Oklahoma City, OK – An investigative audit into purchasing practices at one Tulsa County school district revealed the school paid an average commission of $0.63 for every dollar spent on janitorial supplies.
From July 1, 2004 through December 31, 2009, Skiatook Public Schools Superintendent utilized Rick Enos as a "middleman" to purchase janitorial supplies and security systems the school could have purchased directly itself. The school paid Enos prices that were marked up ranging from 100% to more than 450% over typical retail prices. Had the school purchased the items directly from the suppliers, it could have saved more than $564,000.
"You really have to scratch your head over why you would do this," said State Auditor Steve Burrage. "This case falls right along the same lines of the investigation years ago that uncovered the horror stories of the federal government paying $750 for toilet seats and $695 for ashtrays."
Skiatook Schools would fax an order to Enos' company, E&E Sales. Enos then relayed the order to an actual supplier with instructions to drop ship the items to the district. Realistically, Skiatook Schools could have faxed the order directly to the supplier and cut E&E Sales completely out of the transaction.
"By using this process, the school was paying $60 for an $11 trash can," Burrage said. "Amazingly, the district paid $540 for three mop heads valued at $13.50. It happened because no one shopped for good pricing or compared the delivery tickets from the supplier to the invoices from Enos." The actual supplier's delivery tickets reflected its cost for each item and the order total. A quick comparison with the corresponding E&E Sales invoice would have easily identified the inflated prices the school was paying.
The school also failed to verify it received everything billed on an invoice before the school paid it. In one instance, the school had actually ordered three cases of mop heads but only received a total of three mop heads. The school paid the invoice for the three cases of mop heads. Skiatook Superintendent Dr. Gary Johnson, who also served as the purchasing agent, did not exercise any cost comparison steps in his purchasing practices and did not implement internal controls to verify that products ordered were actually received.
In addition to purchases from E&E Sales, the audit looked at purchases from Austin Security, another of several businesses Enos operates out of his Oklahoma City storefront. Skiatook Schools paid almost $468,000 for 73 security systems, including installation and maintenance, from Austin Security that resulted in a commission to Enos in excess of $223,000. One year after receiving 20 of the security systems, they remained uninstalled. Investigators also learned Austin Security is not licensed to install security equipment as required by law so the district will need to hire a new vendor should they choose to install the remaining systems.
"This is disgraceful and a blatant abuse of taxpayer funds. It never should have happened. This could have been caught before it got out of hand. A properly operating system of internal controls would have exposed this cash cow."