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New York City Comptroller William C. Thompson, Jr. today announced that audits by his office over the past five years generated nearly $198 million in actual and potential revenue and savings.

The Fiscal Year 2006 City Charter-mandated report on the Comptroller's Audit Operations details the findings and recommendations of audits over the last fiscal year, and brings to 497 the number of audits and special reports conducted from Fiscal Year 2002 to Fiscal Year 2006.

The City Charter requires that every City agency be audited at least once every four years. In addition, the Comptroller’s Office performs audits and studies of City agencies and public authorities and private entities that receive funding from or generated revenue for the City.
"Over the past five years, my audit bureaus have identified almost $198 million in actual and potential revenue and savings, and have documented many instances of program inefficiency and mismanagement,” Comptroller Thompson said in the report.
Thompson pointed out that he instructed his audit bureaus to focus their efforts on those aspects of City operations that would maximize revenues and cost savings and also improve the quality of life for our residents.

During Fiscal Year 2006, the Comptroller issued audits covering a wide range of subjects, including revenue identification and collection, cost savings, program performance, asset management, internal controls, and information technology. Audits that generated the most actual and potential revenue and savings include:

• An audit of Homes for the Homeless, Inc. (HFH) disclosed that the non-profit organization violated some key provisions of its contract with the Department of Homeless Services (DHS) to provide temporary housing and related services to homeless families at the Saratoga Family Inn (Saratoga). HFH did not comply with DHS contract provisions relating to payment procedures, leading to $1,055,339 in excessive charges at Saratoga for Fiscal Year 2004. Those excessive charges included $916,855 that was related to the provision of services to clients housed in 33 rooms at Saratoga not covered under the contract with DHS. Also, HFH did not consistently comply with its contract provisions on social services, such as those relating to maintaining health-screening documentation, permanent housing assistance, and employment services.
• An audit of the City’s franchise agreement with Telebeam Telecommunications Corporation (Telebeam) to install, repair, maintain, upgrade, remove, and replace public pay telephones disclosed that Telebeam did not ensure that its media representatives properly reported their total net commission advertising revenue, nor did they correctly calculate and pay fees owed the City. Telebeam’s media representatives underreported $4.8 million on behalf of Telebeam and another $11.4 million on behalf of the other 14 public pay telephone operators who together with Telebeam owe the City $5.2 million. Of this amount, Telebeam owes $1.5 million in fees and related interest.

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

• An audit of the compliance of the Salvation Army (SA) with its contract to operate and manage Carlton House, a 335-unit transitional housing facility for homeless families, found that SA did not comply with certain contract terms. SA did not ensure that Carlton House was maintained in a safe and sanitary condition, and it did not maintain documentation indicating that tenant units were inspected regularly. In addition, SA commingled funds received from DHS with funds from other SA programs; and made payments from its general account that were not fully supported by the documentation in its files; paid for items that were not delivered to Carlton House; paid employees $77,820 for work hours that were undocumented; and did not maintain an inventory list of equipment or affix inventory tags to equipment. Also, DHS did not amend the contract and submit an amendment to the Comptroller for registration when it chose to increase the daily rate it paid SA, contrary to the City’s Procurement Policy Board rules.
• An audit of the compliance of Animal Care and Control of New York City with its contracts with the Department of Health and Mental Hygiene (DOHMH) to care for the City’s entire homeless and unwanted animal population found that although shelter conditions were adequate, certain aspects of the operation could be improved. Cleaning procedures were not always followed; and timelier cleaning of adoption wards, spot cleaning of cages, and proper drying of floors could improve cleaning. The audit noted that other improvements could be made in the following area; shelter, investigations of animals missing from shelters, the isolation of sick animals from healthy animals, and walking of dogs to ensure their proper exercise.

Audits at a number of agencies identified significant deficiencies in internal controls and asset management. Among them:

• An audit of the administration of job order contracts (JOC) by the Department of Education (DOE) disclosed significant weakness in the management of the program. JOC is a procurement method for expeditiously performing maintenance, repairs, and minor construction work. The audit found that DOE did not have an adequate procedure to ensure that required project documentation was submitted and approved. Moreover, DOE lacked any written policies or guidelines that spell out the circumstances – including a monetary threshold – under which the use of job order contracting is appropriate. Further, DOE has not ensured that inspections of proceed-order work are adequately conducted and documented by reports, daily logs, and photographs. These weaknesses in program controls led to contractors: being assigned work outside their contract location; not completing all required work; not performing work satisfactorily; and not completing work on time.

 “For the remainder of my tenure as Comptroller, I will continue to deliver on my commitment to maximize revenue while reducing costs and improving the quality of City services and programs,” Thompson said.

Thompson posts all audits on his website - www.comptroller.nyc.gov - upon their release. A copy of the new annual report also is available on the website.

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