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Home > Leadership > City Comptroller > Audits

Audits

National Grid refunds Buffalo $1 million as a result of

Comptroller Schroeder’s street light audit

Additional refunds are expected from remaining claims spurred by audit

The City of Buffalo has been refunded more than $1 million by National Grid as a result of an audit of street light and electricity costs by Buffalo Comptroller Mark J.F. Schroeder.

“The city was being charged for street light fixtures that did not exist,” said Schroeder.  “Because of our audit, we were able to recoup those funds for taxpayers – with interest.”

Interest represented about 40 percent of the $1million refund.

“National Grid has to pay the same rate of interest that it charges its customers for late payments – 1.5 percent a month,” said Schroeder.

Schroeder said the city has filed more than a dozen additional claims as a result of his audit, and he expects those claims to yield refunds as well.

“There were other significant overcharges that the audit identified, and we are pursuing refunds for those as well,” said Schroeder.  “National Grid just completed its own field audit, so we will compare the two and come to an agreement on how much more the city is owed,”

With roughly 32,000 street lights, electric bills totaling more than $16 million per year, and a complex set of laws and regulations governing utilities, Buffalo Comptroller Mark J.F. Schroeder knew that the audit would require some outside help.

“With the manpower and expertise required for this type of audit, we knew we needed a firm with extensive experience a solid track record for getting refunds for its clients,” said Schroeder.

After a competitive bidding process that resulted in proposals from across the nation, Schroeder found the winning bid in his own backyard.  Buffalo-based Troy & Banks, a national leader in utility audits, has performed more than 10,000 utility audits in all 50 states.  But it was the company’s experience in Buffalo that really impressed Schroeder.

“Troy & Banks efforts in the 1990s led to a $1.5 million settlement with the city’s electricity provider,” said Schroeder.  “This company knows the city’s electrical infrastructure and the laws governing it.”

Equally impressive as its experience was Troy & Banks price.

“We didn’t pay a dime until we got a refund from National Grid,” said Schroeder.
According to the agreement, the city pays 33 percent of refunds up to $100,000 and 25 percent of refunds from $100,001 and above.

“Troy & Banks usually charges its clients 50 percent of refunds, but our competitive bidding process resulted in the company offering an even better deal for taxpayers,” said Schroeder.

The comptroller said that he will work with the Common Council to ensure these types of audits are performed periodically in the future, as there is six-year statute of limitations on overbillings.

“We don’t want to miss out on refunds down the road, so we are looking to draft legislation to ensure this type of audit is done at least every six years,” said Schroeder.

Arbitration panel awards Buffalo $200,000 as a result

of Schroeder's audit of the Erie Basin Marina

Arbitrators confirm city ownership of floating docks

An arbitration panel has awarded the City of Buffalo $198,144, plus nine percent interest, as a result of Buffalo Comptroller Mark J.F. Schroeder's audit that found that the former operator of the Erie Basin Marina had been underpaying its rent.

"This unscrupulous vendor thought they could get away with shortchanging taxpayers," said Schroeder whose audits exposed underpayments in every year from 2005-2013.  "Not on my watch."

The interest on the arbitration award began accruing on January 30 at the daily rate of $48.85, bringing the total owed to the city to more than $204,500.  The panel also confirmed the city's full ownership of the floating docks, despite Brand-On's claims of ownership.

"These docks would have cost $455,00 to replace, and generate annual revenue of $115,000," said Schroeder.  "That is a significant victory for the city."
 
The panel agreed with Schroeder's audit that under its contract with the city, Brand-On was to pay the City 10 percent of fuel sales.   Brand-On had been paying 10 cents per gallon, without any approval from the Common Council or any change in the original contract.  This accounted for $154,103 of the arbitration award. 

The other $44,014 was a result of underpayment of base sales, which includes sales from the Hatch restaurant and the ship store.

Schroeder's audit recommended that the city split up the Hatch and marina operations, and find new operators for both.  The city followed the recommendations and two new vendors, Mollyworld for the Hatch and Smith Boys for the marina, began in 2014.

"Our audit of the 2014 season found that the city received 77 percent more revenue from the Hatch under the new vendor," said Schroeder.

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CPA firm gives Comptroller Schroeder high marks on audit process

Peer review audit says Schroeder’s department consists of “experienced, competent, and qualified professionals”

Buffalo Comptroller Mark Schroeder hired a firm of certified public accountants to review his audit team, known as a peer review, which found that Schroeder’s staff is made up of “experienced, competent, and qualified professionals,” who are “operating effectively.”

“It is always a good idea to bring in someone from the outside to take an independent and objective look at the audit process,” said Schroeder.  “It is actually required by the charter, but to my knowledge, it has never been done before.”

Section 7-10 of the Buffalo City Charter requires that the comptroller have his department “reviewed by a professional, non-partisan objective organization utilizing nationally recognized guidelines.”  After a competitive bidding process, Schroeder selected Amato Fox & Company Certified Public Accountants to conduct the peer review audit, which found that the department is “operating effectively.”

Schroeder credited the leadership of City Auditor Kevin Kaufman, who is also a certified public accountant.  The audit report from Amato Fox & Company found that Kaufman’s “knowledge, drive, and energy level are a positive compliment to the department.”

“I have always known we had a great staff in Department of Audit and Control, but it is reassuring to have a team of professionals validate their excellent work,” said Schroeder.

Click here to read the report.

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Erie Basin Marina operator shortchanged

taxpayers, Schroeder’s audit finds

Contractor underpaid the city in each of the past five years; more than 20,000 gallons of gas unaccounted for

Brand-On Services owes the City of Buffalo $343,245 in rent after underpaying the city in each of the past five years for its lease of the Erie Basin Marina and Hatch Restaurant, according to an audit by Comptroller Mark J.F. Schroeder.

“We will not rest until the taxpayers of Buffalo get back the money that they are owed,” said Schroeder.  “We also recommend that the city terminate the contract with Brand-On Services and look for other firms to operate the marina and restaurant.  The Department of Public Works commissioner agrees with this recommendation, and is preparing Requests for Proposals for these services.”

While the audit only covers the past five years, Brand-On Services has been operating the Erie Basin Marina, including the Hatch Restaurant, since 2001.  Its contract with the city requires it to pay Buffalo a percentage of fuel sales, revenue from the restaurant and marina.

“More than 20,000 gallons of gas is completely unaccounted for,” said Schroeder.  Brand-On’s fuel supplier informed Schroeder that it supplied the company 383,173 gallons of gas over the five-year audit period.  Brand-On reported to the city that it only sold 362,484 gallons during that time.  “The taxpayers of Buffalo deserve to know what happened to those 20,000 gallons of gas.”

In addition to the missing gas, Brand-On has been underpaying the city on the gas it did report.  The contract stipulates that Brand-On pay the city 10 percent of gas sales.  Brand-On has been paying the city 10 cents per gallon, roughly a quarter of what it should been paying.  Between underpaying on the gas it did report, and not paying anything on the 20,000 gallons that are unaccounted for, Brand-On owes the city $82,923.

The remainder of the $343,245 owed to the city comes from unauthorized deductions in rent and underreporting of sales from the store, restaurant, and slip rentals.

“In the past two years, the city has borrowed nearly $2 million dollars in capital funds to invest in the Erie Basin Marina and Hatch restaurant,” said Schroeder.  “I want to ensure that the taxpayers are getting their money’s worth for these investments, because right now, they clearly are getting ripped off.”

Brand-On Services is also the operator of the City Hall cafeteria, the Clinton’s Dish concession stand at Canalside, and First Buffalo River Marina on the Buffalo River, which is owned by the New York Power Authority. 

“Needless to say, we are currently looking into this vendor’s operation of the cafeteria.  The department of Public Works has also issued a Request for Proposals for a new operator of the cafeteria,” said Schroeder.  “We have also alerted the folks at Canalside and the New York Power Authority of our findings.” said Schroeder.

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Schroeder recommends more accountability, transparency

in audit of Common Council’s discretionary fund

Reforms would help ensure tax dollars are being spent properly

In an audit examining the distribution of the Common Council’s discretionary funds, Buffalo Comptroller Mark J.F. Schroeder has included recommendations that would bring more accountability and transparency to the process of awarding the grants.

“We want to make sure that there is proper documentation for every tax dollar spent, including invoices, receipts, and cancelled checks,” said Schroeder.  “We also want to ensure that the organizations receiving this money are legitimate non-profits, and are spending the funds on approved projects that benefit the community.”

The audit began in 2011, before Schroeder took office, and were spurred by the actions of Brian Davis, a former councilman convicted of using discretionary funds for personal gain.  Last July, Schroeder worked with the Common Council to adopt a list of guidelines governing the disbursement of discretionary funds.  The reforms recommended in the audit go even farther to protect tax dollars.

“Every organization receiving money would have to fill out a standardized application form that would be approved by the council, and would include a detailed plan for using the funds, a list of board members, contact information, tax identification number, and verification of its non-profit status.  That information, along with the amount and purpose of the grant, would then be available on the city’s website,” said Schroeder.

Recipient groups would also be required to submit financial disclosure forms listing any business or personal relationships that could potentially create conflicts of interest.  After submitting all the required documentation, the organization would enter into a contract with the city, and would agree to spend the funds in accordance with the guidelines adopted last July.

The audit also recommended the $1 million in discretionary funds be more clearly identified in the city budget, where it is currently listed under “other contractual services.”  In a response to the audit, the Common Council agreed to rename the budget line “Common Council Neighborhood Initiatives.”

“The Common Council has shown a willingness to work with us to improve this process,” said Schroeder.  “These reforms will help to ensure that tax dollars are being spent responsibly.”

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Company gets 89 percent of city towing

business with no bid process, audit finds

Parking meter revenues rise 38 percent after coin theft arrests

One company is getting 89 percent of all city towing business with no bid process in place, for a total of nearly $90,000, an audit of the city’s parking department by Buffalo comptroller Mark Schroeder finds.

“State law requires that all contracts for public work more than $35,000 should be formally bid out and advertised in the newspaper.  Clearly that is not happening, and one company is benefitting from the current process,” said Schroeder, whose audit recommended the Parking Department establish a bid process for city tow jobs.

Riverside Towing and Recovery received nearly nine out of every ten dollars spent on towing during the scope of the audit, January 2011 through March 2012.  Two other competitors split the remaining 11 percent of towing business.

“The parking commissioner agreed to implement a bid process for tow jobs, so we look forward to that being put in place,” said Schroeder.

The audit was initiated last year, before Schroeder took office.  It stems from arrests involving thefts from two different divisions in the parking department in 2011.  An employee was caught manipulating the winning bids associated with the auto impound auction and two employees were arrested in December 2011 for stealing coins from, City owned coin parking meters.

“Since the arrest of the two employees accused of stealing funds from parking meters, we have noticed a 38% increase in revenue from parking meters, projecting to more than $514,000 annually,” said Schroeder, who added that his Annual Audit Plan involves tracking all city expenditures and revenues.

“The goal of the Annual Audit Plan is to put the financial controls in place to prevent these types of incidents from occurring in the future, rather than just waiting for someone to get caught,” said Schroeder.

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Click on the icon below to see the Comptroller's 2015-2016 Annual Audit Plan:

Click here for the Comptroller's 2014-2015 Annual Audit Plan

Click here for the Comptroller's 2013-2014 Annual Audit Plan

Click here for the Comptroller's 2012-2013 Annual Audit Plan

 

Click the links below to see all city audits from 2003-2017:

Fiscal YearDate FiledCommon Council Communication
16-172/1/17Bureau of Fire Prevention Follow-up
16-1710/27/16Police Dept. Overtime
16-179/15/16Broadway Market Follow-up
15-164/18/16Fuel Consumption Follow-up
15-164/18/16Common Council Payroll Follow-up
15-162/12/16Fire Department Payroll Procedures
15-161/27/16Emergency Rehab Loan Program
15-1612/30/15Bureau of Fire Prevention
15-1611/5/15Animal Shelter
15-167/1/15Payroll Procedures of Timekeepers
14-156/10/15Erie Basin Marina 2014 Season
14-151/14/15Broadway Market Revenue
14-1512/10/14Peer Review Audit
14-1512/4/14Office of Licenses Internal Controls
14-1512/4/14Buffalo Public Schools Exempt Employees Payroll Procedures 
14-1511/6/14Division of Water Payroll Procedures
14-159/4/14CDBG funds (as of 7-31-14)
13-146/4/14CDBG funds (as of 5-31-14)
13-145/21/14Dep't of Community Services Payroll Procedures
13-145/21/14Follow Up to 2013 Common Council Discretionary Funds Audit
13-144/21/14CDBG funds (as of 3-31-14)
13-144/9/14Fuel Consumption
13-143/13/14Follow Up to 2012 Parking Department Audit
13-143/13/14Follow Up to 2012 Prescription Drug Plan Audit
13-142/12/14Erie Basin Marina (2013 season)
13-142/12/14Common Council Payroll Procedures
13-1410/7/13Gun Buy Back Audit
13-149/12/13Erie Basin Marina
12-136/12/13Petty Cash Audit
12-132/26/13Common Council Discretionary Funds
12-1312/20/12Prescription Drug Plan
12-1310/25/12Parking Department
12-1309/24/12Gun Buy Back
11-1204/10/12Inventory Audit of Laptops & Telecommunications Devices
11-1211/23/11Medical Invoice Fee Scheduling Audit
11-1210/2011InRem Auction 45 Audit
10-1105/26/11Gun Buy Back Program
10-1104/27/11Parks Division
10-1101/20/11In Rem 44 Auction
10-1112/27/10Division of Treasury and Collections
10-118/12/10Compensation & Benefits Audit Update
09-105/20/10Substance Abuse
09-102/11/10One Sunset - BERC
09-1012/30/09Division of Compensation & BenefitsResponse to Division of Compensation & Benefits Audit Report
09-1011/19/09Petty Cash Audit
09-1010/7/09Council Staff
09-109/23/09Gun Buy Back 2009
09-108/24/09BERC & One Sunset
08-096/30/09Operation of Erie Basin Marina ♦ Council Communication for Erie Basin Marina Audit
08-094/30/09Recycling Program Audit ReportCouncil Communication for Recycling Program
08-0911/5/08City Assets Upon Termination of Broadway Market Management
08-0911/3/08Bailey Amherst District Management Association (BADMA)
08-0910/2/08Gun Buy Back Program
08-0909/24/08Bailey Amherst District Management Association (BADMA)
08-0908/28/08Mayors Impact Team
06-0706/21/07Diversity Hiring Goals
06-0706/20/07Gun Buy Back Program
06-0704/25/07Div of Parking Enforcement
06-0701/18/07Div of City Clerk Audit
05-0604/05/06Bd of Ed Audit
05-0603/31/06Bd of Ed Audit
05-0603/14/06Bd of Ed Audit Follow Up
05-0603/01/06Bd of Ed (7/1/03 - 12/31/05)
05-0601/30/06BMHA
05-0612/22/05Buffalo Sewer Authority
05-0610/28/05Parks Review - Final
05-0610/25/05Parks Review - Part 1
05-069/29/05Erie Basin Marina
05-067/6/05Animal Shelter
05-067/6/05Review of Buffalo Economic Development (BERC) Pension System
04-054/7/05Fuelmaster System for Fleet Gasoline & Diesel Usage
04-053/22/05Police Payroll Review
04-053/1/05License Division Dept. of License and Inspections
04-0510/21/04Performance Audit Report, Single Source and Sole Source Contracts Buffalo Sewer Authority
04-059/16/04Petty Cash Custodian Review, Audit of Petty Cash Funds 2004
04-059/16/04Performance Audit Report,Employee Retirement System (ERS) versus Police and Fire Retirement System (PFRS)
04-059/16/04Fire Department, Audit of Fire Department Demolitions
04-057/8/04Dept. of Public Works, Parks & Streets, Audit Report of Erie Basin Marina
03-046/17/04Audit Report of Buffalo City Comptroller on the Buffalo School District
03-044/6/04Water Board Review, Consideration of Water Rate Increases, The Causes and Historical Perspective
03-044/6/04Police Department,Police Payroll Review
03-043/25/04Buffalo Board of Parking,Audit Report of Buffalo Civic Auto Ramps Agreement and City of Buffalo Enterprise Parking Fund
03-042/17/04Buffalo Board of Education, Audit of State Aid and Grant Cash Management
03-0410/10/03Audit Review, Special Report of Audit Results
03-049/29/03Dept. of Administration and Finance, Audit Report of Division of Parking Enforcement
03-049/12/03Audit of Demolition Bond and Block Grant Requirements
02-036/18/03Dept. of Public Works, Parks & Streets, Audit Report of Erie Basin Marina
02-034/18/03Police Benevolent Association (PBA), Comptroller Report of the Tentative Contract with the City of Buffalo
02-034/10/03Dept. of Administration and Finance, Audit Report Division of Treasury
02-032/18/03Dept. of Public Works, Parks & Streets, User Fee System
02-037/21/02Annual Audit Plan