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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Metropolitan Transportation Authority - New York City Transit
Procurement and Payroll-Related Matters Pertaining to the Use of Certain Federal Funds


Issued: June 18, 2014
Link to full audit report 2012-S-105
Link to 90-day response

Purpose
To determine whether the New York City Transit Authority (Transit) used the American Recovery and Reinvestment Act (Recovery Act) funds efficiently and for authorized purposes, and whether the funds were properly monitored to prevent fraud, waste and abuse. Our audit covered the period April 30, 2009 through January 23, 2013.

Background
The Metropolitan Transportation Authority (MTA) is a public benefit corporation providing transportation services in and around the New York City metropolitan area. The MTA oversees six constituent agencies, including the New York City Transit Authority (Transit). Transit operates the subways in the boroughs of Manhattan, Brooklyn, Queens and the Bronx. Transit also operates the Staten Island Railway and buses in all five boroughs.

In 2009, the federal government passed the Recovery Act to provide financial assistance to states, localities, and public authorities in a time of fiscal distress. The Recovery Act requires entities to use funds for authorized purposes and to mitigate instances of fraud, waste and abuse. In addition, the expenditure of all funds is to be transparent to the public, and the public benefits of these funds are to be reported clearly, accurately and in a timely manner. Transit received Recovery Act funding for 23 projects estimated to cost $441.4 million. We visited 15 of the 23 projects' sites and did a more detailed review of one project, the Induction Loop project (estimated to cost $13.4 million).

Key Findings

  • The prime contractor for the Induction Loop project, Transit Technologies, allowed unauthorized subcontractors to work on the project. One of those subcontractors was Petrocelli Electrical Company, whose former chairman and owner was indicted (and later convicted) on charges of making illegal payments to a labor union representative.
  • Two Transit Electronic Maintenance Division (EMD) supervisors were paid excessive and questionable overtime totaling $31,783 for administrative duties. Most of this overtime was personally requested by the supervisors for themselves. One of these supervisors was paid $2,158 for three overtime instances before the overtime was actually worked. In addition, we tested overtime for three EMD field supervisors and three of their assigned staff, and found they were paid $18,878 for 360 overtime hours. However, Transit activity reports indicated these employees were only at the assigned subway stations for about 149 hours, resulting in a potential overpayment of 211 hours at $10,969.
  • We visited work sites for the Induction Loop project, and noticed that an excessive number of Transit employees were assigned there and receiving overtime. At one work site for the Subway Stations Rehabilitation project, we observed five Transit employees sitting idly and determined they received a full day's pay for not working.

Key Recommendations

  • Monitor project sites to ensure that only workers for prime contractors and preauthorized subcontractors work on the project.
  • Monitor overtime claims to ensure that hours paid were necessary and actually worked, and do not record overtime hours in the timekeeping system before they are actually worked.
  • Develop a better system for assigning Transit employees so that staff does not sit idly and create an environment where employees report the fact that they are not actually working.

Other Related Audits/Reports of Interest

None


State Government Accountability Contact Information:
Audit Manager: Andrea Inman
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236