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New York City Comptroller William C. Thompson, Jr. today announced that 81 audits and special reports conducted by his office during Fiscal Year 2007 generated $13.2 million in actual and potential revenue and savings.

During Fiscal Years 2002 through 2007 the Comptroller’s Office released 578 audits and special reports that have generated a total of $211 million in actual and potential revenues and savings.

The report issued today also disclosed that during Fiscal Year 2007 Thompson issued reports that called into question another $23 million associated with claims filed against the City. Since he took office, Thompson has called into question $93.5 million associated with claims filed against the City. 

The Fiscal Year 2007 City Charter-mandated report on the Comptroller's Audit Operations details the findings and recommendations of audits over the last fiscal year. 

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

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, public authorities, and private entities that receive funding from or generated revenue for the City.

"Over the past six years, my audit bureaus have achieved great success by examining programs with the greatest potential risk of revenue loss, cost overruns, mismanagement, inefficiency, and abuse,” Comptroller Thompson said in the report. “In doing so, they have identified more than $211 million in revenue and savings and have documented many instances of program inefficiency and mismanagement.”

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 2007, 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 the lease agreement of the Staten Island Minor League Holdings, LLC (SI Yankees) covering the operating period January 1, 2005 through October 31, 2006, found that the SI Yankees failed to pay the New York City Economic Development Corporation (EDC) a total of $1,581,154 for reimbursement of electricity use, signage revenue, sinking fund capital contributions, and previous audit assessments levied by the Comptroller’s Office. However, on January 4, 2007, at the conclusion of the auditors’ fieldwork, the SI Yankees signed a lease amendment and agreed to pay the amount of $1,427,899 in full settlement of all outstanding balances owed. Of the settlement amount, EDC accepted $399,185 as satisfaction against all prior audit assessments, and $1,028,714 in satisfaction of the current audit assessment.
  
  
• An audit of the administration of the J-51 Tax Incentive Program by the Department of Housing Preservation and Development (HPD) found deficiencies in the system of internal controls for administering the program. Consequently, HPD improperly approved “certified reasonable costs” for building rehabilitation of $2.8 million, which could result in the granting of $2.6 million in erroneous tax abatements. Under the J-51 program, HPD approves tax exemption and abatement benefits to owners of residential properties who rehabilitate their buildings and to owners of non-residential buildings who convert their buildings to residential use. HPD is responsible for administering the program, verifying eligibility, determining whether the cost of the work is supported, calculating a certified reasonable cost, and issuing certificates-of-eligibility. The auditors found that HPD improperly certified reasonable costs; improperly awarded certificates-of-eligibility to 25 of 56 sampled properties; and has not ensured that required inspections of J-51 rehabilitation and conversion work were adequately conducted.
  
  
• An audit of the license agreement of the Central Park Boathouse, LLC (the Boathouse) disclosed that the Boathouse did not accurately report a total of $2,392,669 in gross receipts to the Department of Parks and Recreation (Parks). As a consequence, since the Boathouse pays the City based on a percentage of gross receipts, the auditors determined that the Boathouse owed the City $381,070 in license fees, plus late charges. The license agreement requires that the Boathouse renovate, operate, and maintain the Boathouse restaurant, café, catering facility, outdoor bar, snack bar, boat, and bicycle rentals, a Park Activity and Resource Center, and a shuttle service in Central Park.

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

• An audit of the oversight of the Department of Education (DOE) of the services provided to mainstreamed elementary school special education students found that it is not monitoring, tracking, or documenting the provision of these services in an effective manner. DOE is mandated by the federal Individuals with Disabilities Act to ensure that all children with disabilities have available to them a free, appropriate public education that emphasizes special education and related services. Documentation maintained by DOE is incomplete, inaccurate, or lacking altogether. Because of these deficient records, DOE could not demonstrate to the auditors to the extent to which services were provided, as prescribed by the students’ Individualized Education Programs.
  
  
• An audit of controls to minimize the length of time that apartments were held vacant for capital renovation purposes by the New York City Housing Authority (NYCHA) disclosed that controls were not adequate. To facilitate renovations, and for other purposes, NYCHA policy provides for the temporary removal of NYCHA apartments from the rent roll. As of October 13, 2005, there were 3.073 NYCHA units – approximately two percent of all NYCHA-managed apartments – temporarily off the rent roll for capital renovation. NYCHA did not have overall time budgets for completing renovations that addressed the need to minimize the amount of time apartments were kept off the rent roll. A review of the vacant apartments at a sample of six developments found that as of October 13, 2005, the 2,017 units that were vacant for capital renovation had been off the rent roll for an average of 40 months. Minimizing the amount of time that apartments were off the rent roll would have resulted in increased revenues from additional NYCHA rental income at a time when NYCHA was in dire financial duress.
  
  
• An audit of controls over the licensing and oversight of carriage-horses, drivers, carriages, stables, and compliance with applicable rules and regulations of the City of New York determined that the Department of Health and Mental Hygiene (DOHMH) and the Department of Consumer Affairs (DCA) have adequate controls over these functions. However, although the Administrative Code statute relevant to the industry includes a requirement for an Advisory Board to have been established, DOHMH failed to establish the Board. As a result, regulations promoting the health, safety, and well-being of the carriage-horses remain broad and general in scope. The auditors also expressed concern regarding both agencies’ efforts in monitoring and overseeing the carriage-horse industry. Both DOHMH and DCA rely on the American Society for the Prevention of Cruelty to Animals (ASPCA) to perform inspections of the horses, drivers, and carriages in this field, but the ASPCA performs these duties without a formal agreement.
  
  
• An audit of the Fire Alarm Inspection Unit (Alarm Unit) of the New York City Fire Department (FDNY) found that the unit does not adequately ensure that requests for inspections of fire alarm systems and the results of inspections are properly recorded and reported, and that the inspections are performed in a timely manner to ensure that safety-related issues are identified and resolved. The Alarm Unit has not developed formal procedures to follow when recording requests for inspections, tracking these requests, conducting inspections, and following up on inspections. Also, the record-keeping practices of the Alarm Unit are inadequate, the Alarm Unit did not meet its informal target for auditing self-certified inspections, and the inspectors of the Alarm Unit are not adequately supervised.
  
  (An audit conducted by this office more than 10 years ago identified some of the same findings.)

Audits at a number of other agencies identified significant deficiencies in internal controls, asset management, and information technology.

“I entered office determined to be an activist Comptroller by aggressively using the powers of my office to find new, creative ways to save taxpayer money and to put our resources to work for all New Yorkers,” Thompson said. “For the remainder of my tenure as Comptroller, I will continue to deliver on my commitment.”

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