This Comprehensive Annual Financial Report of the Comptroller for the Fiscal Year Ended June 30, 2001 with a General Fund surplus, as determined by generally
accepted accounting principles, for the 21st year in a row.
The city is on course toward FY2002 budget balance but faces budget gaps beginning with 2003 fiscal year. FY 2002 is projected to end with a $260 million surplus, which will help the FY 2003 budget, which has a budget deficit greater than $4.5 billion. Therefore, they must borrow from the NYCTFA, about $1.5 billion. The city also faces problems such as deteriorating city infrastructure, which leads to debt service growing at twice the rate of revenues. However, despite all efforts, the FY2006 budget gap can exceed $5.5 billon.
While fiscal year 2002 is certain to end with the budget in balance, fiscal year 2003 is not guaranteed to. The recession and the terrorist attacks left the city in a challenging financial condition. The Comptroller's
analysis reveals that the fiscal year 2003 gap has increased by an additional $1.1 billion, bringing the total deficit to more than $6 billion.
The Mayor's Executive Budget plan for the fiscal years of 2003 to 2006, analyzed by the Comptroller, has a structural imbalance. The City's revenue base is insufficient to support the proposed levels of spending, and the City faces budget gaps and large deficits.
Comprehensive Annual Financial Report of the Comptroller for the Fiscal Year Ended June 30, 2002 - Includes Comptroller's Letter of Transmittal, independent Auditors' Report,
Fund financial Statements, General Fund Schedules, and other schedules.
Despite a projected gap of $1.1 billion in FY 2003, it appears that the City will end the current FY in balance. The budget stabilization account (BSA) and the general reserve will provide the City with a comfortable cushion against any shortfalls in the budget. The outlook for FY 2004 and the outyears of the financial plan shows a lackluster stock market and the 9/11 attacks continue to take their toll on the City's fiscal condition. The City has devised a comprehensive gap-closing program to balance the budget in 2003 and 2004 and reduce the outyear gaps. The increased property tax rate is expected to generate revenues of $838 million in FY 2003 , but this lower than expected increase has reduced the expected FY 2003 surplus roll. However, the Federal government needs to support the City's effort to overcome its fiscal difficulty and labor must work with the City to lower spending on personal services.
The City is likely to end FY 2003 with its budget in blaance and with a small surplus available to offset FY 2004 expenditures. Gap-closing actions implemented since November 2002 will reduce the FY 2004 deficit by $3.2 billion, however, the City still projects a $3.4 billion deficit. Analysis suggests that the problem could be $500 million larger than the City estimates. It is unlikely that a near-term resurgence in the local economy will help reduce next year's budget deficit. The Governor's recently proposed Executive Budget would increase the City's fiscal burdens rather than reduce them. If the proposals are to be enacted, they would increase the City's FY 2004 budget gap by over $800 million. If the Federal and State government refuse to offer meaningful assistance and City unions do not offer savings proposals, the City will be forced to adopt draconian budgetary measures.
The combination of the recession and the impact of the destruction of the World Trade Center is clearly reflected in the City's financial condition. Over the past 15 months the City has implemented a $4.6 billion in FY 2004 gap-closing actions, including an 18.5 percent property tax increase while borrowing $2 billion to meet operating expenses. However, there was still a FY 2004 deficit of at least $3.8 billion. The Mayor proposed a series of actiosn to close the gap, which include $1.4 billion in new taxes, more than $1.1 billion in State aid above current projections, and $620 million in agency gap-closing initiatives. The State Legislature has approved a state budget and associated initiatives. If enacted into law, it will assist the City in balancing its own budget. The ongoing dispute between the Governor and the State Legislature over the State budget, along with the risks in the Executive Budget could result in another round of cutbacks and layoffs.
The Housing Preservation and Development Information System has become a multi-module system with a central repository of information on private and City-owned residential properties and registered property owners. The system design allowed for future enhancements and upgrades. It also met overall goals as stated in the original system justification. However, it did not follow a formal system methodology.A user satisfaction survey revealed that 57 percent of respondents would like to see changes made to HPDInfo.Lastly, the Department does not have procedures in place to ensure that security violations are recorded, documented, and reviewed.
This follow-up audit report is to determine whether the NYC Health and Hospitals Corporation(HHC) implemented the recommendations made in an earlier audit. The previous audit made 22 recommendations to HHC. Of the 22, only 11 were implemented, three were partially implemented, one was not implemented, and seven were no longer applicable. This audit found that HHC has improved its billing and collection procedures. HHC still needs to improve its posting of initial payments into its computer system and the timliness of its initial billings to HMOs. Several recommendations are listed to address the problems noted in this report.
The FDNY has adequate controls over the billing and collection of inspection fees and whether it charges the correct fees. The FDNY billed $35.6 million in BFP inspection fees and collected $34.6 million.The FDNY has not changed its fee schedule in more than a decade. FDNY has a number of internal control weaknesses that can affect billing and collection practices.
This audit conducted on the Roosevelt Island Operating Coorporation determines whether the cooporation financed and maintained the landmarks at Roosevelt Island. All landmarks received attempts to obtain funding, but only four out of the five landmarks were adequately maintained. The corporation promised to stabilize all landmarks and further rehabilitate the island.
From an audit done on the Department of Transportation in 2003, the department assured that private ferry operators complied with the provisions of their Permits and License Agreements. The department also took recommendations into account and stated that fees and bills will be properly adjusted in the upcoming fiscal year.
From an audit done on the NYCServ Project, aimed at consolidating the Department of Finance's customer services, the project complied with requirement and laws and is available for innovation. However, the implementation of the product has been delayed, as certain applications and concerns have not been implemented or addressed.
From an audit conducted on the Department of Health and Mental Hygiene, it was determined that the department's Electronic Death Registration System is not functional. It could not be determined whether business and system requirements and goals were met and whether the design allows for innovation. In addition, reports of the system's development were falsified and the development was not checked for quality assurance. The department must follow rules and provisions to address these issues.
From an audit conducted on the Department of Health and Mental Hygiene, it was found that the department's Disease-Tracking System, the Person Registry Information Management Environment system, is obsolete and was terminated. The system did not meet its business and system requirements, seek advice from quality consultants, or comply with Procurement Policy Board regulations.
An audit of the development and implementation of the Department of Health and Mental Hygiene’s Disease-Tracking system, the Person Registry Information Management Environment system (PRIME). The system automates the collection, tracking, and analysis of disease reports in New York City.
This audit determines whether the Public Safety Agencies, such as the Fire Department, the Police Department, the Department of Probation, and the Department of Juvenile Justice, have implented recommendations for monitoring employees who use city or personally owned vehicles while conducting city business. From the results, all listed agencies have improved their monitoring and continue to move forward to ensure driver safety.
From an audit conducted on the Financial Management System at the Financial Information Services Agency, it was found that the agency has adequate controls to protect its records from unauthorized access. However, the agency should provide substantial training to its security officers and establish a log to record requests from agencies who require special access rights.
From an audit conducted on the Administration for Children's Services, it was found that the administration's oversight of day care centers is ineffective and lacks an efficient approach to overseeing the fiscal requirements of the day cares.
From an audit conducted on the New York County Public Administrator's Office, it was concluded that the office complied with most of the provisions of Article 11 of the New York State Surrogate's Court Procedures Act, the Report and Guidelines of the Administrative Board for the Offices of the Public Administrators, and other applicable laws, rules, and regulations. However, the office needs to adequately manage assets, follow certain provisions thoroughly, use the suspense account strictly for work purposes, and correct timekeeping errors.
From an audit conducted on the New York City Public/Private Initiatives, Inc., the corporation adequately recorded and made payments given to beneficiaries. However, there is missing documentation, and the corporation can improve its recordkeeping to ensure that all beneficiaries receive the proper amount of money alloted to them.
An audit report was completed on June 26, 2003 on the shortcomings and discrepancies in the Department of Parks and Recreation. The Department failed to maintain adequate control of its issuing and processing of permits, as well as the collection of fees that it is entitled to for the use of public spaces for athletic and special events. The report gives 25 recommendations as to how the Department can adjust these issues. (MG02-117A)
The Department of Information Technology and Telecommunications (DoITT) manages the
Department of Finance's system software and hardware. The audit determines that the Department has adequate controls
to protect both its mainframe and network environments. Security matters should be addressed such as the mainframe
environment containing the Department's information protection policies and procedures are not consolidated in one
document. In addition, there is no agency virus response plan.
From an audit conducted on the Off-Track Betting Corporation, it was found that the corporation has adequate controls to ensure that employee reimbursements and charges for General Expenses were reasonable. However, the corporation needs to properly document its expenses and reimbursements.
From an audit conducted on the New York Yankees's maintenance of Yankee Stadium, it was found that the team overstated rental credits needed for maintenance. The team must ensure that all maintenance credits are properly documented and approved before submitting them to the Comptroller's Office.
From an audit conducted on the Department of Health and Mental Hygiene, it was concluded that the department's implementation of the Enhanced Pest Control Program successfully improved pest control efforts, as executed by the Office of Pest Control Services. However, the department must improve its organization and oversight for more effectiveness.
From an audit conducted on the Department of Sanitation, it was determined that the department has adequate controls over the billing, collecting, depositing, and disbursing of funds located in the Special Events Clean-Up account. However, the department neglected the existence of other accounts and did not follow the fiduciary account agreement.
From an audit conducted on the American Museum of Natural History, it was determined that the museum complied with the requirements, procedures, and bylaws set forth by the Department of Cultural Affairs and has adequate control over its financial and operational processes. However, the museum must address timekeeping errors.
The City of New York Office of the Comptroller
Bureau of Financial Audit
EDP Audit Division
Audit Report on the Automated Child Care Information System of the Human Resources Administration
June 27, 2003
From an audit conducted on the Staten Island Yankees, it was found that the team has internal control weaknesses. From this, it could not be determined whether the team made appropriate payments to the New York City Economic Development Corporation. The team also lacks punctuality when making payments and must work to pay off outstanding fees and overall, improve its internal controls.
This is an audit on the development and implementation fo the Department of Design and
Construction's Standardized Change Order Record-Contract Overrun Request Entry System (SCORE). It tracks the status
of each change order and overrun request. SCORE meets the overall goals, and it has been integrated into the Department's
Disaster Recovery Plan. The user satisfaction survey revealed that some have problem entering information into the
system and that some changes should be made.
In June 2001, Brooklyn Baseball Company, L.L.C, and the NYC Department of Parks and Recreation
entered into a 20-year lease agreement. This grants the Cyclones the exclusive rights to use KeySpan Park on Surf Avenue
in Brooklyn. This audit determined whether the Cyclones complied with their lease agreement with the City; paid
the appropriate fees to the City and whether they paid them on time. The Cyclones paid the City $1,131,196 in rental
fees and Parks paid the Cyclones $200,000
related to net parking lot income. Audit findings include the significant weakness in the Cyclones internal controls
that prevented the determination of whether actual attendance, no-shows, and recreated area attendees were reported
accurately, and whether all appropriate fees due the City were paid. The Cyclones did not report $98,600 recorded on
their books as rent revenue, therefore owe the City $49,300 in additional fees. The audit recommends to base actual
attendance on their turnstile counts, as required by the lease, along with other recommendations.
From this audit, it was found that the Seamen's Society for Children and Families complied with the provisions of day care home contracts set forth by the Administration for Children's Services. The society also successfully funded the day cares, but can work on problems, such as adequately overseeing its caretakers and registering students properly.
An audit report was filed on June 30, 2003 on the investigation of the New York City Fire Department in order to identify any pension fund retirees who may be illegally re-employed and to quantify the amounts of any impromper payments to these individuals. It was determined that there were five individuals who received $67,779 in pension payments during 2000 who were working past their applicable employment anniversary dates. It was recommended that these five individuals be investigated and if appropriate, aciton be taken against their crimes. (FL03-128A)
An audit report was filed on June 30, 2003 on the financial and operating practices of the Sergeants Benevolent Association Health and Welfare Fund for the fiscal year 2001. It was determined that the organization generally complied with the procedures and requirements set down by Directive 12, and its administrative expenses were reasonable. Some weaknesses were noted regarding lack of documentation and eligibility of members' dependents, and it was recommended they be rectified. (FL03-086A)
An audit report was filed on June 30, 2003 on the Financial and Operating Practices of the Local 444 S.E.I.U. Sanitation Officers' Association Security Benefits Fund. It was determined that the organization generally complied with the procedures and requirements set down by Directive 12, and its administrative expenses were reasonable. Some weaknesses were noted regarding lack of documentation and reporting, and it was recommended they be rectified. (FL03-151A)
This report determines whether Community School
District 15 complied with applicable Department of Education procedures for purchasing, imprest fund expenditures,
and timekeeping. District 15 generall complied with applicable Department procedures for purchasing. It generall
spent its funds on purchases that were reasonable and necessary for the operation of the schools and facilities.
It did not comply with certain provisions of the Standard Operating Procedures Manual for Financial Management Centers
pertaining to purchasing and inventory management. It also did not always follow timekeeping requirements of the
Chancellor's Regulations. There are several recommendations listed to address the issues in this report.
This audit report FL03-131A is for the Department of Homeless Services Over Its Computer Equipment.
The Department of Homeless Services has widespread problems with its computer inventory system. It has no writtten
policies and procedures for recording, reporting, and safeguarding its computer inventory. As a result of their poor
inventory control practices, $1,841,015 in computer equipment purchased during the audit period was not listed on the
Department's inventor records. Audit recommendations cannot be readily provided due to the extent of their problems.
It is clear that the entire system has to be overhauled.
Audit found that the New York City Health and Hospitals Corporation (HHC) Request for Leave forms
were present and approved for all annual and sick leave taken by the 40 employees that were used as a sample.
The sample tests for reviewing internal controls of Coney Island Hospital over personnel, payrol, and timekeeping
for its employees. Some personnel folders were imcomplete or contained inaccurate information. The report contains
The audit of the New York City Housing Authority (NYCHA) reviewed the fairness and
efficiency of its process for determining tenant eligibility. NYCHA adequately handled its reponsibility
to provide a reasonably fair and efficient process for determining tenant eligibility. Areas of concern
include clarity of its public housing application form and placement of applicants in incorrect housing
This audit assesed the efficiency of the HIV/AIDS Services Administration (HASA) in processing client
applications for permanaent housing. HASA is not efficient in doing this, due to the audit findings. Case managers do not
track the progress of permanent housing applications filed with the Housing Unit. However, the
Human Resources Administration(HRA) officials acknowledged the problems identified during the audit and stated that
HASA has instituted changes. Severeal recommendations are made, which include that the Case Financial Assessment (CBCFA) packages are processed in a more
timely manner, and that supervisors track the timeliness in processing CBCFA packages.
This audit was to
identify New York City pensioners from the New York City Teachers' Retirement System (TRS), the New York City
Police Department Pension Fund (POLICE), and the New York City Fire Department Pension Fund (FIRE) who may be
illegally re-employed (double-dippers or disability violators). There were 24 individuals who violated applicable
sections of State and City laws such as RSSL 211 or 212 and 1117.
The analysis was to provide comparative data on the overall
financial activities of the 85 union-administered active and retiree welfare, education, and annuity funds which
received City contributions during Fiscal Year 2001. Several funds expended lower-than-average amounts for benefits
and maintained high reserves. Several financial issues should be addressed such as operating deficits due to certain
funds exceeding their revenues. Some funds had large operating surpluses resulting in high reserves, which indicate that
they should increase members' benefits. Other issues include improper eligibility delay, consolidation of professional
services, and field audits of funds.
The audit was to identify New York City Teachers' Retirement System (TRS) pedagogical pensioners
who may be illegally re-employed (double-dippers or disability violators). There were 26 individuals found who
violated RSSL sections 211 or 212 and 1117 of State and City laws. The audit recommends that the TRS should investigate
the individuals and forward the names to the Department of Investigation if the circumstances warrant such action.
This is an audit of Neighborhood Youth and Family Services (NYFS) and its compliance with
contracts awarded by the New York City Administration for Children's Services (ACS) and the Department of Youth
and Community Development (DYCD). NYFS did not maintain adequate controls over the recording and reporting of program
expenses and did not maintain sufficient documentation to support expenses charged to its contracts. The City reimbursed
NYFS a total of $411,345. The report has several recommendations.
An audit report was filed on June 30, 2003 on the compliance of Sterling Mets, L.P., (New York Mets) with their lease agreement and fees they owed the city, specifically those incurred in the time period January 1 tp December 31, 2001. It was determined that Sterling Mets owed the city a total of $4,560,631 which accounts for understating revenue, overstating allowable deductions and credits, and previous audits for which Sterling Mets did not pay their dues. It was recommended that Sterling Mets pay their dues in full to the City. (FN03-115A)
The Kings County Hospital has inadequate controls over its inventory of
noncontrolled drugs and medical and surgical supplies. There is a gross discrepancy of 71
percent between the amounts on hand and the amounts recorded in Other Than Personal Services (OTPS).
Therefore, there are extensive record-keeping and security weaknesses found. There was also unrestricted
access to the Pharmacy stockroom, and noncontrolled drugs were issued without proper authorization.