New York State Canal Corporation

Board Governance and Controls Over Selected Financial Practices

The New York State Canal System is a 524-mile navigable waterway consisting of various interconnected canals, canalized natural waterways, lakes and reservoirs. While the Canal System, and the Erie Canal in particular, were once important to commerce, they are now used primarily for recreational and economic development purposes, such as tourism. In 1992, the New York State Canal Corporation was created as a subsidiary of the New York State Thruway Authority, and was charged with operating and maintaining the Canal System. The Corporation also engages in community revitalization projects along the Canal System.

We examined whether the Corporation had effectively managed its community revitalization projects. At the time of our audit, the Corporation had expended about $36 million on such projects. For example, seven harbors had been built, various waterfront improvements had been made, and portions of the planned 500-mile Canalway Trail had been constructed. We found that, because of weaknesses in the Corporationís project management system and management reporting practices, individual revitalization projects were not as closely overseen as they should be. We also noted that work on the 500-mile Canalway Trail was $17 million, or about 49 percent, over budget and at least two years behind schedule. We also examined whether the Corporation had established adequate internal controls over procurement and contracting practices, and found that the controls were generally adequate. However, we noted that controls over canal-side property leases could be strengthened.

We also examined whether the Corporationís Board of Directors had defined and carried out its duties and responsibilities in accordance with applicable requirements and best practices. We found that a number of questionable travel reimbursements were paid to one Board member, and determined that the State cars provided to two Board members may be contrary to the State law prohibiting compensation for board members.

For a complete copy of Report 2005-S-66 click here.
For a copy of the 90-day response click here.