Follow-up Audit Report on the Business Integrity Commission’s Billing and Collection of Licensing and Registration Fees

Executive Summary

The Business Integrity Commission (BIC), established pursuant to Chapter 63 of the New York City Charter, is responsible for regulating the trade waste industry and public wholesale markets in New York City.  BIC’s mission is to eliminate organized crime and other forms of corruption and criminality from these industries so that businesses can operate in a safe, fair, competitive, and open environment.  In furtherance of its mission, BIC has both regulatory and law enforcement authority.  Among other things, BIC licenses or registers businesses that seek to conduct a waste removal business and registers wholesalers who seek to sell their goods in public wholesale markets.  Upon approval, BIC will issue the applicant business a license or registration to operate, which must be renewed every two or three years.  The Rules and Regulations of the City of New York establish license and registration application fees, which range from $1,000 to $7,500.  Application fees may be paid by check, money order, or credit card and are due upon submission of an application either in-person or by mail.

A prior audit of BIC, Audit Report of the Business Integrity Commission’s Billing and Collection of Licensing and Registration Fees (Audit No. FK16-090A), issued by this office on June 28, 2016, (the 2016 Audit) found that “BIC generally charged and collected appropriate application fees for trade waste and public wholesale market licenses and registrations.  However, BIC did not adequately safeguard application fees that it received because it did not deposit cash receipts in a timely manner, properly secure cash receipts pending deposit, and separate the duties for receiving cash receipts and accounting for them in NIMBUS.”  Based on these findings, the 2016 Audit made nine recommendations.  In its response to the 2016 Audit, BIC agreed with six recommendations and disagreed with three recommendations.

Audit Findings and Conclusions

Of the nine prior audit recommendations, we determined that BIC has implemented three recommendations, partially implemented three recommendations, and did not implement three recommendations.

Audit Recommendations

To address the issues identified in this audit, we make the following six recommendations to BIC, all of which were made as a result of the prior audit findings but never fully implemented.

BIC should:

• Electronically scan and deposit all funds received in the bank on a daily basis.
• Accurately represent BIC’s internal control structure in its Directive #1 Checklist.
• Place restrictive endorsements on incoming checks and money orders as soon as they are received.
• Secure checks and money orders awaiting deposit in a locked safe which has a combination that is changed periodically and known to few individuals.
• Compare the list of checks and money orders that are received each day to those that are deposited.
• Issue pre-numbered receipts to payers in numerical sequence, account for all receipts, and compare them to cash receipts reports on a daily basis.

Agency Response

In its response, BIC agreed with four of the six recommendations and disagreed with two recommendations.  In addition, BIC stated that its response to the follow-up audit’s recommendations reflects the agency’s recognition of the importance of internal controls “by outlining additional improvements to be implemented, while maintaining operational efficiency and the ability to effectively achieve the agency’s mission.”