Purpose

To determine whether the New York City Health and Hospitals Corporation (H+H) has established adequate controls over equipment. Our audit scope covered the period July 1, 2016 through August 7, 2018.

Background

H+H is a public benefit corporation created by the New York City Health and Hospitals Corporation Act of 1969. H+H, the largest public health care system in the nation, is a network of 22 facilities, including 11 acute care hospitals, 6 diagnostic and treatment centers, 5 nursing homes, and more than 70 community-based primary care sites located across the City’s five boroughs. The network provides comprehensive health care services to more than 1 million New Yorkers annually.

H+H’s capital assets include land, buildings, and equipment. As of June 30, 2017, H+H reported $8.4 billion in capital assets, of which about $3.5 billion included medical and office equipment. During the year ended June 30, 2017, H+H purchased approximately $154.7 million in equipment. Descriptions, purchase order numbers, and other information pertaining to major movable equipment (costing $500 or more) are recorded and tracked in H+H’s Fixed Asset Management (FAM) system. Equipment costing $1,000 or more must be tagged and the tag number recorded in FAM. When equipment is disposed of, information pertaining to that item is purged from FAM. As of June 30, 2017, FAM contained 203,659 items.

Key Findings

We selected and reviewed a judgmental sample of 338 items (equipment) at nine H+H facilities to determine if H+H had established adequate controls over the recording, tracking, and disposal of equipment. We determined that H+H’s controls over equipment need to be improved, as auditors were unable to find some items. In addition, H+H staff did not always accurately record information in FAM and made errors when tagging items. We located 263 of the 338 sampled items and determined that they were recorded correctly in FAM. However, H+H officials could not account for 18 of the remaining 75 items. According to FAM, these 18 items cost $144,828 and had a book value of $17,924 as of June 30, 2017. We also found various record-keeping issues associated with the remaining 57 items, including:

• 600 infusion pumps, purchased collectively for $1.7 million, were recorded in FAM as one item without identifying the actual location of the 600 pumps. We were unable to track the 600 pumps.
• 5 items, purchased collectively for $296,083, were incorrectly recorded in FAM. Four of the items were incorrectly tagged. The remaining item was recorded as a $148,289 anesthesia machine instead of four physiological monitors.
• An HP computer was purchased on August 27, 2009 for $1,547. We attempted to locate the computer as it was still listed in FAM on June 30, 2017. H+H officials then provided us with an approved relinquishment form indicating that the computer was disposed of on August 10, 2010 because it was deemed obsolete. However, due to the poor documentation regarding disposal, we were unable to determine if the computer had been discarded or inappropriately removed from the facility, or if all proper steps had been taken to ensure that the computer was disposed of in a secure manner.

Key Recommendations

• Communicate policies regarding asset disposal/transfer to all relevant personnel and ensure these policies are followed.
• Review the asset management system for accuracy and implement a system of continuous monitoring.
• Investigate why the 18 items identified in this report could not be accounted for.

Other Related Audit/Report of Interest

New York City Department of Social Services: Oversight of Security Expenses in Single Adult and Adult Family Homeless Shelters (2016-N-6)