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CHRONIC FAILURE TO CORRECT DEFICIENCES CITED AS AN ABUSE OF MANAGEMENT; AGENCY STYMIED EFFORTS TO OBTAIN DATA

The Taxi and Limousine Commission (TLC) has failed to collect $97 million in fines, according to an audit released today by Comptroller William C. Thompson, Jr.

“By failing to employ rigorous collection efforts to ensure that fines are collected the TLC sends a message of indifference toward and tolerance of consistent infractions of the rules and regulations,” Thompson said. “Moreover, such inadequate control could expose the system to fraudulent activity.”

The audit estimates that if the agency took rudimentary steps to collect these fines, the TLC could collect between $3.89 million to $7.79 million.

The TLC’s consistent failure to address its collection and accounting processes qualifies as “abuse” by management under the Generally Accepted Government Auditing Standards (GAGAS). Audits dating back to 1993 have uncovered management weaknesses in the area of fine collections.

The audit also highlights how the city agency stymied efforts to obtain data. TLC’s management did not provide access to accurate information about adjudicated summonses until theTable I end of the audit process. It was not until the Mayor’s Office of Operations intervened did auditors receive most of the requested information.

Among the audit findings were inadequate procedures to locate people who owed fines, lack of coordination with city or outside agencies to collect outstanding fines, lack of adequate procedures to track unpaid fines, inadequate accounts receivable records, problems with the agency’s computer system (TAMIS), weaknesses in controls over blank summonses, inadequate record keeping and storage of summons files, and lack of written policies and procedures.

The TLC claimed that new licensees with outstanding fines had to pay the fines before they could renew their licensees. This was not always the case. According to the audit report, 69 (20%) of the 341tested had their licenses approved or renewed by the TLC without paying their unpaid fines, totaling $26,255. Also, the claim that the agency collected 99 percent of outstanding fines since 1988 proved to be incorrect. In fact, most of the outstanding fines are between two and 13 years old.

“The TLC neglected its responsibility to ensure that summonses were enforced and that fines assessed against violators of TLC rules and regulations were duly collected. Such chronic disregard and neglect of official responsibilities meet the GAGAS definition of abuse by management,” Thompson said. “ The abuse by TLC management is that its failure to institute and exercise strong internal controls results in the failure of this public agency to collect revenue expected and needed by the City.”

The agency generally agreed with 16 of the 18 recommendations, which include the following:

• Develop and implement aggressive internal collection procedures that include mailing of dunning notices to violators, placing debtors in judgment, and submitting outstanding receivables to the Sheriff’s Office and the Law Department when internal collection efforts have been exhausted.
• Improve and document controls to ensure TLC licenses are not approved or renewed for applicants who have unpaid fines.
• Implement procedures to find and contact respondents by using resources available to the agency, such as telephone directories, the New York State Department of Motor Vehicles, the New York State Division of Corporations Web site, etc.
• Comply with Comptroller’s Directive 21 by developing procedures to report its accounts receivable balance monthly, identify or estimate and write-off fines deemed uncollectible, and report its write-off procedures, along with any write-off amounts to the Comptroller’s Office.
• Meet with NYPD Taxi and Bus Unit officials to develop procedures to account for all TLC summonses distributed to the Unit. This should include an accounting of summonses distributed but not yet returned to TLC for processing.
• Establish a filing system and records management policy that will ensure that summons files are properly organized, stored, safeguarded and preserved.
• Conduct a comprehensive review of the TAMIS database with assistance from the Department of Information, Technology and Telecommunications to identify necessary data tables and data fields, remove or label unused data and data fields , assess and identify existing programmatic problems and errors and develop a systematic plan and timeframe for correcting any differences

"The findings are extremely serious and warrant the agency's immediate attention," Thompson said.

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