September 20, 2013
The Honorable Rahul f'v1erchant, Commissioner
Department Information Technology and Telecommunications 255 Greenwich Street 9th floor
New York. NY I0007
Department Information Technology and Telecommunications 255 Greenwich Street 9th floor
New York. NY I0007
CITY OF NEW YORK
OFFICE OF THE COMPTROLLER
JOHN C. LIU
BUREAU OF AUDIT
BUREAU OF AUDIT
MtJNlClPAL BUILDING
ON!: CENTRE STREET, ROOM UOO
Nl'W YORK, N.Y. \0007-2341
TEL: (212) 669-8459 (212) 815-8559
TEL: (212) 669-8459 (212) 815-8559
Re: Final Letter Report on the Audit of Expenditures Submitted by
Accenture LLP for Its Access 1\-'YC Program Contract with the New York City Department oflnformation Technology and TeJecommunications
(Audit Number FM13-082AL)
Dear Commissioner Merchant:
We are sending this Letter Report to provide you with the results of the audit regarding Accentur·e LLP's
(;\ccenture) billing practices for the Access NYC Pwgrarn contract The Access NYC Program provides
New York Citv's residents with online access to Citv, State, and Federal human serv1ces benefit
v
programs. Our objective 1Nas to determine wltether the expenditures for the Access NYC Program contract were reasonable and justified.
During the course of our review, we identified internal control deficiencies regarding the Department of lnfonnation Technology and Telecommunications· (DoiTT) contract management and pByrnent process that we wish to bring to your attention. Specifically, our audit fcnmd that DolTT did not require Accenture to provide detailed information on its consultants' tirnesheets that would allow verification of work hours Also. haniv.are and sofhvare purchAses lacked delivery slips that would allow us to verify ihe purchases vv·ere delivered as ordered. ln our opinion, Do!TT, as the oversight agency for this contract, should enhance its contro\s over its contract management and payment approval process to better ensure that contract cxpenditu res are reasonable and justified.
On August 8, 20 !3, an exit conference was held and the preliminary letter report dated July 26, 2013, was discussed. We submitted a draft letter report on August 20, 20l3, providing DofTT an opportunity to respond to matters discussed herein. On August 30, 20!3, we received your written response, which appears to disagree with most of our findings and recommendations. We suggest that the agency reconsider our recommendBtions requiring that contractors provide more detailed information on their timeshects and to limit rnark-up percentages that contractors can charge on subcontractor vvork in future contracts because these are areas where significant cost savings can be achieved.
The full text of the response is included as an addendum to this lerter report. Our detailed comments concerning the response to our recommendations are incorporated in th1s letter report.
Background
On September 2007, Do!TT awarded a contract to Accenture to provide systems integration services f,1r the Access NYC Program between November I, 2007, and October 3I, 20l0, with an option to renew
:: Backdrop contracts were established by the New York State Office of General Services to pre-qualify vendors for
provision of service-related contracts. These contracts established standard terrns and conditions, set maximum not-
to-exceed prices, and satisfied many legal requirements associated with procurements. Backdrop contracts expired
on December 30, 20 I !. Individual conrracts awarded under a backdrop contract before December 2011 continued to
be governed under those tenns.
Note from Suzannah B. Troy
(Is Elizabeth Weinstein a relation to the Weinstein brothers? What political figure would put a Weinstein relative in a political office -- any and all..)
Accenture LLP for Its Access 1\-'YC Program Contract with the New York City Department oflnformation Technology and TeJecommunications
(Audit Number FM13-082AL)
Dear Commissioner Merchant:
We are sending this Letter Report to provide you with the results of the audit regarding Accentur·e LLP's
(;\ccenture) billing practices for the Access NYC Pwgrarn contract The Access NYC Program provides
New York Citv's residents with online access to Citv, State, and Federal human serv1ces benefit
v
programs. Our objective 1Nas to determine wltether the expenditures for the Access NYC Program contract were reasonable and justified.
During the course of our review, we identified internal control deficiencies regarding the Department of lnfonnation Technology and Telecommunications· (DoiTT) contract management and pByrnent process that we wish to bring to your attention. Specifically, our audit fcnmd that DolTT did not require Accenture to provide detailed information on its consultants' tirnesheets that would allow verification of work hours Also. haniv.are and sofhvare purchAses lacked delivery slips that would allow us to verify ihe purchases vv·ere delivered as ordered. ln our opinion, Do!TT, as the oversight agency for this contract, should enhance its contro\s over its contract management and payment approval process to better ensure that contract cxpenditu res are reasonable and justified.
On August 8, 20 !3, an exit conference was held and the preliminary letter report dated July 26, 2013, was discussed. We submitted a draft letter report on August 20, 20l3, providing DofTT an opportunity to respond to matters discussed herein. On August 30, 20!3, we received your written response, which appears to disagree with most of our findings and recommendations. We suggest that the agency reconsider our recommendBtions requiring that contractors provide more detailed information on their timeshects and to limit rnark-up percentages that contractors can charge on subcontractor vvork in future contracts because these are areas where significant cost savings can be achieved.
The full text of the response is included as an addendum to this lerter report. Our detailed comments concerning the response to our recommendations are incorporated in th1s letter report.
Background
On September 2007, Do!TT awarded a contract to Accenture to provide systems integration services f,1r the Access NYC Program between November I, 2007, and October 3I, 20l0, with an option to renew
Hon. Rahul Merchant
September 20, 20 IJ
Page 2of6
the contract for each tvvo one-year renewal terms. Do!TT exercised both options and extended the contract to October 31, 2012. Under the contract, Accenture was responsible for providing services such as program management and reporting services: planning and analysis services; application/system development, support, and related services; and other systems Integration services. The contract's value vvas approximately $11 I mill\on. As of October 20 12, Accenture was paid $\09,406,005.
Findings and Recommendations
DoTTT did not have adequate internal controls over its contract management and payment approval process. Our review found that the consultants· timesheets lacked sufficient detail regarding the work performed. In addition, Do!TT's project manager did not approve those timesheets in a timely manner. According to the contract "DolTT's objective shall be to review as appropriate, approve and return timesheets to the Contractor within three (3) Business Days after receipt by the City's Proy:ct Manager." During January 2009, Do!TT's project manager approved Accenture timesheets from 69 to 90 days after receipt. Delayed approval of t!meshects was also noted in 2012. For example, on June l I, 20 12, Do1TT approved timesheets that were dated February 22, 2012, i l 0 days after receipt. further, Do!TT did not require consultants to enter a detailed description of work performed on the timesheets. Although not
required by the contract without a detailed description of work performed, we question how DolTT's project manager Ct1tlld approve timesheet hours upwards of three months after work was performed The lack of detail on timesheets and the delay in approving timesheets invalidated the timesheet review process and DoiTT's ability to dctenTJine whether work performedjustified payments made.
[n addition. Accenture and Do!TT project managers approved timesheets for tvvo consultants whose work week exceeded the allowable hours during January 2009. Proper authorization, such as prior \vritten approval or a request for a waiver, was not obtained for these excess hours as required by the contract.
Further, as of October 2012, Accenture billed approximately $36 million for the time and material portion of the contract. Although Accenture billed the City at the personnel service rates specified in the contract for its own employees as well as its subcontractors, Accenture was billed by the subcontractors at hourly rates that were significantly lower than the contract rate, In doing so, Accenture in effect added a significant imputed mark-up on services provided by 1ts subcontractors with u 111ark-up rate as high as I78 percent. For the contract period, subcontractors billed Accenture $2,286,371 for services and Accenture added a $1,06 L505 mark-up, \Vith an average mark-up rate of nearly 58 percent. when A.:centure billed the City for those services (total Accenture billings of approximately $3.3 million or about IO percent of the above $36 million ).1 Consequently, the contract did not include a provis1on that v,ould limit Accenture's mark-up or require Accenture to pass any savings on to the City that it gained by having subcontractors perform work on the contract Conversely, the NYS Backdrop contract2 (through which the Access NYC contract \vas procured) states, "Contracfor's principal duty shall be to obtain the "Best Value' for the Issuing Entity who shall be entitled to all savings negotiated by the Contractor on its behalf'' Therefore, Accenture should have been held accountable for those provisions,
During 2012, subcontractors billed Accenture $290,514 for services provided. Accenture subsequently added :£243,890 when it billed the City for those services at the contract-specified rates-- an average mark-up of 84 percent (total Accenture billings of$534,404 out of the SJ.J million).
the contract for each tvvo one-year renewal terms. Do!TT exercised both options and extended the contract to October 31, 2012. Under the contract, Accenture was responsible for providing services such as program management and reporting services: planning and analysis services; application/system development, support, and related services; and other systems Integration services. The contract's value vvas approximately $11 I mill\on. As of October 20 12, Accenture was paid $\09,406,005.
Findings and Recommendations
DoTTT did not have adequate internal controls over its contract management and payment approval process. Our review found that the consultants· timesheets lacked sufficient detail regarding the work performed. In addition, Do!TT's project manager did not approve those timesheets in a timely manner. According to the contract "DolTT's objective shall be to review as appropriate, approve and return timesheets to the Contractor within three (3) Business Days after receipt by the City's Proy:ct Manager." During January 2009, Do!TT's project manager approved Accenture timesheets from 69 to 90 days after receipt. Delayed approval of t!meshects was also noted in 2012. For example, on June l I, 20 12, Do1TT approved timesheets that were dated February 22, 2012, i l 0 days after receipt. further, Do!TT did not require consultants to enter a detailed description of work performed on the timesheets. Although not
required by the contract without a detailed description of work performed, we question how DolTT's project manager Ct1tlld approve timesheet hours upwards of three months after work was performed The lack of detail on timesheets and the delay in approving timesheets invalidated the timesheet review process and DoiTT's ability to dctenTJine whether work performedjustified payments made.
[n addition. Accenture and Do!TT project managers approved timesheets for tvvo consultants whose work week exceeded the allowable hours during January 2009. Proper authorization, such as prior \vritten approval or a request for a waiver, was not obtained for these excess hours as required by the contract.
Further, as of October 2012, Accenture billed approximately $36 million for the time and material portion of the contract. Although Accenture billed the City at the personnel service rates specified in the contract for its own employees as well as its subcontractors, Accenture was billed by the subcontractors at hourly rates that were significantly lower than the contract rate, In doing so, Accenture in effect added a significant imputed mark-up on services provided by 1ts subcontractors with u 111ark-up rate as high as I78 percent. For the contract period, subcontractors billed Accenture $2,286,371 for services and Accenture added a $1,06 L505 mark-up, \Vith an average mark-up rate of nearly 58 percent. when A.:centure billed the City for those services (total Accenture billings of approximately $3.3 million or about IO percent of the above $36 million ).1 Consequently, the contract did not include a provis1on that v,ould limit Accenture's mark-up or require Accenture to pass any savings on to the City that it gained by having subcontractors perform work on the contract Conversely, the NYS Backdrop contract2 (through which the Access NYC contract \vas procured) states, "Contracfor's principal duty shall be to obtain the "Best Value' for the Issuing Entity who shall be entitled to all savings negotiated by the Contractor on its behalf'' Therefore, Accenture should have been held accountable for those provisions,
During 2012, subcontractors billed Accenture $290,514 for services provided. Accenture subsequently added :£243,890 when it billed the City for those services at the contract-specified rates-- an average mark-up of 84 percent (total Accenture billings of$534,404 out of the SJ.J million).
Hon. Rahul Merchant
September 20, 2013
Page 3 of 6
We also reviewed Accenture's invoices related to hardware and software purchases from third-party vendors in January 2009. Accenture billed $2,053,529 for hardware and sofhvare purchased during January 2009. Although the contract required Accenture to provide appropriate backup and all other supporting documentation to substantiate the invoice charges. Accenture did not provide delivery slips as part or· the supporting documents. Without the delivery slips signed off on by a responsible official, we could not confirm that all the hardware and software purchases were delivered as ordered.
Additionally, during January 2009, DolTT delayed submitting payments for certain hardware and software invoices for up to !50 days. The contract states. "ln the event that the City makes payment within thirty (30) days fmm the City's receipt of the Contractor's invoice, the City shall receive a credit of2% of the amount of the payment, applicable to an invoice submitted to the City within the next thiriy days... for services or third party hardware or software.... In the event that the City makes payment within forty-five (45) days from the City's receipt of the Contractor's invoice, the City shall receive a credit of l% of the amount of the payment, applicable to an invoice submitted to the City within the nexJ thirty days.. for services or third party hardware or software." By not paying invoices in a timely manner, DoiTT forwent the sales discount provided in the contract. In January 2009. Do!Tl' only paid tl1ree of the seven invoices on hardware and software purchases within 30 days of receipt and, as a result. DofTT was not able to take advantage of the sales discount for the four remaining invoices. Furthermore, for the three invoices that were paid within 30 days, DolTT did not ensure that the sales discount was applied to subsequent invoices as allowed under the contract.
We recognize that correcting the internal control weaknesses identified above will not have a significant impact on this contract because the contract is over. However, vve believe that if DoJTT enhances its internal controls to address the weaknesses identified in this report, there may be significant benefits for future contracts. Therefore, we recommend that DoiTT should:
I. Strengthen the internal controls for its payment approval process by:
);.- Reviewing and approving timesheets in a timely manner;
> Ensuring that consultant obtains proper written approval/waiver before extra hour(s) of
work performed is paid; and
> Ensuring that hardware and software purchased by the contractor is fully supported by
documentation that the quantity ordered was actually delivered.
Do!TT Response: "We agree that contemporaneous documentation of de!ivenes should be submitted with invoices, and therefore we accept Recommendation 1 to that extent. Extra hours were properly approved on this project, and the vast majority of timesheets were timely reviewed. and therefore we disagree with the suggestion that systemic changes are needed."
Auditor Comment: DoITT's response to our recommendation only reinforces the need for DoITT to improve its contracting payment efforis. As discussed in this report. if the approval process was flawed and unsupported, DoITT could not ensure the basis for contract payment was appropriate. We reiterate our recommendation.
2. When feasible, take advantage of any sales discount available.
Do!TT Response: "We agree that early payment discounts should be taken advantage of when feasible." !n its response, Oorn agreed with our finding that three invoices were paid in time to
Contrary to Do!TT's interpretation, our report does not recommend that the City unilaterally dictate
contract terms. Hov,rever, we strongly believe that the City should not summarily reject alternatives
that may result in cost savings to the City, The practice of restricting the mark-up percentages that
contractors can charge on subcontractor services and equipment is meant to control cost. Many other
municipalities already include a clause limiting mark-up on subcontractor vvork 111 their contracts. It
would be in the best interest of the City if DoITT conducts the appropriate cost benefit analysis prior
to rejecting an idea that others have found of benefit
The specific tests described below focused on consultants that were billed on a time and material basis
and hardware/software purchases, totaling $4,121.833 during January 2009, The time and material fees
and hardware/software purchases totaled $46,699,166 for the entire contract period, For Accenture
invoices that billed for services, we reconciled 1imesheets lo hours billed on Accenture invoices. To
determine if the correct hourly rate was used for work performed, we obtained and reviewed the
consultants' New York State OGS titles on the Accenture roll-on forms and the contract-negotiated
Alma Fana, Assistant Comptroller for Financial Audit NYC Comptroller's Office
Michael Morgese, Deputy Director, NYC Cornptrolier's Office
We also reviewed Accenture's invoices related to hardware and software purchases from third-party vendors in January 2009. Accenture billed $2,053,529 for hardware and sofhvare purchased during January 2009. Although the contract required Accenture to provide appropriate backup and all other supporting documentation to substantiate the invoice charges. Accenture did not provide delivery slips as part or· the supporting documents. Without the delivery slips signed off on by a responsible official, we could not confirm that all the hardware and software purchases were delivered as ordered.
Additionally, during January 2009, DolTT delayed submitting payments for certain hardware and software invoices for up to !50 days. The contract states. "ln the event that the City makes payment within thirty (30) days fmm the City's receipt of the Contractor's invoice, the City shall receive a credit of2% of the amount of the payment, applicable to an invoice submitted to the City within the next thiriy days... for services or third party hardware or software.... In the event that the City makes payment within forty-five (45) days from the City's receipt of the Contractor's invoice, the City shall receive a credit of l% of the amount of the payment, applicable to an invoice submitted to the City within the nexJ thirty days.. for services or third party hardware or software." By not paying invoices in a timely manner, DoiTT forwent the sales discount provided in the contract. In January 2009. Do!Tl' only paid tl1ree of the seven invoices on hardware and software purchases within 30 days of receipt and, as a result. DofTT was not able to take advantage of the sales discount for the four remaining invoices. Furthermore, for the three invoices that were paid within 30 days, DolTT did not ensure that the sales discount was applied to subsequent invoices as allowed under the contract.
We recognize that correcting the internal control weaknesses identified above will not have a significant impact on this contract because the contract is over. However, vve believe that if DoJTT enhances its internal controls to address the weaknesses identified in this report, there may be significant benefits for future contracts. Therefore, we recommend that DoiTT should:
I. Strengthen the internal controls for its payment approval process by:
);.- Reviewing and approving timesheets in a timely manner;
> Ensuring that consultant obtains proper written approval/waiver before extra hour(s) of
work performed is paid; and
> Ensuring that hardware and software purchased by the contractor is fully supported by
documentation that the quantity ordered was actually delivered.
Do!TT Response: "We agree that contemporaneous documentation of de!ivenes should be submitted with invoices, and therefore we accept Recommendation 1 to that extent. Extra hours were properly approved on this project, and the vast majority of timesheets were timely reviewed. and therefore we disagree with the suggestion that systemic changes are needed."
Auditor Comment: DoITT's response to our recommendation only reinforces the need for DoITT to improve its contracting payment efforis. As discussed in this report. if the approval process was flawed and unsupported, DoITT could not ensure the basis for contract payment was appropriate. We reiterate our recommendation.
2. When feasible, take advantage of any sales discount available.
Do!TT Response: "We agree that early payment discounts should be taken advantage of when feasible." !n its response, Oorn agreed with our finding that three invoices were paid in time to
l:lon. Rahul Merchant
September 20, 2013
Page 4 of 6
quality for the discount allowed under the contract but were not credited to DofTT. Acccnture has agreed to reimburse the $6,833 86 the discount amount.
Auditor Comment: We acknowledge DoiTT's actions and reiterate our recornmcndation tor future contracts.
3. Improve its contract monitoring policy by ensuring that all future contracts:
» Require contractors to provide more detailed information on the timesheets, including but
not limited to:
Do!TT Response: "We agree that contractors should be required to submit proof delivery as back- up to invoices, and therefore we accept Recommendation 3 We disagree that tirnesheet detail has been insufficient.
Recommendation 3 (b) appears to be founded on the assumption that the City unilaterally dictates contract terms to its vendors, but of course that is not the case. Contract terms are negotiated, and terms such as mark-ups and hourly work rates are especially closely negotiated. Our contract negotiations are conducted by experienced contract attorneys, and the resulting contracts are subject to a sequence of revie,vs ending with the Comptroller's registration of the contracts. We negotiate for the lowest possible hourly rates and ultimately settle on a level mutually acceptable to us and the
vendor. We therefore disagree with the suggestion that the hourly rates negotiated with Accenture were inappropriate in any regard.''
Auditor Comment: As the audit points out, tile timeslleets submitted by Accenture only report the consultants' cumulative hours on a weekly basis. Therefore, the information provided on the timesheet was not sufficient to justify the consultants' hours for a time and material contract. Because a time and material contract does not provide a positive profit incentive for the contractor to limit billing, appropriate government monitoring is required to ensure work is completed in an efficient, timely, and cost-saving manner. This would include a requirement for consultants to
provide more detailed information on timesheets.
quality for the discount allowed under the contract but were not credited to DofTT. Acccnture has agreed to reimburse the $6,833 86 the discount amount.
Auditor Comment: We acknowledge DoiTT's actions and reiterate our recornmcndation tor future contracts.
3. Improve its contract monitoring policy by ensuring that all future contracts:
» Require contractors to provide more detailed information on the timesheets, including but
not limited to:
-
A more detailed description of the \YOrk performed.
-
Work location for each specific task order if the hourly rates are affected by work
location
> Include a clause that limits the mark-up percentage (imputed or otherwise) that
contractors can charge on subcontractor services and equipment.
Do!TT Response: "We agree that contractors should be required to submit proof delivery as back- up to invoices, and therefore we accept Recommendation 3 We disagree that tirnesheet detail has been insufficient.
Recommendation 3 (b) appears to be founded on the assumption that the City unilaterally dictates contract terms to its vendors, but of course that is not the case. Contract terms are negotiated, and terms such as mark-ups and hourly work rates are especially closely negotiated. Our contract negotiations are conducted by experienced contract attorneys, and the resulting contracts are subject to a sequence of revie,vs ending with the Comptroller's registration of the contracts. We negotiate for the lowest possible hourly rates and ultimately settle on a level mutually acceptable to us and the
vendor. We therefore disagree with the suggestion that the hourly rates negotiated with Accenture were inappropriate in any regard.''
Auditor Comment: As the audit points out, tile timeslleets submitted by Accenture only report the consultants' cumulative hours on a weekly basis. Therefore, the information provided on the timesheet was not sufficient to justify the consultants' hours for a time and material contract. Because a time and material contract does not provide a positive profit incentive for the contractor to limit billing, appropriate government monitoring is required to ensure work is completed in an efficient, timely, and cost-saving manner. This would include a requirement for consultants to
provide more detailed information on timesheets.
Hon, Rahul Merchant
September 20, 2013
Page 5 of 6
4_ Consider conducting a market survey of lhe hourly rates being paid for various fT consultant work titles and establish a not-to-exceed rate that should be used as a basis for future contracts_
Do!TT Response: "DofTT constantly monitors industly rates. a:1d the backdrop contract in this case provided not-to-exceed rates -from which \ve negotiated discounts for this project''
Auditor Comment: As reported in this audit, the hourly rates DolTT pays its contractors for work performed by subcontractors is significantly higher than those rates the contractor pays its subcontractors. Because the rates established under the OGS Backdrop contracts are no longer in effect, DofTT needs to reconsider its position and conduct a market survey to identifY the current hourly rates for subcontractors. Tl11S survey \viii not only help Do!TT better negotiate rates but wdl also help other City agencies in their negotiations,
Scope and Methodology
We conducted this performance audit in accordance with generally accepted government auditing standards_ Those standards require that vve plan a11d perform the audit to obtain sufficient, appropriate evidence to provide a reason::1ble basis for our findings and conclusions based on our audit objective, We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective, This audit was conducted in accordance with the audit responsibilities of the City Comptroller as set forth in Chapter 5, §93, ofthe New York City Charter.
This audit covered the contract period of November l, 2007, to October 3 I, 20 12,
To achieve our audit objectives, \Ve reviewed the contract betvveen DolTT and Accenture, To gain an understanding o f internal controls over the billing practices and payment approval process, \Ve interviewed relevant personnel from both DofTT and Accenture, We also conducted walk-through meetings with Accenture officials regarding the billing practices and vvith DolTT officials regarding the payment approval process, The results were documented in memoranda and flovvchnrts.
As of October 20 I2, the total expenditures for the contract were $l 09,406.005, To determine the accuracy and cornp!eteness of DolTT's record of payments, we compared the total amount paid to both Accenture's invoices and to the New York City Financial Management System (FMS) Record of Payments.
We judgmentally selected January 2009 as our sample period because it had a mixture of fees charged based on time and materia! rates, fi>-.ed rates, hardvvare/software purchases, and facilities charges_ The total expenditures tor January 2009 were $5, 146,247_ The expenditures are as follo•vs: $2,068,304 in time and material fees, $2,053,529 in hardware/software purchases, $904,476 in fixed fees, and $119,938 in raci!ities charges, We examined all Invoices billed for January 2009 to determine whether they were properly approved by DoTTT
4_ Consider conducting a market survey of lhe hourly rates being paid for various fT consultant work titles and establish a not-to-exceed rate that should be used as a basis for future contracts_
Do!TT Response: "DofTT constantly monitors industly rates. a:1d the backdrop contract in this case provided not-to-exceed rates -from which \ve negotiated discounts for this project''
Auditor Comment: As reported in this audit, the hourly rates DolTT pays its contractors for work performed by subcontractors is significantly higher than those rates the contractor pays its subcontractors. Because the rates established under the OGS Backdrop contracts are no longer in effect, DofTT needs to reconsider its position and conduct a market survey to identifY the current hourly rates for subcontractors. Tl11S survey \viii not only help Do!TT better negotiate rates but wdl also help other City agencies in their negotiations,
Scope and Methodology
We conducted this performance audit in accordance with generally accepted government auditing standards_ Those standards require that vve plan a11d perform the audit to obtain sufficient, appropriate evidence to provide a reason::1ble basis for our findings and conclusions based on our audit objective, We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective, This audit was conducted in accordance with the audit responsibilities of the City Comptroller as set forth in Chapter 5, §93, ofthe New York City Charter.
This audit covered the contract period of November l, 2007, to October 3 I, 20 12,
To achieve our audit objectives, \Ve reviewed the contract betvveen DolTT and Accenture, To gain an understanding o f internal controls over the billing practices and payment approval process, \Ve interviewed relevant personnel from both DofTT and Accenture, We also conducted walk-through meetings with Accenture officials regarding the billing practices and vvith DolTT officials regarding the payment approval process, The results were documented in memoranda and flovvchnrts.
As of October 20 I2, the total expenditures for the contract were $l 09,406.005, To determine the accuracy and cornp!eteness of DolTT's record of payments, we compared the total amount paid to both Accenture's invoices and to the New York City Financial Management System (FMS) Record of Payments.
We judgmentally selected January 2009 as our sample period because it had a mixture of fees charged based on time and materia! rates, fi>-.ed rates, hardvvare/software purchases, and facilities charges_ The total expenditures tor January 2009 were $5, 146,247_ The expenditures are as follo•vs: $2,068,304 in time and material fees, $2,053,529 in hardware/software purchases, $904,476 in fixed fees, and $119,938 in raci!ities charges, We examined all Invoices billed for January 2009 to determine whether they were properly approved by DoTTT
Hon. Rahul Merchant
September 20, 20 l 3
Page 6 of 6
rates Accenture used to bill the City. For Accenture invoices that billed hardware and software purchases, we analyzed purchase orders for quantity ordered and item price.
To determine if the correct contract-negotiated hourly rates were applied, we compared the consultants· titles and rates in the sample invoices with the consultants' contract-negotiated hourly rates based on their OGS titles on their roll-on forms and whether the consultants are identif1ed as traveling resources. We analyzed the working hours on the consultants' timesheets and invoices for January 2009 to determine if the work week billed to the City exceeded the allowable hours. \Ve also reviewed the task descriptions on the consultants' timesheets for any administrative services charged to the City during the contract period.
To test the internal controls of DoiTT's payment approval process, we revievv'ed our sample invoices to determine if they were properly approved in a timely manner and suppotted by the appropriate documents. We reviewed Section 4-06 Prompt Payment of the PPB Rules We examined timesheet approval dates from the Accenture project manager and the DoiTT project manager, Accenture invoice dates, invoice received dates from DoiTT, DolTT's Inspector's Certificate dates, voucher dates, and check issued dates.
To fy and calculate the subcontractors' imputed mark-up for services, we compared the contract- negotiated rate stated on the contract with the subcontractors' hourly rate stated on the subcontractors' contracts.
\Ve also reviewed a limited number of invoices and suppo:ting documents in 2012 to deterrnine if similar control weaknesses identined in January 2009 still existed in 2012.
The results of the above tests cannot be projected to the entire population. However, our results provided a reasonable basis for us to satisfy our objectives.
Sincerely yours,
Tina Kim
c: Steven Hurst, Managing Director. Accenture LLP
Patricia Donaldson, Senior Executive, Accenture LLP
Charles Fraser, General Counsel, DolTT
Linda Mercurio, Director of Audits and Accounts, Do[TT
Elizabeth Weinstein, Director, Mayor's Office of Operations
George Davis fll, Deputy Director, Mayor's Office of Operations
rates Accenture used to bill the City. For Accenture invoices that billed hardware and software purchases, we analyzed purchase orders for quantity ordered and item price.
To determine if the correct contract-negotiated hourly rates were applied, we compared the consultants· titles and rates in the sample invoices with the consultants' contract-negotiated hourly rates based on their OGS titles on their roll-on forms and whether the consultants are identif1ed as traveling resources. We analyzed the working hours on the consultants' timesheets and invoices for January 2009 to determine if the work week billed to the City exceeded the allowable hours. \Ve also reviewed the task descriptions on the consultants' timesheets for any administrative services charged to the City during the contract period.
To test the internal controls of DoiTT's payment approval process, we revievv'ed our sample invoices to determine if they were properly approved in a timely manner and suppotted by the appropriate documents. We reviewed Section 4-06 Prompt Payment of the PPB Rules We examined timesheet approval dates from the Accenture project manager and the DoiTT project manager, Accenture invoice dates, invoice received dates from DoiTT, DolTT's Inspector's Certificate dates, voucher dates, and check issued dates.
To fy and calculate the subcontractors' imputed mark-up for services, we compared the contract- negotiated rate stated on the contract with the subcontractors' hourly rate stated on the subcontractors' contracts.
\Ve also reviewed a limited number of invoices and suppo:ting documents in 2012 to deterrnine if similar control weaknesses identined in January 2009 still existed in 2012.
The results of the above tests cannot be projected to the entire population. However, our results provided a reasonable basis for us to satisfy our objectives.
Sincerely yours,
Tina Kim
c: Steven Hurst, Managing Director. Accenture LLP
Patricia Donaldson, Senior Executive, Accenture LLP
Charles Fraser, General Counsel, DolTT
Linda Mercurio, Director of Audits and Accounts, Do[TT
Elizabeth Weinstein, Director, Mayor's Office of Operations
George Davis fll, Deputy Director, Mayor's Office of Operations
Note from Suzannah B. Troy
(Is Elizabeth Weinstein a relation to the Weinstein brothers? What political figure would put a Weinstein relative in a political office -- any and all..)
