Follow-up Audit Report on the Financial and Operating Practices of the Queens Borough Public Library

Executive Summary

The objective of this follow-up audit was to determine whether the Queens Borough Public Library (QBPL or the Library) fully implemented the nine recommendations of our prior Audit Report on the Financial and Operating Practices of the Queens Borough Public Library (Audit # FN14-099A), issued on July 7, 2015.

The QBPL is one of the largest public library systems in the United States, dedicated to serving one of the country’s most ethnically and culturally diverse areas. The QBPL is primarily funded by City tax levy funds. The City also provides the Library with most of its buildings and with City capital funds for infrastructure work on those buildings. In addition to City funds, the QBPL receives funding from New York State; federal grants; and private donations; and it collects revenues from book sales, fines, and fees.

During Fiscal Year 2019, the QBPL reported $121,548,512 in City funding, $10,161,318 in State funding, and $2,821,705 in federal grants. The QBPL uses a fund accounting structure, which includes restricted, unrestricted, and Board-designated fund accounts. The QBPL may use four of those funds—the City Fund and unrestricted funds in its Fines and Fees Fund, its State Fund, and its Board-designated Fund—for all aspects of the Library’s operations.

Our previous audit, cited above, was conducted to determine whether the QBPL appropriately authorized and recorded its expenditures; whether those expenditures were necessary for the Library’s operation; and whether the QBPL complied with the applicable laws, rules, and regulations governing the use of the Library’s funds. That audit found significant deficiencies in the Library’s operating and financial practices and recommended nine measures to address the deficiencies found. In this report we discuss the implementation status of each of those nine recommendations.

Audit Findings and Conclusion

Of the nine recommendations made by the prior audit report, we determined that the QBPL has fully implemented three, partially implemented five, and that one recommendation was no longer applicable.

Specifically, the QBPL implemented: (1) recommendation #4—that it review certain W-2s it had issued previously to determine the value of any income not properly stated and take appropriate action, including reissuing any W-2s, if necessary; (2) recommendation #8—that it maintain accurate records to support fund allocations and other financial and operational decisions, including raises, bonuses, staff reductions, and reductions in services; and (3) recommendation #9—that it review its policies and procedures to ensure that they adequately promote the mission of the Library and ensure the proper allocation of resources.

The QBPL partially implemented: (1) recommendation #1—that it revise its policies and procedures to ensure that proper Board and managerial oversight responsibilities are established and exercised for all aspects of the Library’s operations, including but not limited to the activities of the Chief Executive Officer (CEO) and other executive staff; (2) recommendation #2—that it ensure the establishment and enforcement of proper financial controls for the effective use of its resources;  (3) recommendation #3—that it revise the timekeeping policy to ensure all employees, including managerial employees, properly account for their work hours; (4) recommendation #6—that it ensure going forward that all compensation is included as taxable income on employees’ W-2s; and (5) recommendation #7—that it establish a reasonable methodology to properly allocate costs among different funds.

Audit Recommendations

Based on this follow-up audit, we make seven new recommendations that the QBPL take the following actions:

• Update its Purchasing Policy;
• Establish a standard allowance for in-town meals to be included in its Business Expense Policy;
• Enforce its credit card policies and procedures, including the procedure requiring the CEO and Chief Financial Officer (CFO) to review and approve credit card and purchasing card charges, or, if the QBPL determines that such review is unnecessary, revise the relevant policies and procedures, such as Authorized Uses procedure, Section A9, to eliminate the requirement and specify the reviews it deems sufficient;
• Properly account for the usage of QBPL vehicles by authorized drivers to identify and include all reportable compensation as taxable income on employees’ W-2s;
• Properly account for the fueling of QBPL vehicles and the location of authorized drivers during work hours to detect and prevent unauthorized use of QBPL’s resources;
• Ensure that QBPL’s Kronos timekeeping system functions properly and will be fully implemented by the scheduled time; and
• Revise its Board-approved allocation methodology and consider allocating management salary costs among unrestricted funds other than the City Fund.

Agency Response

In its response, the QBPL agreed with five of the seven recommendations, disagreed with one recommendation, and stated that it will take the remaining recommendation under advisement. Specifically, the Library disagreed with the recommendation to revise its Business Expense Policy to include a standard allowance for in-town meals and stated that it will take under advisement the recommendation to revise its Board-approved allocation methodology and consider allocating management salary costs among unrestricted funds other than the City Fund.