Audit Report on the Department of Buildings’ Controls over the Processing of Construction Permits

Executive Summary

The New York City Department of Buildings (DOB) is charged with ensuring the safe and lawful use of over 1,000,000 buildings and properties located in New York City (the City) by enforcing the City’s Building Code, Electrical Code, Zoning Resolution, the New York State Labor Law and the New York State Multiple Dwelling Law.  Among other things, DOB performs plan examinations, issues construction permits, inspects properties, license trades, issues Certificates of Occupancy, and Place of Assembly permits.  Most of the permit applications require a New York State licensed professional engineer (PE) or registered architect (RA) to prepare construction drawings (plans) that are included in the applications submitted to DOB for approval.

Work permit applications may be submitted either directly by the property owner or by a PE or RA on the property owner’s behalf through DOB’s Professional Certification Program.  Work permit applications submitted by property owners undergo a review by a DOB plan examiner to ensure compliance with applicable building and construction rules and regulations.  However, work permit applications submitted by PEs or RAs do not undergo a plan examiner review so long as they are certified by one of those licensed professionals as compliant with the applicable rules and regulations.  To monitor the compliance of the professionally certified applications, during the audit scope period DOB required the weekly audits of 20 percent of the professionally certified applications for which permits were issued that week to verify that all necessary documents had been provided, as well as that the application was in compliance with applicable building and construction rules and regulations.

The objective of this audit was to determine whether the controls established by DOB for the processing of professionally certified construction applications are implemented on a consistent basis.

Audit Findings and Conclusions

The audit found that the controls established by DOB for the processing of professionally certified construction applications are generally implemented on a consistent basis, including that there is an appropriate segregation of duties; that there is an adequate application tracking system; and that DOB verifies that the registration of the license of the professional affiliated with the construction work and associated permit is current.  However, the audit found weaknesses in DOB’s implementation of its procedures that increase the risk that permits are granted for work that does not comply with City law and rules.  In particular, we found that DOB did not conduct audits of 20 percent of professionally certified applications in accordance with its own requirements, but rather conducts just over half that amount.

In April 2016, DOB revised its internal audit requirements for audits of professionally certified applications, and replaced the 20 percent sample size with a “representative” sample based on a revised risk paradigm.  However, we have concerns about DOB’s implementation of this new policy.  First, DOB has not completed its revision of the risk paradigm upon which this new policy is based, so the agency cannot be assured that the “representative” samples being selected under this policy take into account all appropriate risk factors.  Second, DOB does not indicate how this likely lower number of audits will be used to provide a level of audit coverage that is comparable to what the previous policy was intended to provide.  Decreasing the targeted percentage of applications to be audited increases the risk that issues related to the other applications that would have otherwise been audited will remain undetected.

Audit Recommendations

To address the issues raised by this audit, we make three recommendations, including that DOB should:

• Ensure that the required follow-up action is taken in all instances where permits are not in compliance with required guidelines.
• Continue to seek additional staff to handle the increased work load due to the increase in the number of professionally certified applications.
• Review its revisions of the professionally certified application audit goals for the agency to ensure that it fully takes into account the potential risks to public safety from the rate and types of non-compliance that have been observed in its audits.  This review should include the completion of its risk paradigm so as to enable DOB to identify the specific characteristics of its representative samples.

Agency Response

In their response, DOB officials agreed with two of the audit’s three recommendations, stating that they have already taken action to begin implementing them, and partially agreed with the remaining recommendation.