Empire State Development

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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Empire State Development
Oversight of International Offices (Follow-Up)


Issued: December 30, 2016
Link to full audit report 2016-F-1
Link to 30-day response

Purpose
To determine the extent of implementation of the two recommendations included in our initial audit report, Oversight of International Offices (2012-S-7).

Background
Our initial audit report, which was issued on June 28, 2013, concluded that, while Empire State Development (ESD) made significant improvements in managing payments to foreign offices, it did not have an appropriate monitoring system to evaluate foreign offices’ activities against contract performance requirements. The recommendations were for ESD to better monitor its foreign office activities to ensure compliance with contract requirements and associated benefits to New York companies and the New York State economy, as well as to ensure that foreign representatives are only reimbursed for actual and necessary expenses incurred in the operation of foreign offices.

Key Findings

  • ESD has made some progress in addressing the issues we identified in the initial audit report; however, further work is needed. In 2015, ESD did implement the new Client Resource Management System that it described in its response to our initial audit. However, we found the system is far less comprehensive than ESD initially described and, in fact, captures little or no data on foreign contractor performance. Despite our repeated requests, and the important role these foreign contractors have in attracting additional international business investment and creating jobs in New York, management could not provide evidence that ESD monitors whether its foreign contractors’ efforts have increased export sales, developed successful investment projects, and created jobs as required by their contracts.
  • ESD officials disagreed with our determination and asserted that they are constantly monitoring the international offices’ performance through their review of periodic reports, as well as monthly teleconferences with the foreign representatives. It was their belief that the combination of all these monitoring mechanisms allows ESD to keep adequate tabs on whether foreign offices meet their contractual requirements. However, despite multiple requests and opportunities throughout the course of our review, ESD was either unable or unwilling to provide auditors with any documentary evidence to indicate that these other purported performance monitoring efforts had occurred or that any feedback was provided to foreign contractors as a result of these activities.
  • In summary, of the two prior audit recommendations, we found one has been fully implemented and the other only partially so.

Key Recommendation

  • Officials are given 30 days after the issuance of the follow-up review to provide information on any actions that are planned to address the unresolved issues discussed in this review.

Other Related Audit/Report of Interest

Empire State Development: Oversight of International Offices (2012-S-7)


State Government Accountability Contact Information:
Audit Director: John Buyce
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