State Comptroller DiNapoli Releases Audits

New York State Comptroller Thomas P. DiNapoli announced today the following audits have been issued.

Department of Financial Services - Virtual Currency Licensing (Follow-Up) (2022-S-18)

The Department of Financial Services (DFS) supervises and regulates the activities of more than 3,200 financial institutions with nearly $10 trillion in assets as of December 31, 2024, including 22 virtual currency licenses with assets totaling more than $404 billion. New York Codes, Rules and Regulations Title 23, Part 200 - Virtual Currencies requires businesses to obtain a license (BitLicense) to engage in virtual currency business activities in New York State, with some exceptions. A prior audit, issued in January 2024, found that DFS was not adequately performing its oversight responsibilities related to the application for and supervision of BitLicenses. Specifically, DFS did not ensure compliance with the Department of Taxation and Finance's tax obligations and might use outdated anti-money laundering risk assessments to approve licenses, and DFS BitLicensees were not in compliance with DFS' cybersecurity regulations, although in some cases they self-certified that they were. DFS officials made some progress in addressing the issues identified in the initial report; of the initial report's six recommendations, three were implemented and three were partially implemented.

Department of Health, New York City Department of Health and Mental Hygiene - Oversight of the Practice of Funeral Directing (2022-S-47)

The Department of Health (DOH) is responsible for governing and regulating the business and practice of funeral directing, undertaking, and embalming in New York State. DOH's Bureau of Vital Records is responsible for administering the Electronic Death Registration System used to electronically register deaths that occur in New York State but outside of New York City. For deaths that occur within New York City, the New York City Department of Health and Mental Hygiene (DOHMH) administers eVital. Auditors found that some funeral directors were not using the tests prescribed by the regulations to verify death, some preparation rooms did not meet standards, some deaths were being registered before disposition of bodies, and some death certificates were duplicated or had no Social Security numbers in the DOH and DOHMH systems. In addition, auditors found that DOH and DOHMH should improve their interagency data sharing and other communication to better identify and address risks of unauthorized funeral directing activity.

The Workers' Compensation Board - Assessment of Costs to Administer the Workers' Compensation Program for the State Fiscal Year Ended March 31, 2024 (2025-M-1)

purpose of this report was to ascertain the total expenses that the Workers' Compensation Board (Board) incurred in administering the Workers' Compensation Program (Program) for the State Fiscal Year ended March 31, 2024. The Office of the New York State Comptroller performed certain procedures, which were agreed to by the Board, to ascertain the Board's expenses. Annual expenses to administer the Program totaled $215.3 million.

Office of Mental Health - Controls Over the Empire State Supportive Housing Initiative (Follow-Up) (2025-F-11)

The Empire State Supportive Housing Initiative's (ESSHI) goal is to develop 20,000 units of supportive housing over a 15-year period ending in 2031. The Office of Mental Health (OMH) serves as the lead procurement agency for ESSHI, which provides up to $34,000 annually per individual toward supportive housing for vulnerable populations experiencing homelessness. A prior audit, issued in December 2023, found significant deficiencies in OMH's oversight of the ESSHI program: a review of selected residents' progress notes identified a lack of face-to-face meetings or in-home visits, delays in developing support plans, and annual income not being verified in all cases. Furthermore, two residents were missing for extended periods of time; four of six providers that auditors inspected had critical issues with housing units (e.g., water leaks and mold); and contract work plans lacked attainable, measurable objectives to allow providers to track their progress toward stated objectives. OMH officials made some progress in addressing the problems identified in the initial audit report, partially implementing three of the initial report's five audit recommendations and not implementing two.

New York City Department of Transportation - New York City Bike Share Program: Oversight of Revenue Collection and Monitoring (2023-N-5)

In 2013, the New York City Department of Transportation (DOT) launched the New York City Bike Share program. DOT contracts with a vendor, and the program generates revenues from rides, sponsorship and advertising, liquidated damages assessed for non-compliance with the terms of the agreement with the vendor, and revenue lost due to replacing parking meters with bike stations, which is fixed at $1 million per year. Auditors found DOT was not enforcing all the terms of the agreement or ensuring that the city and its residents were getting the maximum benefit from the program. DOT could not demonstrate that all revenue sources were received and included in the calculation of DOT's share of the revenues, the vendor complied with all terms of the service level agreements, or the liquidated damages assessed were accurate.

New York Power Authority - Selected Management and Operations Practices - BuildSmart NY/Executive Order 88 (Follow-Up) (2024-F-37)

Executive Order (EO 88), issued on December 28, 2012, mandated a 20% reduction in the average source Energy Usage Intensity (EUI) of State government buildings by April 2020. The organizations subject to EO 88-Affected State Entities-were required to work with the New York Power Authority (NYPA) to achieve their allotted portion of the overall savings. An initial audit, issued September 2023, found NYPA did not reach its goal by April 2020; the actual EUI reduction reported was 14.4%, and when committed (incomplete) projects were added, the reduction in EUI was 22.6%. NYPA officials made progress in addressing the problems identified in the initial audit report. Of the initial report's five audit recommendations, two were implemented, two were partially implemented, and one was no longer applicable.

State University of New York - Oversight of Study Abroad Programs (2024-S-36)

State University of New York (SUNY) Study Abroad Programs (SAPs) include exchange, non-exchange, and faculty-led programs that allow SUNY students the opportunity to participate in educational opportunities globally. The SUNY Office of Global Affairs (SUNY OGA) is responsible for the oversight of SAPs across the SUNY network and each SUNY campus is responsible for administering and monitoring its own SAPs. The audit determined that SUNY OGA could improve its oversight of SAPs in certain areas. Agreements were not consistently submitted by one campus and automated reminders from SUNY OGA to campuses about partnership agreements approaching expiration were not received by officials at one campus. Campuses sent 258 students abroad during the audit scope under the lapsed agreements.

Department of Health: Medicaid Program - Improper Payments for Drugs Without a Federal Drug Rebate Agreement (Follow-Up) (2025-F-20)

The Medicaid Drug Rebate Program requires drug manufacturers to enter into a National Drug Rebate Agreement (NDRA) with the Department of Health and Human Services in exchange for state Medicaid coverage of most of the manufacturer's drugs. Manufacturers then pay states rebates on those drugs for which Medicaid payments were made. A prior audit, issued in February 2024, found the Department of Health (DOH) lacked adequate oversight of Medicaid managed care payments for drugs, which led to improper managed care organization (MCO) payments for drugs from manufacturers without an NDRA at the time of service. Additionally, auditors found flaws in DOH's managed care capitation rate adjustment methodology that resulted in nearly $50.3 million in improper MCO payments for drugs from manufacturers without NDRAs at the time of service that were not included in the rate adjustments. DOH officials made some progress in addressing the problems identified in the initial audit report. Of the initial report's four audit recommendations, one was implemented, one was partially implemented, and two were not implemented.