Report: New Orleans city government has issues with vendor payments

(The Center Square) – A recent audit found that the city of New Orleans can't accurately determine how long it takes to pay its vendors.

Legislative Auditor Mike Waguespack's office found in its report that the city's purchasing software, the Budget, Requisition, and Accounting Services System, generally pays invoices within 30 days but doesn't record the entire invoicing process.

Auditors also noted that since the system can't track the entire payment process, city officials have no way of identifying delays.

According to the report, auditors discovered that the city's Accounts Payable department can delete unprocessed invoices in BRASS, which is unable to produce an audit log that tracks deleted invoices.

One vendor, according to the report, had 16.3% of its invoices deleted in this manner, with another having 14.1% of their deleted. The report also said multiple vendors told auditors that they had to resubmit invoices and the city would delete the previous version.

Auditors also found that procurement delays prevent vendors from submitting their invoices into the system, which leads to delays in payment. They also uncovered that the city doesn't track the timeliness of its procurement processes.

According to data from the accounting software, 23.7% of invoices (38,937 of 164,338) had purchase order dates after the invoice date. The report says this might indicate there was a delay executing the contract or in executing a purchase order. Auditors discovered at least six vendors with contracts executed more than 200 days after the effective contract date.

The accounting system the city uses processes more than 32,868 invoices per year worth an average of $1.62 billion per year, according to data complied between July 1, 2019 and April 18.

According to the report, the city paid 84.7% of its invoices (138,022 of 163,036) within the 30-day requirement between July 1, 2019, and April 18. Invoices that were paid after the 30-day requirement had comments that included purchase order errors, budgetary issues.

The audit revealed that the New Orleans Aviation Board had the most invoices paid more than 30 days late at 3,784, followed by Capital-Streets with 2,633, the Equipment Maintenance Division with 1,450 and the Technology Programs office with 1,201.

The 30-day requirement for invoice payments was codified into an ordinance in April by the City Council. State law also requires that governments pay invoices promptly. If a governmental body doesn't pay an invoice within 45 days, taxpayers are liable for reasonable attorney fees and interest accumulated daily at a rate of 0.5%, not to exceed 15%.

The auditor's office recommends the city improve communications with vendors to "ensure clarity about its invoicing process, forms and documentation required by city departments, and how to contact the city with related issues."

In May 2024, the accounting system had 592 messages, with some dating back to 2021, asking about payment status or other invoice-related questions. Auditors said BRASS was not configured to notify city officials of these messages or allow them to respond. The office recommends a centralized channel to allow the city to be better communicate with vendors.

The city said in a response letter to what it termed a "thorough and robust audit" that it agrees with the recommendations and will implement them by 2025.