Audit of Equipment Acquisitions through Capital Leases and Other Financing Agreements at the Ohio Department of Administrative Services

The Ohio Department of Administrative Services (ODAS) had the responsibility for the procurement of data processing equipment used by various State departments and agencies. The ODAS billed the user agencies for the equipment. This report points out that billings to the agencies during the period July 1, 1982 through June 30, 1989 included about $8.2 million ($4.9 million Federal share) of interest expense and other unallowable costs related to the acquisitions. The unallowable charges to Federal programs are attributed to a lack of adequate procedures to identify interest expense and account for the cost of the equipment. We recommended that ODAS work with the other user agencies in establishing procedures to identify and properly account for the costs of data processing equipment. We also recommended that ODAS make a financial adjustment of $4,897,056 (Federal share) for costs improperly charged to Federal programs through June 30, 1989. State officials generally concurred with our findings and recommendations.