Audit Report on the Administration of the Institutional Network and Crosswalks Fund by the Department of Information Technology and Telecommunication

AUDIT REPORT IN BRIEF

This audit determined whether the City Department of Information, Technology and Telecommunication (DoITT) accurately records and tracks I-NET and Crosswalks revenues and expenses; and whether DoITT ensures that these funds are spent on items for I-NET and Crosswalks, as specified in the franchise agreements.

Since 1983, the City has entered into cable television service franchise agreements with various companies, which required the companies to make available approximately $48 million for the City’s Institutional Network (I-NET) and its public access cable channel–Crosswalks. Of the $48 million, $11.4 million was deposited into fiduciary accounts managed by the City,and the remaining $36.6 million was retained by the companies to be drawn down by the City as needed. As of December 31, 2003, $29.4 million of the funds were spent, leaving a balance of $18.6 million.

DoITT accurately records and tracks I-NET and Crosswalks revenues and expenses. DoITT also ensured that funds were spent on items for I-NET and Crosswalks, in accordance with the franchise agreements. However, DoITT did not consult with the Borough Presidents and the Comptroller on the use of I-NET funds, as required by the franchise agreements with the cable companies. In addition, two of DoITT’s five fiduciary accounts, which have a combined balance of $438,878, have been dormant for several years.

To address these issues, we recommend that DoITT:

• Consult with the Borough Presidents and the Comptroller on future expenditures of I-NET funds. In that regard, DoITT should provide a list of proposed projects and related costs to the Borough Presidents and the Comptroller for comment.
• Determine in conjunction with the City’s Law Department whether the Interconnection Working Group Fund and the Municipal Cable Network Fund are necessary and legally required. If not, the accounts should be closed in accordance with the provisions of Comptroller’s Directive 27, and the funds should be disbursed in accordance with the Law Department’s guidance.