Audit Report on the Financial Practices of New York City Public/Private Initiatives, Inc., Doing Business as The Twin Towers Fund

AUDIT REPORT IN BRIEF

New York City Public/Private Initiatives, Inc. (NYCPPI), a not-for-profit corporation, was formed for charitable and public purposes, including the promotion of the City as a business venue, encouraging economic development. NYCPPI receives City funding and raises additional funding from the private sector.

As a result of the September 11, 2001, terrorist attack, the Twin Towers Fund was created on September 12, 2001, to provide financial support to the family beneficiaries of the uniformed and other rescue workers who lost their lives in the attack. Until the Twin Towers Fund received New York State and Internal Revenue Service approval to operate as a charity, assets collected for the Twin Towers Fund were held by NYCPPI. In addition, NYCPPI collected donations concurrently with the Twin Towers Fund for several months after the Twin Towers Fund received such approval. Between December 2001 and August 2002, NYCPPI transferred $107,934,625 to the Twin Towers Fund.

The audit assessed the adequacy of NYCPPI controls over revenues received and determined whether it distributed funds to beneficiaries in accordance with its established criteria and transferred all contributions and related interest earned to the Twin Towers Fund in accordance with the Charitable Asset Transfer Agreement.

Based on our test of benefit payments, we are reasonably assured that the payments made to family beneficiaries were properly recognized and recorded in NYCPPI’s books and records. In addition, NYCPPI had adequate controls in place to insure that payments to family beneficiaries were accurate, complete, and were in accordance with the established criteria. Although we are reasonably assured that all payments made to beneficiaries were proper, we noted that 12 beneficiary checks could not be accounted for. As of March 2003, we confirmed that none of the 12 checks had been cashed.

Because of internal control weaknesses and the absence of certain documentation, we could not determine whether NYCPPI accounted for all contributions received, whether contributions were promptly and accurately deposited, and whether the correct amount of revenue was transferred to the Twin Towers Fund. Based on the available records, as of March 31, 2003, NYCPPI had at least $107,637 in its checking account that had not yet been transferred to the Twin Towers Fund. In addition, we noted that one beneficiary is owed an additional $10,000 and NYCPPI’s books and records did not properly reflect a $37,500 distribution.

Specifically, NYCPPI did not provide:

• 48 "Batch Deposit Folders" containing critical information including copies of contributors’ checks and letters, and spreadsheets listing individual contributions, were not provided during the audit period.
• spreadsheets that listed the names, check numbers, and amounts of each contribution for 14 "Deposit Reconciliation Files."
• an individual listing of contributions within its cash receipts journal. Rather, the journal combined only four lump sum amounts––$149,612,767, $1,947,735, $3,114,724, and $5,477. Consequently, we were unable to trace the reported amounts to individual contributions recorded in the batch folders and reconciliation files.
• Bank Statements for its Money Market Investment Account. Consequently, we were unable to verify the accuracy of $710,065 in interest recorded on NYCPPI’s books and records.

In addition, we noted that Deposit Authorization Forms were not always reviewed and approved prior to the deposits. Specifically, 15 of 123 Deposit Authorization Forms we reviewed were approved by NYCPPI officials between two weeks and two months after the deposits were made. Nine other Deposit Authorization Forms were approved but were not dated. The timely review and approval of these forms provides further assurance that deposits are complete and accurate.

Subsequent to the issuance of the preliminary draft report, NYCPPI officials provided us the 48 Batch Deposit Folders. In addition, NYCPPI provided documents showing that the remaining $107,649 was paid to the Twin Towers Fund, and that the books and records accurately reflect all interest earned on the Money Market Investment Account and the $37,500 distribution.

Nevertheless, we have concerns about NYCPPI’s record keeping practices, since it took approximately seven months for the organization to provide the requested documentation. Given that NYCPPI collected more than $107 million on behalf of the victims of the September 11 attack, it is therefore critical that appropriate steps be taken to ensure that records are properly organized, safeguarded, and readily available for review.

We recommend that NYCPPI attempt to locate the remaining missing documentation cited in this report and use it to determine whether additional monies are due to the Twin Towers Fund. In addition, NYCPPI should inform the Twin Towers Fund that it should pay $10,000 to the underpaid family beneficiary. Finally, NYCPPI should ensure that its records are properly organized, safeguarded, and readily available for review.