Audit Report on the Brooklyn Borough President’s Office’s Controls over Its Inventory of Computers and Related Equipment

Executive Summary

The objective of this audit was to determine whether the Brooklyn Borough President’s Office (BBPO) has adequate controls over its inventory of computers and related equipment.

The Borough Presidents are the executive officials of New York City’s five boroughs.  The City Charter grants each Borough President, elected to a term of four years, the power to prepare and review budget proposals for the City Council; recommend capital projects; hold public hearings on matters of public interest; consult with the Mayor and the City Council on the preparation of the City’s executive and capital budgets; review and recommend applications and proposals for the use, development or improvement of land within the borough; prepare environmental analyses required by law; provide technical assistance to the borough’s community boards; monitor and make recommendations regarding the performance of contractual services in the borough; and propose legislation in the City Council.

Computers and related equipment (including mobile devices) play a vital role in helping the BBPO staff achieve the agency’s mission.   According to the Comprehensive Annual Financial Report of the New York City Comptroller for Fiscal Year ending June 30, 2017, the BBPO’s actual expenditures totaled $6.1 million, which included $5.0 million for Personal Services and $1.1 million for Other Than Personal Services (OTPS).  The OTPS expenses for this period included purchases of computers and related equipment totaling approximately $43,000.

Audit Findings and Conclusion

The BBPO’s controls over its computers and related equipment (also collectively referred to as computer items) need improvement.  We were able to locate 48 (96 percent) of 50 sampled computer items—according to the BBPO, the 2 missing sampled items were stolen.  We also found that information on the BBPO’s master inventory list for the sampled items was generally accurate.  However, we found that three sampled items were in locations different than the ones listed in the records and three sampled items were recorded with incorrect model or serial numbers.  We also found another eight items with model or serial numbers that did not reconcile with the numbers recorded in the records; however, the discrepancies affecting those eight items (e.g., a serial number missing 1 of its 15 digits) appeared to be due to a careless recording of the numbers.  In addition, although the BBPO uses sequential, pre-numbered property tags to account for its equipment, the BBPO could not account for 1,608 of 4,363 tag numbers (37 percent).  In the absence of an accounting or a verifiable explanation for why those tag numbers were missing from the BBPO’s inventory records, we were unable to ascertain whether they had been assigned to equipment that was not listed in the BBPO’s inventory records or whether they had been skipped, that is, never issued or used by the BBPO.  The audit also found that the BBPO does not maintain an adequate segregation of duties in relation to the management of its computers and related equipment.  Finally, although BBPO officials informed us that they conduct inventory counts at least once each year, they were unable to provide evidence of the counts.  Consequently, we could not corroborate their assertion.

Audit Recommendations

Based on the audit, we make four recommendations:

• The BBPO should regularly review, reconcile and update its inventory records to ensure that the information recorded is accurate.
• The BBPO should ensure that tag numbers are sequentially assigned to all equipment and tracked in cases where tags are damaged and replaced.
• The BBPO should ensure that key tasks related to the inventory of computers and related equipment are adequately segregated or should institute compensating controls if a segregation of responsibilities is not feasible. The BBPO should also update its procedures accordingly.
• The BBPO should ensure that annual inventory counts are conducted and documented.

Agency Response

In its response, the BBPO agreed with two recommendations—that it ensure that tag numbers are sequentially assigned and that annual inventory counts are conducted and documented.   The BBPO partially agreed with one recommendation—that it regularly review, reconcile and update its inventory records—and disagreed with one recommendation, specifically, that it ensure that key tasks related to the inventory of computers and related equipment are adequately segregated, because the BBPO contends that those responsibilities are already adequately segregated.