Purpose

To determine whether the Department of Agriculture and Markets (Department) had adequate procedures in place during the audit period to accurately report its assessable expenses related to its administration of Article 25 of the Agriculture and Markets Law. Our audit covered the period July 1, 2014 through June 30, 2016 for the Apple and Sour Cherry Market Orders and the period April 1, 2014 through March 31, 2016 for the Apple, Cabbage, and Onion Research and Development Programs.

About the Program

During the audit period, the Department’s Market Order Administration was responsible for the administration of all farm product market orders, except those involving dairy products. Each specific market order is established in Department regulations to assist the industry in achieving a variety of objectives, including product promotion, advertising, and research. These market orders include: the Apple Marketing Order, the Sour Cherry Marketing Order, the Apple Research and Development Program, the Onion Research and Development Program, and the Cabbage Research and Development Program. In addition, Article 25 of the Agriculture and Markets Law authorized market orders and allowed for the collection of funds by assessing growers to cover expenses. We note that Chapter 58 of the Laws of 2016 repealed Article 25 of the Agriculture and Markets Law and transferred the responsibility for administering marketing orders and contracts to the New York State Urban Development Corporation (UDC).

Key Findings

• The Department had established procedures to accurately report its assessable expenses for the two years ended June 30, 2016 for the Apple and Sour Cherry Market Orders and for the two years ended March 31, 2016 for the Apple, Cabbage, and Onion Research and Development Programs.
• The Department should work with UDC to improve oversight of the Market Order Program, specifically the Apple Market Order and the New York Apple Association, Inc. (NYAA) contract.
  • The Department did not always enforce contract provisions that limit expense amounts, nor did it provide adequate guidance regarding allowable expenses.
  • We identified more than $1.5 million in questionable reimbursements for goods or services that were not competitively bid in accordance with contract requirements. Additionally, we found $23,000 in expenses that were ineligible for reimbursement.

Key Recommendations

• Work with UDC to strengthen policies and enforce provisions of the Apple Market Order contract.
• Work with UDC to review the expenses identified by our audit and seek repayment for inappropriate, excessive, or ineligible expenses from the NYAA.
• Work with UDC to implement procedures to more effectively monitor market order expenses, such as obtaining electronic expense documentation and performing periodic analyses to identify questionable or unallowable expenses.