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New York City Comptroller William C. Thompson, Jr. today released two audits that found the city's Human Resources Administration (HRA) failed to institute key improvements to its computer inventory tracking systems. The audits, follow-ups to ones issued in 2001, examined whether the agency took steps to address "significant weaknesses" in its inventory controls over computer equipment installed at 133 HRA user sites and stored in three HRA stockrooms.

Thompson's audits - performed in March and April of this year - determined that HRA failed to implement a number of key recommendations made to improve the agency's monitoring of its equipment.

"The initial audits released by the Comptroller's Office identified serious shortcomings in HRA's tracking systems, and found that the agency could not account for a substantial amount of equipment, which may have been lost or stolen," Thompson said. "The agency has not taken significant steps to address these problems, and HRA should not allow such potential waste and abuse to continue."

Follow-up Audit Report on the Computer Equipment Inventory On-Hand at the Human Resource Administration's Stockrooms

In the first audit, "Follow-up Audit Report on the Computer Equipment Inventory On-Hand at the Human Resource Administration's Stockrooms," Thompson noted that HRA did not implement three of four earlier recommendations. As a result, Thompson issued three new recommendations and urged HRA to notify the Department of Investigation about any potential wrongdoing.

The initial audit - released in May 2001 - evaluated HRA's control over its computer hardware and software stored in HRA stockrooms and in a warehouse of Time Record Storage Company, a contracted storage vendor. This audit found that HRA did not: have written inventory procedures for reconciling computer inventory records; segregate the responsibility for receiving and disbursing equipment; maintain a complete log of computer equipment received; issue equipment disbursement forms in sequential order; and, ensure that the disbursement forms contain all required authorization.

The Comptroller's Office made four recommendations. First, the Comptroller recommended that HRA create an inventory project team, which would report to the HRA commissioner, and whose function would be to overhaul and redesign HRA's inventory system to improve its accuracy and make it more timely and useful.

However, this audit found that HRA has not fully followed this recommendation. The agency maintained that such a team should report to the Deputy Commissioner for Management Information Systems. Thompson's follow-up audit, however, recommends that HRA reassign the team to report to the Commissioner, given that many of the problems cited in the 2001 audit are still not resolved.

"Since there is a strong possibility that a substantial amount of inventory may have been lost or stolen, resulting in a substantial loss to the City, the Commissioner should be an integral part of correcting the system," Thompson said. "Since many of the weaknesses identified in our prior audit are still not resolved, we question the effectiveness of the HRA inventory committee."

Thompson noted that the agency still does not have written inventory procedures for reconciling stockroom computer inventory records and does not maintain a complete log of all computer equipment received, among other deficiencies.

The second recommendation urged the agency to investigate a number of discrepancies in its record-keeping. The 2001 audit noted that the agency could not account for 568 pieces of equipment that were listed in inventory records, and that 1,035 items located during the count were not listed in the records.

Although HRA claimed it investigated the discrepancies, this audit noted that the agency did not account for 445 of the 568 pieces of missing equipment.

The Comptroller, as well, recommended that HRA refer all unresolved and significant discrepancies to the Department of Investigation. However, the agency has not provided the Comptroller with any evidence to that effect.

The initial audit identified 97 Dell computers missing from a Brooklyn warehouse operated by the Time Record Storage Company, which held a contract with HRA and was required to maintain an up-to-date inventory of all equipment received and withdrawn from its stock. The contractor was responsible for any discrepancies.

The Comptroller recommended that the agency pursue compensation for the loss. Thompson noted that the agency has followed through on that recommendation because HRA filed suit against Time Moving and Storage, Inc. (formerly Time Record Storage Company) in May 2002. That litigation is still active.

Follow-up Audit Report on Computer Equipment Installed at the Human Resources Administration

In the second audit, "Follow-up Audit Report on Computer Equipment Installed at the Human Resources Administration," Thompson noted that HRA did not implement four of five recommendations made in the 2001 audit.

That first audit evaluated the adequacy of HRA inventory procedures for installed computer equipment, identified deficiencies in computer equipment inventory control, and noted that approximately $2.5 million in equipment was missing.

The 2001 audit determined that the agency did not perform any annual physical inventory counts between 1995 and 2000, allowing $2.5 million in missing equipment to go undetected. As well, auditors determined that certain equipment (i.e. Sun Microsystems servers) had not been included in the agency's database.

The follow-up audit found that Sun Microsystems equipment that cost HRA about $1.34 million - about 11 percent of the equipment sampled - still had not been included in the agency's database.

As with the 2001 audit of stockroom inventory, the Comptroller recommended that HRA: create an inventory project team that reports to the Commissioner to ensure that the inventory control system for installed computer equipment was accurate, timely and encompassing. The audit also recommended that HRA refer all significant and unresolved discrepancies to DOI for further investigation; include all Sun Microsystems equipment on the inventory database; and, follow the existing procedures to ensure that all equipment records are accurate. Those recommendations were not implemented.

A fifth recommendation - that the agency assign more data entry personnel to enter the results of the physical inventory count - is no longer applicable. Thompson has reissued the other recommendations that had not been addressed, and specifically noted that the agency must ensure that the project team is reassigned to the Commissioner.

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