Follow-up Audit Report on the Department of Finance’s (DOF) Administration of the Senior Citizen Rent Increase Exemption Program

AUDIT REPORT IN BRIEF

The Department of Finance (DOF) administers a broad range of programs that offer tax credits, one of which is the Senior Citizen Rent Increase Exemption (SCRIE) program. This program provides an exemption to eligible tenants from future rent increases and offers the landlords an equivalent credit on their property taxes in the form of a property tax abatement credit (TAC). Tenants who apply and are determined to be eligible are legally entitled to SCRIE benefits. Landlords do not have the authority to refuse participation or to prevent a tenant from participating in the SCRIE program. For our scope period of July 1, 2009, through May 31, 2012, DOF issued $357.9 million in new TACs and retrieved $22.5 million in TACS previously issued on behalf of 54,299 tenants.

Our follow-up audit focused on whether DOF has implemented the seven recommendations made in a prior audit report, Audit Report on the Department of Finance’s Administration of the Senior Citizen Rent Increase Exemption Program (Audit No. MG11-053A), issued on September 23, 2011. This audit found that DOF had inadequate controls in place to ensure that all TACs are appropriately issued to landlords.

Audit Findings and Conclusion

The follow-up audit found that DOF has improved its administration of SCRIE. Of the seven recommendations made in the previous audit, we found that DOF implemented six and partially implemented one.

We determined that since the previous audit, DOF has established formal policies and procedures to guide its staff in processing SCRIE applications and related information. In addition, DOF did investigate the accounts with deceased tenants identified in the previous audit and, as of May 31, 2012, had retrieved a total of $9.8 million in TACs. Moreover, DOF has developed controls to ensure that SCRIE records are accurately updated and that benefit transfers are correctly performed for deceased tenants with eligible household members. DOF has also developed additional controls such as the use of LexisNexis to research missing applicant information; has instituted a web-based system to scan and store all SCRIE documents; and currently conducts periodic reviews of SCRIE user accounts.

However, although DOF does currently perform monthly death matches of its SCRIE database with individuals listed as deceased in the Social Security Administration’s Death Master File, it does not perform death matches against all open accounts–specifically for tenants with open accounts who have not renewed their leases. As a result, DOF does not retrieve all TAC payments that were issued subsequent to the death of a tenant and does not always accurately update its database to reflect the current status of all SCRIE accounts. In addition, DOF does not always follow its own policies and procedures pertaining to the recoupment of funds after a change in circumstance. As a result, DOF did not always retrieve the correct TAC payments.

Audit Recommendations

This report makes three new recommendations, specifically that DOF should:

• Include all open accounts in its monthly death matches against the Social Security Administration’s Death Master File.

• Adhere to the timeframes stipulated in its policies and procedures pertaining to the recoupment of funds.

• Investigate and adjust the 16 accounts that were incorrectly processed.

Agency Response

In its response, DOF agreed with all three recommendations.