Objectives

To determine whether the New York City Department of Finance (DOF) Citywide Payments Services and Standards (CPSS) unit has controls in place to ensure that payments received by and processed on behalf of agencies are correctly matched with receivables and that agencies are appropriately advised of payments. We also determined whether the implementation of CPSS improved the payment experiences for the public and promoted time and cost savings for City agencies. The audit covered the period from July 2019 through November 2022.

About the Program

DOF is a revenue service, taxation, and recording agency. Its mission is to administer the tax and revenue laws of the City of New York fairly, efficiently, and transparently, and instill public confidence and encourage compliance. The mission of CPSS, a unit within DOF’s Division of Treasury and Payment Services, is to deliver a citywide service for the acceptance of payments and related business processes, offer a variety of payment options, and improve customer satisfaction. Payments can be made online, in-person, or by mail to a bank lockbox. CPSS administers the Citywide Payments and Receivables Services System (System), a centralized payment repository for accepting payments made to City agencies. The System was intended to allow agencies to focus on their core business while helping them save time and money. DOF reported that from January 2022 through May 2022, CPSS processed about 5.5 million transactions totaling more than $7 billion.

Key Findings

Although DOF has controls for matching payments to receivables and notifying agencies of their payments, several areas need improvement:

• We found issues with data inconsistencies, including a difference of $118.6 million where the Business Dashboard (Dashboard) (an Excel spreadsheet CPSS maintains for its convenience to identify trends and respond to ad hoc requests for information) exceeded the production reports for the month of May 2022. Until we brought the difference to DOF’s attention, DOF was not aware of it and then could not provide documentation to explain this difference. Further, while researching the difference, DOF officials discovered another error of $1.2 million between reports used by CPSS.
• CPSS produces 759 reports from its System. However, when asked why they were produced or who received those reports, CPSS officials did not provide that information, which raises concerns if this information is available. While CPSS management states these reports do not need to match because they are only for internal use, information about the transactions and value of payments processed by CPSS should be reliable, so it can be used to monitor payment trends and potentially identify issues, which is one of the Dashboard’s stated uses.
• In May 2022, CPSS reports showed $20.6 million in real property tax payments under FAIRTAX (a system to record all taxes received by the City, including real property tax) despite the fact that the FAIRTAX system was replaced in 2018.

Deficiencies in DOF’s monitoring process resulted in differences in the data not always coming to DOF’s attention, which could lead to inaccuracies in reporting.

We also found weaknesses in DOF’s internal controls and processes:

• Despite a directive to process payments received daily, at one DOF location, payments received by mail were kept in an unsecured place for up to 3 days before they were logged into an informal tracking sheet and then held for up to 19 days before they were recorded in DOF records.
• DOF does not have a method to measure cost or time savings – a main goal of the System.
• DOF does not have a uniform process to identify and track CPSS-related customer concerns, such as inquiries about payment status, refunds, and complaints.

Key Recommendations

• Review and update CPSS reporting tools and production reports to ensure they provide updated and accurate information and are in line with other reporting sources and that reports address user needs.
• Ensure all checks are immediately logged and deposited daily or routed directly to the lockbox location (payments by mail).
• Survey agencies that use the System to determine any time and cost savings.
• Establish a uniform process for handling customer issues and ensure that the process is formally documented and communicated.