Audit Report on the Other Than Personal Service Expenditures of the Office of Administrative Tax Appeals

The New York City Office of Administrative Tax Appeals (OATA) was established by Local Law 57 of 2007. The law merged two City agencies: the Tax Appeals Tribunal, responsible for hearing appeals of Department of Finance income and excise tax determinations, and the Tax Commission, responsible for hearing protests of property tax assessments. OATA’s mission is to provide a single venue for fair, independent, efficient, City-administered hearings of tax appeals.

We conducted an audit of the Other Than Personal Service (OTPS) expenditures of OATA for the period July 1, 2008, through June 30, 2009—Fiscal Year 2009. The OTPS expenditures during Fiscal Year 2009 totaled $287,419.

Audit Findings and Conclusions

The audit found that generally, all the purchases reviewed were for proper business purposes, properly authorized and approved, and the purchased goods were received and the services rendered. However, OATA had problems with its equipment inventory. It has no written policies and procedures for recording, reporting, and safeguarding its equipment, and it did not maintain complete and accurate inventory records for its equipment. As a result, OATA did not record 130 of 401 (32 percent) equipment items on its inventory records and could not account for six items: two laser printers, two monitors, a postage machine, and a VCR, with a replacement cost of $3,579. For 258 pieces of equipment recorded on inventory, OATA’s inventory records lacked or had incorrect critical information such as descriptions of the items, model numbers, ID tag numbers, and office locations for the items listed. Moreover, the OATA does not always update its inventory records to reflect relocated equipment. Consequently, these weaknesses increase the risk that equipment, including computer equipment, may be stolen and that theft may go undetected.

There were some instances of noncompliance with Comptroller’s Directives concerning parking violations, sales tax, encumbrance documents, and reimbursements.

Audit Recommendations

The audit makes five recommendations. OATA should:

• Develop inventory policies and procedures to ensure that the inventory control system is: (1) accurate (all equipment is recorded on its inventory records and accounted for), and (2) timely (records are adjusted to immediately reflect receipts, transfers, and relinquishments).
• Ensure that it does not pay for parking violations and towing fees issued on its City-owned vehicles and seek reimbursement from the offending drivers.
• Ensure that it does not pay any sales tax on any item or service that it purchases on behalf of the City for official business purposes.
• Ensure that it processes requisitions when a purchase exceeds the micro-purchase limits.
• Reimburse employees only when they submit original receipts as required by Directive #6.

OATA Response

In his response, OATA’s president generally agreed with the audit’s recommendations. However, OATA’s president took exception with several of the audit’s findings. The specific comments raised by OATA’s president and our rebuttals are contained in the relevant sections of this report.