Audit Report on the Conflicts of Interest Board’s Controls over Its Inventory of Computers and Related Equipment

Executive Summary

The Conflicts of Interest Board (COIB) is the independent New York City agency tasked with administering, enforcing, and interpreting Chapter 68 of the New York City Charter, the City’s Conflicts of Interest Law, and the City’s Financial Disclosure Law, set forth in section 12-110 of the City’s Administrative Code.  The COIB was established in 1990 under Chapter 68 of the City Charter, replacing the Board of Ethics.  Through a combination of training, confidential advice, and enforcement, the COIB seeks to prevent ethics questions from becoming ethics problems for public servants.  As part of its operation, the COIB is responsible for educating City employees regarding ethical standards and issuing advisory opinions.  The COIB’s five members are appointed by the Mayor, with the advice and consent of the City Council and serve staggered six-year terms.

During Fiscal Years 2016 through 2018, the COIB expended a net total of $7,330,932, of which $450,253 was for Other Than Personal Services (OTPS) items.  Our review of the City’s Financial Management System of OTPS expenditures during this period found that the COIB charged a total of $38,968 to object code 3320 (Data Processing Equipment) and $50,818 to object code 1990 (Data Processing Supplies)—totaling $89,786.

The COIB’s inventory of computers and related equipment is managed and tracked using Excel spreadsheets to capture item-specific information, including type, make/model, tag number, serial number, location, and to whom the item is assigned.  As of January 30, 2019, the COIB’s inventory list identified a total of 165 computers and related equipment items that were in use.^[1]

The objective of this audit was to determine whether the COIB has adequate controls in place over its inventory of computers and related equipment.

Audit Findings and Conclusion

The COIB needs to improve its controls over its inventory of computers and related equipment.  Although we were able to account for the sampled computers and related equipment recorded on the COIB’s inventory list, we found internal control and recordkeeping weaknesses that need to be addressed.  The COIB’s inventory lists did not consistently identify all of its computers and related equipment.  Its current list was also missing some required information, including serial numbers for some items, the dates the items were issued, and the condition of the items, as prescribed by the New York City Department of Investigation’s Standards for Inventory Control and Management (DOI Standards).  We also were unable to verify whether all computers and related equipment items for a sample of purchases were recorded on the COIB’s inventory list.  In addition, we identified issues with the COIB’s assignments of asset tag numbers to items; specifically, we found that tags were issued out of sequence, and certain tag numbers were unaccounted for.  We also found that the COIB does not have an adequate segregation of duties with respect to its computer inventory and does not perform annual inventory counts as required.

We believe that many of the issues identified are due to the COIB’s not having established written policies and procedures for the accounting, safeguarding, and relinquishment of its computers and related equipment.

Audit Recommendations

Based on the audit, we make 10 recommendations, including:

• The COIB should regularly review, reconcile, and update its inventory records to ensure that the information recorded is accurate.
• The COIB should ensure that an updated inventory list is maintained to record all of its computers and related equipment and that the list includes all of the required information for each item, such as the items serial number.
• The COIB should ensure that all computers and related equipment items purchased are tagged and recorded on its inventory list.
• The COIB should ensure that asset tag numbers are issued in sequential order and tracked and that any gaps in these numbers are investigated in a timely manner and the reasons for them adequately documented.
• The COIB should conduct and document independent annual inventory counts of its computers and related equipment.
• The COIB should ensure that key tasks related to the inventory of computers and related equipment are adequately segregated or, if segregation of responsibilities is not feasible, institute compensating controls.
• The COIB should develop and disseminate detailed written policies and procedures governing the agency’s management of its inventory of computers and related equipment.

Agency Response

In its response, the COIB agreed to implement all 10 recommendations.

[1] The COIB’s inventory list as of January 30, 2019 reflected a total of 643 items, consisting of computer-related and non-computer related items, including items that were salvaged.  For audit testing and random selection purposes, we excluded items that were salvaged, non-computer related, or of inconsequential value (e.g., mouse devices), reducing the audit test population by 472 items.  We also excluded an additional six items that were targeted for testing due to various reasons (e.g., duplicate tag numbers) described in more detail in the Detailed Scope and Methodology section of this report.