Baltimore, MD - Baltimore City’s accounts payable process must improve its accuracy, continuity, efficiency and effectiveness in order to improve the accountability of timely invoice payment processing for vendor invoices, according to a newly released Biennial Performance Audit presented to the Board of Estimates at its May 4th meeting. The audit covered fiscal years 2020 and 2019. 

The Department of Audits (DOA) found that Baltimore City’s Bureau of Accounting and Payroll Services (BAPS), which is managed by the Department of Finance (DOF), does not have policies and procedures to track its accounts payables process. The agency’s current practice of tracking the timeliness of invoice payments raises the likelihood of incorrect reports or potential overstatements of number of invoices paid within 30 days from the date of receipt.

BAPS

According to the Budget Book, Accounts Payable is responsible for paying an average of 10,400 vendor invoices each year. The audit took a snapshot to assess the timeliness of invoice payments.

On November 12, 2021, auditors identified 5,253 outstanding invoices.

• 3,611 outstanding invoices were awaiting BAPS processing.
  • After several requests to DOF, DOA did not receive any further information on these invoices.
  • Of those, 1,537 were outstanding for 31 days or more.
• 1,397 invoices were assigned to agencies for further review.

Agency side

The DOA selected five major agencies (Baltimore City Health Department, Baltimore City Information Technology, Baltimore City Recreation and Parks, Department of General Services , and Department of Public Works) and requested them to provide specific reasons for outstanding invoices from their departments. Major causes for payment delays include insufficient funds, expired vendor contracts, closed contracts, unauthorized justification purchases and vendor invoice issues. 

Agreeing with the audit’s recommendations, starting July 1st, DOF will: 

• Automate and streamline the accounts payable process in Workday.
• Implement formal policies and procedures for the accounts payable process. 
• Work with agencies to analyze and identify common causes of payment delays that can be addressed proactively.
• Work with agencies and Bureau of Procurement (BOP) to minimize change orders and unauthorized purchases.
• Analyze vendor-created invoice issues, solve those issues and build better communication.

“We’ve known anecdotally that late invoice payments have become a problem,” Comptroller Bill Henry said. “Vendors have reached out to my office about unpaid bills and we’ve seen several unauthorized invoice payments come through the Board of Estimates. I’m glad that Finance has a plan of action in place, and I’ll be watching closely to make sure it’s implemented. Paying our bills in a timely matter should be one of the easiest tasks we as a city perform.”

Vendors who have questions about invoices or would like more information can contact Department of Finance Director Henry Raymond's Office at Henry.Raymond@baltimorecity.gov or at 410-396-4940. 

Auditors also reviewed the four recommendations from DOF’s previous Biennial Performance Audit. Of those, two recommendations were fully implemented, one was partially implemented and one was not implemented. 

The performance audit and review can be found at the Comptroller’s website.

Background

The DOA is the City's independent auditor, providing various audits, attestation engagements and assurance services with the overall goal of improving governmental accountability.