ALAN G. HEVESI
COMPTROLLER

110 STATE STREET
ALBANY, NEW YORK 12236

STATE OF NEW YORK
OFFICE OF THE STATE COMPTROLLER

February 10, 2003
Mr. Martin F. Horn
Commissioner
New York City Department of Correction
60 Hudson Street - 6th floor
New York, New York 10013
Re: Report 2002-F-41
Dear Mr. Horn:
Pursuant to the State Comptroller’s Authority as set forth in Article V, Section 1 of the State
Constitution; Article II, Section 8 of the State Finance Law; and Article III of the General Municipal
Law, we have reviewed the actions taken by officials of the New York City Department of
Correction (Correction) as of January 2, 2003, to implement the recommendations contained in our
audit report, Payments for State Felons, State Ready Inmates, and Court Return Inmates (Report
2000-N-12). Our report, which was issued on August 10, 2001, reviewed the adequacy of controls
in place to ensure that such claims were accurate.
Background
The New York City Department of Correction provides custody, control, and care of inmates
sentenced to one year of incarceration or less, detainees awaiting trial or sentence, newly sentenced
felons awaiting transportation to New York State (State) correctional facilities, alleged parole
violators awaiting revocation hearings, and State prisoners scheduled for court appearances in New
York City. Correction handles approximately 114,000 admissions each year, and manages an
average daily inmate population of about 15,000 individuals.
The New York State Correction Law requires both the New York State Department of
Correctional Services (DOCS) and the New York State Division of Parole (Parole) to reimburse
New York City (City) for the incarceration of inmates awaiting transfer to DOCS facilities (State
Ready inmates) and alleged parole violators awaiting revocation hearings, as well as transportation
costs associated with inmate transfers to State facilities. If the State does not take custody of State
Ready inmates within ten business days, it could be held in contempt of court. To avoid contempt
charges, it has contracted with the City to house each newly-committed State Ready inmate for a
period that does not exceed 180 days, in return for a reimbursement of $100 per day. Individuals
housed in this manner are referred to as Contract inmates.

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The State also pays the City for DOCS inmates who are brought to City facilities and housed
there while they await trial (Court Returns). Until April 1, 1999, the State reimbursed the City for
housing sentenced State felons who had one year or less to serve. During 2000 and 2001, the City
claimed an average total of more than $34 million per year from DOCS and Parole.
Summary Conclusions
In our prior audit, we identified under-claims of $10,098 relating to Court Returns and
$23,953 relating to Sentenced Felons. These under-claims pertained to the 50 inmates we sampled
in each of these areas and resulted from the control weaknesses we identified.
In our follow-up review, we found that Correction officials have taken steps to implement the
recommendations contained in our prior report. Correction has established a process to verify the
accuracy of the data submitted by DOCS to ensure appropriate and accurate reimbursement.
Summary of Status of Prior Audit Recommendations
Of the nine prior audit recommendations, Correction officials have implemented seven
recommendations, partially implemented one recommendation, and one recommendation is no
longer applicable.
Follow-up Observations
Recommendation 1
Generate and maintain tapes for State aid claims of State Ready and Contract inmates and use them
for verifying the accuracy of the listings compiled by DOCS.
Status – Implemented
Agency Action – DOCS provides Correction with electronic tapes that list the number of days the
inmates have been housed and the amount of reimbursement for which the State is liable to
the City. Correction now has an electronic database containing data for these same inmates,
which is used to verify the accuracy of the data from DOCS. Correction compares the two
sets of data to verify the accuracy of State aid claims of State Ready and Contract inmates.
Recommendation 2
Continue to review the computer program used to generate data for the Court Return State aid
claims to verify that it computes claimed amounts accurately.
Status – Implemented
Agency Action – An audit report issued on June 15, 2001 by Correction’s Inspectional Service and
Compliance Division’s Internal Audit Unit, concluded that computerization has significantly
improved since 1998. Edit checks were installed to prevent data entry errors.

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Recommendation 3
Continue to manually verify the 1998 State aid claims for Court Returns, and perform the same
review for subsequent years if the 1998 review identifies significant errors.
Status – Implemented
Agency Action – Correction 's Internal Audit Unit undertook an audit of inmate folders for calendar
years 1998 and 1999, and is in the process of reviewing the calendar year 2000 claims for
Court Returns.
Recommendation 4
Recover the amount owed for the under-claims of Court Returns we identified.
Status – Partially Implemented
Agency Action – Correction officials informed us that its Internal Audit Unit is currently performing
a review of the records of every inmate returned to the custody of DOCS in the four quarters
of calendar year 2000. Since the five under-claims of $10,098 cited in our prior audit all
pertain to the year 2000, Correction officials believe that it would be more efficient to
include them in the claim resulting from the current internal audit review.
Recommendation 5
Determine the feasibility of recovering any under-claims for Court Returns. If feasible, recover the
amount owed.
Status – Implemented
Agency Action – Correction identified under-claims of $243,712 and $65,110 covering the third and
the fourth quarters of 1998, and January to December of 1999, respectively. Correction has received
the reimbursements for these claims. Correction’s Internal Audit Unit is in the process of reviewing
the Court Return State Aid Claim for the year 2000. A similar review will be performed for
subsequent year if a significant variance is noted between the DOCS’ electronic information and
Correction’s manual review.
Recommendation 6
Require random comparisons of a sample of electronically entered data and original source
documents as an additional control for ensuring the accuracy of the claim.
Status – No longer applicable
Agency Action – Correction 's Internal Audit Unit undertook an audit of every inmate returned to
the custody of DOCS in calendar years 1998 and 1999, and is in the process of reviewing the

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claim for calendar year 2000. Since a 100 percent review will be conducted, there is no need
for random sampling.
Recommendation 7
Recover the amount owed for under-claims of sentenced-felons.
Status – Implemented
Agency Action – An under-claim of $23,953 was submitted to DOCS as part of the $9.6 million
amended reimbursement claim as cited in regards to Recommendation 8.
Recommendation 8
Identify other under-claims for sentenced felons.
Status – Implemented
Agency Action – Correction sent five amended reimbursement claims to DOCS based on the time
period of our prior audit for the temporary housing of Sentenced Felons. These claims
totaled $9,635,073, at the rate of $17.00 per day, per sentenced felon. However, the State
rejected the Correction claim because it believes that there is no statutory authority for the
State to reimburse the City for these costs. Subsequently, Correction referred the matter to
the New York City Law Department for review.
Recommendation 9
Revise written procedures for preparing State aid claims to include the additional internal control
procedures recommended in this report.
Status – Implemented
Agency Action – The written procedures were revised to include the forwarding of all claims
generated by DOCS for the availability to conduct audits.
Major contributors to this report were Barry Mordowitz and Roseline David.

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We would appreciate your response to this report within thirty days, indicating any additional
actions planned or taken to address any unresolved matters discussed in this report. We also thank
the management and staff of the New York City Department of Correction for the courtesies and
cooperation extended to us during the review.
Very truly yours,

William P. Challice
Audit Director
cc: Deirdre Taylor