Friday, November 2, 2007

Unauthorized copier lease costs big

From Jacksonville, Florida comes the story of how an unauthorized city employee signed 48 copier leases and cost the city over $3 million to clean up the mess. According to a story in the Florida Times-Union (“Copier contracts will cost taxpayers”, 10/29/07), the CFO of Jacksonville’s library system signed a series of 48 contracts with IKON Office Solutions to lease copiers for the library system. That’s particularly troubling since Jacksonville only has 21 library branches.

City rules specify that only eh mayor can authorize such deals, and the whole arrangement was only discovered by the city four years after it started. The employee has been dismissed, but the city had to settle with IKON for $3 million to clean up the mess.

According to the article, the problem was compounded due to lazy oversight in the accounts payable stage: “The city didn't detect the problem with IKON in part because it had other contracts with the Ohio-based company. The library was authorized to make some purchases from IKON off a state contract and a city contract. So when McDowell [the employee in question] did turn invoices over to the city's finance officials for payments, the checks were authorized under the existing contracts.”

The take-away for every institution is to set up clear rules for purchasing and leasing office equipment, enforcing those rules, centralizing all decisions in excess of a preset limit. In addition, a frequent audit of all office equipment assets is a must, for, in addition to the unauthorized decisions, there clearly was a problem of bringing in far too much copier capacity.

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