Audit Report On The Office Of Administrative Tax Appeals’ Controls Over Its Inventory Of Computers And Related Equipment
January 4, 2017 | MG16-101A
The Office of Administrative Tax Appeals (OATA) was established by Local Law 59 of 2007 to bring together the New York City (City) agencies that administer appeals of City taxes. OATA maintains a master inventory list of the agency’s computers and related equipment in a Microsoft Excel file that is comprised of ten worksheets containing information categorized as:
- PCs and monitors;
- storage room;
- assigned laptops;
- unassigned items in office;
- unassigned items in server room;
- Voice Over Internet Protocol (VOIP) phones; and
As of May 23, 2016, OATA recorded that it had a total of 411 computers and related equipment items in inventory. In Fiscal Year 2015, OATA had a budget of more than $4.4 million, consisting of $4.2 million for personal services (PS) expenses and $267,000 for other than personal service (OTPS) expenses.
The objective of this audit was to determine whether OATA has adequate controls over its inventory of computers and related equipment.
Audit Findings and Conclusions
OATA management failed to institute proper controls over its inventory of computers and related equipment. Specifically, it has not developed policies and procedures for its staff to follow to ensure that computers and related equipment are accounted for and are adequately secured. In addition, OATA has not segregated the duties related to maintaining and overseeing inventory among its staff, nor has it established sufficient compensating controls in lieu of segregating those duties. Moreover, OATA does not perform an annual or periodic count of its entire inventory of computers and related equipment.
As a result, we found that OATA’s inventory records for its computers and related equipment were incomplete and inaccurate. Specifically, OATA’s master inventory list did not include certain required information, such as purchase date and price, and it was not updated in a timely manner. In addition, items were recorded on the list in batches rather than individually, and control numbers were not issued sequentially. We also found weaknesses in OATA’s relinquishment practices for goods, resulting in the agency being unable to locate 198 computers and related items.
OATA’s failure to institute adequate controls over its inventory operations significantly increases the risk of waste, fraud and mismanagement of inventory, which could impact the agency’s ability to meet its operational needs.
To address the issues raised by this audit, we make seven recommendations, including the following:
- OATA should create written policies and procedures that delineate staff responsibilities within OATA to ensure compliance with DOI’s Standards while conforming to the specific needs and operations of the agency.
- OATA should ensure that key responsibilities for the management of the inventory of computers and related equipment are adequately segregated or that compensating controls are implemented.
- OATA should perform and document annual inventory counts of its entire inventory and conduct periodic reconciliations between the inventory records and the purchasing records.
- OATA should maintain complete and accurate records of all equipment in accordance with DOI Standards. This includes immediately and accurately updating its inventory records when changes occur.
- OATA should comply with the City’s relinquishment policy and ensure that all unused computers and related equipment presently in storage are relinquished in accordance with the requirements.
In its response, OATA stated, “OATA generally does not disagree with the recommendations in the Draft Report.” However, regarding our recommendation that it create written policies and procedures governing its inventory function, OATA acknowledges that the finding is correct but states that the agency follows the DOI Standards, implying that those City-wide standards are sufficient. OATA also disagreed with some of the findings of the audit or with the way they are presented. After carefully reviewing OATA’s arguments in the response, we find no basis for altering our findings or their presentation therein.
 A VOIP phone is an internet-based phone.