Follow-up Audit Report on the Monitoring of the Private Carting and Public Wholesale Markets by the Business Integrity Commission

In November 2001, a revision of the New York City Charter created the Organized Crime Control Commission, later renamed the Business Integrity Commission (BIC), to consolidate under one agency regulatory jurisdiction over the private carting, the public wholesale market, and the shipboard gambling industries. Previously, these industries were regulated by the Trade Waste Commission, the Department of Small Business Services, and the Gambling Control Commission, respectively.

BIC is both a law enforcement and regulatory agency. Its mission is to eliminate organized crime and other forms of corruption and criminality from the industries it regulates. BIC is empowered to investigate applicants, issue licenses and registrations, enforce applicable laws, and promulgate rules and regulations that govern the conduct of the businesses it oversees. The New York City Administrative Code requires that businesses operating in the trade waste and market industries obtain a license or registration from BIC. Before a license or registration is granted, BIC conducts background and criminal investigations of the applicant’s business and its principals for the purpose of determining the good character, honesty, and integrity of the applicant business. This follow-up audit determined whether the key recommendations made in the previous audit entitled Audit Report on the Monitoring of the Private Carting and Public Wholesale Market Industries by the Business Integrity Commission (Audit No. FK07-089A, issued June 30, 2008) were implemented. The previous audit found significant weaknesses in BIC’s monitoring of the trade waste and market industries.

Audit Findings and Conclusions

In this follow-up audit, we assessed the implementation status of 13 recommendations made in the prior audit report. Of the 13 recommendations, we determined that six recommendations were implemented, one recommendation was partially implemented, and six recommendations were not implemented. A number of issues identified from the previous audit still exist. Specifically, BIC: does not perform any reconciliation to ensure that all complaints received are recorded in the complaint database; does not adequately supervise Market Agents’ activities; does not conduct background checks for some renewal applications; and allows wholesale market businesses to operate without current registrations.
In addition, we identified the following new issues which need to be addressed: BIC does not maintain a minor violation log as required by its procedures and does not assign background checks for investigation in a timely manner.

Audit Recommendations

The follow-up audit makes 12 recommendations, including that BIC should:

• Implement a process to ensure that all complaints received are entered into its database.
• Improve its monitoring of Market Agents’ activities to ensure that they make regular entries of their actions in their memo books as required and complete required documents.
• Ensure that the background check process is completed, adequately documented, and maintained for all principals and key employees of all public wholesale markets that it regulates.
• Develop timeliness measures for the processing of new and renewal applications.
• Ensure that the Background Check Unit supervisors assign applications for investigation when received in order to improve the processing time.

Agency Response

In its response, BIC generally agreed with seven recommendations, disagreed with three recommendations, and did not address two recommendations.