Audit Report on Department of Environmental Protection Controls over the Issuance and Depletion of Credits from its Reimbursable Metering Program

Audit Report In Brief

This audit determined whether the Department of Environmental Protection (DEP) has adequate controls in place to accurately issue and deplete Reimbursable Metering Program credits.

DEP manages and maintains the City’s water supply, distribution, and wastewater systems. It bills and collects the water and sewer charges quarterly for most City properties based on consumption at the premises, which is measured by water meters.  In Fiscal Year 2006, DEP collected $1.7 billion from water and sewer charges.

In the early 1990’s, after Local Law 53 authorized DEP to require the installation of water meters, “The Reimbursable Metering Program” (RMP) was introduced.  This program allows owners of residential properties to have a Licensed Master Plumber of their own choosing, rather than a Plumber assigned by DEP, install their water meters as well as automatic meter reading (AMR) equipment.  Then, the RMP unit issues RMP and AMR credits, generally ranging from $450 to $4,700, to the property owner’s account to reimburse the property owner for the cost of installation.  The credits are applied to outstanding and future water and sewer bills unless property owners request a refund.  Since its inception, more than 16,000 meters have been installed under this program.

Audit Findings and Conclusions

We determined that DEP generally issues and depletes RMP credits in accordance with the RMP guidelines of May 1, 2005.  Applications for refunds and AMR credits were properly processed and posted to customer accounts.  Based on our review and reconciliation of DEP records, we found that in Fiscal Year 2006, DEP issued at least 618 RMP credits totaling $601,545.

However, internal controls need to be improved since the RMP unit, which consists of one individual, is responsible for reviewing, approving, and posting credits.  This individual’s work is not reviewed, nor is the individual required to periodically inform management of the dollar amount of credits approved.  While we found only minor errors, and no indication of any improprieties, this situation could allow inaccurate or improper credits to be issued.

Audit Recommendations

To address these issues, we make three recommendations.  DEP should:

• Ensure that there is an independent review of all credits posted on CIS by the RMP Unit;
• Ensure that the RMP Unit provides management with periodic reports of operational and financial data;
• Consider adding functionality to CIS to allow it to capture and identify credit type and the specific individual who authorized it.

Agency Response

In its response, DEP generally agreed with all of the audit’s recommendations.