Audit Report on the Department of Citywide Administrative Services Management of City Office Space

Executive Summary

The objective of this audit was to determine whether the New York City (City) Department of Citywide Administrative Services (DCAS) adequately accounts for and manages the inventory of City office space.  DCAS is responsible for providing City agencies with the resources and support they need to provide the best possible services to the public.  Among its many other responsibilities, pursuant to City Charter Chapter 35, §824(b), DCAS is authorized to assign and reallocate space and real property to City agencies that is owned and leased by the City.

City government offices occupy over 19 million square feet of space^[1].  This office space includes 12.5 million square feet of space leased at a cost of roughly $365 million a year and 6.5 million square feet of City-owned space which costs the City approximately $70 million a year to operate and maintain.  DCAS manages 51 City-owned buildings and two privately-owned buildings located in the five boroughs which contain over 11.9 million square feet.  This audit focuses on this DCAS-managed office space only.

Audit Findings and Conclusions

DCAS does not adequately account for and manage the inventory of City office space.  The agency does not have a reliable computer system or an effective tracking tool to assist it in processing moves and renovations, or with maintaining an inventory of all City office space.  The audit found that DCAS does not have an accurate inventory listing of available office space and did not consistently follow its protocols for evaluating space requests.  As a result, DCAS is hindered in its ability to track vacancies and is unable to maximize the efficient use of City resources, which could result in unnecessary and increased costs to the City.  The audit also found that DCAS did not make the appropriate entries in the City’s Financial Management System (FMS) regarding certain lease payments to one vendor that resulted in the underreporting of 1099 payments by $4.2 million.

Audit Recommendations

To address the audit findings, we made ten recommendations, including that:

• DCAS should ensure that its real estate database and hard copy space tracking system are regularly reconciled and updated so that an accurate and reliable inventory listing of office space and vacant space is established and maintained.
• DCAS should ensure that information entered in its real estate database and on the hard copy space tracking system such as square footage is accurate.
• DCAS should create a checklist for reviewers to follow and require a certification or supervisory review of the entire space request process to ensure that all required steps have been followed and documented.
• DCAS should document the reasons for any decision not to follow specific protocols in the office space request process.
• DCAS should contact the City’s Financial Information Services Agency (FISA) for advice and make the necessary changes to the accounting records in FMS pertaining to the vendor in question so that a corrected 1099 can be issued.

Agency Response

DCAS officials disagreed with the audit findings, but generally agreed with all ten recommendations.  In their response, DCAS officials disagreed with the report’s findings stating “the auditors’ findings and conclusions are based on flawed methodologies, unsubstantiated claims, and a lack of understanding of standard real estate terms and definitions.  Consequently, DCAS cannot agree with most of the findings of this Audit Report.”

The audit findings were shared with DCAS officials verbally and in writing during the audit and discussed with them prior to the submission of the draft report for their comments.  All information provided by DCAS was taken into consideration and the report was modified where warranted.  For many of DCAS’ arguments related to the audit findings, however, the agency provided no credible evidence to support its claims.  In such instances, in accordance with generally accepted government auditing standards (GAGAS), we have no basis to alter the audit’s findings.

As is clear from DCAS’ response to the audit findings, differences of opinion over the factual issues we report remain.  We recognize the underlying difficulty of accurately maintaining a useful inventory of City office space.  As we report and DCAS describes in its response, there are several different ways of measuring available and/or usable space in the real estate industry.  These differences increase the difficulty for DCAS, which uses two different space inventory management tracking tools, to accurately maintain useful current inventory information in either or both of these tools.  We recognize that the audit scope concerned practices under a prior administration and that DCAS has, as it reports in its response, “implemented new policies and procedures regarding office space management.”  We also note that, despite the difference of opinion DCAS asserts in its response to our findings, it has generally agreed with all ten audit recommendations.