Comptroller Stringer Audit: NYPD Lacks Adequate Controls in its Management of Seized Property

 

The NYPD holds cash, jewelry, weapons, vehicles, and other general property as evidence, contraband, assets subject to possible forfeiture, and lost property; audit found NYPD lacks adequate controls over the collection, recording, and reporting of seized property and related revenue it obtains following arrests and other activities

Missing documentation; cash receipts records that did not match the supporting documentation; late and absent reconciliations of revenues collected from vehicle auction sales

Significant weaknesses affecting NYPD’s Property Evidence Tracking System (PETS)—the computer system used by the NYPD to track seized property—including the NYPD’s inability to use it to track seized property on an aggregate level

Comptroller Stringer recommended 16 measures to ensure proper accountability and transparency regarding seized items, revenue, and other property the NYPD holds

 Today, New York City Comptroller Scott M. Stringer released an audit that revealed weak management and controls over the New York City Police Department’s (NYPD) collection, recording, and reporting of property brought to police precincts following arrests, property seized in investigations and other law enforcement activities, including for potential forfeiture, and property retained for safekeeping. The audit found significant deficiencies in the Property Evidence Tracking System (PETS), the NYPD’s computerized system meant to track this inventory, which compromise the NYPD’s ability to track and account for it on a centralized, aggregate level.

The audit findings included unaccounted-for gaps in PETS invoice numbers and discrepancies in the NYPD’s records concerning seized and retained property, asset forfeitures, and related revenues the NYPD reported to the public for Calendar Years 2017 and 2018, pursuant to the requirements of Local Law 131.

The revenue-reporting discrepancies in the NYPD’s records involved missing documentation; cash receipts records that did not match the supporting documentation; late and absent reconciliations of revenues collected from vehicle auction sales, owing in part to the NYPD’s delays in billing a vendor for the City’s share of the proceeds of such sales; and mismatches between the NYPD’s recording of revenue it received from two federal agencies, the U.S. Treasury Department and the U.S. Department of Justice (DOJ), and documents it received from those agencies.

“The NYPD has a responsibility to the public to safeguard, track, properly dispose of, and account for all the property and revenue it receives on behalf of the City,” said Comptroller Stringer. “Our audit found that the NYPD’s system for tracking and accounting for property and revenue is inadequate — resulting in inaccuracies and gaps in its legally required public reports and the records that should support them. New Yorkers deserve to know that their police department is appropriately and accurately tracking seized property, the public revenue it generates, and the items that are supposed to be returned to their rightful owners when legal proceedings are resolved.”

When the NYPD makes an arrest, any property seized is brought to the precinct where an invoice for the property is created in PETS, the agency’s computerized system of record for inventorying and tracking the movement of property that comes into its possession. The precincts transfer the property to one of the police department’s borough offices, auto pounds, or warehouses, depending on the size and type of the property. The NYPD returns property that is not subject to forfeiture proceedings and can be legally returned to its rightful owner; destroys contraband, including weapons no longer needed for a criminal case; and disposes of unclaimed physical items, including jewelry and vehicles, through online public auctions, once the applicable retention period for that property expires.

The NYPD also deposits unclaimed cash and revenue derived from auctions into the City’s general fund. During the period the audit covered, the NYPD worked with two private companies that conduct auctions for the NYPD — PropertyRoom for general property and IAA for vehicles.

Comptroller Stringer’s audit found the following inadequacies regarding the NYPD’s management of seized property and related revenue:

• The NYPD lacked adequate controls over the collection, recording, and reporting of seized property and related revenue.
• Significant weaknesses affected the NYPD’s Property Evidence Tracking System (PETS) — the computer system the NYPD used to track seized property during the Comptroller’s audit scope period. Among other things, the NYPD could not use the system to track seized property centrally on an aggregate level.
• PETS lacked adequate data input controls, which weakened its reliability and affected the accuracy and usefulness of the records it contains and the reports it generates.
• Unaccounted-for gaps in the invoice numbers PETS assigned could signify that transactions that should have been recorded were not or that transactions were inappropriately deleted.
• As a result of the above-mentioned deficiencies and limitations, the NYPD could not efficiently and effectively determine at a central management level whether the property that came into its custody was being properly maintained and disposed of.
• Discrepancies were identified in the data concerning seized property and retained property that the NYPD reported to the public for Calendar Years 2017 and 2018 pursuant to the requirements of Local Law 131. For example, the information the NYPD reported for four of the eight mandated categories for one or both years was not supported by its backup documentation. In addition, the NYPD did not timely report the data that Local Law 131 required regarding seized and returned property.
• The NYPD did not maintain adequate supporting documentation for the amounts it recorded in the City’s Financial Management System (FMS) as revenue received from the State’s District Attorneys’ Offices.
• The audit also found that the cash receipts the NYPD recorded in FMS as revenue for Fiscal Years 2017, 2018, and 2019 did not match the supporting documentation for DOJ and Treasury receipts.
• NYPD incorrectly classified some entries in FMS.
• NYPD did not perform a timely reconciliation of the vehicle auction sales and did not timely bill its vendors for its share of vehicle auction sales proceeds.

To address these findings, Comptroller Stringer recommended 16 measures to improve the NYPD’s collection, recording, and reporting of seized property and related revenue to help ensure full accountability for the proper disposition of all property and related revenue. They include the following:

• Ensure that the system the NYPD reports it is deploying to replace PETS — known as PETS 2.0 — is designed with adequate reporting capabilities so that it can track and report on the location and disposition of seized property on an aggregate basis and utilize that capability to ensure that the property is being properly maintained and promptly disposed of.
• Ensure that PETS 2.0 is designed with appropriate input controls relating to edit checks and data validation.
• Ensure that any unaccounted-for invoice numbers are appropriately investigated, documented, and approved and that adequate documentation is maintained for skipped invoices.
• Ensure that adequate reconciliations of revenues received are performed and that the required information concerning those revenues is checked for accuracy before the NYPD posts the Local Law 131 report on its website.
• Maintain a cash receipts record of the revenues it receives from the State that includes all relevant information required to adequately track the receipts.
• Post the annual Local Law 131 report on its website timely and comply with all the reporting requirements.
• Ensure adequate supervisory review of the NYPD’s tracking of seized and forfeited revenue to ensure that proper reconciliations, including follow-ups on discrepancies, are timely performed.
• Ensure adequate supervisory review over the NYPD’s entries in FMS to ensure they are correctly classified and applied to the correct fiscal year.
• Develop a process for reconciling reviews of auction vendor revenues and monitor its implementation.