Audit Report on the Financial Controls of The New York Public Library

AUDIT REPORT IN BRIEF

This audit determined whether the New York Public Library (Library) expenditures funded by City appropriations were valid and accurate. The Library uses funds from City appropriations for general operating expenditures such as payroll, fringe benefits, book purchases, supplies, and equipment. For Fiscal Year 2004, Library expenditures from City appropriations were $87,031,652 for Personal Services (PS) and $29,582,615 for Other Than Personal Services (OTPS).

Audit Findings and Conclusions

In general, the New York Public Library expenditures funded by City appropriations were valid and accurate.

Specifically,

• OTPS expenditures were reasonable and necessary for Library operations.

• Vendor invoices were in the system to substantiate payments, and payments were valid and accurate.

• Fines and fees collected at Library branches were accurately reported to the Accounting Department and deposited in the bank.

The Library also maintained adequate personnel files that contained all required and appropriate documentation. Additionally, the Library implemented three of the five recommendations made in the previous audit report, Follow-Up Audit Report on the Financial Operating Practices of the New York Public Library, issued June 29, 2001.

However, the audit disclosed some internal control deficiencies in the Library’s purchasing practices, inventory management, and record-keeping of computer equipment. Specifically, the Director of the Purchasing Department did not oversee the purchases of goods and services incurred by the Library Facility Department; purchase orders were issued without required competitive bidding or proper approval; some files were incomplete, lacking contractual agreements documenting the justification for purchasing certain goods and services; and some expired contracts were not renewed although vendors continued to perform services. In addition, there was a lack of segregation of duties in the management of equipment leases.

Audit Recommendations

To address these issues, we make 12 recommendations. The major recommendations are that the Library should:

• Ensure that all purchase orders are properly approved and authorized by the appropriate personnel in the Purchasing Department.

• Ensure that the Purchasing Department follows the Library’s policies and procedures for procurement of all goods and services. This would include purchases incurred for the Facility and Information Technology Group (ITG) and all other Library departments.

• Ensure that all expired contracts are renewed through competitive bidding before additional purchases are made on those contracts, and that purchase orders are not issued against expired contracts.

• Establish written procedures for the inventory of all computer equipment. The procedures should ensure that all equipment, whether in the warehouse or installed in the Library, is accurately accounted for in the Library’s inventory records.

• Ensure that distribution of computer equipment from the warehouse is appropriately documented and recorded in the master inventory database.

Regularly update its computer equipment inventory records, verify that equipment is properly tagged, ensure that equipment is in the reported location, and ensure that additions and deletions of inventory are properly recorded.