Final Letter Report on the New York City Economic Development Corporation’s Controls over Its Computer and Other Computer-Related Equipment

Executive Summary

The audit determined whether the New York City Economic Development Corporation (EDC) is in compliance with certain inventory procedures as set forth in the Department of Investigation’s (DOI’s) Standards for Inventory Control and Management and whether it is maintaining internal control systems as required by the New York City Comptroller’s Directive #1.

EDC is a not-for-profit corporation operating under contract with the City of New York (the City) to promote economic development and business growth.  Its mandate is to encourage investment and attract, retain, and create jobs in New York City.

Results

The audit found that EDC has segregated the duties for purchasing, receiving, and maintaining the inventory of computer and computer-related equipment among different staff members, in accordance with Comptroller’s Directive #1.  That Directive states that key duties and responsibilities need to be divided or segregated among different staff members to reduce the risk of error or fraud.   However, the audit also found some discrepancies on EDC’s inventory list, although we found no instances of missing equipment.  Specifically, during our observations at EDC’s offices we found that 22 of the 997 computer and other computer-related equipment items tested had incorrect serial numbers on the inventory list.  At the exit conference, EDC explained that for 8 of the 22 items the correct serial numbers were recorded in a secondary field in its inventory system.  EDC provided evidence to that effect.  However, although the correct serial numbers were recorded in the secondary field in EDC’s inventory system, the incorrect serial numbers were recorded in the field designated for the item’s Serial Number.  Having two serial numbers for one item is inappropriate and can lead to confusion for the agency as well as auditors.  DOI’s Standards for Inventory Control and Management requires that “[p]ermanent records [be] maintained, centrally, to track all non-consumable goods issued to each agency unit, including type of equipment, manufacturer, serial number, agency control number, condition, location, date issued, and the person(s) responsible for maintenance.”   The purpose of these inventory controls is to safeguard all assets against possible theft and misuse.

Recommendation

The audit recommended that EDC should correct its inventory list to ensure that the serial numbers for the 22 computer and other computer-related equipment items are properly and consistently listed.

Agency Response

In its response, EDC stated, “(w)e are pleased that the Comptroller’s examination which included 997 IT-related items, found that all equipment was accounted for through physical observance as well as with supporting documentation.”