Alan G. Hevesi
Comptroller
Alan G. Hevesi
Comptroller
Assistant Deputy Comptroller for Audit
Guy Carlsen
Director, Bureau of Financial Audit
Sylvia Perez
Special Projects Team
Susan Morrison Goldfine
Iris Hinds
Marcia Vale
Nancy Crerar
Hope Lendzian
Report Editor
Pearl J. Brandwein
March 1, 1996
Mayor Giuliani, Speaker Vallone, and Members of the City Council:
I am hereby releasing to you this Charter-mandated report on audit operations, which covers the first full fiscal year of my administration. This report summarizes the major findings and recommendations contained in all fiscal year 1995 audits and studies conducted by the Comptroller's Bureau of Management Audit and Bureau of Financial Audit (Audit Bureaus) as well as by the Comptroller's Bureau of Engineering. It also summarizes agency responses and corrective actions taken to date.
In fiscal year 1995, the Audit Bureaus issued 120 audits and special reports, a 71-percent increase in output over fiscal year 1994, when 70 audits were issued. Those 70 audits represented a 23-percent increase over the 57 audits issued in fiscal year 1993. The Bureau of Engineering, for the first time, also issued four audits meeting GAGAS requirements under the Audit Bureaus' guidance. This significant increase in output is reflective of the management initiatives that I reported to you last year. I expect that audit output will continue to improveand that we will meet the Charter mandate that each City agency be audited at least once every four years.
I am especially proud that audit quality has been enhanced while productivity has increased. After a two-week, onsite visit of our audit operation, the Institute of Internal Auditors (IIA) issued a peer review report that stated: The Bureaus of Audit generally conform with the Government Auditing Standards issued by the Comptroller General of the United States. This is the highest rating that we provide in our reviews. (A copy of the IIA's full report is appended.) The IIA further stated that: Since the last external review, conducted in 1992, the Bureaus of Audit have concentrated on increasing the output of audit reports, as well as changing practices that previously delayed the issuance of reports. Thus, both the number of financial related and performance audit reports issued has increased substantially. Under Generally Accepted Government Auditing Standards, the auditing function must undergo an external peer review every three years.
As I issue this report, the City faces a budget gap of $2 billion for fiscal year 1997. Thus, as in the recent past, it continues to be imperative that we: (1) evaluate programs in terms of their performance and cost-effectiveness, (2) review agencies' internal controls to ensure that the City only pays for contracted services that are actually received, (3) analyze the results of ongoing privatization projects to determine whether they deliver expected services and achieve projected savings, and (4) identify programs run by government workers that can benefit from managed competition. The Audit Bureaus will continue to concentrate their efforts in those areas as well as on broader program audits and studies that can have a larger impact, not only on how the City measures and delivers services, but at what cost.
Audits can play an important role in such matters, as illustrated by our evaluation of the Department of Employment's Adult Training Program, which showed that despite the large sums of money spent, the agency's contracted-out training efforts were ineffective in terms of placing and retaining public assistance (PA) recipients in jobs, and in removing them from the welfare rolls: only 12 percent of the PA recipients participating in the program were placed and retained in jobs, and removed from welfare. Similarly, two other studies (one done by the Audit Bureaus, and one done by a consultant under Audit Bureaus' oversight) showed that the City and the State could save up to $720 million over the next five years by competitively bidding for the services of firms that transport preschool handicapped children, and by reforming the manner in which these children are evaluated and provided with services. The Department of Transportation has already achieved annual savings of $24 million in City and State funds ($120 million over five years) by competitively bidding 120 preschool transportation contracts, as we recommended. The remaining tuition and transportation savings are still available. Most of these savings could be gained by matching the national average of 57 percent of preschool handicapped children who are served through itinerant non-center based, full-day programs. This would result in both lower tuition and lower transportation costs. On February 6, 1996, the State Education Department announced a major legislative proposal requiring that a greater number of children be placed in less costly integrated settings. The State proposal mirrors our proposal to increase the use of itinerant services, which would significantly reduce tuition and transportation costs.
Given the City's current and future budget gaps, my Audit Bureaus must also identify opportunities for the City to collect additional revenues and to offset or recoup overbillings and overpayments. One audit of the Cablevision franchise agreement disclosed almost $12 million in under-reported gross revenues subject to franchise fees, resulting in $552,000 in additional franchise fees due, of which $376,000 has been collected to date. An audit of overtime premiums paid by the Department of Transportation to its Bridge Riveters/Repairers revealed $1.5 million in improper payments over a seven-year period. An audit of the MTA's bill to the City for the maintenance of Long Island Railroad stations located within the City limits disclosed not only that the City had been overbilled for $467,000 (the Office of Management and Budget subsequently reduced the City's payment to the MTA by that amount), but that unsafe and/or poor conditions existed at 25 of the 31 LIRR stations. At times, we even find instances where incorrect and/or duplicate payments have been made, such as an overpayment of $496,000 by the Board of Education to the United Federation of Teachers Welfare Fund. The Board of Education recouped the entire amount. These types of audits help to close the budget gap by identifying funds that the City can collect or recoup.
Closing the huge budget gaps for fiscal year 1997 and subsequent fiscal years will undoubtedly result in significant cuts in services. Nonetheless, these cuts can be partially offset by renewed efforts on the part of City employees to increase productivity, and by efforts on the administration's part to ensure that programs truly deliver services in a cost-effective fashion. In these tough times, we can ill afford to waste precious resources on programs that do not work, or on programs that do not achieve the desired results. My Audit Bureaus will play a constructive role in this re-thinking process by broadly challenging "business as usual" practices, and by generating innovative ideas for improving services and reducing costs. Consequently, I have asked my auditors to focus on program audits as often as possible, and to recommend realistic and practical methods for improving agency efficiency and effectiveness, for enhancing revenues, and for eliminating waste.
One approach to challenging "business as usual" practices is to suggest managed competition as a first step in determining whether privatization of a service is worthwhile. For example, our audit of the Department of Sanitation's (DOS) vacant lot cleaning program found that the City might save more than $1 million each year by using a private contractor to clean vacant lots instead of using inhouse cleaning crews. DOS reported that it is implementing our recommendation to expand our cost comparison exercise and to determine whether using private contractors to clean vacant lots would be cost-effective. Concurrently, it is important to remember that privatization is not a panacea, and that it does not always reduce costs and improve services. For example, our engineering audit of the Department of Transportation's cost of resurfacing streets with inhouse crews, compared to the cost of contracting-out the work, showed that in some boroughs City workers did the job more efficiently because of certain variables, including the ownership and location of asphalt plants and the size of the jobs contracted-out to private vendors.
Another way to challenge "business as usual" practices is to review how the City measures the services that it delivers or receives. The City cannot afford to dump money into programs simply because they sound like a good idea. Rather, the City must know what the services actually achieve. One audit of the Department of Housing Preservation and Development found that the agency does not know whether it is effectively enforcing the Housing Code. While it measures code-enforcement activities(the number of inspections performed, the number of violations issued and removed, etc.), it does not measure effectiveness(whether the violations identified are ultimately corrected). According to the audit, 43 percent of the most hazardous violations, which should have been corrected within 24 hours, were still active and not corrected one year after being identified by HPD inspectors. These audit findings mirror those of another study performed by my Office, showing that 40 percent of the time landlords falsely certify that they have corrected the violations. Because of the audit and the study, HPD began to initiate false certification lawsuits; of the nine that were started in August and September 1995, eight have resulted in fines as of December 1995.
Other audits also identified major City programs that failed to develop reliable measures of effectiveness. The Board of Education (BOE) enrolled approximately 158,000 students in its Occupational Education Program during school year 1993, but it did not measure whether the program instills in students the necessary employment skills for occupational jobs or whether it prepares them for higher education. Similarly, our audit of the City Department of Youth Services (DYS) found that it had no means for monitoring the 37 Beacon programs to determine whether it was getting good value for the $450,000 a year provided to each of the programs. In fact, most of the programs were not living up to even the broadest language of their contracts. The Beacons sampled during the audit did not provide 59 percent of the activities required by their contracts. Since the audit was published, DYS, in concert with my Office and others, has made major changes to its proposed Beacon contract. Unlike prior contracts, the new one requires contractors to provide specific information about target groups, measurable program outcomes, and expected attendance levels. Such interagency cooperation provides an excellent example of how audits can have a positive outcome, ultimately benefiting the residents of our City.
I or my staff have testified at City Council hearings regarding the need to develop more meaningful performance indicators in City government, and I have directed my Audit Bureaus to incorporate performance indicator components in several fiscal year 1995 studies, such as HPD's Housing Code Enforcement and the Department of Finance's Tax Warrant Collections. We also worked closely with the City Council towards developing legislative proposals related to two similar audits: the Department of Employment's Adult Employment Program, and the Department of Youth Services' Beacon Program. In addition, and at the Council's request, we audited the Council's "Computers in the Classroom" program to ensure that the School Construction Authority (SCA) had implemented it as intended. My auditors found that the Council's program does a good job of providing computers to thousands of City school children. The audit, however, found some problems with how the SCA manages the program. Therefore, we made recommendations, which the SCA agreed to implement.
One of my major concerns is that, when proposing ways to reduce the budget gap, the City does not end up, inadvertently, increasing its costs. Our audit of the Department of Juvenile Justice (DJJ) Aftercare Program determined that, while saving money in DJJ through cuts in the program, the City was actually increasing its juvenile detention costs. We estimated that the Program saved the City and State more than $5 million in detention and incarceration costs between fiscal years 1992 and 1994 because children who participated in the program were less likely to be re-arrested compared to non-participants. Despite the cost savings, DJJ saw the number of its Aftercare case managers reduced because of a hiring freeze, resulting in a 44-percent enrollment decline in the program. This saved the City $316,000 in program costs; however, it increased by $3 million City and State costs for detention and incarceration of juveniles. Overall, we estimated that enrollment of all eligible children would result in net City savings of up to $11.4 million annually.
During fiscal year 1995 my EDP Audit Unit also expanded our coverage of the City's deployment and use of information technology by issuing 10 EDP audits, compared to two audits issued in each of the two preceding fiscal years. These 10 audits covered three data centers and five applications (including the Department of Finance's FAIRTAX system); the remaining two were follow-up audits. The FAIRTAX audit found that the system was three years behind schedule and approximately $58 million over the project's estimated cost of $86.6 million, and attributed much of the overrun to the fact that the project was not monitored by an independent Quality Assurance (QA) technical firm as originally planned. This clearly shows how important it is for City agencies to engage outside QA firms during large computer installation projects if they do not have an adequate inhouse QA function. The audit also noted that the Department of Finance had not exercised its right to collect almost $1 million in royalties owed by the consulting company that built the new system; $691,000 of that amount has now been collected by Finance.
With the staffing cuts that have occurred in reaction to the City's continuing fiscal problems, I am increasingly concerned about agencies' basic internal controls over their human and fiscal resources. To encourage appropriate management attention to such controls, my auditors conducted several audits covering the payroll and purchasing practices of Community Boards, and compliance with Directives 1 and 11 by the Departments of Health, Consumer Affairs, and Buildings. In another audit reflective of poor internal controls at the Department of Environmental Protection (DEP), we found that as of May 1, 1995, the Port Authority owed the City $15.4 million for water and sewer service that had not been billed from 1989 to 1994; another $4.6 million in older water and sewer charges had been billed, but not collected; and $243,258 in current water and sewer charges that had been billed, but not collected. As a result of this audit, $13 million has been collected to date.
I am also concerned about the City's capital budget and infrastructure, which is why I directed my engineers to begin to perform formal audits of capital programs. In fiscal year 1995 four engineering audits concentrating on capital construction matters were issued, including a review of the DEP's progress in upgrading six upstate sewage treatment plants in accordance with Federal EPA requirements and an evaluation of DEP's monitoring of water main installation contractors.
I have also directed my auditors to follow up on our recommendations to ensure that the agencies implement them. In fiscal year 1995 we issued nine follow-up audits, including Parks' Pools, DOE's Summer Youth Employment Program (SYEP), the Police Department's Sprint Computer System, and the Health Department's Monitoring of Day Care Centers. Our audit of Parks' Pools, done immediately after the original audit, found major improvements in both water quality and the availability of lifesaving and safety equipment. Similarly, we immediately followed up on a SYEP audit to ensure that our youth received meaningful employment experience in the Summer of 1994. We found that project sponsors were more responsible in monitoring the work sites, resulting in fewer incidents of youth inactivity.
I believe we have delivered on the commitment I made in last year's report, which was to transform the Audit Bureaus into important players in the turnaround process needed to help the City make it through these tough times. The reports summarized herein demonstrate how a professional audit operation can benefit the operations of the City and its finances. They also show disturbing trends in the City's weakened internal controls over its human and financial resources. We will continue to work to increase the productivity of the auditing function to provide as broad a coverage of the City as possible.
Sincerely,
Alan G. Hevesi
Summary of Audit Results I
Index to Government Agency Audits II
Index to Non-Government Agency Audits XI
Economic Impact of Audits of Government and
Non-Government Agencies XII
Economic Impact of Audits of Government Agencies XIII
Economic Impact of Audits of Non-Government Agencies XIV
Section I: Government Agencies 1
Section II: Non-Government Agencies 149
Potentialcost avoidance, savings and revenues identified in fiscal year 1995 were in a range of $242 million to $408 million.It should be noted that these are estimates of what could be achieved if all of the audit recommendations are implemented. Of this $242 million -$408 million:
$205.2 million - $372.2 million represents potential cost savings or revenues from a variety of management and financial audit findings.
The remaining $36.8 million represents potential cost avoidance derived from claim audits that were not settled.
The Comptroller's Office issued 124 audits and special studies in fiscal year 1995 (117 audits and 3 special studies by the Audit Bureaus, and 4 audits by the Engineering Bureau). It also performed desk audits of managerial lump sum and welfare fund payments, and of rental credits submitted by the New York Yankees, as well as a review of subsidy payments to libraries.
This report is divided into two sections: one for audits and studies of City agencies and public authorities, and one for audits and studies of private entities that received funding from or generated revenue for the City. The audits were performed in accordance with Generally Accepted Government Auditing Standards, as required by the City Charter.
Many of the audit recommendations have been implemented, either in whole or in part. Information on implementation status (described in the "Update" section of each audit summary) was provided by the various agencies in response to our follow-up inquiries, and by the Audit Coordination and Review Unit of the Office of Management and Budget. This information is presented in the "Follow-up" section of each audit summary.
INDEX TO GOVERNMENT AGENCY AUDITS
(All Audits Unless Indicated as "Report")
AGENCYAUDIT TITLE PAGE
Actuary, Office of Procurement and Vouchering
Practices 3
Borough President, Financial and Operating 4
Bronx Practices
Borough President, Financial and Operating
Manhattan Practices 6
Borough President, Financial and Operating
Queens Practices 8
Buildings, Bureau of Electrical Control's
Department of Inspector Productivity 9
Internal Controls Over
Cash Receipts 10
Community Board, Payroll, Timekeeping Procedures
Bronx #6 and Other Than Personal
Services Expenditures 12
Community Board, Financial and Operating
Bronx #10 Practices 13
Community Board, Payroll, Timekeeping and
Brooklyn #2 Purchasing Procedures 15
Community Board, Payroll, Timekeeping Procedures
Brooklyn #13 and Other Than Personal
Services Expenditures 16
Community Board, Payroll, Timekeeping, and
Brooklyn #17 Purchasing Procedures 18
Community Board, Payroll, Timekeeping, and
Brooklyn #18 Purchasing Procedures 19
Community Board, Compliance With Purchasing,
Manhattan #4 Payroll, and Timekeeping
Procedures 20
Community Board, Payroll, Timekeeping Procedures
Manhattan #5 and Other Than Personal
Services Expenditures 22
Community Board, Financial and Operating
Manhattan #8 Practices 24
Community Board, Compliance With Purchasing,
Queens # 6 Payroll and Timekeeping
Procedures 25
Community Board, Compliance With Purchasing,
Queens #7 Payroll and Timekeeping
Procedures 27
Community Board, Compliance With Purchasing,
Queens #11 Payroll and Timekeeping
Procedures 28
Community Board, Financial and Operating
Staten Island #1 Practices 29
Community Development Two CDA Contractors and CDA
Agency Contract Performance
Indicators 31
Comptroller, Internal Control Review of
Office of the Bureau of Asset
Management's Trading Division 33
State Street Bank and Trust Co.
N.A.'s Compliance with the Terms
of the Custodian Agreement
with the City of New York for
Short Term Investment Assets
Contract 33
Fiscal Year 1994 Cost Allocation
Plan (Report) 34
AGENCYAUDIT TITLE PAGE
Comptroller, Rent Escalation Costs for Space
Office of Leased by the New York City
Comptroller at 161 William Street
(Lease No. x6379) 35
Consumer Affairs, Collection Enforcement Program 36
Department of
Internal Controls Over Cash
Receipts 37
Education, Board of Occupational Education Programs 39
Registration of Homeless Students
in NYC Schools 40
Internal Controls of the Data
Center 41
Follow-up of the Integrated
Purchasing and Inventory
System (IPIS) 42
Community School District 9 -
Effectiveness in Expending and
Accounting for Travel and
Conference Expenditures 43
Community School District 10 -
Effectiveness in Expending and
Accounting for Travel and
Conference Expenditures 45
United Federation of Teachers
Welfare Fund Payments Under A-132 46
Individuals Employed As School
Bus Drivers by Private
Companies Under Contract 47
Costs of Service Alternatives
and Quality of Transportation
for Preschool Handicapped
Children in NYC (Report) 49
AGENCYAUDIT TITLE PAGE
Education, Comptroller's Report to the New
Board of York State Legislature on
Preschool Handicapped
Transportation and Program
Service Delivery (Report) 49
Elections, Board of Payroll and Timekeeping Practices 52
Employment, Adult Training Program's
Department of Effectiveness in Providing
Vocational Training to Public
Assistance Recipients and Placing
Them in Jobs 54
Follow-up of the Summer Youth
Employment Program 55
Environmental Air Pollution Inspection Program 57
Protection,
Department of
Follow-up on Correcting a Series
of Deficiencies in its Water
Main Installation Practices 58
Billing of the Port Authority of
New York and New Jersey for Water
and Sewer Usage 60
Progress in Upgrading the City's
Six Sewage Treatment Plants in the
Catskill and Delaware Watersheds 61
Finance, Department of Use and Reporting of Performance
Measures for its Business
Collection Unit 63
System Certification and Internal
Project Controls Over the
Development of the Fairtax System 64
Fire Department Inspection Efforts of the Bureau
of Fire Prevention 67
Bureau of Information and Computer
Service Data Center 68
AGENCYAUDIT TITLE PAGE
Billing Practices of the
Explosives Unit 69
Fire Department Misapplication of Fire Code in Fee
Collection and Misuse of Notices
of Violation by the Fire Suppression
Systems Unit 70
General Services, Follow-up of Collection of
Department of Rent in Arrears 72
Health and Hospitals Elmhurst Hospital's Affiliation
Corporation Contract with Mt. Sinai School
of Medicine 74
Queens Hospital's Affiliation
Contract with Mt. Sinai School
of Medicine 75
Health, Department of Follow-up of the Bureau of Day
Care's Monitoring of Centers,
Inspection Practices, Processing
of Complaints, and Related
Matters 78
Division of Vital Records'
Compliance with Comptroller's
Directive No. 11 - "Cash
Accountability and Control":
Preliminary Findings 79
Health, Department of Division of Vital Records'
Compliance with Comptroller's
Directive No. 11 " Cash
Accountability and Control" 80
Division of Vital Records'
Business Relationship with
VitalChek Network 81
Housing Authority Internal Control for the
Data Center 83
Housing Preservation and Management of Open Market
Development, Orders to Obtain Maintenance
Department of and Repair Services for In-Rem
Properties 85
AGENCYAUDIT TITLE PAGE
Housing Preservation and Enforcement of the Housing
Development, Maintenance Code 86
Department of
Human Resources Foster Care Tracking
Administration and Claiming Systems 87
Child Welfare Administration's
Procedures for Recouping
Overpayments Made to Foster
Care Agencies 88
Investigation, Payroll and Timekeeping
Department of Practices 90
Juvenile Justice, Effectiveness of the
Department of Aftercare Program 91
Labor Relations, Administration of NYC's Health
Office of Benefits Program 93
Welfare Benefits Payments
Subsystem of the Premium
Accounting and Central
Enrollment System (PACES) 94
Welfare Fund Retiree Benefit
Payments Under Agreements
A-6 Through A-121 for the
Month of February 1994 95
Mayor's Office of Data Processing Controls Over
Contracts the Vendex and CCE Systems 97
Medicaid Medicaid Claims by New York
Downtown Hospital 99
Mental Health, Family Court Mental Health
Department of Services 100
Metropolitan Transportation Claims for the Station Maintenance
Authority Costs of the Metro-North Commuter
Railroad 102
AGENCYAUDIT TITLE PAGE
Metropolitan Transportation Claims for the Station Maintenance
Authority Costs of the Long Island Railroad 103
Multi Agency Supporting Documentation of
Negotiated Change Order Costs
in DGS, DEP and DOT 105
City-wide Procurement Payment
Vouchers 106
Managerial Lump Sum Payments 109
Welfare Fund Payments 110
Subsidy Payments to Libraries 111
Parks and Recreation, Follow-up on the Environmental
Department of and Physical Safety of New York
City Outdoor Public Swimming
Pools. 112
Police Department Follow-Up on the Disaster Recovery
Plan for the 911 and Sprint
Systems 113
Retirement System, Non-Pedagogical Pensioners Working
Board of Education for the City After Their
Retirement 116
Retirement System, Pensioners Working for the City
New York City After Their Retirement 117
Employees
Retirement System, Pedagogical Pensioners Working for
Teachers the City After Their Retirement 119
Retirement System, New York City Fire Department
Fire Department Pensioners Working for the City
After Their Retirement 121
Retirement System, Pensioners Working for the City
Police Department After Their Retirement 122
AGENCYAUDIT TITLE PAGE
Sanitation, Administration of its Vacant
Department of Lot Clean-up Program 125
School Construction "Computers in the Classroom"
Authority Program Evaluation of the
Construction and Installation
of Computer Centers in Public
Schools for FY 94 126
Sheriff, Office of the Internal Controls Over Seized
City Vehicles 128
Tax Commission Follow-up on the Current Status
of the Implementation of
Recommendations Made by the
New York State Comptroller 129
Transportation, Timesheets and Overtime Earned by
Department of Members of Local 40 - Bridge
Repairer Series of Titles
Covered Under Agreeement A-5028-1 130
Quality of Bus Service In New York
City Provided by Private Bus
Companies Under Contract 131
Division of Franchise Concessions
and Consents and the Bureau of
Transit Operations' Ferry
Operations 132
Maintenance and Repair Unit's
Automotive Inventory Operations 133
Comparing In-House to Contractor's
Resurfacing Costs 135
Individuals Employed as School Bus
Drivers by Private Bus Companies
Under Contract 137
AGENCYAUDIT TITLE PAGE
Welfare Funds Financial and Operating Practices
of the Health and Welfare Fund
(Including the Civil Legal
Representation Fund) of the
Patrolmen's Benevolent Association 139
Financial and Operating Practices
of Union Administered Benefit
Funds Whose Fiscal Years Ended in
Calendar Year 1990 140
Analysis of the Financial and Operating
Practices of Union Administered
Benefit Funds Whose Fiscal Years
Ended in Calendar Year 1992 141
General Controls for the Health
and Welfare Applications of the
Patrolmen's Benevolent Association
Health and Welfare Fund Office 142
Operating Practices of the New York
City Transit Police Officers
Security Benefits Fund 143
Operating Practices of Local 858 -
International Brotherhood of
Teamsters Off Track Betting Corp.
Branch Office Managers Welfare
Fund 144
CUNY Faculty Welfare Fund for the
Retirees Covered Under Agreement
#3080 145
Youth Services, Beacon Program 146
Department of
INDEX TO NON-GOVERNMENT AGENCY AUDITS
Claims 151
Franchise, Concession and Lease Audits 154
Rental Credits Submitted by
the New York Yankees 155
-XIII-
ECONOMIC IMPACT OF AUDITS OF GOVERNMENT AGENCIES -FISCAL YEAR 1995 ACTUAL POTENTIAL-XIV-
ECONOMIC IMPACT OF AUDITS OF NON-GOVERNMENT AGENCIES -FISCAL YEAR 1995 ACTUAL POTENTIALIntroduction
This audit determined whether the Office of the Actuary (OA) complied with City policies governing the procurement of goods and services, and verified the accuracy and propriety of payments. We examined 215 vouchers with a total dollar value of $455,790 for purchases made during fiscal year 1994.
We reviewed all payment vouchers for FY 94 for small procurements and interviewed appropriate personnel.
The OA performs annual valuations of the assets and liabilities of the City's five actuarial Retirement Systems and other non-actuarial pension funds.
Results
For the most part, the Office of the Actuary complied with the City's procurement and vouchering guidelines, but some weaknesses in the OA's procurement and vouchering procedures did exist.
Our audit disclosed that 22 vouchers, totalling $4,009 (10 percent of 215 vouchers audited) had the following:
incorrect object codes,
goods purchased, which were available through DGS's storehouse, and
payment made more than three months in advance of receipt of services rendered.
The Office of the Actuary agreed to implement three of the four audit recommendations.
Update
The Office of the Actuary has not provided follow-up information.
BRONX BOROUGH PRESIDENT'S OFFICE
Financial and Operating Practices of the Bronx Borough President's Office
Introduction
The audit's objectives were to determine whether the Bronx Borough President's Office complied with applicable City payroll, purchasing, and timekeeping procedures; with the six Comptroller's Directives #1, #3, #6, #13, #24, and #25; and with applicable Payroll Management System procedures, issued by the Office of Payroll Administration, and New York City Charter regulations. The audit covered July 1, 1993 - June 30, 1994.
Results
The Bronx Borough President's Office generally complied with the applicable Comptroller's Directives as well as with Payroll Management System procedures, and the City Charter. Our examination of the Borough President's Office's Personal Services (PS) and Other Than Personal Services (OTPS) expenditures did not disclose any improper use of money.
However, we found some internal control weaknesses such as:
inadequate segregation of duties pertaining to the purchasing function;
weaknesses in its cash accountability and control system related to the sale of City maps;
validity of its imprest fund checks was not restricted to 90 days after issue as required by Comptroller's Directive #3;
inadequate monitoring of the status of open invoices for grant reimbursements totaling $23,730 that were outstanding for over 180 days;
inadequate segregation of the payroll, personnel, and timekeeping responsibilities of the individuals assigned to these functions;
use of a manual system for timekeeping and leave records even though the Borough President's Office implemented the City's Payroll Management System (PMS) in August 1985.
The audit made 16 recommendations related to purchasing, imprest funds, segregation of duties, and grant revenues. The Bronx Borough President agreed to implement all of the audit recommendations.
Update
The Bronx Borough President's Office reported that it has implemented the recommendations. It has segregated the authorizing, processing, paying, recording, and reviewing functions for making purchases. The map selling, transaction recording, and sales receipts depositing functions have also been segregated. The audit recommended that imprest fund checks should be stamped "Void After 90 Days" which the agency is now doing. The grant revenues were reconciled and the data was forwarded to the Comptroller's Revenue Monitoring Unit. Finally, the Bronx Borough President's Office segregated the payroll, personnel, and timekeeping functions by re-assigning current staff.
Introduction
The audit's objectives were to determine whether the Manhattan Borough President's Office complied with applicable City payroll, purchasing, and timekeeping procedures; with the six Comptroller's Directives #1, #3, #6, #13, #24, and #25; and with applicable Payroll Management System procedures, issued by the Office of Payroll Administration, and New York City Charter regulations. The audit covered July 1, 1993 - June 30, 1994.
Results
The Manhattan Borough President's Office generally complied with the applicable Comptroller's Directives as well as with Payroll Management System procedures, and the City Charter. Our examination of the Borough President's Office's Personal Services (PS) and Other Than Personal Services (OTPS) expenditures did not disclose any improper use of money.
However, we found some internal control weaknesses such as:
non-compliance with some purchasing procedures, by purchasing supplies and gasoline directly from vendors even though the items were available through the Department of General Services' (DGS) "requirement contracts" and/or through the DGS storehouse.
failure to obtain competitive bids for purchases exceeding $500 for seven out of 53 vouchers reviewed, and inadequate documentation supporting the payments for seven gasoline purchases.
lack of sufficient accountability and control over sales of City maps.
inadequate segregation of incompatible imprest fund functions and failure to ensure the accurate reconcilation of the imprest fund account.
inadequate monitoring of employees' attendance - - certain employees exceeded the maximum annual leave balance permitted by City regulations.
The audit made 18 recommendations related to purchasing, invoice payments, segregation of duties, imprest funds and timekeeping procedures. The Manhattan Borough President's Office agreed to implement all of the audit recommendations.
Update
The Manhattan Borough President's Office reported that it has implemented all of the
audit's recommendations.
Introduction
The audit's objectives were to determine whether the Queens Borough President's Office complied with appropriate City payroll, purchasing, and timekeeping procedures; with the ten Comptroller's Directives #1, #3, #6, #11, #13, #19, #21,, #23, #24, and #25; and with applicable policies and regulations of the City's Payroll Management System, and the City Charter. The audit covered July 1, 1993 - June 30, 1994.
Results
The Queens Borough President's Office generally complied with the applicable Comptroller's Directives as well as with Payroll Management System procedures, and the City Charter. Our examination of the Borough President's Office's Personal Services (PS) and Other Than Personal Services (OTPS) expenditures did not disclose any improper uses of money.
However, we found some weaknesses such as:
lack of written procedures concerning employee lunch periods;
no inventory listing of major equipment.
The audit made two recommendations concerning lunch periods and inventory. The Queens Borough President's Office agreed to implement both of them.
Update
The Queens Borough President's Office reported that it has prepared and issued a written policy on lunch periods to all staff. In addition, it has purchased small metal tags for installation on all major equipment.
DEPARTMENT OF BUILDINGS (DOB)
Introduction
This follow-up audit's objective was to determine whether the Department of Buildings (DOB) implemented the five recommendations made in our previous audit report (MD89-408 dated August 16, 1990). We reviewed the previous report and related workpapers, interviewed agency personnel, and reviewed agency documentation. The previousaudit had determined that:
inspectors recorded fictitious information,
supervision of inspectors was inadequate,
there was noncompliance with training-visit requirements,
training visits were not conducted by supervisors,
the minimum number of training visits were not conducted,
reporting of training visits was erroneous,
there was noncompliance with double-check inspection requirements, and
there was noncompliance with sign-out procedures.
Results
The DOB has implemented one recommendation, partially implemented another, and disagreed with two recommendations. In addition, we could not determine the status of one of the recommendations.
The follow-up audit resulted in the following seven new recommendations:
the DOB should ensure that only borough supervisors conduct training visits;
the DOB should ensure that the borough supervisors complete a minimum of four training visits per week (3 on Staten Island);
the DOB should ensure that supervisors report only on the training visits actually conducted -- and not those conducted by other supervisors in their borough;
the DOB should review training-visit logs thoroughly confirming that training-visit review reports contained only the training visits actually conducted;
the DOB should ensure that all borough supervisors perform the required double-check inspections twice per week; and
the DOB should review sign-out logs thoroughly ensuring that all inspectors are complying with the sign-out procedures.
Furthermore, the DOB should rescind a September 25, 1991 intra-departmental memorandum to Manhattan inspectors and enforce sign-out regulations for all inspectors.
Update
The DOB agreed with three out of seven recommendations made in the audit report. The DOB's management stated that it is not always possible for a supervisor to conduct training visits; consequently, these visits are sometimes performed by non-supervisory staff, which DOB prefers to not conducting them at all. The DOB has also modified its procedure for reporting training visits in order to eliminate the appearance of "duplicate" visits. The DOB revised PPN #14/93 to allow for a more flexible weekly supervisory inspection schedule and now uses caller-ID to track its inspectors, thereby eliminating their need to sign out at the end of the day.
Introduction
The audit's objective was to evaluate the efficacy of the Department of Buildings' (DOB) internal controls over cash receipts. For the purpose of this audit, cash included currency, checks, and money orders.
The auditors reviewed the DOB's procedures for collecting and recording cash receipts, interviewed agency personnel, made unannounced visits to cash collection offices, and analyzed a sample of transactions.
A significant part of the DOB's overall function--assuring that work, done under the Department's jurisdiction, meets code standards and is performed by qualified individuals--involves collecting revenues from permits, licenses, fines, etc. Revenues received by the DOB are recorded on the Buildings Information System (BIS), the DOB's property profile system. According to the DOB's records, the agency's cash receipts totalled $40,264,634 in fiscal year 1994.
Results
Overall, we found that the DOB generally adhered to the Comptroller's Directives related to the monitoring and the accounting for cash receipts. However, we did find the following weaknesses in its controls:
cashiers did not always reconcile cash to individual reconciliation reports to ensure totals reconciled;
cashiers and supervisors did not sign-off on transaction cancellations; and
DOB should strengthen its controls over cash on hand, manual receipts, and money received through the mail.
Update
The DOB has implemented ten of thirteen recommendations. The DOB disagreed with the other recommendations concerning the necessity to keep office safes locked at all times, the necessity to maintain separate listings of fees received in the mail, and the recommendation that persons, who log the mail receipts, not process the transactions too. The Agency keeps its office safes in locked rooms, and only a limited number of personnel have access to the safes. The DOB does not believe it is necessary for the borough offices to maintain separate collection lists because the volume of fees received is small. Such lists are maintained by the central office and at BEC cash collection sites. Finally, DOB management has two mechanisms in place to alert them if monies received by mail were lost or stolen. The first is a customer's complaint that payments made did not result in their receipt of a license or a permit. The other mechanism is the daily cashier reconciliations showing a cash shortage.
BRONX COMMUNITY BOARD #6
Introduction
The audit's objectives were to determine whether Bronx Community Board #6 complied with applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Bronx Community Board #6 amounted to $147,743 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $138,800 and Other Than Personal Services (OTPS) expenditure amounted to $8,943.
Results
Bronx Community Board #6 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping as well as in the administration of the imprest fund, as follows:
the Bronx Borough President's Office did not use PMS as the official time record for each employee;
there was no written policy about working through lunch periods;
compensatory time was authorized after it had been earned;
personal expense vouchers were used for expenditures that should have been processed through the imprest fund.
The audit recommended that:
Bronx Community Board #6 ask the Bronx Borough President's timekeeper to use PMS as the offical time record for each employee and reconcile all the leave balances periodically;
Bronx Community Board #6 ask the Bronx Borough President's timekeeper to provide each Community Board employee with a summary of leave balances annually, requesting that all leave balances be verified, and discrepancies reported;
The Bronx Community Board #6 Chairperson establish a written policy as to when employees will be allowed to work through their lunch period and establish procedures for prior written approval;
The District Manager authorize all employees' compensatory time prior to its being earned, not after.
Bronx Community Board #6 responded that it agreed with the audit recommendations.
Update
Bronx Community Board #6 has not provided follow-up information.
Introduction
The audit's objectives were to determine whether Bronx Community Board #10 complied with the applicable City payroll, purchasing, and timekeeping procedures; the six Comptroller's Directives #1, #3, #6, #13, #24, and #25; and the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Bronx Community Board #10amounted to $181,923 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $132,704 and the Other Than Personal Services (OTPS) expenditure amounted to 49,219.
Results
Bronx Community Board #10 complied with many of the requirements of the above procedures and guidelines. However, for fiscal year 1994, we found some internal control weaknesses in the purchasing, payroll, and timekeeping functions, in that the Community Board:
rubber stamps the Board Chairman's signature on purchase orders and vouchers;
does not always solicit bids from three vendors for purchases over $500;
does not maintain a complete list of its equipment;
does not require its employees to sign for their paychecks;
does not require its employees to sign in and out daily;
does not request the Bronx Borough President's Office to reconcile the community board employees timesheets to the Payroll Management System (PMS) records.
The audit recommended that the Agency:
discontinue rubber-stamping the Chairman's signature on its purchase and payment vouchers;
discontinue processing vouchers prior to receipt of the vendors' invoices;
obtain the necessary bids for all purchases exceeding $500 in accordance with PPB rules;
safeguard assets by maintaining an inventory list of all major assets;
establish procedures ensuring that all employees sign the payroll distribution report or a similar form;
institute the use of a daily sign-in/sign-out log for all non-managerial employees;
ask the Borough President's Office to reconcile the PMS employee Leave Detail Report to the employees' timesheets;
discontinue the practice of improperly coding part-time employees annual and sick leave usages.
Update
Bronx Community Board #10 has implemented all of the audit recommendations except one concerning signatures for payroll distribution, because employees are paid through direct deposit.
Introduction
This audit's objectives were to determine whether Brooklyn Community Board #2 complied with applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing practices, and interviewed appropriate personnel.
Actual expenditures for Brooklyn Community Board #2 amounted to $130,887 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $112,066 and Other Than Personal Services (OTPS) amounted to $18,821.
Results
Brooklyn Community Board #2 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping, voucher preparation, and purchasing practices, as follows:
employee annual and sick leave usage were not reflected in City payroll records;
payment vouchers were not properly completed when submitted to the Borough President's Office;
the City's bidding requirements for purchases over $500 were not followed.
The audit recommended that:
Broooklyn Community Board #2 discuss with the Brooklyn Borough President's Office their practice of not recording employees leave usage on the Payroll Management System (PMS) time records. PMS records should be kept current by the Borough President's Office's prompt submission of completely filled out time records;
the Board ask the Brooklyn Borough President's Office to provide the Board's employees with copies of its master time cards and have the employees reconcile the master time cards with their personal records;
the Board ask the Brooklyn Borough President's Office to develop voucher processing steps complying with the intent of the Comptroller's Directives and The Boards' Guidelines;
the Board solicit bids whenever making purchases over $500 to ensure that the lowest possible price for the desired goods or services was obtained.
Brooklyn Community Board #2 agreed with the audit recommendations.
Update
Brooklyn Community Board #2 has not provided follow-up information.
Introduction
The audit's objectives were to determine whether Brooklyn Community Board #13 complied with the applicable City payroll, timekeeping, and purchasing procedures; the five Comptroller's Directives #3, #6, #13, #24, and #25, and the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, and examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Brooklyn Community Board #13 amounted to $142,358 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $108,097 and Other Than Personal Services (OTPS) expenditure amounted to $38,844.
Results
Brooklyn Community Board # 13 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping and purchasing practices as follows:
the Board's employees do not always sign out at the end of the day;
the employees' timesheets did not always agree with the time per the log out book;
the employees' leave balances per the master time cards differed with the Payroll Management System (PMS) records;
the Board does not have written procedures for employees' lunch periods.
The audit recommended that the Board:
compare timesheets to the log book to ensure they are accurate;
request that the Brooklyn Borough President Office timekeeper use the PMS as the official time record and reconcile leave balances periodically;
ensure that employees verify all leave balances;
require its employees submit leave slips prior to usage of the time;
establish written guidelines regarding lunch periods;
cease submitting blank signed purchase orders and payment vouchers to the Brooklyn Borough President's Office;
have payment vouchers prepared, completed, and signed by authorized employees of Brooklyn Community Board #13 before they are submitted to the Borough President's Office;
designate an employee as the individual authorized to prepare the payment voucher;
not split purchases in order to circumvent competitive bidding or contract requirements;
adhere to the $250 limitation on individual purchases made from its imprest fund account as specified in Comptroller's Directive #3;
properly safeguard its imprest fund checkbook.
Brooklyn Community Board #13 generally agreed with our recommendations, with the exception of our recommendation to use the City's Payroll Management System as the official time and leave record for each employee.
Update
Brooklyn Community Board #13 has not provided follow-up information.
BROOKLYN COMMUNITY BOARD #17
Payroll, Timekeeping and Purchasing Procedures of Brooklyn Community Board #17
Audit # FL 95-117A
Comptroller's Audit Library # 6398
Issued: June 5, 1995
Monetary Effect: Not Applicable
Introduction
This audit's objective determined whether Brooklyn Community Board #17 complied with applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Communtiy Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Brooklyn Community Board #17 amounted to $190,102 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $109,191 and the Other Than Personal Services (OTPS) expenditure amounted to $80,911.
Results
Brooklyn Community Board #17 complied with many of the requirements of the above procedures and guidelines. However, for fiscal year 1994, we found some internal control weaknesses in the timekeeping and purchasing functions, in that the Community Board did not:
request that the Brooklyn Borough President's Office (BBPO) record leave usage for the community board employees on the Employee Time Record (ETR);
request that the BBPO provide the community board employees with leave time balances so they can reconcile this to their own records;
compare weekly timesheets to the time log to verify the time recorded;
prepare written steps for the processing of vouchers;
solicit bids for purchases over $500;
maintain written records for bid awards;
secure the imprest fund checkbook in a locked drawer.
The audit recommended that the Board:
formally request that its employees time be entered on the ETRs and that the employees be provided leave balances so they can reconcile their leave time balances;
verify the time per the timesheet to the time per the time log;
request that the BBPO develop voucher processing steps;
always solicit bids when making purchases over $500 and maintain the bid records;
keep the imprest fund checkbook locked in a drawer and only allow authorized employees access to it.
Update
Community Board #17 has reported that it has implemented or is in the process of implementing five of our seven audit recommendations. The Agency reported that it is aware of new procedures in place regarding purchasing and bidding but it has not received a copy of the procedures. The recommendation concerning the safeguarding of the imprest fund checkbook is not applicable because the Board no longer has an imprest fund.
Introduction
The audit's objective was to determine whether Brooklyn Community Board #18 complied with applicable City payroll, timekeeping, and purchasing procedures; and with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Brooklyn Community Board #18 amounted to $149,342 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $107,583 and Other Than Personal Services (OTPS) expenditure amounted to $41,759.
Results
Brooklyn Community Board #18 complied with many of the requirements of the above procedures and guidelines. However, for fiscal year 1994, we found some internal control weaknesses in the purchasing and timekeeping functions, in that the Community Board:
does not request the Brooklyn Borough President Office (BBPO) to enter the community board employees leave time usage on the Payroll Management System (PMS) time records;
does not request that the BBPO provide the community board employees with copies of leave balances so they can reconcile this to their own records;
does not have written steps for the processing of vouchers.
The audit recommended that the Board:
request the BBPO to enter all necessary data (including leave usage) promptly on the PMS time records;
request that the BBPO provide the community board employees with copies of leave balance records so they can be reconciled;
request the BBPO to develop voucher processing steps for accountability.
Update
Brooklyn Community Board #18 has implemented the three audit recommendations.
Introduction
The audit's objective was to determine whether Manhattan Community Board #4 complied with applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24 and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Manhattan Community Board #4 amounted to $165,182 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $123,515 and the Other Than Personal Services (OTPS) expenditure amounted to $41,667.
Results
Manhattan Community Board #4 complied with many of the requirements of the above procedures and guidelines. However, for fiscal year 1994, we found some internal control weaknesses in the purchasing and timekeeping functions, in that the Community Board did not:
obtain three bids for purchases over $500;
check off the box on vouchers certifying that it received and verified the items for which it was billed;
stamp the original invoices "vouchered and paid" and attach them to the vouchers;
request unit prices on invoices to facilitate verification;
pay its rent in a timely manner;
maintain an updated inventory list;
require its employees to submitt all leave slips on a consistent basis.
The audit recommended that the Board:
solicit bids for all items over $500;
specify information on vouchers;
stamp invoices (vouchered and paid);
request unit pricing on invoices;
document petty cash approvals;
pay bills on time;
approve timesheets and leave slips, in an appropriate manner; and
update its inventory list.
Update
Manhattan Community Board #4 has implemented all of the recommendations.
Introduction
The audit's objectives were to determine whether Manhattan Community Board #5 complied with the applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices and procedures, examined the timekeeping and purchasing records and interviewed appropriate personnel.
Actual expenditures amounted to $154,492 in fiscal year 1994. Personal Services (PS) amounted to $128,629 and Other Than Personal Services (OTPS) amounted to $25,863.
Results
Manhattan Community Board #5 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping, purchasing, and the administration of the imprest fund, as follows:
the District Manager was allowed to earn and to use 115 hours of compensatory time that she was not entitled to.
weekly time sheets lacked proper supervisory verification.
in some instances, the District Manager working in a non-managerial title, accrued 12 hours of compensatory time simply by working a normal seven-hour work day.
in some instances, employees' time used was either not entered or entered incorrectly on the Payroll Management Report (PMS).
Manhattan Community Board #5 violated Comptroller's Directive #25 by processing six miscellaneous vouchers ($12,695) to pay rent instead of processing contract vouchers or order vouchers.
the Board had a lack of segregation of duties in preparing vouchers, authorizing vouchers, and in adminstering the imprest fund.
The audit recommended that:
the timekeeper at the Manhattan Borough President's Office review all timesheets andleave balances for any compensatory time that the District Manager earned and used as a manager, and for any hours not work;
the Manhattan Borough President's Office deduct any unauthorized compensatory time from the District Manager's annual leave balance;
the Manhattan Borough President's Office ensure that all employee title changes are made timely and properly with the City's Department of Personnel, especially changes from a non-managerial title to a managerial title;
the District Manager ensure that all timesheets and compensatory authorized slips have supervisory approval in writing before being sent to timekeeping at the Manhattan Borough President's Office;
the District Manager approve or authorize compensatory time slips for part-time employees;
the timekeeper at the Manhattan Borough President's Office request that employees reconcile their leave balances and report any differences;
Manhattan Community Board #5 comply with Comptroller's Directive #25 and use miscellaneous vouchers only when amounts cannot be predetermined;
Manhattan Community Board #5 delegate the responsibility for reconciling the Imprest Fund bank account to its Community Associate;
Manhattan Community Board #5 take the necessary steps to avoid including expenses for different months on one imprest fund replenishment voucher.
Update
Manhattan Community Board #5 has implemented all of the nine recommendations.
Introduction
The audit's objectives were to determine whether Manhattan Community Board #8 complied with applicable City payroll, purchasing, and timekeeping procedures; with the five Comptroller Directives #3, #6, #13, #24, and #25; and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Manhattan Community Board #8 amounted to $165,214 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $119,993 and the Other Than Personal Services (OTPS) expenditure amounted to $45,221.
Results
The audit found that Manhattan Community Board #8 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping, payroll distribution, and bidding practices, as follows:
Manhattan Community Board #8 did not require attendance to be recorded daily and employee's timesheets were not routinely approved by their supervisors;
Manhattan Community Board #8 did not have adequate payroll distribution procedures. The Board did not require employees to sign for their paychecks, as required by Directive #13;
Manhattan Community Board #8 did not follow the City's bidding requirements for purchases over $500.
The audit recommended that:
Manhattan Community Board #8 institute the use of a daily sign-in/sign out log forall employees;
Manhattan Community Board #8 ensure that all employee timesheets were approved by the employee's supervisor and that leave transactions were approved before submitting timesheets to the Borough President's Office for PMS processing;
Manhattan Community Board #8 ensure that any employee, receiving a paycheck,signs the payroll distribution report or a similar form; and
Manhattan Community Board #8 obtain bids from at least three vendors when purchasing items or acquiring services costing over $500.
Update
The Mayor's Office of Management and Budget (OMB) reported that Manhattan Community Board #8 has implemented three of the four recommendations:
a daily sign-in/sign-out log was instituted,
all employee timesheets and leave transactions were approved by their supervisors, and
any bid will be obtained from at least three vendors when purchasing items costing over $500.
The OMB reported that all Manhattan Community Board #8 employees received their paychecks through direct deposit; therefore, the recommendation concerning the payroll distribution report signature upon paycheck receipt is no longer applicable.
Introduction
The audit's objectives were to determine whether Queens Community Board #6 complied with applicable /city payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Queens Community Board #6 amounted to $160,221 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $116,928, and Other Than Personal Services (OTPS) expenditures amounted to $43,293.
Results
Queens Community Board #6 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping, purchasing, and the protection of the physical assets, as follows:
there were a number of occasions where employees signed in inappropriately, or did not sign in for days they reported having worked;
two expenditures made by Queens Community Board #6 which should have been charged to general contracting services were charged to incorrect object codes;
the District Office did not identify its major equipment as the property of Queens Community Board #6.
The audit recommended that:
Queens Community Board #6 verify each employee's timesheets;
Queens Community Board #6 remind its employees to sign-in and sign-out properly;
Queens Community Board #6 classify expenditures properly by charging them to the correct object codes, and
identify its equipment by means of tags or etching as a protective measure against theft.
The Board agreed to implement all of our recommendations.
Update
Queens Community Board #6 will implement one recommendation at a later date and has already implemented three out of four recommendations:
it has conferred with the Borough President's Office regarding budget codes.
it has added an additional review for verifying timesheets and sign-in sheets.
it will identify its equipment when funds become available for the purchase and installation of metallic numbered tags.
Introduction
The audit's objectives were to determine whether Queens Community Board #7 complied with applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Commuity Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Queens Community Board #7 amounted to $162,512 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $135,153 and the Other Than Personal Services (OTPS) expenditure amounted to $27,359.
Results
Queens Community Board #7 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping.
The audit recommended that Queens Community Board #7 verify each employee's timesheets by comparing them to his/her sign-in/sign-out records. The Board agreed to implement our recommendation.
Update
The Mayor's Office of Management and Budget (OMB) reported that the Board has implemented the recommendation.
QUEENS COMMUNITY BOARD #11
Introduction
The audit's objectives were to determine whether Queens Community Board #11 complied with applicable City payroll, timekeeping, and purchasing procedures; with the five Comptroller's Directives #3, #6, #13, #24, and #25, and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Queens Community Board #11 amounted to $145,866 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $85,077 and the Other Than Personal Services (OTPS) expenditure amounted to $60,789.
Results
Queens Community Board #11 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping, the protection of the physical assets, control over long-distance telephone calls, and in the administration of the imprest fund, as follows:
employees did not always sign in when starting the workday, or sign out when leaving the District Office for the day;
the District Office did not identify its major equipment as the property of Queens Community Board #11;
there was an indication of lax computer security because a computer virus appeared on the Board's CITYNET terminal;
Queens Community Board #11 did not have a telephone log to monitor long distance telephone calls;
the Board did not limit its imprest fund checks to being negotiable for only 90 days after being issued;
The audit recommended that Queens Community Board #11:
identify its equipment with tags or etching as a protective measure against theft;
scan periodically its computers for viruses;
ensure that its employees sign-in and sign-out every day;
have employees complete their own timesheets;
maintain a log of long-distance telephone calls; and
rubber stamp imprest fund checks "Void After 90 Days."
Update
The Mayor's Office of Management and Budget (OMB) reported that Queens Community Board #11 has implemented all of the audit recommendations.
Introduction
The audit's objectives were to determine whether Staten Island Community Board #1 complied with applicable City payroll, purchasing, and timekeeping procedures; with the six Comptroller's Directives #1, #3, #6, #13, #24, and #25; and with the Mayor's Community Assistance Unit's Procedural Guidelines for Community Boards.
We reviewed the timekeeping and purchasing practices, examined the timekeeping and purchasing records, and interviewed appropriate personnel.
Actual expenditures for Staten Island Community Board #1 amounted to $147,189 in fiscal year 1994. The Personal Services (PS) expenditure amounted to $128,903 and the Other Than Personal Services (OTPS) expenditure amounted to $18,286.
Results
Staten Island Community Board #1 complied with many of the requirements of the above procedures and guidelines. However, we found some internal control weaknesses in timekeeping, payroll distribution, in the protection of the physical assets, and in the administration of the imprest fund, as follows:
Staten Island Community Board #1 did not maintain an inventory listing of its major equipment;
the Board did not record attendance daily, monitor undocumented sick leave, require its employees to have prior written approval for annual or compensatory time, monitor excessive compensatory-time balances, and provide written procedures governing lunch periods for employees;
the Board did not require its employees to sign for their paychecks; and
did not restrict the validity of imprest fund checks within 90 days.
The audit recommended that:
Staten Island Community Board #1 maintain an inventory listing of its major assets and identify its major equipment by using metal tags;
the Board institute the use of daily sign-in/sign-out log for all employees. Employees should fill out weekly timesheets;
the Board require, when applicable, medical documentation for sick leave usage;
the Board ask the Staten Island Borough President's Office to discontinue the practice of coding all sick leave usage as documented, unless the employee submits the required documentation;
the Board require its employees to submit leave authorization slips for approval prior to taking annual and compensatory leave;
the Board ask the Staten Island Borough President's Office's Timekeeping Unit to transfer the District Manager's excessive compensatory time balance to sick leave;
the Board issue written procedures governing lunch periods.
Update
Community Board #1 has implemented all of the nine audit recommendations.
Introduction
The Community Development Agency (CDA) administers the Community Services Block Grant and other funds earmarked for the Community Action Programs in New York City. Community Action Programs provide services to local communities in dire need of education for youths, programs for the homeless, services for immigrants, assistance to the elderly, and job-readiness programs for various target populations. These programs are administered through contracts with community-based organizations (contractors) throughout the five boroughs of New York City.
Our audit objectives were as follows:
to conduct an audit limited to two CDA contractors involving detailed audit testing of each, and
to review a larger sample of CDA contracts to determine whether built-in performanceindicators could be used by the CDA to measure the overall success of its programs.
Results
According to our audit, the Haitian Center provided only two-thirdsof the student hours of instruction required by its CDA contract during fiscal year 1994. The Haitian Center did not provide 14,328 hours of classroom instruction that could have provided services to at least 66 additional people during the contract period. The CDA paid $54,226 for services not rendered. Due to inherent weaknesses in the CDA's monitoring procedures, the Agency did not detect this situation.
In addition, our review of the two contractors' financial records identified expenditures for which neither the Citizens Advice Bureau nor the Haitian Center could justify their use of CDA funds. Overall, we found that approximately $21,682 in expenses fell into one of these categories, representing 45 percentof the dollar amount of the expenses reviewed.
The audit made 13 recommendations to address the above weaknesses.
Update
The CDA responded it has implemented or already has some of the policies and procedures in place that were recommended in the audit report pertaining to the review of the success of the Community Action Programs by the contract managers. In addition, the CDA has shared the audit findings with the State Education Department; the CDA monitors the review of its contract agencies' fiscal records approximately twice a year. Finally, the audit report had recommended that the CDA recoup $21,682 in funds because the Haitian Center and the Citizens Advice Bureau could not properly justify the expenditure. The CDA stated that it believes both the Haitian Center and the Citizens Advice Bureau have reasonably demonstrated the propriety of their expenditures, and the CDA does not intend to seek recoupment of these funds at this time.
NEW YORK CITY COMPTROLLER'S OFFICE
Introduction
We assessed the adequacy of the internal controls within the Bureau of Asset Management at the request of the Deputy Comptroller for Pensions. This report details the results of our review of the internal controls over the operations of the Bureau's Trading Division (the Bureau). The Bureau is responsible for making short-term investments on behalf of the City's five major pension funds, variable supplemental funds, the City Treasury, and other City funds.
Results
The Bureau's systems, procedures, and guidelines for short-term investments provided adequate internal controls over the Trading Division's operations. The Bureau communicated effectively its primary goals for achieving optimum return on investments while minimizing the risk of losses. The Bureau has issued policy guidelines to control risk. We found some control weaknesses which are immaterial and made 10 procedural-change related recommendations which Bureau officials agreed with, for the most part.
Update
The Comptroller's Office is implementing the audit recommendations.
Introduction
State Street Bank (the Bank) is under contract with the City to serve as custodian of short-term investment assets. We reviewed the contract dated April 1, 1993 - December 31, 1996 between the City and State Street Bank.
State Street Bank is responsible for safekeeping, holding, servicing, receiving, and disposing of assets according to the terms of the contract. Under the terms, the Bank must follow various investment procedures for receiving and delivering securities, for charging and crediting the accounts, and for transferring funds to and from the account's demand bank by following netting procedures. (If the funds in an account at State Street from a sale or redemption of securities exceed the funds required that day for purchases of securities, State Street transfers the difference to the account's demand deposit bank. If the day's purchases exceed sales and redemptions, the demand deposit bank transfers the difference to State Street).
Results
State Street Bank complies with contractual provisions that are essential for the performance of its custodial duties, based upon tests performed and our examination of documentation from the Bank and the Comptroller's Bureau of Asset Management.
State Street Bank billed the City for the correct amount, which did not exceed the contract maximum. The Bank accurately computed the fail-float credits and off-set these against the quarterly fees. The Bank followed the required investment transaction procedures, complied with the contract's netting provisions, maintained the required insurance coverage, and provided the Bureau of Asset Management with the required accounting and performance-measurement reports.
Update
This audit did not make any recommendations; therefore, follow-up is not necessary.
Introduction
The Cost Allocation Plan is used to identify and distribute allowable indirect costs of certain support services within City agencies. Portions of these costs may eventually be passed on to programs eligible for Federal funding and thus be reimbursed to the City.
Results
Our analysis resulted in a summary schedule that was forwarded to the Office of Management and Budget (OMB) and that indicated the percentage of staff time spent providing services to various City agencies during fiscal year 1994. The time allocation was based on various statistics including headcounts, staff days expended for each project and the number of vouchers and documents processed during the period.
OMB uses this information as a basis to determine and apply appropriate costs of certain support services to different City agencies.
Update
This report did not make any recommendations; therefore, follow-up is not necessary.
Introduction
The objective of this audit was to determine whether the landlord's 1993 operating expenses, charged to the Comptroller's Office for space leased at 161 William Street, were accurate and in accordance with the lease agreement.
Based on a lease agreement between 161 William Associates and the City of New York, the Comptroller's Office staff occupies space on the 2nd, 3rd, 4th and 5th floors at 161 William Street in Manhattan. When the landlord's expenses exceed those of the base year (the year that the tenant first occupied the premise), the landlord allocates the excess expenses to each tenant based on the percentage of space occupied by the tenant.
Results
We found that the landlord's 1993 Operating Expense Statement, sent to all tenants, was overstated by $18,893. Based on the lease agreement, we also found expenses listed on the 1985 - 1992 Operating Expense Statements that should not have been included. As a result, the landlord overcharged the Comptroller's Office, based on its pro rata share of expenses, by $6,763.
Update
The Comptroller's Office received a one-time credit of $6,763 from the landlord.
Introduction
The New York City Department of Consumer Affairs (DCA) administers and enforces various consumer protection laws. DCA issues violation notices and assesses fines against violators of these laws. The audit objectives were to determine whether DCA's February 24, 1993 inventory of outstanding fines is collectible and what the Department has to do to collect these fines.
Results
We estimate that $2.3 million of the fines outstanding as of February 1993 are collectible and an additional $1 million in fines are collectible annually over and above what the DCA already collects. However, in order to collect these amounts, the DCA must obtain judgments against the businesses. Under current law, the DCA can obtain judgments only through costly court orders. We recommended that the DCA seek State and City legislation to grant it docket and expanded hearing authority in order to readily obtain judgments without court expenses. Until these legislative changes become law, the DCA should seek court judgments against businesses where it is cost-effective; our analysis of the February 1993 inventory identified a cost-effective break-even point consisting of 29 cases with outstanding balances of $10,000 or more.
Update
The Mayor's Office of Management and Budget (OMB) reported that the DCA has implemented one out of five recommendations reported in the final report and is in the process of implementing the remaining four recommendations. The following recommendation was implemented:
DCA in concert with OMB, have considered the net revenue benefit of adding attorneys and paralegals to DCA's staff in order to litigate against vendors with outstanding fines, and plan to hire two attorneys, one paralegal, and one collector.
The following four recommendations are being implemented:
The DCA will review outstanding fines and implement court action against businesses with fines exceeding $10,000.
The DCA will hire staff to evaluate cases to be brought to court based upon age, monetary value, and cost effectiveness of each case.
The DCA will continue to work with the Office of State Legislative Affairs and the City's OMB to obtain docket and hearing authority.
The DCA, in conjunction with the Mayor's Office of Legislation, will continue to encourage the State Legislature to pass a bill amending the City Charter, the Agricultural and Markets Law, and the County Law, thereby giving DCA expanded hearing authority and the authority to docket its hearing decisions in the Civil Court.
Introduction
The New York City Department of Consumer Affairs (DCA) collects license fees from businesses, such as home improvement contractors and towing companies. In addition, DCA inspectors inspect and issue violations to businesses not in compliance with the Consumer Protection Law, or with the City and State weights and measures statutes, or with City licensing laws. Violations result in the businesses paying prescribed fines and penalties by check or in cash. Four DCA units--the Collections Unit, the Legal Unit, the Licensing Unit, and the Bingo Unit--are responsible for collecting checks, which can be either mailed in or dropped off in person. A separate Cashiers' Unit is responsible for collecting all cash payments.
The objective of this audit was to evaluate the effectiveness of the DCA's internal controls over cash receipts. For the purpose of this audit, cash receipts include currency and checks.
Results
Overall, we found that the DCA generally adhered to guidelines related to monitoring and to accounting for cash receipts established by Comptroller's Directives #1 and #11. However, the DCA does not have up-to-date policies and procedures regarding the recording, collecting, and depositing of cash receipts (In January 1994, the DCA revamped its computerized-accounting system. However, its formal procedures were not updated to reflect the changes made to the system). In addition, we found the following weaknesses in their controls:
The DCA did not perform reconciliations between the Consumer Affairs Management Information System (CAMIS) receipts and daily deposits.
The DCA did not exercise tight controls over its mail receipts.
The DCA did not comply with Comptroller's Directive #11 in regard to returned checks.
The audit made 14 recommendations related to cash receipts, CAMIS receipts, a log for mail receipts, security of keys to lockboxes, and procedures for handling returned checks.
Update
The DCA agreed with the audit recommendations and has reported that it has implemented seven. The DCA states that it will implement the remaining recommendations, concerning the creation of written procedures for reconciling CAMIS receipts and logging in money received through the mail.
BOARD OF EDUCATION (BOE)
Audit Report on the New York City Board of Education's Occupational Education Programs
Introduction
Approximately 157,964 students were enrolled in the Board of Education's (BOE) OccupationalEducation Programs during school year 1993. Occupational Education Programs were designed to develop in students the necessary employment skills for occupational jobs (defined below) or to prepare them for higher education, such as college or technical school.
This audit determined:
whether the BOE's occupational education teachers were properly licensed for the courses they taught;
whether the effectiveness of the BOE's Occupational Education Programs was measured properly.
Results
The BOE does not have any formal procedures to ensure that occupational education teachers have the specific licenses required for the courses they teach. As a result, approximately 11 percent of the sampled occupationaleducation teachers were not licensed to teach the courses they taught during the 1992-1993 school year.
In addition, the BOE does not have an effective method for evaluating its OccupationalEducation Programs. Consequently, it does not know whether the Programs meet its primary goals.
The audit made 16 recommendations related to licensing of teachers and developing criteria to evaluate the success of the program.
Update
The Mayor's Office of Management and Budget (OMB) reported that the BOE has implemented five of the audit recommendations:
the BOE has distributed guidelines to principals and other appropriate personnel at the high schools;
the BOE has distributed memos to school officials emphasizing the importance of appropriate licenses;
the BOE is reviewing the credentials of teachers whose assignment does not match their licenses;
the BOE is taking the appropriate steps to re-assign teachers un-licensed to teach the course which they have been assigned;
the BOE has implemented a comprehensive policy for evaluating the success of the Occupational Education Programs and has an Advisory Council on Occupational Education.
Of the outstanding recommendations, seven are pending implementation, one has been partially implemented, and three do not have a current implementation status.
Introduction
Under the Federal Stewart B. McKinney Homeless Assistance Act, states must ensure that homeless children have access to a free, appropriate public education. Each state must ensure that local educational agencies, such as the New York City Board of Education (BOE) in cooperation with local social service agencies (in the case of New York City, the Department of Homeless Services) provide services to children and their families. In March 1987, the Chancellor issued Regulation A-780 requiring homeless children to be registered in a school within 24 hours (or one school day) after they have entered or been transferred to a City shelter.
Results
Although the BOE's computerized Student Information System (SIS) is capable of comparing the date that a student's family enters a shelter facility with the student's school registration date, the BOE does not use this information to report on the extent that school districts are meeting the 24-hour requirement. The BOE generates monthly rosters of homeless students, attending public schools, to monitor their attendance, but these rosters do not provide enough information to enable the BOE to use them to assess each districts' performance in registering students in relation to the Chancellor's regulation. The audit gave four recommendations to the BOE's Information Systems Unit, Division of Student Support Services:
generate monthly reports for each district indicating the time it took to register homeless students;
identify reasons for non-compliance with the 24-hour requirement;
maintain written records of the discrepancies appearing on monthly rosters and show how these discrepancies were resolved; and
report each district's performance to the Chancellor.
Update
The BOE has implemented three of the four audit recommendations. The BOE is not generating monthly reports for each district indicating the time it took to register homeless students.
Introduction
The audit's objective was to evaluate management's control over the Board of Education's (BOE) Data Center in the areas of physical security, computer operations, and disaster recovery/contingency planning. We toured the #2 MetroTech Data Center, where we interviewed the center's management and observed computer operations. We also reviewed the center's operations procedures, verifying both those applicable to the audit objectives and those related to data input/output. We relied upon the October29, 1993 Management Letter, issued by Ernst & Young, to the Board for the period ending June30, 1993. The Management Letter described an audit examination of computer applications, security, personnel policies, and disaster recovery. We used the results of Ernst & Young's examination to limit the scope of our evaluation to physical security, computer operations, and disaster recovery/contingency planning.
Results
We found no major control weaknesses in physical security and computer operations. The BOE has addressed the two disaster-recovery issues raised by Ernst & Young. However, we found that the current Disaster Contingency plan was outdated, inaccurate, incomplete, and not tested adequately. An additional finding covers security "time-out" for unattended workstations which would permit unauthorized access to data. The BOE agreed to implement all five recommendations before the end of the calendar year.
Update
The BOE has not provided follow-up information.
Introduction
The follow-up audit's objective was to determine whether the Board of Education (BOE) implemented the recommendations made in a February 26, 1993 audit report, entitled "The Board of Education's Integrated Purchasing and Inventory Control System" (7A91-05). In this report, we discussed each recommendation as well as its current implementation status.
In following-up, we examined the BOE's newly-developed standards for application development and documentation, and its formal Systems Development Life Cycle (SDLC) methodology to determine whether these standards and the SDLC provided reasonable assurance that an adequate end product would be created if the standards and SDLC were followed. The BOE established a steering committee to ensure that the users, who are ultimately involved with the system, would participate in the overall progress of the application. We confirmed the establishment of a quality assurance function: its goal is to ensure the implementation of quality systems. We asked BOE's representatives about the current status of IPIS implementation.
This follow-up audit lasted from February to April 1995. We used the Federal Information Standards and Generally Accepted Government Auditing Standards (GAGAS) as audit criteria.
Results
At the time of our previous audit, only two out of four IPIS sub-systems were implemented, and Bureau of Supply officials had suggested the elimination of IPIS. As a result, the estimated cost savings of $17 million, projected over four years, might not have been fully realized.
At the time of this follow-up, the BOE has partially implemented two out of five prior recommendations. It has developed standards in accordance with a Systems Development Life Cycle methodology (SDLC) and has partially staffed an internal quality assurance function. However, we observed that the SDLC policy, requiring user involvement and sign-off, was not followed. This exposes the BOE to a risk of an improperly designed system.
On February 6, 1995, the BOE's Auditor General advised the Comptroller's Office that IPIS would not be fully implemented because of the need for extensive modifications and costly enhancements in order to meet user requirements. We were also informed that the BOE has implemented another system, FASTTRACK, designed to facilitate re-engineering of the Requisition system to meet the BOE's current purchasing and inventory needs. This was the intent of the Purchasing sub-system component of IPIS which was not implemented.
The follow-up audit gave two recommendations which the BOE generally agreed with, and to which they responded: "The Division (of Management Information Services) fully agrees with the audit recommendations, but due to limited funding and a shortage of staff, progress on audit implementation has been limited. However, the Board will continue to explore every possible avenue to achieve the implementation of the audit recommendations."
Update
In spite of budget constraints, the Board of Education has started to implement two audit recommendations concerning the System Standards Document and the Project Life Cycle/Quality Assurance function in an effort to monitor and to ensure compliance with standards. The BOE plans to implement both recommendations by June 1996.
Introduction
This audit's objectives was to determine Community School District #9's effectiveness in expending and accounting for Other Than Personal Services (OTPS) Expenditures charged to object codes 405 and 490 (mostly related to travel and/or attending conferences), and to determine whether such expenses were approved, processed, and paid in accordance with the New York City Board of Education's (BOE) Standard Operating Procedures (SOP) Manual.
Community School District #9, governed by a community school board, appoints a superintendent who directs and manages the schools.
In fiscal year 1993, Community School District #9 processed 537 payment vouchers (totalling $133,101) for object codes 405 and 490), and in fiscal year 1994, they processed 515 vouchers (totalling $126,268).
To accomplish our objective, we sampled 213 payment vouchers for compliance with the SOP manual in fiscal years 1993 and 1994.
Results
Out of the 213 payment vouchers sampled for fiscal years 1993 and 1994, there were 40 instances (totalling $8,160) where we questioned all of an expenditure or a portion thereof. Included in the questioned expenditures were excessive food costs, totalling $5,252 (64%) of all questioned expenditures. Furthermore, we found 89 instances where the expenditures were not processed in compliance with the SOP Manual, including 50 instances where a unit price breakdown was not listed on receipts from vendors.
The audit gave nine recommendations to address the above weaknesses.
Update
The BOE has implemented eight of the nine audit recommendations:
the pricing policies were revised;
the SOP Manual was revised;
the approving officer thoroughly investigates all expenditures;
all payment vouchers are checked for mathematical accuracy;
a tracking system for vouchers was established;
all procedures for storing and retrieving files were
strengthened;
all expenditures requiring bidding have the properly completed documentation completed and on file;
the BOE is monitoring the Community School Boards and Districts to ensure compliance with revised regulations.
The BOE, however, does not plan to incorporate a requirement into the Standard Operating Procedures Manual that all purchases for food have the unit price per item and the per person cost.
Introduction
This audit's objectives were to determine Community School District #10's effectiveness in expending and accounting for Other Than Personal Services (OTPS) Expenditures charged to object codes 405 and 490 (mostly related to travel and/or attending conferences), and to determine whether such expenses were approved, processed, and paid in accordance with the New York City Board of Education's (BOE) Standard Operating Procedures (SOP) Manual.
Community School District #10, governed by a community school board, appoints a superintendent who directs and manages the schools.
In fiscal year 1993, Community School District #10 processed 664 payment vouchers (totalling $134,925) for object codes 405 and 490, and in fiscal year 1994, they processed 463 vouchers (totalling $101,115).
To accomplish our objective, we sampled 238 payment vouchers for compliance with the SOP Manual for fiscal years 1993 and 1994.
Results
Our audit found that Community School District #10 did not adequately monitor food, travel, and conference expenditures for compliance with the SOP Manual. Out of the 238 payment vouchers sampled for fiscal years 1993 and 1994, our audit revealed 74 instances (totalling $24,533) where we questioned all of an expenditure or a portion of it. Included in the questioned expenditures were excessive food costs totalling $21,686 (88% of all questioned expenditures). Furthermore, we found 59 instances where the expenditures were not processed in compliance with the SOP's, including 29 instances where a unit price breakdown was not listed on vendor receipts.
The audit gave nine recommendations to address the above weaknesses.
Update
The BOE has implemented eight of the nine audit recommendations:
pricing policies were revised;
the SOP Manual was revised;
the approving officer thoroughly investigates all expenditures;
all payment vouchers are checked for mathematical accuracy;
a tracking system for vouchers was established;
all procedures for storing and retrieving files were strengthened;
all expenditures, requiring bidding, have properly completed documentation on file;
the BOE is monitoring the Community School Boards and Districts to ensure compliance with the revised regulations.
Tbe BOE, however, does not plan to incorporate a requirement into the Standard Operating Procedures Manual that all purchases for food have the unit price per item and the per person cost.
Introduction
The audit's objective was to review payments made by the New York City Board of Education (BOE) to the United Federation of Teachers' (UFT) Welfare Fund (the Fund), on behalf of each covered employee under Agreement #132 from May 1 - July 31, 1994. Prior payments made to the above Fund were reviewed for accuracy and appropriateness, and were free of errors.
To accomplish the above objective, we reviewed the terms and conditions of Agreement #132 and all payment vouchers issued from May 1 - July 31, 1994.
Results
The BOE overpaid the Fund $495,846as a result of duplications and incorrect calculations for retroactive payments. The audit gave two recommendations to the BOE to address Fund overpayment.
Update
The Mayor's Office of Management and Budget (OMB) reported that the BOE implemented the two audit recommendations:
the BOE recouped the $495,846 from the Fund in March 1995;
the BOE has established policies to verify that calculations were correct under Agreement #132 and that retiree lists used to prepare retroactive payments to the Fund were correct.
Introduction
The audit's objectives were to determine whether all of the sampled school bus drivers had the required "19-A status" or had criminal driving records that would have disqualified them from driving New York City school buses. Article 19-A of the New York State Vehicle and Traffic Law requires that school bus drivers be at least 18 years old, have a valid commercial driver's license or permit to operate a school bus, pass a bus driver's physical examination, and have no disqualifying criminal history or violations on their driving records that would prevent them from operating a school bus.
We selected a sample of 575 out of 4,064 school bus drivers, reviewed their driving records to determine whether they had the required 19-A status or whether they had any restrictions on their licenses that would prevent them from driving. In addition, we requested a criminal history search through the New York State Office of Court Administration of any charges filed against them.
Then we ascertained if those convictions would disqualify them from operating a school bus.
Results
Our review was generally "positive" and disclosed that:
All five hundred and seventy-five school bus drivers from our sample had the required 19-A status to drive a school bus.
Twenty-five of the sampled school bus drivers had their licenses suspended for periods ranging from one to 1,671 days. We reviewed the employers' payroll records for four of these drivers, whose licenses were suspended for 49 days or more, and found that none of these drivers operated a school bus while his or her license was suspended.
Four other school bus drivers had accumulated nine or more points on their driver's licenses within an 18-month period; however, all four had successfully completed a motor-vehicle accident prevention course, thereby reducing their points to less than nine.
Sixty-three school bus drivers (from our sample) had criminal offense convictions. However, there was no evidence that any of these drivers had convictions disqualifying them from driving a school bus.
One driver, among the above mentioned 63, was convicted of reckless endangerment in the first degree, a criminal charge that would have disqualified her from driving a school bus for five years. However, she continued to drive a bus because a court granted her a waiver of the disqualification, which is allowed by State law.
Seven drivers, in the group of 63, were convicted of driving while intoxicated (DWI). DWI convictions disqualify a school bus driver from driving a school bus for five years only if the offense occured while driving a school bus or if the driver was convicted twice within a five-year period. According to a DMV official, none of these seven drivers were operating a school bus at the time of their DWI conviction or were convicted twice within the five-year period. Drivers, convicted of DWI for the first time, had their licenses suspended for a six-month period according to DMV officials. The seven drivers were convicted of DWI from 3 to 11 years prior to our review. Therefore, their licenses were fully restored prior to our review.
Update
The Board of Education generally agreed with our recommendations. It will review the remaining driving records of the 21 school bus drivers with suspended licenses and will take immediate steps to investigate all school bus drivers with criminal convictions.
BOARD OF EDUCATION (BOE)
2) Comptroller's Report to the New York State Legislature on Preschool Handicapped Transportation and Program Service Delivery
Issued: November 19, 1994
Report # N/A
Monetary Effect: Potential Savings of between $168.9 million and $360.1 million in tuition and transportation costs over the next five years by increasing the use of itinerant services to the State average of 24.2 percent and competitively bidding the transportation contracts. (Even greater five-year savings, peaking at $720 million, could be attained if the use of itinerant services were increased to the national average of 57 percent.)
Introduction
The New York State Legislature required the New York City Comptroller's Office to conduct a review of publicly-funded, pre-school, handicapped, transportation services in the City of New York. The Comptroller prepared three reports for presentation to the State Legislature. Two reports were prepared internally by the Comptroller's Office and a study was prepared by KPMG Peat Marwick LLP (KPMG) under the direction of the Comptroller's Office.
The KPMG study evaluated transportation aspects of the pre-school program. The Comptroller's report (MG95-101A) determined whether New York City provides special education "itinerant services" to pre-school, handicapped children at the same level as other jurisdictions in New York State in order to calculate the potential savings that would be realized if the City optimized these types of services. (Generally, the cost of services and transportation provided on an "itinerant" basis [for example, at a child's home, at a Headstart center, or in a therapist's office] is less than the alternative of providing "center-based" services in pre-schools). The other objective was to survey the children's parents in order to evaluate the performance of bus companies providing transportation service to handicapped pre-school children between the ages of three and five.
The Comptroller's summary report analyzed the results of the two reports mentioned above, evaluated the delivery of services, and indicated the implications of these reports relating to other programs and issues.
Results
New York City's use of center-based services far exceeds the State average. Center-based services offer the most intensive (and expensive) level of service. The Federal "Individuals with Disabilities Education Act" (IDEA) entitles disabled children between the ages of three and five to free public education and related services. Under Federal guidelines, disabled children should be placed in the least restrictive environment (LRE) to the maximum extent possible, and should receive services in a setting that meets their needs but does not segregate them from "non-disabled" children. In effect, the LRE concept encourages and supports the inclusion of disabled children with their "non-disabled" peers. The inappropriate placement of a child in a center-based program would be a violation of LRE requirements.
Our analysis of New York State Department of Education data revealed that New York City uses center-based services excessively for disabled pre-school children, effectively segregating the disabled children from their non-disabled peers. In fiscal year 1994, only 4.5 percent of the City's pre-school population received special education itinerant services. If New York City increased its use of special education itinerant services and matched the New York State average of 24.2 percent (which excludes New York City), then the City and State could save approximately $168.9 million and $360.1 million, in tuition and transportation costs respectively, over the next five years (fiscal years 1995-99). This range of savings incorporates various scenarios related to the demand of service and the extent to which the City implements competitive bidding for transportation contracts. Even greater savings ($720 million) could be attained if the use of itinerant services were increased to the national average of 57 percent.
Our survey of parents of handicapped pre-school children disclosed that approximately 46 percent of the respondents have pre-school handicapped children who are speech impaired. In its study, KPMG reported that 4,278 (58.3%) children were speech impaired (in making this calculation, we excluded the needs categories of "pre-school disability" and "not available," which could also include speech-impaired children). New York State Comptroller's audit report, "Pre-school Handicapped Education Program" (Number 93-S-23), issued February 10, 1994, stated that a State Department of Education official "told us that speech impairments can generally be treated effectively through itinerant services." Based on these factors, increasing the special education itinerant services to the aforementi