Audit Report on the Financial and Operating Practices of the Office of the Special Narcotics Prosecutor

Executive Summary

The Office of the Special Narcotics Prosecutor (OSNP) is responsible for felony narcotics investigations and prosecutions in the five boroughs of New York City (City). OSNP was founded in 1971 and is the only agency of its kind in the United States. The Special Narcotics Prosecutor is appointed by the City’s five independently elected District Attorneys (DAs).

During our audit scope period, Fiscal Years 2018 and 2019, OSNP employed or administered the City-funded compensation of 313 individuals, consisting of 156 Assistant District Attorneys (ADAs) the City’s five DAs assigned to OSNP, referred to as legal staff, and 157 support staff members.

OSNP pays salaries, benefits, and one-time payments for recognition and retention purposes for both legal and support staff. However, ADAs’ salaries and any additional one-time payments are determined by each ADA’s home DA’s office.

According to the City’s Comprehensive Annual Financial Reports, OSNP expended $22,184,198 in City funds in Fiscal Year 2018, consisting of $20,626,249 for Personal Services (PS) and $1,557,949 for Other Than Personal Services (OTPS). In Fiscal Year 2019, OSNP expended $23,292,327 in City funds, consisting of $21,734,222 for PS and $1,558,105 for OTPS.

The objective of this audit was to determine whether OSNP maintained adequate fiscal controls over its City-funded PS and OTPS expenditures as required by applicable rules, regulations, policies, and procedures.

Audit Findings and Conclusion

For the period July 1, 2017 through May 30, 2019, OSNP generally maintained adequate controls over its OTPS expenditures, totaling $2,362,758. However, we found that certain of those expenditures, totaling $12,203, lacked adequate support in OSNP’s records to establish that they (1) were allowable under Comptroller’s Directive #6, Travel, Meals, Lodging, and Miscellaneous Agency Expenses or other applicable guidelines; and (2) supported OSNP’s criminal justice activities, in accordance with OSNP’s classification of them as “Special Expenses” under budgetary Object Code 460.^[1]

Generally, the inadequately supported and potentially inappropriate OTPS expenditures involved transportation expenses, restaurant and meal charges, and expenditures related to special events, such as two functions honoring other law enforcement officials. Many of these problematic OTPS expenditures, totaling $5,905 (48 percent by dollar value), were charged to a credit card assigned to the Special Narcotics Prosecutor. OSNP has now closed the credit card account.

With respect to PS expenditures, we found that OSNP paid a total of $1,077,475 in City-funded one-time payments to 151 ADAs during our audit scope period, as directed by their employing DAs, but with no documentation that those payments were based on appraisals of their job performance. Additionally, OSNP did not maintain adequate personnel records for its ADAs as required by Comptroller’s Directive #13.

Finally, we found that OSNP improperly authorized the payment of an estimated $88,710 in cash overtime to employees who, according to OSNP’s records, worked overtime voluntarily and were therefore ineligible to receive cash compensation for doing so.

Audit Recommendations

To address the issues raised by this audit, we make the following eight recommendations:

Regarding OSNP’s OTPS expenditures that lacked adequate support and were potentially inappropriate, OSNP should:

• Properly use the City’s Chart of Accounts, including its definitions, in identifying and classifying expenditures, and ensure that they use the 460 object code only for special expenses that are (a) not chargeable to other object codes, and (b) related to law enforcement activity;
• Follow Comptroller’s Directive #6 regarding the proper use of City funds in the agency’s operations;
• Ensure that established internal procedures regarding the use of agency credit cards are followed at all times and by all employees; and
• Ensure that payment vouchers submitted through FMS are adequately supported to ensure compliance with Comptroller’s Directive #1.

Regarding OSNP’s weaknesses in PS expenditures, OSNP should ensure that:

• One-time payments to ADAs are appropriately supported by documented justifications based on the ADAs’ job performance;
• Complete employee personnel records that include, at minimum, the information mandated by Comptroller’s Directive #13 are maintained;
• Information regarding the dates and amounts of and justifications for one-time payments is maintained in the recipients’ personnel files; and
• Established procedures regarding eligibility for cash overtime payments are followed.

Agency Response

In its response OSNP agreed with seven of the eight recommendations and partially agreed with one recommendation. However, OSNP disagreed with certain findings of the audit. Specifically, OSNP disagreed with the audit’s questioning OTPS expenditures related to meals, taxis, and other miscellaneous expenses, including those charged to an American Express credit card, based on the lack of documentation in OSNP’s files or the contents of some of the documentation. OSNP maintained that generally its expenditures were appropriate, although OSNP acknowledged the need for improvement in its process to ensure that each expenditure’s business purpose is documented in its payment records. OSNP also disagreed with certain statements in the draft report suggesting an inadequate review process for issuing one-time payments to its ADAs. However, OSNP conceded that its records lacked documentary evidence of such reviews. In its response, OSNP stated, “We welcome the thoughtful recommendations provided by the Comptroller in this report and have begun to incorporate those that are appropriate into our internal policy and procedures.”

Endnote

[1] According to the New York City Chart of Accounts, Object Code 460 denotes “all special expenditures relative to elected officials and other criminal justice activities.” An object code is a “3-character code which classifies expenditures pursuant to the Chart of Accounts issued by the City Comptroller.” City of New York, Adopted Budget, Fiscal Year 2021, Expense, Revenue, Contract, p. iv, https://www1.nyc.gov/assets/omb/downloads/pdf/erc6-20.pdf