Update: In the interest of clarity, the City Controller's report makes clear that the book-keeping problems occurred before the current L&I administration -- including Commissioner Fran Burns -- were in power.
PHILADELPHIA – City Controller Alan Butkovitz today released the FY07-09 audit of the Department of Licenses and Inspections (L&I) that found $11 million of demolition costs that were not reported on the City’s books. As a result, the City Controller’s Office was unable to determine whether these costs were ever billed and/or collected.
In the years covered under the audit, the Controller’s Office estimated that a total of $55.5 million of expected demolition billings should have been reported on the books. However, the audit found that only $44.5 million was actually recorded in the City’s receivable system. According to Butkovitz, the $11 million difference is a result of untimely billings coupled with a poor record keeping system, all of which were found in the City Controller’s previous audit.
"There are millions of dollars that were not being properly recorded on the City’s books,” said Butkovitz. “As a result there is no way of knowing who owes what.
“We have raised this issue in previous audits. It’s unacceptable for L&I to continue failing to collect millions in outstanding revenue, especially in our current financial state.”
Butkovitz continued, “Moreover, it appears that, again, L&I didn’t even bill for some of the work it completed.”
During a test of five billable demolition expenditures, auditors identified two invoices totaling $23,964 for work that was completed at a property on the 2700 Block of N. Taylor St., but the owner was never billed for the City’s demolition services.
“When L&I fails to send an invoice to the property owner for work it completed, it's almost certain that the money will never be collected," said Butkovitz. “The City ends up straining more of its resources while spending significant amounts of its revenues."
In addition to finding millions of dollars in unpaid demolition work, the audit also found an unexplained shortage of $2.8 million between revenues for licenses and fees recorded in the City’s primary accounting system and the related amounts recorded in L&I ‘s database.
According to Butkovitz, a difference in revenues is partially due to bounced checks not reflected in L&I's database.
"Improperly recording bounced checks allowed individuals to have licenses and permits to which they were not entitled," said Butkovitz. "L&I must reconcile the data it maintains with the amounts being recorded on the City's system."
To view a copy of the Department of Licenses and Inspections Auditor’s Report for Fiscal Years 2007 - 2009, please visit the Controller’s website at www.philadelphiacontroller.org