Bureau of Audit

Annual Audit Report Fiscal Year 2010

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March 1, 2011

Mayor Bloomberg, Speaker Quinn, and Members of the City Council:

I hereby transmit the annual report on the operations of the audit bureau of the New York City Comptroller's Office for Fiscal Year 2010. This report is mandated under Section 93 (f) of the City Charter, which stipulates that no later than March 1 of each year, the Comptroller is to provide a report to the Mayor and City Council on all major audit activities of City agencies conducted in the previous fiscal year.

As Comptroller, I am committed to make aggressive and vigorous use of the power of audit to both champion and pursue the achievement of efficient, effective City operations and services. The severe national and local recessions have resulted in lower tax collections at the State and City level. As a consequence, the City is facing looming budget deficits in the billions of dollars in each of the next several years. Therefore, it is critical that we root out waste, mismanagement, and inefficiencies in City government. As New York City Comptroller, my audits will be crucial in accomplishing that task and in putting government resources to work to improve the lives of all New Yorkers.

In Fiscal Year 2010, the audit bureau issued 80 audits and special reports that resulted in $129.5 million in actual revenues and savings, $26.6 million in potential revenues and savings, and called into question another $26.4 million associated with claims filed against the City.

Additionally, the audit bureau offered 562 recommendations to City agencies and other related entities to improve government programs and operations. While Agency managers are responsible for resolving and implementing recommendations promptly and effectively, auditors are responsible for following up to see that action is taken and that intended results are realized. Follow up of this year's recommendations found that Agencies reported implementing or partially implementing 435 recommendations (77%) and not implementing 127 recommendations (23%).

The Comptroller's Office welcomes your interest in ensuring that those recommendations [made by the audit bureau] which have not been implemented are carefully considered by City agencies. The benefit from audit work is not in the recommendations made, but in their effective implementation. Corrective action taken by management is essential to improving the effectiveness and efficiency of Government operations. To that end, we have provided supplementary information on the status of all our recommendations by both audit report and by agency.

Finally, according to Generally Accepted Government Auditing Standards, government auditing entities must undergo an external peer review every three years. The audit bureau underwent such a review in 2010 by the Institute of Internal Auditors (IIA).In its review, the IIA concluded that the audit bureau complied with Generally Accepted Government Auditing Standards, reported no negative findings, and offered no recommendations for improvement. In addition, the review expressly noted that the bureau should be commended for its performance across several areas.

Sincerely,

John C. Liu