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.

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

Claims 151

Franchise, Concession and Lease Audits 154

Rental Credits Submitted by
the New York Yankees 155

FISCAL YEAR 95 FISCAL YEAR 95
FISCAL YEAR 95 ACTUAL POTENTIAL
NUMBER OF COST AVOIDANCE/ COST AVOIDANCE/
AUDIT TYPE REPORTS SAVINGS/REVENUE SAVINGS/REVENUE (1) TOTAL

Government Agencies 98 $40,530,766 $203,348,488 $243,879,254
$369,925,704 $409,989,170

Government Agencies NA $373,285 $7,670 $380,955
Desk Audits

Total Government 98 $40,904,051 $203,356,158 $243,793,359
Agencies $369,933,374 $410,370,575

Non-Government Agencies 26 $1,167,484 $38,183,432 $39,350,916

Non-Government NA NA NA NA
Agencies Desk Audits

Total Non-Government 26 $1,167,484 $38,183,432 $39,350,916
Agencies

Grand Total Government and
Non-Government Agencies 124 $42,071,535 $241,539,590 $283,144,275
$408,116,706 $449,621,494

(1) The potential cost avoidance/savings/revenue amounts are estimates
that could be achieved if audit recommendations are implemented.

-XIII-

ECONOMIC IMPACT OF AUDITS OF GOVERNMENT AGENCIES -FISCAL YEAR 1995

ACTUAL POTENTIAL
# OF COST ACTUAL ACTUAL COST POTENTIAL POTENTIAL
AGENCY REPORTS AVOIDANCE (3) SAVINGS (4) REVENUE (5) AVOIDANCE (6) SAVINGS (7) REVENUE (8)

Actuary, Office of 1
Borough Presidents 3 $940 $3,519
Buildings, Dept. of 2
Community Boards 13
Community Development 1 $75,682
Agency
Comptroller, Office of 4 $6,763
Consumer Affairs, Dept. of 2 $2,300,000 $1,000,000
Education, Board of 10 $24,522,784 $168,926,938 $495,846
$335,504,154
Elections, Board of 1
Employment, Dept. of 2 $150,000
Environmental Protection 4 $13,000,000 $17,700 $4,401,000
Finance, Dept. of 2
Fire Department 4 $286,000 $4,870,000
General Services, Dept. of 1
Health & Hospitals Corp 2
Health, Dept. of 4 $2,500
Housing Authority 1
Housing Preservation 2
& Development, Dept of
Human Resources Admin 2
Investigation, Dept. of 1
Juvenile Justice, Dept. of 1 $11,400,000
Labor Relations, Office of 3 $4,945 $1,041,691
Mayor's Office of Contracts 1
Medicaid 1 $160,924
Mental Health 1 $60,024
Metropolitan Transit Authority 2 $467,300
Multi-Agency 2
Parks & Recreation, Dept. of 1
Police Department 1
Retirement Systems 5 $1,295,000
Sanitation, Dept. of 1 $44,509 $7,000,000
School Construction Authority 1
Sheriff, Office of the City 1
Tax Commission 1
Transportation, Dept. of 6 $183,525 $1,360,800 $800,864
Welfare Funds 7
Youth Services, Dept. of 1
TOTAL Government Audits 98 $0 $25,186,257 $15,344,509 $0 $191,541,672 $11,806,816
$358,118,888
Desk Audits NA 373,285 7,670
TOTAL: 98 $0 $25,559,542 $15,344,509 $0 $191,541,672 $11,814,486
$358,118,888

Total Actual Cost Avoidance/Savings/Revenue: $40,904,051
From Government Audits/Desk Audits

Total Potential Cost Avoidance/Savings/Revenue: $203,356,158 $369,933,374
From Government Audits/Desk Audits

(3) The only audits this year with actual cost avoidance were claim audits. Actual cost avoidance represents
the difference between the claim amount and the settlement amount.
(4) Amount already saved by agency.
(5) Amount already received or recouped by the agency.
(6) The only audits this year with potential cost avoidance were claim audits. Potential cost avoidance represents
the difference between the claim amount and the audit accepted amount for those claims that have not been settled.
(7) Amount that could be saved by the agency, in the future, by following the audit recommendations.
(8) Amount that could be recouped by the agency, in the future, by following the audit recommendations.

• Reflects potential savings in tuition and transportation costs over the next five years.
  

-XIV-

ECONOMIC IMPACT OF AUDITS OF NON-GOVERNMENT AGENCIES -FISCAL YEAR 1995

ACTUAL POTENTIAL
# OF COST ACTUAL ACTUAL COST POTENTIAL POTENTIAL
AUDIT TYPE REPORTS AVOIDANCE SAVINGS REVENUE AVOIDANCE SAVINGS REVENUE

Claims 17 $638,094 $36,888,270

Franchise, Lease 4 $450,583 $721,964
and Concession
Audits

New York Yankees 5 $78,808 $573,198
Rental Credits
Desk Audits

TOTAL Non-Government 26 $638,094 $0 $529,391 $36,888,270 $0 $1,295,162
Audits

Total Actual Cost Avoidance/Savings/Revenue: $1,167,484
From Non-Government Audits

Total Potential Cost Avoidance/Savings/Revenue: $38,183,432
From Non-Government Audits

Introduction

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.

• 
  MANHATTAN BOROUGH PRESIDENT'S OFFICE
  

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.

• BROOKLYN COMMUNITY BOARD #2
  

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.

• 
  COMMUNITY DEVELOPMENT AGENCY (CDA)
  

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 aforementioned levels should be attainable.

In addition, our survey disclosed that approximately 68 percent of the disabled pre-school children served during fiscal year 1994 were enrolled in a pre-school employing the same personnel who had performed each child's initial evaluation. We agree with the New York State Comptroller's Office audit, which stated that there is a conflict of interest for pre-schools to perform such evaluations since they ultimately determine the type of services and the setting in which a child should receive them, because the pre-schools, or their associates, have a vested interest where children are placed. The current situation could limit the use of special education, itinerant services in New York State, especially in New York City.

Overall, parents are generally satisfied with transportation services provided. They rated 91 percent of rollover contractors and 69 percent of the bid contractors either good or excellent. According to the KPMG study, the use of competitive bidding over a 5-year period (fiscal year 1995 through fiscal year 1999) could save the City and State $37 million to $84 million. While a higher percentage of parents were more satisfied with the rollover contractors, given the cost savings of the competitively bid contracts identified in the KPMG study, the difference in satisfaction levels may not be that significant, given the current re-evaluation of services and service levels within the context of the City's fiscal difficulties. Indeed, appropriate performance measures, coupled with frequent inspections and penalties for non-performance, would ensure that bid contractors provide service at the rollover contractor levels.
The report (MG95-101A) gave nine recommendations to the City or the New York State Legislature in order to address the problems stated. The summary report gave 14 recommendations, which expanded upon the recommendations of both the KPMG study and the Comptroller's report (MG95-101A).

Update

These reports did not include agency comments. The Mayor's Office of Management and Budget (OMB) reported that the BOE is working on implementing the report recommendations. The Department of Transportation has already achieved annual savings of $24 million in City and State funds ($120 million projected over five years) by competitively bidding 120 pre-school transportation contracts. The additional savings from increased usage of itinerant services for pre-school children have yet to be realized.

The Comptroller's Office, along with Corporation Counsel and the Board of Education, drafted legislation relating to the evaluation and placement of pre-school children with disabilities. The legislation expanded the number of organizations that may provide evaluators of pre-school children, while work is continuing on the remaining legislation.

In his January 31, 1996 Financial Plan, the Mayor has included savings of $8 million in City funds for increasing the use of itinerant services to 19 percent.

• BOARD OF ELECTIONS (THE BOARD)
  

Introduction

This audit's objectives were to determine whetherall employees receiving paychecks were bona fide employees of the Board of Elections (the Board), to reviewinternal controlsover payroll-related processes, and to evaluate the Board's compliance with applicable rules and regulations in reference to employee annual/sick leave.

Results

There are internal control problems related to the payroll and timekeeping systems at the Board. It either failed to develop its own adequate written policies and procedures concerning payroll and timekeeping practices or failed to follow applicable City regulations and Comptroller's Directives.

Based on documents, additional testing, and our observation of the payroll distribution on November 19, 1993, 482 of the 498 individuals, who received payroll checks for the November 19, 1993 payroll, were bona-fide employees of the Board. We could not confirm that the remaining 16 temporary individuals were bona-fide employees (this does not necessarily mean that they were not bona- fide employees) for the following reasons:

The Board does not require written authorization for checks mailed or picked up by someone other than the employee.

The Board does not retain copies of the Paycheck Distribution Control Report which is signed when employees receive their checks.

The Board does not maintain adequate personnel records for all of its employees.

We also found payroll and personnel inconsistencies entered into the Payroll Management System (PMS) by the Board. Some employees were given accruals of annual or sick leave in excess of their standard monthly amount. Others were allowed to use time not accrued, resulting in large negative balances; some employees were allowed to accumulate an annual leave balance exceeding the maximum permitted by either the labor contract or Department of Personnel regulations, if applicable to the Board. When we asked the Board for documentation regardingthe determination of excess accruals, Board officials could not supply us with any; subsequently, the documentation supplied was insufficient to justify the accruals. Such problems cause concern over the validity of the employees' annual and sick leave balances appearing in the PMS.

In terms of monetary results, 204 Board employees had sick leave accruals exceeding their standard rate of accrual, for a total excess dollar value of $243,588, and 151 employees had annual leave accruals exceeding their standard rate of accrual, for a total excess dollar value of $162,740. In addition, 63 employees had annual leave balances over the maximum accumulation of 378 hours allowed by both the Department of Personnel (DOP) and the contract, for a total excess dollar value of $653,017.

Our review also identified two managerial employees who, at the time of their resignations, were not paid in a lump sum, as required by Comptroller's Directive #14. Instead, they remained on payroll until all of their leave time was paid out. These employees stated in their resignation letters that, even though their last day of work in the office was April 16, 1993, their resignations would be effective when all of their accrued leave had been used up. Consequently, one employee received a full paycheck for seven months and the other employee for 13 months. Neither of these employees worked during this time. They were paid $33,659 for sick leave and compensatory time beyond what they would have received had proper procedures been followed.

The Board does not follow appropriate procedures in relation to its workers' compensation cases. Employees were allowed to maintain large negative sick leave and annual leave balances instead of using them up before converting over to Option II of the Workers' Compensation stipulations, required by their contract. In addition, we found one instance where the Board failed to inform the Law Department that an employee returned to work which resulted in an overpayment of more than $12,000 to the employee. (At the time of our audit, the Law Department was aware that this employee had collected wages and workers' compensation simultaneously, and it was in the process of recovering the overpayment.)

In summary, the Board's internal controls over payroll are weak and insufficient. They do not provide reasonable assurance that payroll transactions are processed in accordance with Comptroller's Directives #1, #13, and #14.

The audit made 24 recommendations related to payroll and timekeeping procedures.

Update

The Board of Elections reported that it has implemented 14 recomendations. It did not address four of our recommendations, and either disagreed or partially disagreed, with the remaining six recommendations primarily because it insisted that it is not a City agency and, therefore, not subject to City rules and regulations.

• DEPARTMENT OF EMPLOYMENT (DOE)
  

Introduction

The audit's objective was to determine the effectiveness of the Department of Employment's (DOE) Adult Training Program in meeting its primary goals -- to place and to retain recipients of public assistance and other unemployed people in jobs after providing occupational skills training. The audit reviewed the program's efficacy and procedures in reference to PA recipients.

To accomplish the above objective, the auditors selected three samples for review:

a sample of PA recipients who did not complete the training program,

a sample of PA recipients who completed the training program, but were placed unsuccessfully in jobs;

a sample of PA recipients who were placed in jobs.

Results

Our audit found that:

Forty-four (44) percent of the program's participants dropped out before completing training; 44 percent of those did so for "invalid" reasons but did not incur any PA related sanctions.

Twenty-eight (28) percent of those program participants who completed the training did not show up for job interviews, or refused job offers, or did not show up for their job once they had been placed, for invalid reasons, but did not incur PA related sanctions. DOE did not inform HRA about these individuals because it does not have a procedure for doing so.

Contractors inaccurately report on the number of PA participants who are placed and retained in jobs. Of the 599 reported to have been placed in a job within 90 days of program termination, and to still be in a job on the 90th day following placement, 184 (31 percent) are projected, based on a sample, to have not been placed and/or retained.

Only half of the PA participants who were placed and retained in jobs came off the PA rolls. Twenty-one percent were removed but then returned to PA rolls within nine months of being placed. Twenty-nine percent were never removed at all and never had their PA benefits adjusted.

In terms of placing and retaining PA participants in jobs, the program has a 17 percent effectiveness rate for all program enrollees. If removal from PA rolls for any amount of time is added as an additional goal, the program's effectiveness is 12 percent. As a result, it costs about $21,000 to train, place, retain and remove from welfare, a program participant who is a PA recipient.

Update

In its most recent correspondence regarding the audit, the Department of Employment stated: "The attached report represents the status of the Department's implementation of [your audit's] thirteen recommendations . . . . In the eight months since the audit's publication, the Department of Employment has developed policies to implement the recommendations . . . [and] is implementing the recommendations fully or is completing the process of developing the systems, procedures, guidelines, instruments, etc. necessary for full implementation. Except where noted, all recommended actions will be fully in place by the end of fiscal year 1996."

Introduction

The audit's objective was to determine whether our most significant recommendations regarding youth inactivity at the work sites and regarding improper timekeeping procedures, identified in our 1993 audit of the Department of Employment's Summer Youth Employment Program, had been implemented in the 1994 program.

To accomplish this objective, the auditors performed unannounced visits at various worksites in order to observe work activity and to review time records.

The Summer Youth Employment Program (SYEP) is a Department of Employment (DOE) program geared toward economically-disadvantaged youths. SYEP administers this program through contractors, known as project sponsors, who recruit and monitor work-site sponsors. There were 52 project sponsors, roughly 3,200 work sponsors, and approximately 38,000 youths in the 1994 SYEP, which had a budget of nearly $35.7 million.

Results

Overall, we found significant improvement in the DOE's oversight of the 1994 SYEP. Project sponsors were more responsible in monitoring the work sites, resulting in fewer incidents of youth inactivity and improper timekeeping practices. However, room for improvement still exists.
For the five major recommendations made in the previous audit report, the DOE has made substantial progress in implementing two recommendations related to ensuring that project sponsors visit the work sites, and to conducting their own analysis of time records. The DOE has partially implemented the recommendations related to conducting monitoring visits on an unannounced basis. The DOE did not agree to implement the remaining two recommendations concerning the maintenance of logs at the work sites for project sponsors to sign when collecting time records and conducting monitoring visits.
In the follow-up audit report, there were eight recommendations made. The DOE was able to fully implement six of the eight recommendations, and one was partially implemented. The remaining recommendation is no longer applicable.

Update

The DOE agreed with seven out of eight recommendations and has implemented or partially implemented all seven recommendations made in the follow-up audit report. Recommendation number 4 is no longer applicable because the work sites cited in the audit report for youth inactivity were not used in the 1995 SYEP. Regarding the partially implemented recommendation, the DOE made approximately 2.82 visits per site in the 1995 SYEP work year. This falls slightly short of the recommended 3 visits per site but is still a significant increase over the previously reported figure.

• 
  DEPARTMENT OF ENVIRONMENTAL PROTECTION (DEP)
  

Introduction

The audit's objectives were to evaluate the efficiency and timeliness of the Department of Environmental Protection's (DEP) response to air pollution complaints, its monitoring of emission-producing equipment, and its enforcement of New York City's air pollution control code.

To accomplish the above objectives, the auditors reviewed a random sample of air pollution complaints received by the DEP to determine whether duplicate complaints were consolidated into one inspection and to determine the DEP's average complaint response time. The auditors also reviewed the enforcement action taken by DEP against a random sample of owners of emission-producing equipment, whose registration or certificate to operate had expired.

The DEP's Bureau of Air Policy and Programs, Division of Source Control and Enforcement, enforces the laws, codes, and regulations covering the use of equipment or devices that may pollute the air or create noise above acceptable levels, by investigating air and noise pollution complaints, inspecting emission-producing equipment, and issuing notices of violations.

Results

According to the audit, the DEP inspectors conducted unnecessary inspections (at a cost of $17,700). In addition, it took the DEP an average of 28 calendar days to respond to an air complaint, in excess of the DEP's goal of 20 calendar days. The audit also found that the DEP's Complaint Center operators did not always obtain sufficient supplementary complaint information to enable inspectors to make thorough inspections. When this supplementary information was obtained by the operators, inspectors did not always use it. Finally, the audit found that enforcement action was not taken on a consistent basis or within an established time frame against owners, who had not renewed their registrations or certificates to operate. As a result, owners continued to operate emission-producing equipment illegally and did not pay the applicable fees for a renewed registration or certificate to operate. We estimated that DEP has not collected $601,000 in fees.

The audit made 11 recommendations.

Update
The DEP has implemented seven recommendations, concerning the monitoring of air pollution complaints and inspections (one recommendation concerned the amount of time one of the employees spent on union matters). The DEP partially implemented three recommendations, which include identifying duplicate air complaints, establishing enforcement action procedures that would identify the time periods for initial and follow-up compliance inspections, and monitoring the status of equipment that appears on the Overdue Applicant Response Report. The DEP does not plan to re-assign inspectors from other enforcement squads to the compliance squads unless the compliance squads become overburdened.

Introduction

The audit's objective was to perform a follow-up review of the DEP's water main installation practices and to review the implementation status of the recommendations made in a 1990 Comptroller's report (EMA90-002-1). The earlier report highlighted the DEP's failure to enforce provisions of contracts with water main installation contractors.

To accomplish the above objectives, Comptroller's Office Engineers

checked on-going projects,

observed soil backfilling and pavement restoration operations,

reviewed the DEP inspectors'job monitoring practices, and

reviewed project records.

The DEP has an on-going water main installation program which not only replaces older, deteriorated mains but also extends mains into areas not adequately supplied. During the past five fiscal years (1990 - 1994), 286 miles of distribution mains, costing $221.3 million and 31 miles of the larger trunk mains costing $129.4 million, were installed.

Results

The audit found that the DEP had implemented only two of the 11 recommendations made in the previous report. Seven were only partially implemented, and two were not implemented at all. We found

pipe disinfection deficiencies that may put the health of those using water from the new mains at risk;

trench backfilling deficiencies that adversely affect the underground support of both the mains and the pavement above. In addition the DEP still has not proven that its water main disinfection method was capable of achieving the required disinfection intensity.

The report contains seven recommendations (some additional and some re-stated recommendations) to address the current problems:

The DEP should strictly enforce its contract specifications with special attention to pipe and pavement support;

The DEP should hire Professional Engineers and soil testing laboratories to oversee the backfilling operation rather than having contractors hire them;

The DEP should immediately implement our previous recommendation for formal training of its inspectors and construction managers hired to oversee the project.

Update

The DEP reported it has implemented two out of seven audit recommendations:

contract specifications were modified for consistency with State Department of Health standards for proper bedding of the pipe, proper compaction of all backfill for the entire depth of trenches, and for adequate pipe cleaning and disinfection;

specific deficiencies will be considered in the context of overall contract compliance and will receive appropriate weight during the contractor evaluation process.

The DEP anticipates implementing the remaining five recommendations by the end of fiscal year 1996.

• DEPARTMENT OF ENVIRONMENTAL PROTECTION (DEP)
  

Introduction

The New York City Department of Environmental Protection (DEP) operates and maintains the New York City water and sewer system. Since 1985, the City has leased the water and sewer system to the New York City Water Board (the Water Board), which established fees and charges. Out of the 807,000 water and sewer accounts, 562,000 are metered and charged according to water consumption. The remaining 245,000 accounts are charged a flat rate based on an established formula. Since April 1995, the DEP has been responsible for billing and collecting water and sewer fees. Prior to 1995, the Department of Finance billed customers based on data supplied by the DEP. Our audit focused on the Port Authority because of its size and the extent of its property ownership in the five boroughs.

Results

As of May 1, 1995, the Port Authority owed $15.4 million for water and sewer service that had not been billed from 1989-1994. 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 were billed but not collected. As of May 15, 1995, the Port Authority paid $11.2 million of these charges, and the DEP canceled $3.5 million in charges, thereby leaving $5.6 million still outstanding as of May 31, 1995. We recommended that the Water Board decrease its proposed May 1995 rate increase from 5 percent to 3.5 percent, but the Water Board disagreed and passed the full 5 percent increase. We also recommended various procedural changes to improve the billing and collection systems including an aggressive pursuit of the $5.6 million in outstanding charges.

Update

The DEP has implemented six of the nine audit recommendations:

the DEP will improve the account data in its Customer Information System (CIS)

the DEP has pursued aggressively the outstanding fees owed by the Port Authority. Since the the release of the audit, the Port Authority has paid $12,992,000;

the DEP, in conjunction with the Port Authority, will establish a process to resolve billing and meter issues in a timely fashion;

the DEP staff reads and bills the meters at JFK and LaGuardia airports quarterly;

the DEP uses the CIS for documenting and tracking its attempt to resolve non-routine, significant problems with customers. It also plans to review other case management and tracking software; and

the DEP has billed the Port Authority for the 46 un-billed accounts. These accounts will be scheduled for quarterly reading and billing.

The DEP cannot increase its workload of billing customers bi-monthly instead of quarterly, and any staff increases must be presented as part of the Executive Budget Submission process.

Introduction

The audit's objective was to evaluate the Department of Environmental Protection's (DEP) effectiveness in upgrading the six City-owned sewage treatment plants in the Catskill and Delaware watersheds, pursuant to a "determination" of the Federal Environmental Protection Agency (EPA).

To accomplish the above objective, the auditors reviewed agency records and interviewed appropriate personnel.

Results

We were pleased to find that the DEP

has developed a plan to upgrade the six sewage treatment plants;

has established a "suitable project team" to effectively manage and oversee its plan; and

has selected its consulting firms for this project in accordance with the Procurement Policy Board Rules.

However, we also found that

The DEP lacked a formal procedure for informing senior management about progress made in upgrading the sewage treatment plants.

The DEP unit, responsible for monitoring the upgrade of the sewage treatment plants, lacks procedures to perform this function; the sewage treatment plant upgrade program is, therefore, behind schedule.

The DEP does not have EPA approval for the delays.

We recommended that the DEP's newly-developed formal procedure inform senior management about the project's progress. The DEP should seek approval from the EPA at the start of construction delays since three have already occurred at six sewage-treatment plants, as well as potential delays that -- based on the DEP's current progress -- are likely to occur at the other three plants in the ensuing months. In addition, we made recommendations to improve the effectiveness of the DEP's Strategic Planning and Development Unit, which is responsible for the independent monitoring of the project's progress.

Update

The DEP reported that it implemented five of the seven audit recommendations. As of November 1, 1994, the DEP Commissioner established a formal procedure of bi-weekly meetings attended by upper management and staff to discuss the progress of the watershed filtration avoidance deliverables. The DEP Strategic Planning and Development Unit is developing critical project elements and time frames between "begin construction" and "complete construction." This will be done in conjunction with the Critical Path Method submitted by the contractor. The DEP database was programmed to accept the critical project elements. The DEP has established a tickler file to keep the staff informed of critical elements throughout the course of the project. Two other recommendations, concerning developing critical timeframes for beginning and completing construction for all six sewage plants, will be completed by October 1996.

• 
  DEPARTMENT OF FINANCE(DOF)
  

Introduction

The NYC Department of Finance (DOF) identifies and collects outstanding amounts owed by tax delinquents. Once the DOF identifies a tax debt, its billing units initially attempt to collect the money by sending a series of three or four billing notices. If the tax liability remains uncollected after 90 days, the DOF's Billing Collection Unit (BCU) issues a warrant, directing a DOF officer or employee, or the Sheriff of any county of the state, to levy upon and sell the debtor's real and personal property for the payment of the amount assessed. Uncollected warrants are subsequently forwarded to the Field Collections Unit. The BCU's Quality Control Unit is responsible for expediting the time it takes to review a warrant for errors. Four previous audits conducted by our office found problems with the Business and Field Collections Units, which inhibited the DOF's ability to collect on tax warrants.

Results

Although the DOF's management of its delinquent-tax collection program includes several components of good program management, the DOF's management neither sufficiently assesses BCU's performance nor reports important information about that performance to elected officials and to the public in the Mayor's Management Report. As a result, neither DOF management nor elected officials and the public know how well BCU is performing. Our seven recommendations to the DOF include the following:

develop better performance measurements,

calculate historical trends for BCU's operations and use these to improve tax warrant collections,

enhance the information reported in the Mayor's Management Report.

Update

The DOF reported that it has implemented the following four audit recommendations:

The DOF has consolidated the Field Collection Unit and the Parking Summons Collections Unit into BCU, thus improving BCU's collection ability.

The DOF has completed its comparison of trends and variance analyses to the results of other entities performing similar functions. According to the DOF, the comparison indicated that it had successfully employed its collection strategy.

The DOF is working with the Mayor's Office of Operations to determine the appropriate indicators for the MMR.

The DOF currently provides explanations for unusual performance -- internally and externally -- through oversight agencies.

The remaining three audit recommendations are being implemented.

Introduction

This audit's objectives were to review the development and implementation of the Department of Finance's (DOF) computerized FAIRTAX tax and revenue collection system. We focused on the system certification and internal project controls required by DOF management. FAIRTAX replaced 40 major computerized systems and approximately 1,400 software programs previously used to process revenue collection information.

To meet our objectives, we interviewed DOF managers representatives from the Mayor's Office of Management and Budget (OMB), the Mayor's Office of Operations, and the Comptroller's Office of Contract Administration to determine whether all performance-related matters were addressed. We reviewed the original FAIRTAX system architecture, DOF contracts with Andersen Consulting, Deloitte & Touche, and IBM as well as amendments to gain an understanding of what the original contracts entailed.

We sampled 16 DOF payment voucher packages out of 141 voucher packages (totalling $35.3 million) containing 77 invoices totaling $4.5 million. We evaluated these expenditures in accordance with Comptroller's Directive #24, "Purchasing Function - Internal Controls." We also reviewed the expenditures reported in IFMS for contracts related to FAIRTAX development through May 1995.

In addition, we assessed DOF's compliance with KPMG Peat Marwick's 1989 management letter recommendations pertaining to FAIRTAX by first reviewing the SDLC employed by Andersen Consulting. Then, we examined the effectiveness of the Project's Quality Assurance (QA) function

by reviewing the Deloitte & Touche QA contract and all amendments;

by interviewing Deloitte & Touche personnel concerning their role in providing quality assurance for the FAIRTAX development project;

by obtaining and reviewing the Quality Assurance Plan and all QA work performed by Deloitte & Touche through 1991.

Results

DOF management failed to meet all of its responsibilities in planning and controlling the project and delivering the FAIRTAX system and its intended benefits on a timely basis and within reasonable costs. This is illustrated by the major completion delays and cost overruns identified by our audit. Although the DOF initially estimated that FAIRTAX would be 100 percent functional in 1992 at a cost of $22.6 million, by May 15, 1995, the DOF had converted only 55 percent of the total number of taxes scheduled for processing by FAIRTAX. These converted taxes represent 93 percent of the total fiscal year 1994 tax revenue. To reach this point in FAIRTAX'S development, the DOF spent an estimated $144.6 million, including $49.4 million for the purchase of computer and telecommunications hardware, $36.7 million for system development and quality assurance contracts, and an estimated personnel cost of $58.5 million for on-going direct City labor cost. The project's cost will reach $159.8 million before its completion. These increases were not the result of major changes in the project's scope.

Additionally, the Andersen Consulting contract states that the City will receive royalties if Andersen Consulting either sells or transfers any of the Fairtax subsystems to other
jurisdictions. We found that Andersen Consulting owes the City $960,000 for modules of the Fairtax subsystems sold to other municipalities.

The audit gave 13 recommendations to address the above weaknesses.

Update

The DOF has implemented three of the 13 audit recommendations:

FAIRTAX's development was completed on May 15, 1995. All seven sub-systems, as defined in the contract, have been installed;

DOF has received $691,000 out of $960,000 in royalties to date from Andersen Consulting;

DOF has established procedures for reporting the value of credits associated with the Andersen Consulting contract to the City.

The DOF plans to implement three other recommendations concerning the addition of taxes to the existing sub-system (e.g., Utility Tax), performing a series of post-implementation internal control reviews for all taxes implemented, and conducting complete reviews of FAIRTAX acceptance and disbursements. Six recommendations no longer apply because the FAIRTAX development cycle was completed; one recommendation is in violation of the retainage provisions contained in Section 106 of the General Municipal Law.

• FIRE DEPARTMENT (FD)
  

Introduction

The Fire Department's (FD) Bureau of Fire Prevention (the Bureau) operates a large-scale inspection and public certification program based upon a system of regulations and legislation designed to reduce the loss of life and property due to fire. The Bureau, consisting of 14 District Offices and 10 Headquarter inspection units, performed 423,506 inspections and collected $51 million in inspection fees in 1993 and 1994.

Results

The Bureau's District Offices and the Headquarters' High-Rise and Motor Fuel Safety Units forfeited an estimated $3.9 million in revenue by not performing an estimated 21,123 annual, biennial, and 10-year inspections from 1984 to 1993. The Bureau could increase inspection fee revenue by an estimated $3.4 million yearly without additional staff or cost. Bureau inspections were not performed because the District Offices did not automatically generate inspection orders and rarely re-visited "No Access" sites. The High Rise Unit's office building records are not systemically updated, and the Motor Fuel Safety Unit does not maintain a database of accounts. The FD reported the number of inspections performed in the Mayor's Management Report incorrectly. We recommended the following:

Modification of the Bureau's computer database (FPIMS) for District Office inspection orders, which would also generate orders for the Motor Fuel Safety Unit.

Inclusion of completed inspections performed by the Bureau.

Tracking of "No Access" accounts by the District Offices and then scheduling inspections in advance more effectively.

Consolidation of inspection duties by the District Offices and the Motor Fuel Safety Unit.

Update

The Fire Department reported that it agrees with and has implemented or is in the process of implementing six of the nine recommendations. It did not agree with three receommendations and does not intend to implement them. These three recommendations concern the scheduling of fire inspections in advance, the practicality of consolidating the inspections duties of the Motor Fuel Safey Unit into the District Offices, and the including of only completed inspections in its measurements of inspections performed. The Fire Department stated that the scheduling of inspections in advance would create a negative effect on safety -- forcing high hazard accounts to wait for an inspection to be scheduled. The Motor Fuel Safety Unit has now been merged with the Bulk Oil Unit -- the FD may consolidate this new unit with the District Offices in the future if it is deemed advantageous. Lastly, the FD believes it more accurately protrays the use of its inspectional staff by including inspection stops as well as inspections performed in its statistics.

Introduction

The audit's objective was to evaluate the effectiveness of the New York City Fire Department's (FD), Bureau of Information and Computer Services' (BICS) data center in the areas of data and physical security, program change control, computer operations, and backup/contingency planning.

The auditors interviewed BICS senior management, toured the data center, observed operations, and reviewed the documentation provided. We also tested FD's compliance with Comptroller's Directive #18, Mayor's Directive #81-2, the NYC Department of Investigation's System Security Standards for Electronic Data Processing, and the NYC Data Processing Standards.

The BICS data center supports multiple applications, the most significant -- STARFIRE system -- dispatches FDNY uniformed resources to fires and other emergencies and generates management data.

Results

The audit found that the BICS' management has not implemented a Data Security Plan or policies for the protection of its data and/or sensitive information. The audit disclosed numerous physical security and access control problems including the lack of protection for hardware (computers) from damage or destruction and data corruption. The BICS' quality control procedures do not protect data adequately from inadvertent or intentional destruction or modification. The quality control function is not used by the specialized programming personnel who maintain the STARFIRE system. The BICS has no computerized back-up facility (essential for the STARFIRE system dispatch response time) to resume automated operations quickly. A written disaster recovery plan was never approved, implemented, or tested to ensure that the BICS data center could resume operation quickly in case of an emergency. The data center does not have a tape librarian, adequate physical security in the tape library, or procedures to protect the tapes stored in the library from improper use.

The FD agreed with 18 of our recommendations and disagreed with the remaining four recommendations regarding the STARFIRE system.

Update

The FD has not provided follow-up information.

Introduction

The Fire Department's (FD) Bureau of Fire Prevention's (the Bureau) Explosives Unit monitors the transportation and storage of explosives in the City; inspects construction sites where explosives are used; and monitors explosive materials used for entertainment purposes (movies, television, and theater). The Administrative Code dictates that blasting and explosive inspections must be billed at the rate of $210 per hour, per inspector. Instead of following the Administrative Code, the Bureau of Fire Prevention's Explosives Unit established its own policy defining when, where and how much to charge.

Results

For fiscal years 1993 and 1994, the Explosives Unit spent 5,858 hours on inspections and billed the inspected companies $292,740 in fees instead of $1,232,280. This difference exists because the BFP did not bill at the rate of $210 per hour, per inspector, and did not bill for all inspection activities. According to BFP officials, "BFP Fee Policy Guidelines are ambiguous, and they can be misconstrued." If the Fire Department had billed for its inspections in accordance with the Administrative Code, then the Explosives Unit would have generated approximately $470,000 more in revenues for the City annually.

The Explosives Unit should start billing at the Administrative Code rate or else initiate legislation in the City Council to change the Administrative Code rate. In addition, the BFP should update its policy and strictly define how fees should be charged at all times.

Update

The Fire Department reported that it agrees with and has implemented one of the three recommendations by rewriting the fee guidelines to define them clearly. The FD still maintains that the Administrative Code gives the Fire Commissioner the power to modify the Code, and therefore does not plan to implement the two other recommendations -- billing for its inspection hours in accordance with the fee schedule in the code, and intiating legislation in the City Council to change the fee schedule in the Administrative Code.

Introduction

The Fire Department's (FD) Bureau of Fire Prevention (BFP) administers inspection programs governed by the City's Administrative Fire Prevention Code (the Code). The Code dictates fees charged for permit-related and service-related inspections, and the circumstances permitting fee waivers. The Code also specifies the type of inspections the BFP performs -- buildings with sprinkler and/or standpipe fire suppression must be inspected once every five years. If a condition violates City rules, property owners receive a Notice of Violation.

Results

The Bureau of Fire Prevention waived approximately $1 million yearly in service-related inspection fees for not-for-profit organizations based upon a Fire Department's General Counsel legal opinion. We believe that the FD cannot legally waive inspection fees for not-for-profit organizations. We do not necessarily disagree with the FD's position; however, if the City believes that not-for profit organization waivers are justified, then the Code should be amended to provide exemption for not-for-profit organizations.

The BFP's Fire Suppression Systems Unit issued Notices of Violations (NOVs) to property owners with sprinkler and standpipe systems before the end of the five year period to induce property owners to schedule required tests. If the property owner scheduled a test within 35 days, BFP "cured" the NOV, effectively crediting itself with a resolved violation. This type of use of NOVs by the Fire Suppression Systems Unit as a means of inducing compliance with the Fire Prevention Code appears to be inappropriate because no violation of the law exists at the time the NOV is issued. As a result, property owners received fines that they should not have gotten.

We recommend that the Unit stop issuing Notices of Violations prior to the five year period; instead it should mail notice cards to property owners asking them to schedule the appropriate inspections.

Update

The Fire Department reported that it agrees with and intends to implement all of our recommendations.

• DEPARTMENT OF GENERAL SERVICES (DGS)
  

Introduction

The Division of Real Services (DRES), of the New York City Department of General Services (DGS), manages commercial buildings and vacant lots acquired by the City through real estate foreclosure and condemnation.

The first part of this report is a follow-up review designed to determine whether the DGS has implemented the six major recommendations made in our previous report entitled, "New York City Department of General Services' Procedures for Collecting Rent Arrears from Former Tenants of City-Owned Properties," (ME90-109, issued July 25, 1990). In this report, we discussed the previous report's six major recommendations, in detail, as well as the current implementation status of each recommendation.

The second part of this report focuses on new issues not part of the original audit. Since the completion of the previous audit, DGS' "active" rent arrears are now more than four times as great--from $5.2 million in fiscal year 1989 to $22.2 million in fiscal year 1993. Furthermore, during this same period, total rent arrears more than doubled--rising from $13.1 million to $31.2 million. Total arrears include "active" arrears (the debtor still occupies the premises) and "terminated" arrears (the debtor no longer occupies the premises).

Our previous audit had found that the DGS failed to check tenants' credit-worthiness before approving new leases and failed to initiate eviction proceedings quickly. In addition, the previous audit identified delays in beginning in-house collection activities and in referring accounts to DGS' collection agency.

Results

Many of the problems cited in the previous report still exist because the DGS has only partially implemented the earlier six major recommendations.

The DGS' Division of Real Estate Services (DRES) has established written procedures for tracking accounts, and preparing three-day rent demand notices and for tracking notice expiration dates, and preparing court petitions. However, these written procedures did not include time limits for the transmission of the above-mentioned documents. Written procedures were not distributed to all the Lease Enforcement staff.

The 27 largest active and deferred accounts, representing 22 tenancies and totalling approximately $20.5 million, did not always include copies of the notices, and files did not include proof that a notice had ever been issued. A review of case files that had notices revealed that they were issued months past DRES' own time frame. Quinn Restaurant, for example, did not receive a Notice of Default until approximately three years after it had defaulted on the rent. Some reasons may be the DGS' computer system, which does not automatically generate notices, and its computerized tracking system, which does not have some of the dates indicating when notices were mailed out.

The DRES' procedure manual does not include time limits for collection of defaulted payments, which increases the large dollar amount. In many instances, the DGS enters into "pay-out agreements", either by cancelling rent due or by delaying payment of the rent arrears. Consequently, the City loses income from the property because other would-be tenants cannot rent the property until the non-paying tenant is evicted. An example is Enzo Biochem Inc. which stopped paying rent in March 1991, but an agreement signed on October 30, 1992, deferred the rent owed until the year 2001. Despite this agreement, Enzo Biochem Inc. stopped making rent payments for the current period.

The follow-up audit made 16 recommendations to address the problems noted above.

Update

DGS has implemented 12 recommendations and plans to implement two other recommendations. DGS disagreed with and will not implement two recommendations involving the improvement of computerized-tracking reports and Comptroller's Office approval for all future settlements. DGS stated that its tracking reports are adequate; however, we still feel that DGS should incorporate the additional dates we recommended in our audit report. This additional information would help the DGS pursue collections in a more timely manner. The Department stated that any agreements that neither waive rent nor have an appropriate interest rate do not require Comptroller's approval. The Law Department concurs with their interpretation. We disagree and will ask our legal counsel to obtain further information from the Law Department. During our audit, we found an agreement without the Comptroller's approval or the appropriate interest rate because it was below the City's own borrowing rate.

• HEALTH AND HOSPITALS CORPORATION (HHC)
  

Introduction

The contract between the Health and Hospitals Corporation (HHC) and Mount Sinai School of Medicine requires the school to provide physicians and supporting medical services to patients in City Hospital Center in Elmhurst.

The objectives of this audit were to determine whether:

Mount Sinai School of Medicine is complying with contractual provisions and performance indicators specified in its affiliation contract with City Hospital Center at Elmhurst

Elmhurst Hospital is adequately measuring and monitoring Mount Sinai School of Medicine's compliance with contract provisions.

To accomplish the above objectives, the auditors interviewed Mount Sinai School of Medicine and Elmhurst Hospital personnel working in diverse capacities in various departments, including finance, radiology, and medical records. We reviewed Elmhurst Hospital's report of Mount Sinai's performance indicators for fiscal year 1994 and selected certain indicators to perform specific tests. We also evaluated contractual compliance regarding sign-off on medical records, x-ray reviews, procurement procedures, timekeeping procedures, and physicians' credentials.

In addition, we reviewed Elmhurst Hospital's floor check reports and conducted our own unannounced floor checks of 11 services.

Results

We found a lack of compliance with some contract provisions on the part of Mount Sinai and its physicians as well as a lack of monitoring of Mount Sinai by Elmhurst Hospital personnel, as follows:

Elmhurst Hospital's Executive Director did not require Mount Sinai to be fully accountable for its performance at Elmhurst;

Mount Sinai's and Elmhurst's internal auditors did not monitor the work hours of resident physicians to ensure that they were not working more hours than allowed by New York State regulations;

Mount Sinai did not have a formal tracking system for emergency x-ray re-reads;

Affiliated physicians, do not sign off on medical records within 30 days;

Affiliated personnel were accounted for during our unannounced floor checks but did not always follow contractually-required timekeeping procedures.

The audit made five recommendations to address the above weaknesses.

Update

The HHC and Elmhurst Hospital agreed with the audit recommendations. They claim that they have various mechanisms in place for all performance indicators. The HHC stated that a new Radiology Information System (RIS) logs all x-ray re-reads to indicate that they were verified within 24 hours. However, the auditors feel that this RIS cannot be relied upon because the original x-ray readings are erased sometimes by follow-up readings. Elmhurst Hospital currently does two unannounced floor checks per month. It will expand its floor checks to off-hours and non-physician personnel. Elmhurst Hospital will monitor the working hours of all resident physicians.

Monetary Effect: Not Applicable

The contract between the Health and Hospitals Corporation (HHC) and Mount Sinai School of Medicine calls for the school to provide physicians and supporting medical services to patients in Queens Hospital.

The objectives of this audit were to determine whether

Mount Sinai School of Medicine is complying with contractual provisions and performance indicators specified in its affiliation contract with Queens Hospital.
Queens Hospital is adequately measuring and monitoring Mount Sinai School of Medicine's compliance with contract provisions.

To accomplish the above objectives, the auditors interviewed Mount Sinai School of Medicine and Queens Hospital personnel working in diverse capacities in various departments, including finance, radiology, and medical records. We reviewed Queens Hospital's report of Mount Sinai's performance indicators for fiscal year 1994 and selected certain indicators to perform specific tests. We also evaluated contractual compliance regarding sign-off on medical records, x-ray reviews, procurement procedures, timekeeping procedures, and physician credentials.

In addition, we reviewed Queens Hospital's floor check reports and conducted our own unannounced floor checks of seven service areas and evening floor checks of five areas.

Results

We found a lack of compliance with some contract provisions on the part of Mount Sinai and its physicians as well as a lack of monitoring of Mount Sinai by Queens Hospital personnel, as follows:

Queens Hospital's Executive Director did not require Mount Sinai to be fully accountable for its performance at Queens Hospital;

Mount Sinai's and Queens' internal auditors did not monitor the work hours of resident physicians to assure that residents adhered to New York State regulations regarding work hours;

Queens Hospital did not conduct an adequate number of floor checks of affiliate personnel;

Affiliated personnel did not always follow contractual timekeeping procedures, and some physicians could not be located during unannounced floor checks;

Affiliated physicians did not sign off on medical records within the required time period;

X-rays for emergencies were not always re-read by an attending physician within 24 hours.

The audit made seven recommendations to address the above weaknesses.

Update

The HHC responded in May 1995 that it already had processes in place that covered the recommendations' intent at the time of the audit. In November 1995, it stated that it had implemented recommendation number three by establishing guidelines for acceptable corroborating evidence, which Mount Sinai should provide when a physician is unaccounted for during a floor check. These guidelines, implemented by the HHC, account for a physician's absence during a floor check. The following procedures are now in place:

A physician's leave time balance must be charged as unaccounted time.

A physician, attending a meeting during the floor check, must submit proof of attendance.

• DEPARTMENT OF HEALTH (DOH)
  

Introduction

This follow-up review determined whether the Department of Health (DOH) had implemented 11 recommendations made in our earlier audit of its Bureau of Day Care's (BODC) monitoring of centers, inspection practices, and processing of complaints and related matters.

To accomplish the above objective, the auditors interviewed appropriate agency personnel and reviewed documentation provided by the Department of Health and the Audit Coordination and Review Unit (ACRU) of the Office of Management and Budget (OMB).

Results

The DOH has implemented five of the eleven recommendations made in the previous report, partially implemented two, is unable to implement one due to budgetary and legislative obstacles, and has not implemented three recommendations. The three recommendations that the DOH has not implemented involved the thoroughness and frequency of inspections, the identification of hazardous conditions, and the development of inspection standards. This follow-up report repeated the earlier three recommendations.

Update

The Mayor's Office of Management and Budget (OMB) reported that the DOH has implemented the recommendation concerning the Senior Sanitarian's unannounced field visits and reviews of the sanitarians' daily time reports. The DOH partially implemented the recommendation requiring sanitarians to call their borough office at the start and end of each inspection (the sanitarians now call their borough offices at the beginning and end of each day). The DOH does not have enough staff to answer telephone calls from sanitarians at the end of each inspection. Moreover, the DOH still disagrees with the recommendation concerning complete inspections, performed by sanitarians, at each visit, including re-inspection visits. Instead, they perform initial inspections and only re-inspections of outstanding violations.

• DEPARTMENT OF HEALTH (DOH)
  

Introduction

The Department of Health's (DOH) Division of Vital Records registers births and deaths, issues birth and death certificates as well as permits for burial, cremation, and disinterment. In fiscal year 1994, the Division of Vital Records collected $1 million in revenue from the issuance of birth and death certificates.

The objective of this audit was to determine whether the DOH's Division of Vital Records was in compliance with Comptroller's Directive #11, requiring cash to be deposited on the same business day as received, and storing cash overnight in a safe if not deposited that day.

To accomplish the above objective, the auditors observed the processing of mail requests for birth and death certificates, and interviewed appropriate personnel.

Results

The audit found a significant backlog of unprocessed mail requests for birth and death certificates along with the requests' accompanying undeposited checks and money orders. As a result, checks were not being deposited on a timely basis were, therefore, subject to loss or misappropriation since they were stored in boxes on the desks or floor in the work area of the Division of Vital Records.

The audit made nine recommendations to address the above weaknesses.

Update

The Mayor's Office of Management and Budget reported that the DOH has implemented the following recommendations:

The DOH stores all checks and unopened mail in a safe and secure area;

The DOH staggers day shifts to allow several employees to work on backlogged mail during early morning hours and after cashiers close to the public; and

The DOH uses overtime to clear the backlog.

The DOH's implementation of the second and third recommendations, noted above, eliminates the necessity to implement three of the other recommendations.

The DOH plans to maintain a log of incoming checks and money orders by proposing the design and installation of an integrated mainframe-based cash-management system. The DOH is unable to implement the remaining two recommendations concerning daily checks and money order deposits because it does not have enough staff to do so.

Introduction

The Department of Health's (DOH) Division of Vital Records registers births and deaths, issues birth and death certificates as well as permits for burial, cremation, and disinterment. In fiscal year 1994, the Division of Vital Records collected $1 million in revenue from the issuance of birth and death certificates.

The objective of this audit was to determine whether DOH's Division of Vital Records is in compliance with Comptroller's Directive #11.

To accomplish the above objective, the auditors attempted to match the total daily receipts recorded on the cash register tapes to the cash receipt journal, and to the bank deposit slips and bank statements for a selected sample of days. They also conducted a surprise cash count of the cash collected, compared the total number of birth and death certificates issued to the accompanying reports, and calculated the length of time to transfer revenue into the City's Treasury Collection Account.
Results

The audit found numerous internal control weaknesses. At the Cashier's Unit, the DOH was unable to reconcile the cash collected to all the certificates issued; errors keyed in on the cash registers could not be verified for authenticity or for intentional coverup of cash shortages. An antiquated cashiering system easily allows cashiers to pocket cash collected at the windows and to replace it with checks received by mail. At the Burial Desk Unit, a lack of segregation of duties and inadequate supervision of work performed could lead to abuse and misappropriation of funds. At the Fiscal Management Revenue Unit, a delay of transferring revenue to the City Treasury Collection Account resulted in lost interest ($2,500).

The audit made seven recommendations in order to address the above weaknesses.

Update

The DOH reported that it has implemented five of the seven audit recommendations:

The Cashiering Unit Supervisor initials the cash register tapes after reviewing errors.

The DOH has assigned the daily reconciliation task of the Burial Desk Document Logs to the Burial Desk supervisor.

The Cashiering and Burial Desk Units have established organized systems for maintaining and filing records.

The Cashiering Unit Supervisor now cuts off the raised seal of voided certificates and attaches the voided certificates to the daily summary forms.

The DOH closed its miscellaneous revenue account on August 15, 1995.

The DOH plans to implement the remaining two recommendations concerning re-engineering its entire Cashiering Unit, Burial Desk Unit, and Vault Unit while fully implementing a new hospital-based Electronic Birth Certificate system for electronic entry of birth certificate information by January 1997.

Introduction

The Department of Health's (DOH) Division of Vital Records (VitalChek) registers births and deaths, issues birth and death certificates as well as permits for burial, cremation, and disinterment. Applicants for birth and/or death certificates can pay by credit card for certified copies through a firm called VitalChek. VitalChek processes copies of certicates for applicants in person, by mail, telephone, and/or by facsmile transmittal for a fee of $15.00 per copy. In fiscal year 1994, the Division of Vital Records collected $1 million in revenue from the issuance of birth and death certificates.

The objective of this audit was to determine whether DOH's arrangement with VitalChek was proper.

To accomplish the above objective, the auditors observed DOH operators working in the credit card unit, processing telephone requests for birth and death certificates. They also interviewed the President of VitalChek, surveyed other cities which have business arrangements with VitalChek, performed a telephone survey of consumers, who use their credit cards to order certificates, and consulted with the Comptroller's Office of General Counsel.

Results

The audit resulted in a number of findings:

there were questionable procurement practices;

there was a failure of VitalChek to file New York City General Corporation Tax Returns and New York State Corporate Tax Returns;

credit card users got better service than mail users, whose requests remain unprocessed;

there was a $5 fee charged by VitalChek, which is excessive, and possibly in violation of the City Charter, DOH Regulations, and NYS General Business Law.

Update

The DOH implemented all of the follow-up audit report recommendations. It terminated immediately its relationship with VitalChek, referred the Comptroller's audit report to the Department of Investigation's Inspector General Office, contacted the Department of Finance to recoup any taxes due from VitalChek, re-organized the DOH Mail Unit, and determined that it can and will continue to accept credit cards payments. According to the Mayor's Office of Management and Budget (OMB), the DOH agreed that it should not conduct business with a company that is negligent in paying NYC taxes. However, the DOH did re-establish its relationship with VitalChek after the firm paid taxes due to the Department of Finance.

• HOUSING AUTHORITY (NYCHA)
  

Introduction

The audit's objective was to review the effectiveness of the New York City Housing Authority (NYCHA) data center management's control of physical security, backup/contingency planning, program change control, and computer operations.

The NYCHA is responsible for building, operating, and maintaining housing for low-income New Yorkers. NYCHA also operates senior centers, community centers, programs for youth, and centers for tenants with special needs. The Systems and Computer Services Department of NYCHA is responsible for the planning, development, operations, and maintenance of all computer systems within NYCHA's network.

Our fieldwork covered the period of September 1994 through January 1995. In order to review the effectiveness of the NYCHA data center, we:

interviewed NYCHA computer operations staff, support services staff, technical support staff, computer security staff, planning and engineering staff, and special projects staff

reviewed NYCHA's procedures for those centers under review performed a walk through of the facilities at 250 Broadway, 123 William Street, and 75 Park Place

tested NYCHA's compliance to the data center standards set forth by management and

reviewed physical and access security of selected AS/400s located throughout the City.

Results

We concluded that physical security and access controls within NYCHA's Data Center are not adequately controlled since the front area of the Data Center is not monitored, and cardkey access to the Data Center is active 24 hours a day.

We also found that:

the security privilege levels of the TOP SECRET security package are not set to the highest level;

the user departments do not review access violations reports;

the access security control for the AS/400 and UNIX environment is not adequate;

there is no Computer Security Standards User's Guide for the AS/400 and UNIX environments;

there is no alternate power backup in NYCHA's current Data Center;

the preventive maintenance of computer equipment is not logged;

the tape files and documentation controls need improvement; and,

the inventory control of computer equipment needs improvement.

We reviewed the physical and access security of 25 selected AS/400s located throughout the City and noted that the physical security was weak and that the AS/400s are underutilized.

During the course of the audit, NYCHA entered into an off-site business recovery contract; created an independent Quality Assurance (QA) library and changed its job documentation standards to correct the discrepancies that we identified.

Update

The NYCHA agreed with most of the 21 audit recommendations and is in the process of reviewing how to implement them. Ten of the 21 recommendations have already been implemented. The NYCHA disagreed with the recommendation to install an alarm system for the AS/400s computer system because it would be too costly. The NYCHA prefers to replace lost equipment in this case. It also disagreed with the installation of an uninterrupted power supply for the AS/400s local computers because they are not considered essential to the NYCHA's operation.

• DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT (HPD)
  

Introduction

The audit's objective was to review certain aspects of the Department of Housing Preservation and Development's (HPD) procurements of small-dollar (less than $15,000) repair and maintenance services for In-Rem properties.

Results

The audit found that:

HPD does not promptly correct hazardous conditions in HPD-managed properties;

HPD does not routinely complete the Mayor's Office of Contracts' Form 5 (Report of Unsatisfactory Vendor Performance) when vendors perform unsatisfactorily; and

HPD does not complete and maintain fully the required documentation for open-market order awards.

HPD "strongly disagreed" with the audit's main finding that it does not promptly correct hazardous conditions in City-managed buildings.

Update

The Department of Housing Preservation and Development generally agreed with the three audit recommendations. The Agency has implemented a tracking system on a test basis, to document the gravity of reported conditions at HPD-managed properties and its timeliness in correcting these conditions. This system will be fully operational upon completion of modifications identified during the test phase. The Agency has instructed its staff to use a special form (Form 5) for reporting unsatisfactory vendor performance. Finally, it has reiterated the importance of obtaining formal bids and the completion of Open Market Order forms and Invitation to Bid Quotation sheets to its staff.

Introduction

The audit's objective was to determine whether the Department of Housing Preservation and Development (HPD) effectively enforces the Housing Maintenance Code. The Deparment's housing inspectors visit privately-owned buildings to investigate tenant complaints. If they find conditions that violate the Housing Code, they issue Notices of Violations (NOVs) to owners.

We examined performance indicators used by HPD management and records of inspections on HPD's violations database. We also surveyed nine U.S. cities for a comparison of their performance with HPD's. Because HPD does not monitor or measure its effectiveness in terms of the correction rate of violations, we tested a statistical sample of violations issued by HPD for immmediately-hazardous conditions, excluding violations for lack of heat and hot water. The violations were in the HPD violations database since July 1994.

Results
The Department does not know whether it is effectively enforcing the Housing Code. It measures code-enforcement activities--the number of inspections performed, the number of violations issued and removed, etc. However, HPD does not measure its effectiveness--whether the violations identified are ultimately corrected. The audit found that violations were erroneously removed from HPD's database even though they were not corrected while those violations that were corrected are still listed on the database. In addition, the auditors examined the violations history of three buildings with hundreds of violations and found that inspectors identified the same conditions repeatedly and issued multiple NOVs for the same uncorrected conditions.

According to the audit, 43 percent of the most hazardous violations, issued by HPD in fiscal year 1994, were still listed on its database for fiscal year 1995. They were not corrected one year after being identified by HPD inspectors. According to the Housing Code, these violations should have been corrected within 24 hours. In comparison to other cities that were surveyed during the audit, the NYC HPD has the lowest violation correction rate -- 57 percent versus rates in the range of 85 percent to 95 percent for the four other cities.

Update
The HPD agreed with all six recommendations. It has taken the necessary steps to implement them. The Department of Housing Preservation and Development has included performance indicators in the 1996 Mayor's Management Report showing the landlords' emergency repair records. The HPD will distribute pamphlets to tenants who wish access to the Housing Court if their landlords fail to correct violations cited by the HPD inspectors.

Introduction

The audit's ojective was to evaluate the accuracy of foster care children's address files contained in the Child Care Review Service (CCRS) database. This database is maintained by the Human Resources Administration's (HRA) Child Welfare Administration (CWA). We also evaluated HRA's efforts to comply with reimbursement claiming guidelines issued by the New York State Department of Social Services (DSS).

In order to evaluate the accuracy of CWA-maintained address files in CCRS, we tested the records for children in foster care as of September 30, 1992. Our review included computerized and manual records maintained by both CWA and voluntary child care agencies, tapes/diskettes of computerized information from CCRS, as well as the Placement Support System, and Automated Payment System databases.

In order to evaluate HRA's compliance with the DSS' guidelines regarding the submission of claims for reimbursement (the large number of deferred reimbursements by the DSS prompted this review), we reviewed the audit letters for Federal non-participation expenses issued by the DSS' Quality Assurance and Audit group from July 1991 - December 1992.

Results

A significant number of records in the CCRS database reflects inaccurate information, including out-of-date or inaccurate addresses, which affects CWA's ability to locate children quickly. Based on our research, the following conditions relate to the 50,702 children in the CCRS database:

84 children may never have been recorded at all, and 4,422 of the 32,530 children in homes supervised by voluntary agencies have incorrect addresses listed;

4,621 of the 18,172 children in homes supervised by CWA have incorrect addresses listed;

1,103 children (471 of the 18,172 children in homes supervised by CWA, and 632 out of 32,530 children in homes supervised by voluntary agencies) were discharged from foster care, but their records did not reflect this action.

We also found that the CCRS records listed a "generic" address for 2,574 foster children (55% of whom have been in foster care for more than two years) at 80 Lafayette Street, New York, New York, 10013, which is the address of CWA's main office.

We reviewed the timeliness of the data input for 9,663 children placed into foster care from June 1991 - September 1992. The DSS requires the recording of a child placed into foster care within seven days. The CWA did not record initial placement data within the required seven-day time frame for 8,433 (87 percent) of these children.

The main reasons for the inaccuracies and delays in entering and updating data in the CCRS database are a lack of integration among CWA's manual systems and its 18 fragmented computer-based systems, as well as a lack of caseworker involvement with systems, and inadequate management controls.

The DSS deferred $101,354,930 in claims by New York City for Federal non-participation expenses from July 1991 - December 1992. The DSS did not reimburse the City's $50,677,465 share to the HRA when the claims were initially submitted because documentation, such as the client identification number, the date of payment, the check number, and the period for which reimbursement was sought, were not included in the back-up documentation required by the DSS. The HRA has reclaimed most of the deferred claims; however, as of June 1994, the gross amount of the City's deferred expenses, which were not reclaimed, totalled $4.36 million.

Update

Out of the 11 recommendations cited in the audit report, the HRA implemented four, is in the process of implementing six, and has not yet implemented one other recommendation. The HRA met with the State Department of Social Services in March 1995 and agreed to implement the Statewide Services Payment System (SSPS) fully by November 1996. The SSPS will replace CWA's authorization of payments method to foster care providers. The SSPS will also affect the way the State reimburses the City for claims, and it will eliminate several CWA foster-care automation systems, duplicate forms, and manual record systems.

Introduction

The audit's objective was to determine whether the Child Welfare Administration (CWA) has adequate procedures for recouping overpayments made to foster care agencies.

To accomplish this objective, the auditors interviewed agency personnel, reviewed and analyzed the monthly CWA collection reports, verified the accuracy of the net amounts the CWA advanced to the foster-care agencies and conducted tests to determine whether recoupments could be made more quickly.

The City requires foster care agencies to be audited in order to verify that funds are used for the purposes intended and that expenses incurred are documented properly. Occasionally, these audits reveal overpayments made to foster-care agencies. The CWA initiates the process of recouping overpayments whenever a final audit has been issued. According to the CWA's records, it collected $928,436 during fiscal year 1994; $4.25 millon in overpayments were still outstanding from 18 foster-care agencies as of June 1994.

Results

Our review and analysis of the foster-care agency recoupments for fiscal years 1992-1994 indicated that, for the most part, the CWA has recouped all scheduled overpayments from foster-care agencies in accordance with the agreements it had with those agencies. However, we did find weaknesses in the CWA's controls over the recoupment rate process with the foster-care agencies. The CWA has no written procedures for determining the recoupment rates; recoupment terms were inconsistent from one foster-care agency to another, and one person has full control over setting and negotiating recoupment terms with the foster-care agencies. As a result, there are no checks and balances to ensure that recoupment terms were calculated accurately and objectively.

Update

The agency has not provided follow-up information.

• DEPARTMENT OF INVESTIGATION (DOI)
  Department of Investigation's Payroll and Timekeeping Practices
  

Introduction

The audit's objectives were to determine whether

the employees listed on the DOI payroll were bona-fide; the DOI accurately maintained its employees' leave balances by correctly entering the leave time used and compensatory time earned on the Payroll Management System's (PMS) Employee Time Reports from their approved time sheets;

the DOI's internal controls over the timekeeping and payroll distribution functions provided reasonable assurance that paychecks were distributed only to bona-fide employees, and whether DOI performed timekeeping and payroll distribution functions in accordance with the procedures outlined in Directive #13.

Results

The Department of Investigation's (DOI) internal controls over the payroll and timekeeping functions are generally sufficient, providing reasonable assurance that payroll and timekeeping transactions will be processed in accordance with City regulations. However, among the 50 sampled employee records, we found minor discrepancies between the usage time recorded on the sampled time sheets and the usage reflected on the PMS Employee Leave Summary Reports, for a total of 90 hours. The differences affected six employees, totalling 53 hours of annual leave, 7 hours of sick leave, and 30 hours of compensatory time.

Update

Although the audit found that the DOI's controls over the payroll and timekeeping functions were sufficient, the report did include one recommendation, that the timekeeping supervisor should exercise additional care when comparing employees' PMS reports to their timesheets. The DOI implemented this recommendation by having the timekeeping supervisor perform semi-annual audits of all agency timesheets for a two-week test period in addition to the regular weekly review of ten percent of the timesheets and the Optical Character Reader (OCR) Cards.

• DEPARTMENT OF JUVENILE JUSTICE (DJJ)
  

Introduction

The Department of Juvenile Justice (DJJ) services children ages 7-16, who are arrested and placed in a secure facility (Spofford Juvenile Center), or in one of its non-secure detention facilities. Upon release from a detention facility, children and their families may enter DJJ's Aftercare program voluntarily. It offers the following services: education, counseling, and job placement. In fiscal year 1994, children were enrolled in the Aftercare program for an average of seven months. During that fiscal year, each of DJJ's five case managers had an approximate caseload of 40 children during the program cycle. The objective of this audit was to evaluate the Aftercare program's effectiveness in preventing the re-arrest of children.

Results

The Aftercare Program is effective for the following reasons:

the children participating in the program were less likely to be re-arrested compared to those who did not participate;

the Program participants werere-arrested less frequently, thereby spending less time in detention facilities or in jail;

the results of participation in the Program last over time; and

the program saved the City & State over $5 million in detention and incarceration costs during fiscal years 1992-1994.

Despite the cost savings, DJJ was forced to reduce the number of Aftercare case managers because of a hiring freeze, which resulted in a 44 percent enrollment decline in the Program.

We recommended that DJJ:

ask OMB to approve the hiring of more case managers,

work with OMB to get New York State to share in the Program's funding, and

measure post-Program follow-up data for children released from Aftercare.

We estimated that enrollment of all eligible children would save the City $11.4 million annually.
Update

DJJ plans to implement the above audit recommendations and to apply for a significant amount of funds from New York State so that it can expand the Aftercare Program. (Governor Pataki has proposed $13.8 million for deterrence programs.) DJJ is also working with the Department of Information and Technology Telecommunications (DOITT) to expand the Juvenile Justice Information System in order to track the careers of juveniles from detention to post-detention enrollment in programs.

• NEW YORK CITY OFFICE OF LABOR RELATIONS (OLR)
  

Introduction

The audit's objectives determined whether the Office of Labor Relations (OLR) effectively administered the City's health benefits coverage, ensuring that employee and dependent participants conform to the program's eligibility provisions, and that OLR provided City agencies with adequate guidance regarding documentation requirements necessary to establish a participant's eligibility.

The Health Benefit Program of OLR is directly responsible for overseeing employee health benefits. Its functions include issuing policy and procedures on health benefits for all mayoral agencies, developing and monitoring health insurance contracts, controlling membership, training City agency personnel, and evaluating consultant-prepared reports on employee health benefits usage. During fiscal year 1992, OLR administered health benefits coverage for approximately 1,089,662 active New York City employees, City retirees, and their dependents. This coverage cost the City $1.2 billion.

Results

Based on our interviews with OLR officials, our review of OLR's issued policies and procedures, and the results of our internal control review, in addition to our testing of employee health benefit files, we believed that OLR is, in general, competently administering enrollments and changes to employee health benefits coverage. Notwithstanding the overall adequacy of OLR's efforts, the City may be paying over $636,000 in annual premiums for employees who have family coverage instead of individual coverage. OLR agreed to implement the audit's recommendations.

Update

The OLR has not provided follow-up information.

• NEW YORK CITY OFFICE OF LABOR RELATIONS
  

Introduction

The audit's objective was to review the implementation of the Welfare Benefits Payments Sub-system (WBPS) to the Premium Accounting and Central Enrollment System (PACES) at the Office of Labor Relation s (OLR) by determining whether the conversion plans were followed, screens and system-generated report formats were developed in accordance with user requirements, and the new system was secured, in order to protect the information pertaining to these retirees.

The Comptroller's EDP Audit Division

interviewed OLR's management to determine whether the conversion of their system was satisfactory in reference to user screens and system-generated reports;

interviewed the Comptroller's Division of Office Audit staff to determine whether the conversion of this system porvided satisfactory user screens;

analyzed security reports and privileges ensuring that the system was properly protected; and

verified that system backup was maintained enduring proper restoration in the event of a power failure.

The EDP Audit Division matched the NYCERS file to the OLR's WBPS file (March 1994) to determine whether all retirees were added properly to the WBPS file. The Office Audit Division will report its results under separate cover (Report FR95-080A).

Results

The audit found that OLR has properly implemented WBPS; however, we identified some weaknesses which, if corrected, would enhance WBPS' and PACES' security and data integrity.

The Security Administrator could use the available system security package to enhance WBPS' integrity and reliabilty.

Password change control could be strengthened and a time-out facility of user terminals should be implemented.

The OLR agreed with our recommendation stating, "We will begin the necessary coding ... to implement the Comptroller's recommendation."

Update

The OLR has not provided follow-up information.

Introduction

The Office of Labor Relations (OLR) submitted payment vouchers, totalling $6,336,624, for February 1994, for retiree-welfare fund benefits, using the PACES Welfare Benefits Payment Subsystem (WBPS) to calculate and process the City's contributions to these funds. We conducted an audit of the first payments made through WBPS.

All retiree-welfare fund benefit payments were reviewed for accurate headcount by using the previous month's headcount, as well as all new additions less all new deletions to arrive at the current month's headcount. All payments were audited for compliance with the respective agreements for rates, titles, and effective eligibility date.

Results

Our audit revealed that PACES had included titles not authorized for payment by the respective agreements to the various welfare-benefit funds, resulting in overpayments of $1,694 and questionable payments of $405,691 under a default code.

Under agreements A-44, A-52, A-54, A-63, and A-86, OLR made a net overpayment of $3,251 due to duplicate payments for months already paid, incorrect rates used, and miscellaneous disallowances.

Six pension numbers were duplicated; four of the six had the same names but one digit of the social security number was different; the remaining two had different names and different social security numbers.

The audit made 12 recommendations in order to address the above weaknesses.

Update

The OLR has implemented all twelve audit recommendations. It has recouped all overpayments noted in the audit, and is currently updating its records in PACES to ensure that duplications of social security or pension numbers do not recur.

• 
  MAYOR'S OFFICE OF CONTRACTS (MOC)
  

Introduction

The objective of this audit was to evaluate the Vendor Information Exchange (VENDEX) and the Contractor and Consultant Evaluation (CCE) computer systems to determine the effectiveness and efficiency of their data processing controls. The Mayor's Office Of Contracts (MOC) developed VENDEX to provide the City with a comprehensive contract and contractor-management information system. The MOC is responsible for entering and maintaining the integrity of VENDEX data and programs. The CCE system was developed by the Mayor's Office of Design Construction (ODC) to capture information about construction and construction consultant contractors. The Department of Information Technology and Telecommunications (DOITT) maintains the computer which processes both the VENDEX and CCE system data.

To achieve our objectives, we examined VENDEX information for contracts from January 1992 - December 1994. We performed the following tasks:

checked procedures for reconciling VENDEX information to source data provided by ICCIS, IFMS, CCE, and DOF;

reviewed agency procedures for entering business questionnaire and performance evaluation input forms;

determined whether error correction procedures existed; and

used computerized audit software to evaluate the integrity of data on VENDEX's evaluation and contract files.

Results

Contract and purchase order information on VENDEX is not complete because there are no procedures for periodically reconciling the information sent from FISA systems with the information on VENDEX. The two causes of incomplete contract and purchase order information on VENDEX are as follows: (1) FISA does not perform any specific procedures ensuring that all contracts and purchase orders, extracted from ICCIS and IFMS, are actually passed to the VENDEX data transfer file; (2) VENDEX may reject FISA data- transfer file transactions without correction.

The Mayors' Office Of Design Construction (ODC) notifies agencies when construction-contract performance evaluations are due and, upon their receipt, enters the information into the
CCE system. VENDEX users access CCE files on a VENDEX screen. CCE information,

viewed on VENDEX, may not be complete or accurate for the following reasons:

evaluation for performance may contain Employee Identification Numbers (EINs) that do not match valid EIN's on the VENDEX System;

agencies did not submit up-to-date performance evaluations from July 1994 - March 1995, in part, because they did not receive CCE notification reports as reminders; and
ODC did not have appropriate audit-trail procedures for tracking unauthorized changes to CCE data.

The Department of Finance (DOF) has not provided the VENDEX system with information on warrants for those taxes converted into the FAIRTAX system, including Unincorporated Business Tax, General Corporation Tax, and Commercial Rent Tax. This information is used by agency contract administrators to ascertain if vendors doing business with the City are responsible or have any outstanding warrants.

The audit gave three recommendations to the MOC and four recommendations to the ODC.

Update

The Mayor's Office of Management and Budget (OMB) has reported that the Mayor's Office of Contracts has implemented two recommendations concerning the reconciliation of VENDEX information with FISA and added a sequence number to the Change Request Control Log for each change order. The third recommendation, concerning extracting a warrant file from FAIRTAX, has been installed in VENDEX and is currently being tested.

The OMB reported that the ODC has implemeted two recommendations concerning the deletion of all duplicate company records and is training two staff members to produce the Construction Evaluation Due Reports. The ODC will implement the remaining two recommendations concerning the re-engineering of the CCE system after it has been transferred into VENDEX.

• 
  MEDICAID
  

Introduction

The audit's objective was to examine the in-patient Medicaid claims made by NY Downtown Hospital and to verify the accuracy of the billings submitted, and to ensure that NY Downtown Hospital is in compliance with Medicaid Regulations.

Results

The audit of in-patient claims submitted by NY Downtown Hospital for Medicaid Reimbursements resulted in our disallowing 19 patient cases valued at $160,924. We disallowed these claims because of erroneous charges, incorrect billings to Medicaid, missing patient account records, and failure to identify a Medicare-Part "B" billing.

Update

New York Downtown Hospital has not provided follow-up information.

• 
  DEPARTMENT OF MENTAL HEALTH, MENTAL RETARDATION AND ALCOHOLISM SERVICES (DMH)
  

Introduction

The Department of Mental Health, Mental Retardation and Alcoholism Services (DMH) provides court-ordered forensic evaluations of individuals of all ages at its Family Court Mental Health Services clinics in New York City. These clinics are located within the Family Courts of the Bronx, Kings, New York, and Queens counties. In fiscal year 1994, the Mental Health clinics serviced 3,463 cases at an approximate cost of $2.1 million.

The audit's objectives were to determine whether Family Court Mental Health Services performs evaluations in a timely manner, meets the forensic evaluation needs of the Family Court, and uses its resources effectively and efficiently.

To accomplish the above objectives, the auditors:

reviewed a sample of cases,

sent survey questionnaires to all the Family Court judges,

reviewed scheduling logs at the clinics, and

sent a questionnaire to former Family Court Mental Health Services clinicians.

Results

According to the audit, forensic evaluations were not completed by the first adjournment date in 48 percent of all sampled cases. As a result, detained delinquents may remain longer than necessary in a detention facility costing the city an additional $60,024. Moreover, judges may be forced to parole or release detained delinquents and designated felons because these cases must be disposed of within mandated time limits.

We also found that Mental Health Services has labor relations problems affecting productivity and morale which are illustrated by a high clinical staff loss.
The audit made six recommendations in order to address the weaknesses noted above.

Update

The Mayor's Office of Management and Budget (OMB) reported that Mental Health Services has implemented four of the six audit recommendations:

Mental Health Services staff now contacts clients at their homes, detention facilities, and/or through their lawyers within 48 hours of their scheduled appointments as a reminder. In addition, clients also receive certified mail-grams.

Mental Health Services has begun scheduling client appointments before 9:00 A.M. as of July 17, 1995.

Mental Health Services has included statistical information on the Family Court Mental Health Services in the Mayor's Management Report.

Mental Health Services is conducting a cost-and-benefit-study on custody and visitation evaluations in conjunction with the Mayor's Office of Operations and OMB.

Mental Health Services decided against hiring a consultant to determine the causes for the high loss of clinical staff at Family Court Mental Health Services, but has conducted its own study with the Mayor's Office of Operations and OMB. Furthermore, Mental Health Services has a tracking system, monitoring the receipt of requested documents from other agencies, and does not plan to create a new one.

• 
  METROPOLITAN TRANSPORTATION AUTHORITY (MTA)
  

Introduction

Our audit verified whether the Metropolitan Transportation Authority's (MTA) reimbursement claim for costs associated with the operation, maintenance, and use of Metro-North's New York City stations was accurate and reasonable; ascertained whether these costs were allowed under Chapter 415, Section 1277 of the New York State Public Authorities Law of 1966 (NYSPAL) in accordance with generally accepted accounting principles and other regulatory pronouncements; and determined whether the 14 stations located in the City are maintained in satisfactory condition by Metro-North.

Results

We reviewed the MTA's invoice to the City for the operation, maintenance, and use of Metro-North stations located within the City for the fiscal year ending March 31, 1994 and ascertained that it was both accurate and reasonable. Metro-North's billing, over the years, has improved considerably, and we took no exception to the amounts billed for this fiscal year.

We inspected the stations primarily for safety and cleanliness, but we also noted, where applicable, the absence of such amenities as shelters, train schedules, and public telephones. While the stations on the Harlem Line were generally cleaner than those on the Hudson Line, and although some stations were in better repair than others, all were problematic in some ways.

The most dangerous conditions we found were broken or missing protective caps on the third rail at the Morris Heights and University Heights stations, and exposed electrical wiring at Grand Central Terminal. Other safety hazards identified at several stations included staircase and platform edging requiring repair. The most prevalent problems were graffiti (12 stations), the need to repaint yellow safety lines (9 stations), and cracked and broken concrete (9 stations).

Update

The Metropolitan Transporation Authority has not provided follow-up information.

Introduction

The audit's objectives were to verify the Metropolitan Transportation Authority's (MTA) costs billed to the City for the operation, maintenance, and use of operating LIRR stations in New York City to the costs on the books of the Long Island Railroad (LIRR). We determined whether these costs were allowed under Chapter 415, Section 1277 of the New York State Public Authorities Law of 1966 (NYSPAL) and whether these costs were in accordance with generally accepted principles and other regulatory pronouncements. Our second objective was to determine whether the poor and unsafe conditions reported in a previous audit had been corrected.

Results

We found that the MTA overbilled the City $467,587 for fiscal year 1994 station maintenance charges by overstating direct labor and overhead costs for police protection by $425,872; for material costs and overhead by $14,155; and for direct payment vouchers by $27,560.

The MTA overstated the amount paid for police protection by double-counting certain officers' time, including charges for time not spent patrolling stations (including administrative turnout time), and mis-stated police sergeant supervisory costs.

The MTA overstated material costs by incorrectly including charges for repairs to a control circuit for the third rail and not crediting the City for materials returned to the MTA's inventory.

The MTA overstated direct payment vouchers by over-allocating police cars and supply costs, and charging the wrong fiscal year for painting and miscellaneous expenses.

The LIRR has improved its billing for police protection and miscellaneous maintenance expenses significantly since the fiscal year 1993 bill. In that year, the total disallowance was $507,832.

We visited all 31 LIRR stations located in the City, observing unsafe and poor conditions at 25 of the stations. Thirteen stations had the same problems as in the previous year. Some of the conditions at the 25 stations included the following:

unsecured garbage compactors,

platform holes,

worn out sections of platforms previously repaired,

eroding platform curbing,

missing guard/hand rails,

peeling paint,

graffiti, and

soil erosion on the platform

Update

The MTA agreed with our finding that they overbilled the City for maintenance charges. The Office of Management and Budget reduced the City's payment to the MTA by $467,300.

• 
  MULTI AGENCY
  

Introduction

The audit's objective was to determine whether the Departments of General Services (DGS), Transportation (DOT), and Environmental Protection (DEP) complied with §9-02(p)(1)(i), §9- 02(p)(1)(ii), and §9-02(p)(1)(iii) of the Procurement Policy Board (PPB) Rules concerning construction contract change orders negotiated in the absence of a documented, established cost history.

To accomplish the above objective, the auditors reviewed existing construction contract change order files and interviewed appropriate personnel at each of the agencies.

Results

We found that all of the negotiated cost change order files we examined at the DGS and the DEP lacked a documented cost history. This was also the case with half of the files examined at the DOT. In addition, we found that in all three agencies, the change order files, that lacked a documented-cost history, also lacked a written determination of the basis of the cost negotiation by the Agency Chief Contracting Officer. Finally, we found that all three agencies, whose change order files we examined, lacked a documented cost history and as-built field records. These agencies should take steps to ensure compliance with the above-cited PPB Rules, which would include the following steps:

referencing written estimates to specific industry-estimating publications in order to support cost reasonableness

directing Agency Chief Contracting Officers to prepare written determinations of the basis-of-cost negotiations where change order files lack a documented cost history

maintaining as-built field records for negotiated cost change orders

codifying competitively bid unit prices, which can serve as the basis of a cost history for future negotiated cost change orders, and when applicable

codifying information obtained from as-built field records, which can serve as the basis-of-cost history for future negotiated cost change orders.

Update

The Office of Management and Budget (OMB) submitted to us the response for the DOT. The DOT agreed with three out of four recommendations made in the audit report and DOT is either in the process of implementing or has implemented the three recommendations. It disagreed with the audit's interpretation of the PPB rules regarding "as-built" field records.

The DEP agreed with two of the four recommendations made in the audit report. The DEP has taken the necessary steps to implement two of the recommendations. It disagreed with recommendations # 3 and # 4 to the effect that the DEP Agency Chief Contracting Officer should comply with PPB rule Section 9-02 (p) (1) (ii). The DEP intends to recommend to the Procurement Policy Board that this section of the PPB rules be deleted or changed to show that a project manager or similarly titled employee responsible for the progress of the contract can comply with the PPB rule stated above.

Introduction

The audit's objectives were to track and report on specific agency procurement trends. The Comptroller's Desk Audit Division issues a letter report to each agency on our post audit of vouchers every six months. This report is a compilation of all post audits performed by Desk Audit for the above period. We have replaced the letter reports with this type of formal audit report, which will be issued every six months.

From July 1, 1993-December 31, 1993, we reviewed FISA weekly reports, decided which vouchers were to be reviewed, and requested those vouchers along with supporting documentation from the respective agencies. We examined 2,038 paid vouchers from 102 City agencies, totalling $12,572,045, for this six-month period.

All vouchers were audited for proper payments and compliance with New York City procurement guidelines.

Results

Three hundred and eighty two (382) paid vouchers totalling $1,339,505 (19 percent of the 2,038 paid vouchers we examined), did not comply with the City's purchasing guidelines. Some agencies:

used incorrect object codes for their expenses. Vouchers totalling $335,054, (25 percent of the payments that we found) did not comply with City purchasing regulations.

made payments to vendors with non-encumbered funds, improperly using a VME.

failed to make payments against an existing encumbrance. These vouchers totalled $275,219 (21 percent of the unacceptable vouchers).

did not enter into a formal contract with vendors when aggregate payments within a fiscal year exceeded $10,000. These vouchers totalled $155,995 (12 percent of the unacceptable vouchers).

failed to obtain the minimum number of bid quotes required by Chapter 3, Section 356 of the Procurement Policy Board Rules for expenses exceeding $501. These expenditures totalled $151,434 (11 percent of the unacceptable vouchers).

did not provide a proper description of the goods or services required on the purchase order. As a result, items described on the invoice were not matched easily to a specific purchase order.

could not provide the vouchers and/or supporting documentation we requested. As a result, we could not verify the accuracy and propriety of some City disbursements. This category totalled $105,524 (8 percent of the unacceptable vouchers).

failed to use existing Department of General Services (DGS) requirement contracts when procuring goods and services totalling $48,235 (4 percent of the unacceptable vouchers).

charged expenditures to the incorrect fiscal year. These expenditures totalled $28,624 (2 percent of the unacceptable vouchers).

authorized purchase order increases exceeding the 10 percent limit imposed by Local Law 60. These totaled $28,077 (2 percent of the unacceptable vouchers).

erroneously issued blanket purchase orders without processing the documents through DGS's Division of Municipal Supplies (DMS) as required by DMS BP 067-00. These blanket purchase orders totalled $24,182 (2 percent of the unacceptable vouchers).

processed purchase orders without providing sufficient written information on the document about the items and/or the unit price of the items ordered as required by the New York City Charter, Chapter 13, Section 331. This violation totalled $29,640 (2 percent of the unacceptable vouchers).

lacked adequate documentation to support sole-source procurement totalling $9,916 (approximately 1 percent of the unacceptable vouchers).

used VME's instead of their imprest fund accounts to purchase supplies, materials, equipment, and non-personal services for less than $250. The amount in this category totalled $2,472 (less than 1 percent of unacceptable vouchers).

paid for services more than three months in advance. Items in this category totalled $7,560 (less than 1 percent of the unacceptable vouchers).

did not certify copies #8 and #10 of their purchase orders that supplies, materials, equipment, and services were inspected and received before paying for them in violation of the New York City Charter, Chapter 13, Section 330. Items in this category totalled $95,526 (7 percent of the unacceptable vouchers) and $7,257 (less than 1 percent of the unacceptable vouchers) respectively.

did not mark "VOUCHERED" or did not certify the agency verification of IFMS processing on the payment voucher required by Comptroller's Directive #24. Items in these categories totalled $1,723 and $884 respectively.

purchased and received goods and services before funds were encumbered, thereby violating Comptroller's Directive #24. This practice indicates internal control weaknesses and also distorts an agency's budget.

Some Community Colleges authorized voucher payments exceeding $20,000 without entering into a formal contract with the vendor, a requirement of the State Education Law 6218. These vouchers totalled $134,179 (10 percent of the unacceptable vouchers).

One agency overpaid two vouchers by $252 as a result of an oversight. This represented less than 1 percent of the unacceptable vouchers.

Update

No follow-up is necessary.

• 
  Audits of Managerial Lump Sum Payments
  

The Audit Bureau's Division of Office Audit pre-audits lump sum payments to employees covered by the Management Pay Plan upon their final separation from City employment.

The employees covered by this plan receive a lump sum payment for accrued annual leave, sick leave, and overtime. The payment is calculated in accordance with Personnel Orders 16/74, 78/3, 24/77, 78/9, and 88/5. Employees who were in the Managerial or Executive Pay Plan on December 31, 1977, were given vested rights for their previously accrued annual leave, sick leave and overtime. After January 1, 1978, the plan became the Management Pay Plan.

The Management Pay Plan covers five categories of employees who are paid in accordance with the appropriate Personnel Orders covering their time balances.

Upon final separation from service, each employee's agency submits a lump sum payment claim package to the Comptroller for pre-audit.

These pre-audits resulted in a net decrease totalling $243,358.31 on all lump sum claims submitted by agencies in fiscal year 1995, as follows:

Total number of claims in fiscal year 1995 609

Total amount of agency-prepared lump sum claims $9,692,307.23

Total amount of lump sum claims approved for payment $9,448,948.92

Claims correctly prepared by the agency 225

Claims reduced during pre-audit 236

Claims increased during pre-audit 147

Claims denied 1

Total dollar value of agency overpayments, before pre-audit $308,286.37

Total dollar value of agency underpayments, before pre-audit $64,928.06

Net decrease resulting from pre-audit $243,358.31

The Division of Office Audit ensures that agencies are in compliance with provisions contained in more than 600 agreements between the City and various unions, covering welfare and annuity benefits for active and retired employees.

Copies of all payment vouchers are submitted to the Comptroller by City agencies in accordance with Comptroller's Directive 8 (Special Audit Procedures on High Risk Vouchers). The payments are reviewed by the Division of Office Audit to ensure that they conform with the terms and conditions of all agreements, Office of Labor Relation (OLR) stipulations, Department of Personnel Orders, Office of Collective Bargaining decisions, etc. Part of each audit entails the examination and analysis of various OMB/FISA computer reports and a subsequent examination of records maintained at agency locations. Audits have revealed the following types of errors:

Contributions made in error for unauthorized titles

Contributions made for retirees prior to their actual retirement date

Duplicate payments for a title or a group of titles under two different agreements

Misinterpretation of agreements, causing overpayment

Follow-up meetings are frequently held with agency personnel to clarify technical matters raised in the audits. Agencies are required to respond to the audit findings by indicating the corrective action taken and measures implemented to avoid future infractions.

Post-audit findings for fiscal year 1995 are as follows:

Number of
Vouchers Total Amount

Total Number of Vouchers 3,193 $343,310,529.59
Vouchers Found Acceptable 3,034 331,472,293.81
Vouchers Found Unacceptable 78 11,838,235.78
Overpayments 135,460.92
Underpayments 30,293.74

Recoupments totalled $129,927.01 for fiscal year 1995. Part of this amount was for overpayments identified in the previous fiscal year. Agencies recouped amounts overpaid either by a check from the appropriate fund or by deducting the overpayments from subsequent payment vouchers.

The City provides monthly subsidies to the three public library systems - Brooklyn, New York and Queens - under an obligation plan approved by the Office of Management and Budget. In order to ensure that the City does not advance excessive funds to these institutions, their monthly expenditure reports are monitored and monthly advances reduced when necessary.

In fiscal year 1995, monthly advances were accurate and so no reductions were necessary.

• DEPARTMENT OF PARKS AND RECREATION (DPR)
  

Introduction

The Department of Parks and Recreation (DPR) operated 55 outdoor public pools--32 olympic and intermediate pools and 23 mini pools -- during the 1994 summer season.

The audit's objective was to review the current environmental and physical safety of the New York City outdoor public swimming pools and to determine the implementation status of eight recommendations made in a previous audit, "The Environmental and Physical Safety of New York City Outdoor Public Swimming Pools" (1A94-062) issued on June 21, 1994.

To accomplish the above objective, the auditors interviewed DPR officials, conducted unannounced inspections of all pools operating in 1994, reviewed written tests that were administered to filter plant operators (FPO) at the completion of the DPR's training class, and reviewed and compared the DPR's Advocate's pool inspection reports to our own observations.

Results

The audit found major improvements in the areas of water quality and the availability of lifesaving and safety equipment. Filter Plant Operators (FPO's) knew their jobs and were doing well; supervisors completed daily inspection checklists. The DPR's advocates have also increased the frequency of unannounced pool inspections. Unfortunately, the DPR failed to implement our recommendation regarding the need for a single-chain-of-command personnel structure at each pool; many structural/safety hazards, broken showers and/or toilets, poor drainage, peeling paint, and other dirty conditions still existed. Lastly, numerous FPO's did not receive training or take the exam at the completion of their training. Some FPO's took the test several times for no apparent reason despite having passed it initially.

Update

The Department of Parks and Recreation has not provided follow-up information.

• POLICE DEPARTMENT (NYPD)
  

Introduction

This follow-up of an August 1992 audit was about the disaster recovery plan and preventative measures for the New York City Police Department's (NYPD) 911 and SPRINT (Special Police Radio Inquiry Network) systems (7A92-05). The previous audit report addressed five major findings. The NYPD

did not have a comprehensive disaster recovery plan for its 911 and SPRINT systems;

did not have an off-site back up location for its computer facility;

did not have an off-site library facility for use by SPRINT operation manuals or for storing back-up copies of SPRINT computer programs on tape;

could not provide rapid response because its off-site back-up communications locations were structurally inadequate (water seepage, loose tiles), and lacked the up-to-date computer and communications equipment found at One Police Plaza; and

did not have an operational fire suppression system.

Results

In general, the NYPD has addressed the eight recommendations made in the previous report; they have fully implemented five, partially implemented one, and are in the process of implementing two recommendations.

The NYPD's Management Information Systems Division (MISD) has written a comprehensive disaster recovery plan which, for the most part, complies with the Department of Investigation's (DOI) System Security Standards.

The NYPD entered into an agreement with the Financial Information Systems Agency (FISA) stipulatating that FISA will provide an off-site back-up location with the necessary computers and computer programs to restore the SPRINT system in the event of a disaster at One Police Plaza. We observed tests of this back-up system and found that the MISD can restore SPRINT at FISA and connect the FISA computer to terminals in four of the five back-up communications facilities.

The NYPD has placed tapes containing back-up copies of SPRINT computer programs and SPRINT operation manual in a secure police department facility outside headquarters.

Four of the five communications back-up sites have installed computer equipment enabling 911 operators and dispatchers to enter the calls onto the SPRINT system. However, we found that the back-up communications site in Manhattan still cannot process high priority 911 calls in the same time frame as the other back-up sites.

We also found that the fire suppression system installed to safeguard the SPRINT system and adjacent Call Receiving Operator/Radio Dispatch areas is still not operational.

During our follow-up audit, we noted some additional areas where the NYPD could improve its disaster recovery testing procedures.

The NYPD does not keep records of tests of its disaster recovery plan.

The NYPD's Management Information Systems Division Contingency/Disaster Recovery Plan was not fully tested.

Some test participants from the Department of Information Technology and Telecommunications and the NYPD did not receive adequate instructions about disaster recovery procedures.

All of the tests were conducted with advance warning instead of on an unannounced basis; therefore, participants had time to prepare for them. This would not have been the case in a true emergency.

The MISD may not be able to restore all of SPRINT's reporting functions as prescribed by the City.

The follow-up audit made nine additional recommendations.

Update

The NYPD has implemented five of the nine follow-up audit's recommendations:

All appropriate supplies are kept at the borough back-up sites (except for the Manhattan office).

The current 911 facility at One Police Plaza will become the NYC back-up 911 center after the proposed Public Safety Answering Center (PSAC) has been opened. This facility will replace the Manhattan back-up facility.

The Communications Division has trained operators and dispatchers to operate the computer terminals and to solve minor problems at back-up sites.

The Mayor's Office of Management and Budget (OMB) will issue a Certificate to Proceed for $215,000 for a fire detection system, and an alarm and fire suppression system at One Police Plaza.

The NYPD conducts periodic unannounced tests.

Of the remaining four recommendations, two are partially implemented, and two require additional evaluation.

• 
  RETIREMENT SYSTEMS
  

Introduction

This audit's objective was to review the adequacy of the NYC Board of Education Non-Pedagogical Pensioners' (BERS) administrative controls that would ensure that pensioners are not being re-employed illegally by the City, to identify those pensioners, who might be re-employed illegally, and to quantify the amounts of any improper payments to individuals, who might be violators of §211 and §212 of the New York State Retirement and Social Security Law, or of § 1117 of the NYC Charter, during calendar year 1992.

Results

Eight re-employed individuals were BERS retirees. Further review determined that they were in compliance with applicable regulations. Accordingly, there are no monetary findings regarding any of the eight BERS retirees.

Nonetheless, this audit and similar audits of the other four retirement systems (Teachers' Retirement System--FL95-064A; Police Department Pension Fund--FL95-065A; New York City Employees' Retirement System --FL95-066A; and Fire Department Pension Fund--FL95-067A) found problems regarding City pensioners re-employed by the City. Our combined audits found substantial noncompliance (over 20 percent of the 831 re-employed City retirees) with public service re-employment laws including the following:

Controls are inadequate to ensure that retirees comply with re-employment laws;

Lack of or inadequate computerized monitoring of City pensioners re-employed by the City;

City retirees need to be matched against non-City public payrolls;

City agencies' failure to ensure that City retirees complete the waiver-issuing process before being re-hired by the City;

CUNY's failure to indicate an effective waiver period.

The audit recommended that:

BERS should participate in organizing a special task force consisting of the five retirement systems to set up a computerized monitoring program of controls to identify those retirees working in New York public service;

BERS contact New York State officials to match City pension payrolls with the payrolls of the State and its municipalities;

BERS should reinforce to City agencies the importance of effective agency procedures regulating the re-employment of retirees. Waivers should be issued in a timely manner only in those cases where it is appropriate.

Update

The BERS has not provided follow-up information.

Introduction

This audit's objective was to review the adequacy of the NYC Employees' Retirement System's (NYCERS) administrative controls that would ensure that pensioners are not being re-employed illegally by the City, to identify those pensioners, who might be re-employed illegally, and to quantify the amounts of any improper payments to individuals, who might be violators of §211 and §212 of the New York State Retirement and Social Security Law, or § 1117 of the NYC Charter, during calendar year 1992.

Results

Twenty-three (23) re-employed individuals were NYCERS retirees. These retirees received over $133,000 in pension payments in 1992 in violation of applicable laws and regulations.

This audit and similar audits of the other four retirement systems (Board of Education Retirement System -- FL95-063A; Teachers' Retirement System -- FL95-064A; Police Department Pension Fund -- FL95-065A; and Fire Department Pension Fund -- FL95-067A) found problems regarding City pensioners re-employed by the City. Our combined audits found substantial non-compliance (over 20 percent of the 831 re-employed City retirees) with public service re-employment laws including the following:

Controls are inadequate to ensure that retirees comply with re-employment laws;

Lack of or inadequate computerized monitoring of City pensioners re-employed by the City;

City retirees need to be matched against non-City public payroll;

City agencies failure to ensure that City retirees complete the waiver-issuing process before being re-hired by the City;

CUNY's failure to indicate an effective waiver period.

The audit recommended that:

NYCERS investigate those individuals who received both pensions and salaries from re-employment;

NYCERS contact the department of Investigation with the names of individuals found to be illegally collecting pensions;

NYCERS notify retirees about the re-employment regulations;

NYCERS should participate in organizing a special task force consisting of the five retirement systems to set up a computerized monitoring program of controls to identify those retirees working in New York public service;

BERS contact New York State officials to match City pension payrolls with the payrolls of the State and its municipalities;

BERS should reinforce to City agencies the importance of effective agency procedures regulating the re-employment of retirees. Waivers shold be issued in a timely manner only in those cases where it is appropriate.

BERS should return to CUNY the incorrect waivers it issued.

Update

NYCERS officials generally agreed with our recommendations although they were concerned about lack of staff to implement the recommendations. Nevertheless, NYCERS officials verbally agreed to follow up on all of the cited cases and provided evidence that they are doing that.

• RETIREMENT SYSTEMS
  NYC Teachers' Retirement System Pedagogical Pensioners Working For The City After Their Retirement
  

Introduction

This audit's objective was to review the adequacy of the NYC Teachers' Retirement System Pedagogical Pensioners' (TRS) administrative controls that would ensure that pensioners are not being re-employed illegally by the City, to identify those pensioners, who might be re-employed illegally, and to quantify the amounts of any improper payments to individuals, who might be violators of §211 and §212 of the New York State Retirement and Social Security Law, or of § 1117 of the NYC Charter, during calendar year 1992.

Results

Eighty-six (86) re-employed individuals were TRS retirees. These retirees received over $705,000 pension payments in 1992 in violation of applicable laws and regulations.

This audit and similar audits of the other four retirement systems (Board of Education Retirement System--FL95-063A; Police Department Pension Fund--FL95-065A; NYC Employees' Retirement System--FL95-066A; and Fire Department Pension Fund--FL95-067A) found problems regarding City pensioners re-employed by the City. Our combined audits found substantial non-compliance (over 20 percent of the 831 re-employed City retirees) with public service re-employment laws including the following:

Controls are inadequate to ensure that retirees comply with re-employment laws;

Lack of or inadequate computerized monitoring of City pensioners re-employed by the City;

City retirees need to be matched against non-City public payrolls;

City agencies' failure to ensure that City retirees complete the waiver-issuing process before being re-hired by the City.

CUNY's failure to indicate an effective waiver period.

The audit recommended that:
the TRS investigate those individuals identified as receiving pensions and simultaneously being re-employed, and begin recoupment procedures immediately;

the TRS forward to the Department of Investigation, the names of individuals found to be illegally collecting pensions;

the TRS immediately send special reminders to retirees clearly stating their responsibilities regarding public service re-employment;

the TRS participate in organizing a special taskforce consisting of the five retirement systems to set up a computerized monitoring program of controls to identify those retirees working in New York public service;

as part of the taskforce, contact New York State officials to match City pension payrolls against the payrolls of the State and other municipalities within the State;

as part of the taskforce, reinforce to City agencies the importance of effective agency procedures to ensure that retirees being hired comply with laws regarding public service re-employement;

the TRS return to the Chancellor's Office of CUNY for correction, those waivers that CUNY issued which are incomplete or inconsistent.

The TRS agreed with most of the audit's recommendations.

Update

The TRS has not provided follow-up information.

• RETIREMENT SYSTEM
  

Introduction

The audit's objective was to review the adequacy of the NYC Fire Department's (FD) administrative controls that would ensure that its pensioners were not being re-employed illegally by the City, to identify those pensioners, who might be re-employed illegally; and to quantify the amounts of any improper payments to individuals, who might be violators of §211 and §212 of the New York State Retirement and Social Security Law or of § 1117 of the NYC Charter, during calendar year 1992.

Results

Fourteen (14) re-employed individuals were FD retirees. These retirees received over $286,000 in pension payments in 1992 in violation of applicable laws and regulations.

This audit and similar audits of the other four retirement systems (Board of Education Retirement System -- FL95-063A; Teachers' Retirement System -- FL95-064A; Police Department Pension Fund -- FL95-065A; and NYC Employees' Retirement System -- FL95-066A) found problems regarding City pensioners re-employed by the City. Our combined audits found substantial non-compliance (over 20 percent of the 831 re-employed City retirees) with the public service re-employment laws including the following:

Controls are inadequate to ensure that retirees comply with re-employment laws;

Lack of or inadequate computerized monitoring of City pensioners re-employed by the City;

City retirees need to be matched against non-City public payrolls;

City agencies failure to ensure that City retirees complete the waiver-issuing process before being re-hired by the City; and

CUNY's failure to indicate an effective waiver period.

The FD's officials generally agreed with our recommendations.

Update

The FD reported that it has implemented five out of seven audit recommendations and will implement the two remaining recommendations:

The FD notified in writing each retiree found in violation about the amount owed, the length of the recoupment period, and the amount of the monthly repayment. Recoupment began in December 1995 and will continue until all the money has been recouped.

The FD is participating in a joint taskforce composed of the five retirement systems, and chaired by the director of the Office of Payroll Administration. One of the goals of the taskforce is to monitor the public service payrolls including the New York State payroll.

The taskforce will contact New York State officials to match City pension payrolls with State and other municipality payrolls within N.Y. State.

The taskforce will reinforce the importance of effective agency procedures to City agencies to ensure that retirees being re-hired will comply with public service re-employment laws.

The FD has requested corrections from CUNY for those incomplete or inconsistent waivers.

The FD will forward the names of individuals illegally collecting pensions to the Department of Investigation, and they will send reminders to retirees clearly stating their responsibilities regarding public service re-employment.

Introduction

This audit's objective was to review the adequacy of NYC Police Department (Police) administrative controls that would ensure that its pensioners are not being re-employed illegally by the City, to identify those pensioners, who might be re-employed illegally, and to quantify the amounts of any improper payments to individuals, who might be violators of §211 and §212 of the New York State Retirement and Social Security Law, or of § 1117 of the NYC Charter, during calendar year 1992.

Results
Forty-six (46) re-employed individuals were Police retirees. These retirees over $457,000 in pension payments in 1992 in violation of applicable laws and regulations.

This audit and similar audits of the other four retirement systems (Board of Education Retirement System -- FL95-063A; Teachers' Retirement System -- FL95-064A; New York City Employees' Retirement System -- FL95-066A; and Fire Department Pension Fund -- FL95-067A) found problems regarding City pensioners re-employed by the City. Our combined audits found substantial non-compliance (over 20 percent of the 831 re-employed City retirees) with publice service re-employment laws including the following:

Controls are inadequate to ensure that retirees' comply with laws regarding re-employment;

Lack of or inadequate computerized monitoring of City pensioners re-employed by the City;

City retirees need to be matched against non-City public payrolls;

City agencies' failure to ensure that City retirees complete the waiver-issuing process before being re-hired by the City; and

CUNY's failure to indicate an effective waiver period.

Police officials generally agreed with our recommendations.

Update
Police officials reported that they have implemented five of our seven audit recommendations and hope to implement the two remaining recommendations:

the Police Pension Fund has investigated all individuals identified as "double-dippers" and has begun recoupment measures ($34,147.96 has been recovered in calendar year 1995)

the Police have agreed to forward to the Department of Investigation the names of those illegally collecting pensions; however, no retiree investigated was considered appropriate for such a referral.

the Police have sent a reminder to retirees clearly stating their responsibilities regarding public service re-employment.
the Police have reviewed their hiring practices and found them to be adequate. These procedures have identified retirees during the pre-hiring period.

the Police are currently returning all waivers received from CUNY that do not clearly state the effective dates of employment.

The Police Department will participate in a joint effort with representatives from the other retirement systems in establishing a computerized monitoring program of controls in order to identify retirees working in New York public service. New York State officials should be contacted to match City pension payrolls with State and other municipal payrolls within the State. However, the Police Pension Fund noted that the Comptroller's Office is the custodian of the Police Pension payroll records.

Introduction

The audit's objective was to determine whether the Department of Sanitation (DOS) is properly preparing and forwarding bills to the Department of Health's Bureau of Pest Control (BPC) for costs associated with cleaning privately-owned vacant lots. In addition, the auditors determined whether it is cost-effective to maintain an in-house cleaning function to clean vacant lots (especially City-owned lots) instead of using private contractors to clean them.

The auditors reviewed the billing records and a sample of bills for fiscal year 1994. In addition, the auditors compared the DOS' direct costs associated with cleaning a sample of lots to the cost estimates provided by a private contractor for the same services.

Results

According to the audit, the DOS' Lot Cleaning Division did not inform the BPC of 42 vacant lots that had been cleaned during fiscal year 1994. Consequently, private lot owners were not billed for $44,509 -- the cost to clean their vacant lots. In addition, the Billing Unit made computational errors in 27 out of 100 cases selected for review. As a result, the DOS undercharged some private lot owners a total of $20,539 and overcharged others a total of $2,053.

Based on the audit tests, it might have cost considerably less to use a private contractor to clean the vacant lots instead of using the DOS' in-house cleaning crews. In fact, according to our estimate, the DOS could have saved approximately $7 million (including $1.1 million in City funds) by using private contractors during fiscal year 1994. The audit made several recommendations to improve administrative and billing processes, and also recommended that the DOS engage in "managed-competition" to decide whether or not to privatize its lot cleaning function.

Update

The DOS responded that it has implemented four of the seven recommendations made in the audit report. It has partially implemented and is proceeding toward fully implementing the remaining recommendations concerning the review and correction of bills for lot cleaning, the installation of a computerized-billing system, and determining the cost effectiveness of using private contractors to clean vacant lots.

• 
  SCHOOL CONSTRUCTION AUTHORITY (SCA)
  "Computers in the Classroom" Program: An Evaluation of the Construction and Installation of Computer Centers in Public Schools for Fiscal Year 1994
  

Introduction

Under its annual capital and budget program, (Resolution A) the City Council appropriates funds to the School Construction Authority (SCA). Under the "Computers in the Classroom" Program, Resolution A funds are used to construct and install new computer centers or to improve existing computer centers in the City's public schools. The City Council requested an audit of the program for fiscal year 1994 to ascertain whether the SCA built the projects which had been authorized, at a reasonable cost, and to determine whether the centers are being used and deemed useful by students and teachers. For fiscal year 1994, the Council appropriated $7.2 million for computer centers in 33 schools, and the Bronx and Staten Island Borough Presidents provided funding for another $1.7 million for nine schools.

Results

Overall, the program makes a valuable contribution to the Board of Education's (BOE) efforts to modernize the City's educational system. The fiscal year 1994 funding gave students access to 1,765 more computers, 283 more printers, 58 more digital scanners, and 28 more digital cameras. Funding of the program should continue because it will provide even more students with computer technology.

At the same time, we identified various problems and issues that need to be addressed so that future projects can be administered more efficiently and so that funds can be used to maximum benefit. We found that work done at 26 schools deviated from the funded planned projects and that the SCA exceeded the original funding allocation at 15 schools by about $686,000. We also found that the SCA did not effectively manage the projects: many projects were not completed on time, structural and operational problems at some schools could have been avoided with better planning, and the SCA's administrative costs were excessive. We also found weak controls in some schools over the equipment. Over $16,000 in equipment was missing, stolen, or unaccounted for, and computers in some schools were being used only by teachers and administrators. The audit resulted in 22 recommendations addressed to the Board and to the SCA.

Update

The SCA responded that it agrees and intends to implement in full 11 of 13 recommendations addressed to it in the audit report. It agrees with the remaining two recommendations (develop a reporting system showing the various components of administrative costs and establish a management process to review cost and quality of projects) but will implement these recommendations in a modified way.

The BOE has not provided follow-up information.

• 
  NEW YORK CITY SHERIFF'S OFFICE (SHERIFF)
  

Introduction

The City Sheriff's Office (Sheriff) recovers outstanding debts owed to the City by collecting outstanding judgments. Scofftow, the largest collection program, permits deputy sheriffs to identify and authorize the towing of vehicles whose owners have more than $230 in outstanding judgments from uncollected parking summonses. Contracted private-company employees accompany deputy sheriffs to tow the vehicles and to videotape the vehicles being towed. If owners do not redeem their vehicles within 10 days of notification by the Sheriff, their vehicles are sold at public auctions or auctioned off as salvage to licensed dismantlers. Total revenue from the Scofftow Program was expected to increase from $34 million in fiscal year 1994 to $52 million in fiscal year 1995. The audit's objective was to evaluate the adequacy of the internal controls over seized vehicles.

Results

Overall, the internal controls over seized property are adequate. The Sheriff's Office records vehicles seized in the Scofftow Program and follows standard operating procedures; there is adequate separation of key duties and responsibilities. We found some weaknesses which are immaterial. Two weaknesses in particular -- the absence of pre-numbered receipts for cash received in the field, and the lack of written explanations for vehicles not towed -- could result in problems since deputy sheriffs could collect cash and not turn it in. Our recommendations address these problems. Despite their weaknesses, we concluded that the controls over seized property were adequate.

Update

The Sheriff's Office has not provided follow-up information.

• 
  NEW YORK CITY TAX COMMISSION
  

Introduction

Each calendar year, the Department of Finance's (DOF) Property Division determines the assessed value of all real property in the City in order to prepare the annual real estate tax assessment roll. Once this tax roll is published, changes in assessments can be made only by either the Department of Finance or the Tax Commission. During FY 1989 and 1990, the State Comptroller conducted two audits of the Tax Commission's property tax assessment appeals process. In both audits, the State Comptroller recommended ways to improve the Tax Commission's internal control system and issued 12 major recommendations in two audit reports. The objective of this follow-up audit was to determine whether the Tax Commission had implemented those recommendations.

Results

Based on our review of 40 sample case files from the Tax Commission's 1994 tax remission roll, our discussions with hearing officers, and a review of documentation from Tax Commission officials, we deem all 12 of the major recommendations proposed by the State Comptroller's audits to have been implemented. Therefore, there was no need to include any new recommendations in this report.

Update

This audit did not make any recommendations; therefore, follow-up is not necessary.

• 
  DEPARTMENT OF TRANSPORTATION (DOT)
  

Introduction

The audit's objective was to determine the legitimacy of the overtime hours worked and, if the hours were not legitimate overtime, the related premium costs paid for overtime in relation to the Comptroller's Determination for employees in the DOT titles of Bridge Repairer/Riveter and Supervisor Bridge Repairer/Riveter, covered under agreement A-5028-1.

To accomplish the above objectives, we examined and analyzed all timesheets for the above series of titles at DOT, covering a one-year period (October 25, 1992 - October 22, 1993). After determining the number of ineligible hours for each employee during this period, we calculated the premium costs allowed for overtime hours and determined the excess premium costs paid by the City. In order to estimate any excess premium costs paid in the previous years, we randomly sampled the time-sheets of some of the employees for calendar years 1987-1993.

Results

For the sampled period (October 25, 1992 - October 22, 1993), we found that 7,167 hours of ineligible overtime (46% of all overtime hours paid) had been approved for payment, resulting in excess premium costs of $183,525.

We estimate that approximately $1,360,800 in ineligible excess premium costs has been paid in the six-year period examined on a sample basis.

A significant change in the number of overtime hours worked occurred from calendar year 1987 - calendar year 1988. In 1987, 7,407 overtime hours were worked; in calendar year 1988, 24,230 overtime hours were worked, a significant increase of 327 percent.

The average ratio (in our sample) of ineligible hours to total overtime hours for the years 1987-1991 was 48 percent. This compares favorably to the 46 percent for the audit period October 25, 1992 - October 22, 1993, when a 100 percent review of timesheets was conducted, indicating that the methods used to project the total excess costs over the six-year period would have resulted in an accurate estimate.

Seven recommendations were made to address the above weaknesses.

Update
The Mayor's Office of Management and Budget reported that the DOT has implemented all of the audit recommenations possible at this time. The DOT has instructed its employees to review timesheets properly, to ascertain why mistakes led to overpayments, and to identify those employees involved. They have also reviewed the upward trend in overtime hours concluding that the increase could be attributed to the implementation of the comprehensive bridge program.

Nevertheless, the recommendations addressing the recoupment of ineligible overtime payments remain to be implemented because the issue was disputed by the Unions representing the workers involved, and the City is waiting for the outcome of the grievance procedure. The DOT is waiting for an opinion from the Office of Labor Relations.

• DEPARTMENT OF TRANSPORTATION(DOT)
  Audit Report on The Quality of Bus Service in New York City Provided by Private Bus Companies Under Contract With The Department of Transportation
  

Introduction

The audit's objective was to determine the effectiveness of the Department of Transportation's (DOT) ability to oversee the quality of services of private bus companies providing service to the public and to verify independently all data submitted by the bus companies to the DOT regarding their performance.

We reviewed the DOT's quarterly reports which summarize its Surface Transit Division survey results of all seven private bus companies. Through field observations, we reviewed the performance of one of the seven companies (Green Bus Lines) to determine whether the DOT's monitoring reports reflected the actual performance of the private bus companies.

Results

According to the DOT, all seven companies met or exceeded the standards for the 10 performance indicators developed by the DOT. Our observations yielded slightly different results from those reported in the Surface Transit's performance reports for Green Bus Lines in all categories except four. Significant differences were found in the following categories: complaint handling, on-time performance, wheelchair-lift accessibility, and signage. Green Bus Lines could improve in these performance areas, which greatly affect customer satisfaction.

The DOT agreed with the seven audit recommendations. Two recommendations dealt with the development of standards for on-time performance and wheel-chair accessibility. The DOT agreed that standards for these two indicators were needed but stated that increasing existing standards required negotiations with all the bus companies and, therefore, could not be imposed unilaterally. One recommendation was that the DOT should follow-up on customer complaints against Green Bus Lines. The DOT does not have a customer service department to assume this task. The audit report recommended that the DOT require Green Bus Lines drivers to check the wheelchair lifts daily. The DOT stated that the bus drivers were doing this in addition to the supervisors who check the lift mechanisms weekly. The DOT said it would share the audit's findings with the other six private bus companies and then review the recommendation for additional funding from the Office of Management and Budget (OMB) in order to hire additional monitoring staff.

Update

The DOT has not provided follow-up information. The Office of Management and Budget status report did not describe the most recent status of the information.

Introduction

This audit's objective was to determine whether the Department of Transportation's (DOT) controls over its billing and collection process were both adequate and efficient, whether DOT could accurately identify its accounts receivable, and whether outstanding receivables were referred timely for appropriate action. The auditors focused on the collections resulting from revocable consents, electric transformers, and those franchise fees due from the Metropolitan Transportation Authority's (MTA) Long Island Railroad (LIRR).

The auditors interviewed appropriate agency personnel, examined documents for information accuracy and sufficiency and traced deposits and payments through the appropriate DOT departments. The auditors also evaluated the existing procedures for collecting all possible revenues, and whether they were adhered to in reference to properly-deposited and FISA-reported revenue.

Results

The audit found that the Division of Franchise, Concessions and Consents (DFCC) mailed bills on time, followed up with payment due notices whenever necessary, collected appropriate interest where applicable, and maintained and reconciled outstanding receivable records. Although DFCC's collection percentage rate exceeded 90 percent, it has not been able to collect outstanding receivables from the LIRR. The LIRR's outstanding receivable amount is $800,864 for fiscal year 1993.

The DOT should collect the LIRR's outstanding debt, review all of its consent agreements, determine an acceptable rental increase, and negotiate increases based upon it. Re-negotiated consents should include provisions for collection of security deposits and interest charges for all late payments. The DOT should ensure that the LIRR complies with all of its consents and agreements, and deactivates abandoned consents.

Update

The DOT officials stated that the issues discussed in the audit report should be referred to the NYC Law Department for settlement since they involve legal issues of the LIRR consents and franchises. On July 17, 1995, the MTA forwarded a letter to the DOT's Division of Franchises, Concessions and Consents with a settlement proposal outlining the franchise fees of $921,730 owed by the LIRR, the payment of $1,017,775 owed to the LIRR by the City's Economic Development Corporation (EDC) and the disposition of inactive train tracks at two locations. The DOT's letter to the MTA on October 25, 1995, agreed to accept the LIRR's offer to pay $148,800 for 12 active freight crossings. The DOT also stated that the LIRR would have to pay $344,000 in outstanding franchise fees, in addition to street restoration fees for three abandoned railroad crossings. The DOT requested an answer from the LIRR regarding these matters.

Introduction

The Department of Transportation's Vehicle Maintenance and Repair Unit (VMRU) maintains an inventory of automotive parts valued at $3 million to repair the DOT's fleet of approximately 3,200 vehicles. The VMRU maintains a central automotive storehouse and six satellite repair shops throughout the five boroughs.

The VMRU's automotive parts inventory records are computerized on the Department of General Services, Office of Fleet Administration's Fleet Administration Maintenance Information System (FAMIS), which should allow VMRU to track the receipt, issuance, and on-hand balance of parts, as well as the cost incurred for labor and materials to repair DOT vehicles.

The audit's objective was to evaluate the Vehicle Maintenance and Repair Unit's inventory practices and procedures, and to verify whether VMRU's inventory operation effectively safeguarded its inventory of automotive parts.

Results

The DOT's Vehicle Maintenance and Repair Unit's (VMRU) inventory operation is ineffective and operating without any uniform, consistent policies or procedures and without adequate internal controls. VMRU does not have procedures for the following:

detecting errors and irregularities;

maintaining adequate inventory records and

safeguarding its inventory.

The VMRU does not have procedures governing its inventory operation. Its management neither recognizes the lack of adequate internal controls and written procedures as problems nor does it recognize the significance of existing operating weaknesses.

The following internal control weaknesses increase the risk of theft or accidental revenue loss:

Inventory adjustments can be made readily (via the computer) without any prior authorization or approval from VMRU management. There is no record of who makes an adjustment.

The automotive inventory is not adequately safeguarded.

Unauthorized personnel are permitted to enter the storage areas to take parts.

Our physical count indicated that the inventory records for 31.6 percent of the 291 parts counted at the Central Automotive Storehouse (CAS) and 19 percent of the 149 parts counted at the Brooklyn satellite shop were inaccurate.

The reported dollar value of the 291 items (counted at the CAS) was $29,457 and included the following discrepancies: $2,993 was not found during the count and $2,226 in additional automotive parts were found during the count, but were not recorded on the CAS inventory. Therefore, the absolute dollar value of these discrepancies equaled $5,219, indicating that approximately 18 percent of the CAS inventory value was not recorded accurately.

The reported dollar value of the 149 items at the Brooklyn shop was $6,379 and included the following discrepancies: $463 was not found and $950 in additional automotive parts were found during the count, but were not recorded on the Brooklyn shop's inventory. Thus, the absolute dollar value of the discrepancies was $1,413, indicating that approximately 22 percent of the Brooklyn shop's reported inventory was not recorded accurately.

Additionally, receipts of various automotive parts and oil were not inventoried. Attenuators valued at $525,420, rebuilt parts valued at $18,956, and oil valued at $14,700 were not recorded on inventory lists.

Update

The DOT has not provided follow-up information.

• DEPARTMENT OF TRANSPORTATION (DOT)
  

Introduction

The audit's objective was to compare the cost of using the Department of Transportation's (DOT) own crews to re-surface streets to the cost of hiring contractors to do the work. This audit is a follow-up to a May 1989 Comptroller's audit (MC88-201) that found that in-house crews are competitive with outside contractors in terms of labor cost and quality.

To accomplish the above objective, cost data for streets that had been re-surfaced by in-house crews during fiscal year 1994 was compared to the City's costs for similar streets re-surfaced by contractors.

Results

The audit found that streets re-surfaced by in-house crews were done at lesser cost than those by contractors in Brooklyn and on Staten Island. In Queens, however, contractors' costs were lower than the DOT's in-house crews. Cost differences were attributed to the following:

the location of asphalt plants,

the use of DOT's own asphalt plant or asphalt purchases from outside vendors,

the number of square yards re-surfaced by contractors.

The audit indicated that in-house costs for milling (grinding of streets before placing asphalt) was competitive with contractor-milling costs on contractor re-surfacing projects requiring milling. This contrasts with a City-wide milling contract which costs more than milling done by the City (on its own re-surfacing projects) and is also more costly than the private sector projects that include milling.

The audit also noted that despite the Mayor's Office listing of asphalt resurfacing as one of its proposed managed competition initiatives between the City and the private sector, a specific cost competition project which was partly underway torward the end of the audit was dropped just prior to the issuance of the audit. No reasons were offered for the termination nor was any date given for any future competition projects.

The audit made a total of 15 recommendations including eight general recommendations and seven cost-competition related recommendations to ensure that the DOT's cost-competition projects are comparable and would take the following factors into account:

location of asphalt plants,
street length/width,
traffic conditions,
thickness of top and bottom layers of asphalt.

In addition, the audit recommends that work in the various boroughs be distributed to the DOT or to a private contractor depending upon the lowest cost.

Update

The Mayor's Office of Management and Budget (OMB) reported that DOT has implemented two out of the eight general recommendations:

The DOT has a program that analyzes in-house costs to determine whether the factors causing the cost differences are justified, and if not, takes steps to reduce them.

The DOT continues doing in-house work but also contracts out re-surfacing work.

OMB reports that the other six general recommendations are "pending implementation".

The DOT reports that it has no specific date or plans for resumption of the original cost- competition project, although it stated that future cost-competition projects will involve in-house bidding on the same contract(s) as the private sector. No date has been set for any of these contracts.

Of the seven cost-competition related recommendations, OMB classfies five as "pending implementation" and two as "not applicable" because in-house and the private sector will be bidding on the same contract.

DEPARTMENT OF TRANSPORTATION (DOT)
Individuals Employed as School Bus Drivers by Private Companies Under Contract With the New York City Department of Transportation
Audit # MG95-131A
Comptroller's Audit Library # 6344
Issued: December 28, 1994
Monetary Effect: Not Applicable

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 122 school bus drivers out of 849 school bus drivers, and reviewed their driving records to determine whether they had the required 19-A status, and whether they had any restrictions on their licenses that would prevent them from driving. In addition, we requested a criminal history search of any charges filed against them through the New York State Office of Court Administration. We then determined if those convictions would disqualify them from operating a school bus.

Results

Our review was generally "positive" and disclosed that:

All one hundred and twenty-two school bus drivers from our sample had the required 19-A status to drive a school bus.

Fourteen of the sampled school bus drivers had had their New York State driver's licenses suspended for periods ranging from one to 3,800 days. We reviewed the employers' payroll records for six drivers, whose licenses were suspended for 49 or more days, and found that one driver was listed and paid as a driver for seven weeks during the eight-month period when his license was suspended. Our review disclosed that another driver was also the owner of the bus company and did not have a contract with DOT until after his license was restored.

Two other school bus drivers had accumulated nine or more points on their driver's license within an 18-month period. One driver had successfully completed a motor vehicle accident prevention course, thereby reducing her points to less than nine. The other driver accumulated 11 points on his license as of July 15, 1993 and did not take a motor vehicle accident prevention course until May 18, 1994. We reviewed payroll records for the bus company listed by DOT as this driver's employer and determined that he did not operate a school bus for this company during the 10 months that he had 11 points on his license.

Ten school bus drivers from our sample had criminal convictions. However, there was no evidence that any of these drivers' convictions would disqualify them from driving a school bus.

Three drivers out of the above mentioned 10 were convicted of driving while intoxicated (DWI). DWI convictions disqualify a school bus driver from driving a bus for five years only if the offense occurs while driving a school bus or if the driver is convicted twice within a five-year period. According to DMV officials, none of these three drivers were operating a school bus at the time of their DWI conviction or had been convicted twice within a five-year period. Drivers convicted of DWI for the first time have their driver's licenses suspended for a six-month period according to DMV officials. The three drivers were convicted of DWI from 3 to 12 years prior to our audit period. Therefore, their licenses would have been fully restored prior to our review.

Update

DOT generally agreed with our recommendations. According to the Office of Management and Budget, DOT conducted an investigation and determined that none of the school bus drivers cited in the audit were operating a school bus while under suspension.

• 
  WELFARE FUNDS
  

Introduction

The audit's objectives were to determine

whether the Health and Welfare Fund (Fund) of the Patrolmen's Benevolent Association (PBA) of the City of New York was administered in accordance with the Fund Agreement, the Declaration of Trust, and the Comptroller's Internal Control and Accountability Directive #12;

whether members' interests were adequately protected.

We reviewed the fiscal and operating practices of the Fund July 1, 1990 - June 30, 1991.

Our audit included a review of:

the Fund's compliance with Directive #12,

the propriety of recorded transactions,

the reasonableness, propriety and allocation of administrative expenses,

the Fund's internal controls, and

a test of benefits paid to participants.

The Fund is a supplementary benefit plan established in 1964 under a collectively-bargained agreement between the PBA and the City of New York.

Results

The Fund is administered in accordance with the Fund Agreement, the Declaration of Trust, and Directive #12. The Fund's internal control structure seems adequate and effective in ensuring the propriety, reasonableness, and allocation of Fund expenses as well as ensuring that benefits are paid in accordance with Fund provisions. We did find, however, that the Fund's money market investments could be better protected by collateralization, and that the Fund's administration of its legal services benefits could be improved. Certain Fund practices violate the Fund Agreement and ERISA regulations. Errors and omissions were made on the Fund's 1991 annual return to the Internal Revenue Service. Fees were paid to a consultant for services of questionable value, and certain expenses were not properly allocated between the Fund and the Union. The documentation process of certain benefits also needs improvement.

Update

Follow-up was not necessary.

Introduction

New York City contributed approximately $420 million to the 108 Union-administered active, retiree welfare and annuity funds included in this survey, whose fiscal year ended during calendar year 1990. The welfare funds were established under collective bargaining agreements and declarations of trust betweeen the Unions and the City of New York. The funds provide City employees, retirees, and dependents with a variety of supplemental health benefits not included in City-administered health insurance plans. Certain other benefits are also provided at the discretion of the individual funds.

Results

Similar to our reviews of the financial data submitted by the funds for the past 13 years, we have found broad variations in the amount spent for administrative purposes, even though, in certain instances, there is a clear indication that these costs have been reduced. Several funds expended lower-than-average amounts for benefits, thereby maintaining higher reserves. We futher noted various areas of non-compliance with Directive #12 requirements pertaining to fund agreements.

Update

Follow-up was not necessary.

Introduction

New York City contributed approximately $490 million to the 107 Union-administered active, retiree welfare, and annuity funds included in this survey whose fiscal year ended in calendar year 1992. The welfare funds were established under collective bargaining agreements and declarations of trust betweeen the Unions and the City of New York. The funds provide City employees, retirees, and dependents with a variety of supplemental health benefits not included in City-administered health insurance plans. Certain other benefits are also provided at the discretion of the individual funds.

Results

Similar to our reviews of the financial data submitted by the funds for the past 14 years, we have found broad variations in the amount spent for administrative purposes, even though, in certain instances there is a clear indication that these costs have been reduced. Several funds expended lower-than-average amounts for benefits, thereby maintaining higher reserves. We futher noted various areas of non-compliance with Directive #12 requirements pertaining to fund agreements.

Update

Follow-up was not necessary.

• 
  WELFARE FUNDS
  

Introduction

The Comptroller's EDP Audit Unit reviewed the general system controls for the Health and Welfare applications of the Patrolmen's Benevolent Association (PBA) of the City of New York and Incorporated Fund Office (the Fund) to determine whether the proper internal controls are in place. We attempted to review the development controls for the Catastrophic Benefits system but were unable to do so because it is in the development process, and the documentation necessary for our evaluation did not exist.

Results

PBA computer-operations management has developed sophisticated computer applications, has used adequate equipment in performing welfare benefits functions, and has planned to increase computer automation of the current operation. The PBA's Health and Welfare Fund and the consulting groups have demonstrated the technical expertise to support the operation. We view our findings and recommendations as additional steps that would further improve this installation.

Security controls must be strengthened
The fund's written documentation needs improvement
A system disaster recovery plan should be adopted.

Update

The PBA has not provided follow-up information.

Introduction

This audit determined the accuracy of contributions received by the NYC Transit Police Retirees Security Benefits Fund from the NYC Transit Authority (TA). The TA transmits the City's annual $925 per retiree contribution to the Fund. Since the Fund does not receive City monies directly, it is not subject to Comptroller's Internal Control and Accountability Directive #12, "Benefit Funds -Uniform Reporting and Auditing Requirements." Therefore, our audit did not include a review of the Fund's administration and reporting activities for compliance with this Directive.

Results

We found a shortfall in TA contributions to the Fund, totalling $386,415. The shortfall consisted of $277,643 in 1992 and $108,772 in 1993. The total shortfall consisted of two parts; the first part was the result of differences in the eligible retiree count, and the second part was the result of differences on the TA's contributions statements including one mathematical error of $48,004.

The audit recommended that the NYC Transit Police Retirees Security Benefits Fund ensure the recoupment of $386,415 from the TA. This amount must be turned over to the New York Police welfare funds on behalf of the Transit Police retirees.

Update

The TA met with the auditors and provided the documentation supporting the payments of $304,278 to the Fund, which were not considered during the audit. The New York City Police Department has the detailed records supporting the payment of the remaining of $82,137.

• WELFARE FUNDS
  

Introduction

Local 858-International Brotherhood of Teamsters, Off Track Betting Corporation's (OTB), Branch Office Managers Welfare Fund was established under the provisions of an Agreement and Declaration of Trust, effective April 1, 1980, to provide health and welfare benefits to eligible members. This report deals with the Fund's compliance with applicable procedures and reporting requirements set forth in Comptroller's Directive #12, "Benefit Funds -- Uniform Reporting and Auditing Requirements."

Our audit determined whether the Fund's internal controls over its processing and financial reporting of received contributions, benefit payments, employee salaries, and administrative expenses were adequate and effective; evaluated whether the Fund's allocation of administrative expenses was reasonable; and, assessed whether the Fund's level of reserves were adequate.

Results

The Fund generally complied with applicable policies, procedures, and reporting requirements. However, we found that:

prescription drug claims were not properly documented.

the Fund provided no basis for allocation of administrative expenses.

the Fund may not have an adequate level of reserves.

insurance premiums were improperly included in the Fund's annual paid benefits resulting in misleading financial reporting.
Update

The Welfare Fund has not provided follow-up information.

• WELFARE FUNDS
  

Introduction

The audit's purpose was to verify the accuracy of payments made by the City University of New York (CUNY) to the Professional Staff Congress/CUNY - Benefits Fund (the Fund) from July 1, 1993 - December 31, 1993, on behalf of all eligible retirees and to ensure compliance with City Guidelines governing the submission of vouchers to the Comptroller's Office for post audit.

In order to accomplish the above objectives, we reviewed

all voucher payments from July 1, 1993 - December 31, 1993

all relevant agreements established between the Fund and CUNY

all pertinent City Guidelines.
Results

The audit found that CUNY did not forward all documentation to support the propriety of payments made in accordance with Comptroller's Directive #8 when submitting vouchers to our office for post audit. Moreover, vouchers were approved for payment prior to the Comptroller's Office receiving agreement A-3080 and issuing of the Memorandum of Understanding which led CUNY to use rates that were to be authorized.

Update

The CUNY Welfare Fund has not provided follow-up information.

• 
  DEPARTMENT OF YOUTH SERVICES (DYS)
  

Introduction

The objectives of the audit were to determine whether the Department of Youth Services (DYS):

included measurable objectives and performance indicators in its 37 Beacon contracts;

monitored and evaluated the success of the Beacon programs in meeting contract requirements;

ensured that contractors offered all the activities listed in their contracts; and

ensured that contractors served the number of participants required by the contract for each activity.

We reviewed copies of registered contracts for all 37 Beacon Programs to determine whether they contained measurable objectives and whether activities were scheduled for seven days a week. We selected a random sample of five Beacons, one from each borough, for a more detailed review. We made unannounced field visits to each of the five Beacons to determine whether they supplied the required number of service hours specified in these contracts, and fulfilled contractual attendance requirements.

We also obtained copies of the DYS' Monthly Reporting Forms, Beacons' Weekly Activity Charts, and monthly narrative reports. Then, we compared the number of participants to the total number of individuals who participated in each activity and reviewed the monitoring reports for sufficient information availability to determine the Beacon Program's success.

Results

The Beacon contracts were poorly designed -- 36 out of the 37 contracts lacked adequate performance indicators -- consequently, it was impossible to measure their success.

We found a vast discrepancy in the number of activities offered and the number of individuals served, even though each community-based organization received the same funding (approximately $450,000 per year). As a result, the DYS could not determine whether communities received the same relative value from their Beacon programs, or were shortchanged. Nine out of 37 Beacons did not provide activities seven days a week even though they were contractually required to do so. The Beacons did not:
offer all the activities specified in their contracts for the requisite number of hours;

offer 110 out of 188 contract-required activities; instead, they offered 64 non-contract-required activities either to replace or to add to the others.

Poor contract design and vague language affected a majority of the contracts, which did not include performance indicators measuring the Programs' success. No stipulation was included for tracking and reporting the number of people participating in activities; inaccurate statistics were submitted.

The audit made 14 recommendations to address the aforementioned weaknesses.

Update

The DYS has implemented 13 out of 14 audit recommendations. The DYS is still funding all Beacons at the same dollar level; however, the DYS is considering some changes in the funding level, as well as the management of the school opening fees.

On June 7, 1995, a City Council hearing on the Beacon report was held; the Comptroller testified on the Agency's behalf. In September 1995 the Comptroller's Office reviewed a draft RFP. The draft reflected improvements based on the recommendations proposed in our audit. While we made suggestions for further clarification and specificity in certain areas, the RFP did require programmatic goals, specific objectives, measurable outcomes and measurement tools for each activity. In January 1996 we reviewed and commented on the draft of the Beacon contract. We found that, as we had suggested, it required contractors to provide specific information about target groups, measurable program outcomes and expected attendance levels.

• SECTION II

Total Claim Amount $40,297.373

Less: Claim Amount of Settled Claims 1,399,431

Unsettled Claim Amount 38,897,942

Less: Claim Amount of Denied Claims NA
Claim Amount of Unresolved Claims 38,897,942

Less: Audited Amount of Unresolved Claims 2,009,672

Potential Cost Avoidance* 36,888,270

• Note: As stated, these cost avoidance figures are only "potential." They are based on results of audits, which are only the first step in the claim process. As claims are further processed, and as they are concluded via settlement or lawsuit, the actual figures will be different because of other factors that need to be considered at other steps of the claim process.

Audit Disposition/
Audit Date Claim Accepted Settlement
Number Claimant Issued Amount Amount Amount

FP94-169A Board of
Cooperative
Educational
Services -
Albany -Schoharie
Schenectady
Counties 08/19/94 * * *

5C94-155 Garrison
Protective
Services,Inc. 10/11/94 * * *

5C94-153 Garrison
Protective
Services,Inc. 10/18/94 * * *

FP94-173A Ray's
Maintenance
Service,Inc. 10/24/94 * * *

FP94-181A Par Plumbing,
Co., Inc. 12/07/94 * * *

FP94-243A Brooklyn USA
Athletic Asso-
ciation, Inc. 12/09/94 $168,619 NA $37,997

FP94-171A Vera Institute
of Justice,Inc 01/26/95 * * *

FP95-114A Brooklyn Union
Gas Company 03/13/95 * * *

FP94-240A Steers/Corbetta
Joint Venture 06/08/95 * * *

FP94-185A Falco
Construction
Corporation 04/25/95 * * *

FP94-172A Thalle
Construction
Corp. Inc. 04/24/95 * * *

Audit Disposition/
Audit Date Claim Accepted Settlement
Number Claimant Issued Amount Amount Amount

FP94-170A Schiavone-
Daidone
Joint Venture 06/29/95 * * *

FP95-132A Hotel St.
George Assoc. 06/29/95 $1,190,444 NA $687,500

FP95-141A YMCA of
Greater New
York Inc./
Eastern
Division 06/08/95 $ 40,368 NA $ 35,840

FN95-142A Abe's Leather
Mart, LTD 03/15/95 * * *

FN95-171A Tzippy
Realty Corp
and Everything
99 Cents, Uno
Peso Dollar
Stores, Inc. 05/19/95 * * *

FN95-179A Nathan M.
Dweck 06/14/95 * * *

Fiscal Year 1995 Totals $40,297,373 $2,881,616 $761,337

NA No longer applicable because claim has been settled

• Amount not disclosed because case is still open

  FRANCHISE, CONCESSION, AND LEASE AUDITS

Actual Remaining
Audit Comptroller's Audit Date Revenue Potential
Number Library No. Name Issued To - Date Revenue

3C94-134 6373 Cablevision 4/11/95 $375,963 $176,044
Systems/
DOITT

FN94-241A 6439 TAM 6/29/95 $ 26,157 $110,756
Concessions/
Parks

3E93-106 6354 Concessions 2/14/95 $ 48,463 $435,164
Monitoring
Unit/Parks

3C94-119 6350 Alley Pond 1/17/95 0 0
Tennis Club/
Parks

TOTAL: $450,583 $721,964

Report No Date Issued Actual Remaining Total
Revenue Potential
To - Date* Revenue

FN95-059A** 05/O9/95 $56,244 $515,827 $572,071
3C94-146 05/09/95 6,035 25,444 31,479
FR95-075A 05/09/95 6,361 11,660 18,021
FR95-135A 06/29/95 4,421 6,163 10,584
FR95-169A 06/29/95 5,747 14,104 19,851

TOTAL $78,808 $ 573,198 $652,006

• Amount of original disallowance per audits, accepted by New York Yankees as a Yankee cost.
• Disallowance based upon reaudit of credits per agreement for calendar years 1990, 1991 and 1992.