Purpose

To determine whether the Niagara Frontier Transportation Authority’s discretionary spending complied with its guidelines and was reasonable, adequately supported, and properly approved. Our audit period was April 1, 2010 to March 31, 2012.

Background

The Niagara Frontier Transportation Authority (Authority) was created by an Act of the New York State Legislature in 1967 to promote the development and improvement of transportation and related services within the greater Buffalo region. The Authority currently operates bus and light rail services, two airports, and a small boat harbor. The majority of its revenues are earned from operating assistance, passenger fares, concessions, and commissions. 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 $2.65 million 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. We reviewed 165 payments totaling $280,887.

Key Findings

• We questioned certain travel reimbursements that were not in compliance with Authority policy or lacked sufficient justification of the business need.
• The Authority lacked formal policies and procedures for certain items, and therefore, the propriety of the related expenditures was unclear. We questioned the propriety of certain discretionary expenses, including the costs for special events, memberships, and gifts to business officials in another country.

Key Recommendation

Examine written policies and procedures to determine if they adequately address potentially questionable discretionary spending. The review should include (but not be limited to) the definitions of such costs, the necessary written justifications, dollar thresholds, required formal approvals, and supporting documentation.

Other Related Audits/Reports of Interest

Battery Park City Authority: Selected Aspects of Discretionary Spending (2012-S-158)
State University Construction Fund: Selected Aspects of Discretionary Spending (2013-S-14)