Follow-Up Audit Report on the Financial Controls of the New York Public Library

AUDIT REPORT IN BRIEF

This follow-up audit determined whether the New York Public Library (Library) implemented the 12 recommendations made in a previous audit entitled Audit Report on the Financial Controls of the New York Public Library (MG05-092A), issued November 22, 2005. This audit also determined the Library’s current position on two recommendations that were not implemented in an earlier, 2001 follow-up audit, Follow-up Audit on the Financial and Operating Practices of the New York Public Library, (ME01-077F, issued June 29, 2001). In this report, we discuss the current implementation status of the recommendations made in the prior audits.

The 2005 audit disclosed that in general, Library expenditures funded by City appropriations were valid and accurate. However, this previous audit noted concerns in the Library’s purchasing practices, inventory management, and record-keeping of computer equipment. The auditors found that the Director of the Purchasing Department did not oversee the purchasing of goods and services by the Facility Department; purchase orders were issued without required competitive bidding or proper approval; some files were incomplete, lacking contractual agreements documenting the justification for purchasing certain goods and services; and some expired contracts were not renewed although vendors continued to be paid and to perform services. In addition, there was a lack of segregation of duties in the management of equipment leases.

Audit Findings and Conclusions

The current follow-up audit disclosed that of the 12 recommendations made in audit MG05-092A, issued November 22, 2005, the Library implemented 10 recommendations and partially implemented 2 recommendations. Regarding the latter: the Library did not segregate all vital functions of negotiating, approving, and managing equipment leases; and although the inventory is properly tagged and the inventory records are regularly updated, we found discrepancies during our physical inventory at two branch libraries.

The two recommendations made in the earlier, 2001 follow-up audit, which were found not implemented by the 2005 audit and repeated in that audit, were now found to be implemented.

During the current audit, we identified new issues concerning purchase requisitions for computer purchases that lacked the required Information Technology Group (ITG) approvals; and the tracking and recording of external hardware and software user licenses within the ITG inventory database.

Audit Recommendations

To address the issues from the previous audit that still exist, we recommend that the Library:

Segregate all vital functions of negotiating, approving, and managing equipment leases. The Library should provide increased management oversight of the entire process.
Correct discrepancies found during our physical inventory count, and regularly verify and update its computer equipment inventory listing.

To address the new issues identified in the current audit, we recommend that the Library:

Add a statement to the purchase requisition form indicating the need for ITG’s approval and add a place for an authorized signature.

Maintain within the ITG inventory database a list of inventory-related information on external hardware, such as, power supplies, external modems, and external hard drives, as well as software user licenses.