Audit Report On The Queens Borough President’s Office’s Controls Over Its Inventory Of Computers And Related Equipment

Executive Summary

The objective of this audit was to determine whether the Queens Borough President’s Office (QBPO) had adequate controls over its inventory of computers and related equipment in compliance with applicable rules and regulations.

The Queens Borough President, along with the Borough Presidents of New York City’s (City’s) other four boroughs are the executive officials of their respective boroughs.  The City Charter grants each Borough President, elected to a term of four years, various powers, including: the power to prepare and review budget proposals for the City Council; recommend capital projects; consult with the Mayor and the City Council on the preparation of the City’s executive and capital budgets; and appoint some of the members and provide technical assistance to the borough’s community boards.

The Queens Borough Board—a committee consisting of the Borough President (Chairperson), the borough’s Council Members, and the borough’s community board chairpersons—is empowered to initiate and review comprehensive or special purpose land use plans, mediate disputes between community boards, and make policy recommendations to the Mayor and City Council.  Computers and related equipment (including mobile devices) play a vital role in helping QBPO staff carry out the agency’s activities. According to the City Comptroller’s Comprehensive Annual Financial Report (Annual Report) for Fiscal Year (FY) ending June 30, 2018, the QBPO’s actual expenditures totaled $5.75 million, which included $4.1 million for Personal Services (PS) and $1.65 million for Other Than Personal Services (OTPS).  The OTPS expenses for this period included purchases of computers and related equipment totaling approximately $41,600.

Audit Findings and Conclusion

The QBPO did not have adequate controls over the agency’s inventory of computers and related equipment.  We identified several discrepancies in the QBPO’s inventory records.  Preliminarily, the inventory records of the QBPO’s computers and related equipment did not accurately reflect the inventory on hand—the records included equipment that auditors could not find in the agency’s possession and excluded other equipment that we found in the agency’s possession but that was not listed.  Additionally, the QBPO’s inventory records contained incorrect information, and some required information was missing.  Information that was incorrect or missing included one or more of the following fields: the locations; descriptions; models; and serial numbers of the items.  One of the reasons for the discrepancies and missing information is that the QBPO did not perform the required periodic physical inventory counts that would help to ensure the accuracy and completeness of the inventory records.

We also found several deficiencies relating to the QBPO’s asset tags.  Specifically, we found gaps in the sequence of asset tag numbers used; instances of duplicate asset tag numbers being used; and several equipment items without affixed asset tags.  In addition, we found that the QBPO also did not have an up-to-date and complete list of its unused computers and related equipment and had no immediate plans of salvaging and relinquishing those items.  Finally, we found that the QBPO did not follow its own written policies and procedures with regard to its purchasing, receiving and payment processes, nor did it sufficiently segregate these functions among its staff or establish compensating controls when those duties could not be appropriately segregated.

The deficiencies identified in the QBPO’s controls over its inventory operations, if not corrected, significantly increase the risk of waste, fraud and mismanagement with respect to its computers and related equipment.

Audit Recommendations

Based on the audit, we make 21 recommendations, including that:

• The QBPO should maintain complete and accurate inventory records of all of its computer and related equipment. This includes immediately updating its inventory records when changes occur, including the acquisition of new equipment and the reassignment of existing equipment.
• The QBPO should ensure that all necessary and required information for each inventory item is included in the master inventory record.
• The QBPO should perform and document annual inventory counts of its entire inventory of computers and related equipment and ensure that all discrepancies are independently investigated and any adjustments to its inventory records are reviewed and approved by management. The inventory count should be conducted by QBPO staff independent from the IT unit, and this procedure should be added to the QBPO’s written policies and procedures.
• The QBPO should ensure that tag numbers are sequentially assigned to all computers and related equipment without skipping tag numbers. If the issues generating sequential tag numbers using its inventory system and label making software cannot be resolved, the QBPO should maintain a log that adequately tracks the tag numbers to avoid gaps in the numbering sequence.
• The QBPO should comply with the City’s inventory relinquishment policy and ensure that it adopts a consistent process and formalizes in writing its procedures for relinquishing its computers and related items.
• The QBPO should process payments only when all required documents are present (such as original approved requisition forms and signed packing slips or receiving reports) and contain the requisite approvals to help avoid duplicate payments.
• The QBPO should ensure that it does not pay sales tax on any item or service that it purchases on behalf of the City for official business purposes. It should also review its prior purchases to determine whether additional payments of sales taxes were made (other than the ones identified by this audit) and request refunds from those vendors.
• The QBPO should ensure that key responsibilities for the management of the agency’s inventory of computers and related equipment are adequately segregated or that compensating controls are implemented.

Agency Response

In its response, the QBPO agreed with all of the audit’s 21 recommendations, and stated, “we accept all of your recommendations for augmenting our inventory controls, and we have already implemented many of these recommended procedures.”  Specifically, the QBPO indicated that it has already implemented or partially implemented 11 of them (#s 1, 3, 4, 8, 9, 15, 16, 17, 18, 19, and 21), and will implement or is in the process of implementing the remaining 10 (#s 2, 5, 6, 7, 10, 11, 12, 13, 14, and 20).