Purpose

The purpose of this performance audit was to determine whether the Department of Agriculture and Markets (Department) has adequate procedures in place to accurately report its assessable expenses related to its administration of Article 25 of the Agriculture and Markets Law. We performed our audit pursuant to legislative mandates included in Section 294(8) of this Law, which direct that the Comptroller audit the expenditures for each market order. Our audit covered the period July 1, 2011 through June 30, 2014 for the Apple and Sour Cherry Market Orders and the period April 1, 2011 through March 31, 2014 for the Apple, Cabbage, and Onion Research and Development Programs.

Background

Within the Department, the Market Order Administration unit is responsible for administration of all farm product market orders, except those involving dairy products. Each specific market order detailed in Department regulations is established to assist the industry in achieving a variety of objectives, including product promotion, advertising, and research. These market orders include: the Apple Market Order, the Apple Research and Development Program, the Sour Cherry Market Order, the Onion Research and Development Program, and the Cabbage Research and Development Program. Article 25 of the Agriculture and Markets Law authorizes the market orders and allows for the collection of funds by assessing growers to cover expenses.

Key Findings

• The Department has adequate procedures in place to ensure that it accurately reports its assessable expenses in all material aspects.
• The Department needs to improve its oversight of its Market Order Program, particularly its Apple Market Order, which is administered pursuant to a contract with the New York Apple Association, Inc. (NYAA).

Key Recommendations

• Follow up on the questionable expenses identified in our report and seek repayment for any inappropriate or ineligible expenses.
• Strengthen policies and enforce provisions of the Apple Market Order contract by:
  • Developing written guidelines for expenses deemed necessary for NYAA’s performance under its contract, including travel reimbursement in excess of State rates and business entertainment expenses; and
  • Enforcing contract criteria for maintaining documentation to support expenses, such as vehicle cost allocations, contractor bidding, and sole source justification requirements.

Other Related Audit/Report of Interest

Department of Agriculture and Markets: 2007 and 2008 Annual Marketing Orders: Statements of Revenues, Expenses and Changes in Fund Balances (2009-S-7)