Audit Report on the Internal Audit Review of Professionally Certified Building Applications by the Department of Buildings

AUDIT REPORT IN BRIEF

We performed an audit on the internal audit review of professionally certified building applications by the Department of Buildings (DOB). To obtain a building permit, a property owner must employ a New York State licensed professional engineer or registered architect to prepare plans and then must submit them to DOB. DOB examiners review the plans to ensure they comply with applicable requirements. Alternatively, property owners can obtain a building permit by having their permit applications "self-certified" by the licensed engineer or architect who affirms that the plans comply with all applicable laws and codes. Self-certification eliminates the plan review process by DOB, thereby expediting the processing of permit applications. DOB procedures require that a minimum of 20 percent of all self-certified applications be subject to an internal DOB audit.

In Fiscal Year 2001, DOB received 57,172 applications for building permits. Of these applications, 20,214 (35%) were professionally certified.

DOB conducted audit reviews of 20 percent of the professionally certified applications submitted to the Department, in accordance with its policies and procedures. In Fiscal Year 2001, those audits found that 59 percent of the applications contained errors. In contrast, our review of 73 applications disclosed that 67 percent contained errors. The difference in the percentage between our audits and those of DOB is particularly disturbing, since 14 of the 25 applications in our sample that had already been audited by DOB contained problems DOB did not uncover. Such a high number of errors on certified applications indicates that DOB should take additional steps to ensure that engineers and architects have sufficient knowledge and experience to certify applications accurately and that they take professional care when doing so.

Moreover, DOB did not always conduct its audits within 45 days of the issuance of the permit, as required by its procedures. Also, DOB policies and procedures require that the plan examiners report serious code and zoning objections to the borough commissioners for appropriate action; however, DOB has no formal guidelines for determining whether an objection is serious and should therefore be reported. Consequently, certain problems that are treated as serious in one borough may be treated differently in other boroughs.

In addition, although DOB officials stated that applications should be selected for audit on a random basis, DOB procedures do not specify what selection method should be used. With the exception of Manhattan, borough office commissioners claimed that applications were selected for audit based a number of different factors, including the complexity of the project, the frequency of problems found with certain applicants, and the location of the project. However, there was no documentation showing how these issues were considered when applications were selected for audit. Such a system lacks internal controls and leaves the Professional Certification program susceptible to fraud and abuse.

Also, the DOB Office of Investigations Audits and Discipline has no formal guidelines for determining which self-certifying applicants should be investigated. That Office oversees borough office compliance with DOB procedures for auditing professionally certified applications, and it identifies and investigates architects and engineers who have an established pattern of violations. Moreover, there is no DOB database that tracks audit findings by applicant that could be used to identify patterns and problems with certain architects and engineers who should be investigated.

Finally, three borough offices have no fee estimators to verify that appropriate permit fees are being paid, as required by DOB procedures.

This report makes a total of 14 recommendations. The major recommendations are as follows:

The Department of Buildings should:

• Provide appropriate training to plan examiners to help ensure that they issue 10-day notices when required.
• Ensure that audits are performed within 45 days of permit issuance, as required.
• Develop a citywide standard and implement formal guidelines for determining whether problems on applications are serious, and require the issuance of a ten-day notice.
• Issue guidelines that specify how borough offices are to select applications for audit and ensure that the borough offices comply with the agency guidelines.
• Develop and implement guidelines and a formal process for the borough offices to follow when identifying applicants for referral to the Office of Investigations, Audit and Discipline. The Office of Investigations, Audit and Discipline should also develop and implement guidelines and a formal process to follow when selecting applicants for investigation.
• Periodically ensure that borough offices have technical personnel assigned to review cost estimates.