe, efficient and at a reasonable cost.” To accomplish its mission, the Authority incurs direct costs for specific program purposes and it incurs indirect or “discretionary costs” that support overall objectives.

The audit identified a total of $543,400 of Authority spending that was discretionary in nature. Each public authority should have formal policies and procedures specifying which types of discretionary spending are appropriate and the dollar thresholds for each. In addition, the policies should state what type of supporting documentation and formal approvals are necessary for such costs.

Key Findings

• The Authority did not have formal policies that explicitly outlined whether certain types of discretionary expenses were proper, what would be considered reasonable amounts for such expenditures, and what documentation would be required to demonstrate that employees used due diligence to obtain the lowest reasonable cost.
• We questioned the propriety of certain discretionary expenditures totaling about $60,000. Among the items, questionable expenses included the costs for special events, memberships, and sponsorships.
• Although the nature of certain other discretionary expenditures appeared reasonable, we questioned whether the Authority paid the lowest reasonable costs to obtain the benefits intended from such expenditures.

Key Recommendation

Examine written policies and procedures to determine if they adequately address potentially questionable discretionary spending, including definitions of costs and necessary justifications, dollar thresholds, formal approvals, and supporting documentation.

Other Related Audit/Report of Interest

Battery Park City Authority: Selected Aspects of Discretionary Spending (2012-S-158)