View Fiscal Year 2004 Annual Audit Report (pdf)

Audits released by the Office of New York City Comptroller William C. Thompson, Jr. generated $20.6 million in actual revenue and savings and identified $20.3 million in potential revenue and savings during Fiscal Year 2004, according to a new report released today. The City Charter-mandated report on the Comptroller's Audit Operations details the findings and recommendations of 101 audits and special reports issued between July 1, 2003 and June 30, 2004 .

"Audits concluded over the last three fiscal years have generated $129.5 million in actual and potential revenue and savings, the highest amount over a three-year period in the last nine fiscal years," Comptroller Thompson said in the report. "These results represent a 233 percent increase in actual revenue and savings and a 36 percent increase in potential revenue and savings over the amounts achieved during the 1999-2001 fiscal years."

Thompson pointed out that he instructed his audit bureaus to concentrate on audits of City operations that show the most dramatic potential for risk of revenue loss, cost overruns, and mismanagement. The result has been a greater amount of revenue and savings generated per audit.

The average actual and potential revenue and savings per audit climbed dramatically, from $147,000 during FYs 1996-1998 to $188,000 during FYs 1999-2001 to $440,000 during FYs 2002-2004.

During Fiscal Year 2004, the Comptroller issued audits covering a number of topics, including revenue identification and collection, cost savings, program performance, asset management, internal controls, and information technology. Of note, he said, was an audit that found that the procurement process conducted by the Department of Education (DOE) in awarding a vending machine license to the Snapple Beverage Group was fundamentally flawed. That agreement provided Snapple an exclusive vending machine opportunity for about 1,200 City schools, and guaranteed that Snapple would pay a minimum of $40.2 million to the DOE over a five-year period. Auditors discovered that during the process there were minimal solicitation efforts, an inadequate request for proposals package and a defective bid evaluation and selection process.

The new report describes audits that generated the most actual and potential revenue and savings. Among them:

• An audit of the Department of Transportation identified $18,063,487 in a fiduciary account that should have been transferred to the City's General Fund. Those funds have since been transferred.
• An audit of the Department of Parks and Recreation found that the agency did not effectively monitor its concessionaries to ensure that they complied with capital improvement provisions of their concession agreements. The audit found that improvements totaling nearly $10 million were not completed at 37 of the 58 concessions inspected by auditors, and that the City lost at least $290,000 in concessionaire fees that, had improvements been made, would have allowed concession operations to generate revenue.
• An audit of the Department of Consumer Affairs identified $2.1 million in excess funds the Department allowed to accumulate in its Home Improvement Contractors Fund account that could have been used to satisfy contractor fines due the City. Those funds have since been transferred.
• An audit of the Taxi and Limousine Commission (TLC) found that the agency allowed $97.3 million in fines to remain uncollected; of this amount, $3.89 million could have been collected by implementing rigorous collection efforts. The TLC is in the process of implementing 16 recommendations and is seeking legislation to allow for the suspension of Department of Motor Vehicle licenses for outstanding TLC debt.
• An audit of the New York City Fire Department found that, based on a review of the 800 uniformed positions in the agency's 10 largest administrative units, the City could save $1.7 million annually by civilianizing 47 positions currently held by uniformed employees. The agency already has supervised or filled with light-duty personnel 12 of the positions.

The report also describes audits that disclosed the most significant service delivery issues. Among them:

• An audit of the Department of Homeless Services found that it did not comply with the City Charter and Procurement Policy Board Rules when entering into informal agreements with operators of conditional housing facilities. The audit also identified unsafe and unsanitary conditions several locations. The agency since has scaled down its "scatter site" program and entered into two contracts.
• An audit of the Department of Education's school safety plans for 10 elementary schools found that the 2003 and 2004 safety plans reviewed did not meet the DOE deadlines for completion and approval.
• An audit found the Department of Health and Mental Hygiene's (DOHMH) Complaint Inspection Program is ineffective in following up on complaints about food establishments, and that 40 percent of complaints sampled received no follow-up by inspectors. The DOHMH has indicated that it has implemented and is in the process of implementing seven of the audit's recommendations.
• An audit of the Workforce Investment Act (WIA) Program administered by the Department of Small Business Services (DSBS) disclosed that the DSBS has not ensured that the City has been allocated all of the Federal WIA funds to which it was entitled for its adult and dislocated worker job training and placement programs. DSBS has reported that it has partially or fully implemented four of the audit's five recommendations.

Audits of internal controls and inventory management identified significant deficiencies in expense justification, documentation, and asset management. Among them:

• An audit disclosed that controls over the cancellation of handgun licenses at the New York City Police Department (NYPD) were inadequate and inconsistent, and found 160 deceased individuals who still had active handgun licenses. The NYPD has indicated that it has implemented or will implement all of the report's recommendations.
• Audits of the Department of Correction (DOC) over its food and non-food items at the Rikers Island storehouses found that the agency had inadequate and ineffective controls over its inventory. For instance, the audit found 4,935 cases of bay leaves, which would have taken 20 years to deplete, and 1,392 cases of diapers, when no more than 15 babies are allowed to live on Rikers at the same time. DOC has implemented all of the recommendations.

The City Charter requires that every City agency be audited at least once every four years. The Office performs audits and studies of City agencies and public authorities and private entities that receive funding from or generated revenue for the City.

"I am proud of the success of the audit bureaus over the past three years, where my audits identified $129.6 million in actual and potential revenue and savings, and documented many instances of program inefficiency and mismanagement," Thompson said. "I will continue to deliver on my commitment to finding ways to enhance revenue, uncover waste and abuse, and improve agency operations."

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