Thursday, April 29, 2010

Audit by NYC Comptroller Finds Fault with “Powerhouse” Nonprofit

The New York Times reports that the Economic Development Corporation, a nonprofit organization with a president appointed by the mayor of New York City, has been written up following an audit of the organization by the NYC Comptroller.  The nonprofit, which reportedly “has swelled in the size of its budget and in its importance as the primary vehicle for an aggressive development agenda,” was found to have collected inadequate rent, overpaid a contractor and approved unsubstantiated payroll records.  It was also criticized for its lack of transparency and internal controls.  According to Comptroller John C. Liu, the nonprofit “has become a powerhouse agency, but we have very little understanding of what comes in and out of it. … 'You cannot see anything that is going on.''  The New York Times reported the following specifics:

The audit found that the Economic Development Corporation did not hand over $98 million in lease payments from developers in a Times Square project, whose tenants include Conde Nast and Reuters; $16 million in proceeds from the sale of city-owned property in the Bronx, Brooklyn and Queens; and $10.6 million from the dormant fund.  The comptroller found smaller examples of what he said were waste and mismanagement. The corporation improperly accounted for more than $861,000 in loans intended to help small businesses. In one case, the agency gave $338,928 in excess energy credits to businesses as part of a cost savings program it operated with Consolidated Edison.

In a detailed two-page rebuttal, the development agency defended its actions, including its practice of retaining a portion of its money, a practice it says was supported in an opinion from the city's Law Department.

JRB

http://lawprofessors.typepad.com/nonprofit/2010/04/audit-by-nyc-comptroller-finds-fault-with-powerhouse-nonprofit.html

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