Results in Brief

The 1995 and 1997 Capital Improvement Programs represent a $500 million commitment to the construction and improvement of state facilities. Statutorily, these funds may be spent only on approved projects and must be properly accounted for. Board regulations, policies, and contractual agreements provide additional requirements relative to these issues. Although the SPWB generally complied with these financial and administrative requirements, we noted the following instances of non-compliance. First, legislative approval was not always obtained for project scope and budget changes. Second, certain furniture and equipment acquisitions were not consistent with Board policy. Finally, accounting records for University and Community College System of Nevada (UCCSN) maintenance projects were not sufficient to determine the propriety of expenditures. As a result, the SPWB does not have reasonable assurance all project expenditures were appropriate. The SPWB needs to implement additional controls to ensure compliance with the financial and administrative requirements established for CIP projects.

Improvements are also needed to ensure the SPWB provides complete, timely, and accurate information to the Legislature. The Legislature faces the considerable challenge of accommodating the state’s growing facility needs through the approval of the CIP. To meet this challenge, reliable information must be available to set priorities and make decisions. Despite the need for reliable information, certain project performance indicators were not accurate or supported by quantifiable data. In addition, construction completion dates were not always documented. Finally, project status reports were not prepared timely. By improving reliability, management information can be more effectively used to direct the resources of the SPWB.

Principal Finding

· The SPWB transferred about $50,000 of expenditures related to a community college renovation project to a statewide roofing project without legislative approval. As a result, renovation expenditures exceeded the authorized amount. (page 10)

· NRS 341.090 authorizes the SPWB to expend appropriated funds for the advance planning of a capital improvement project. Advance planning, as defined by this statute, does not include construction costs. Despite this, the SPWB expended $175,000 of 1995 planning funds for construction costs at a community college. (page 10)

· A $5 million high technology center operated by the UCCSN included a budget of $220,500 for furniture and equipment purchases. Board policies and procedures require these purchases to be within this authorized funding limit. Despite this requirement, furniture and equipment purchases exceeded $800,000. In addition, this amount was paid directly to the UCCSN without supporting invoices or other documentation of receipt. (page 11)

· An advanced technology center at a community college was approved for construction with a $11.9 million budget. The budget included $1.9 million for furniture and equipment. In compliance with Board policy, a proposed acquisition listing was submitted to the SPWB. However, this listing was not sufficient to allow the SPWB to adequately monitor the acquisition of the presented items. For example, the listing included acquisitions totaling $140,000 described only as “start-up equipment needs”. (page 12)

· UCCSN maintenance project appropriations in the 1995 and 1997 CIP’s, totaled $25 million. Unlike most CIP projects, the SPWB has delegated accountability for these appropriations to the UCCSN. However, the SPWB has not maintained adequate records to ensure the propriety of the project expenditures. Consequently, we could not determine if expenditures were within the approved scope of the project or if any uncommitted funds were available for reversion. (page 12)

· The SPWB reported certain CIP performance indicators that were not accurate. For example, project timeliness was reported to be 100%. This statistic was based on the status of three projects, none of which were near completion. Consequently, there was no quantifiable support for the accuracy of this indicator. (page 14)

· The SPWB did not always document a date of substantial completion for construction agreements. This date becomes the basis for measuring project timeliness. Furthermore, without this date the SPWB cannot assess liquidated damages. (page 14)

State Public Works Board

Agency Response

to Audit Recommendations

Recommendation Number		Accepted	Rejected
1	Implement controls to ensure legislative approval is obtained to expend CIP funds outside the authorized scope and budget of a project	X
2	Comply with the Board’s furniture and equipment acquisition policies and procedures	X
3	Implement controls to ensure adequate records are maintained to fully document and account for UCCSN maintenance project expenditures	X
4	Establish procedures to ensure performance indicators are reliable	X
5	Establish procedures to ensure a Certificate of Substantial Completion is filed for each construction contract	X
6	Submit monthly Project Status Reports as required by statute	X
TOTALS		6	0

Results in Brief

Agency Response

Number

Accepted

Rejected