Nearly one-third of city agencies surveyed by New York City’s corruption watchdog reported having no staff performing internal audit functions, while half lacked internal audit plans, according to a Department of Investigation (DOI) report that good-government advocates say points to serious financial, operational and fraud risks.

The 2025 Annual Anti-Corruption Report, released by the DOI last month, found uneven internal auditing capacity across city government during the final stretch of the Eric Adams administration. 

Of the 50 agencies and offices that responded to DOI’s questionnaire, 30% said they had no staff performing internal audit functions, 17 reported having fewer active audit staffers than budgeted, and 16 reported recruitment or retention challenges tied to auditing roles.

The report also found that only half of responding agencies had an internal audit plan, which DOI described as a best practice for identifying expected audit work and needed resources. 

Among the 15 agencies that reported having no internal audit staff, only one had engaged external auditors in the past five years, suggesting that agencies without internal auditors were generally not turning to outside auditors to fill the gap.

The DOI did not identify which agencies lacked audit staff or internal audit plans. The report names the 50 agencies and offices that responded to the questionnaire, but says individual agency responses were “aggregated or anonymized, where appropriate” to promote candid responses from agencies participating in the review.

Grace Rauh, executive director of Citizens Union, told amNewYork the findings point to a serious weakness in the city’s oversight systems.

“The DOI report overall identifies a series of weaknesses in the city’s internal audit infrastructure across the board that present, frankly, serious financial, operational, and fraud risks for the city,” Rauh said.

Grace Rauh, executive director of Citizens Union, testifies at a July 7 City Council hearing on proposed pay raises for elected officials.Credit John McCarten/NYC Council Media Unit

The report covers October 2024 through September 2025, before Mayor Zohran Mamdani took office. City Hall stressed that the report does not reflect the current administration’s practices because it covers the final stretch of the Adams administration.

“Oversight, accountability, and transparency are essential to maintaining public trust, and the Mamdani administration is committed to ensuring city agencies have the tools and personnel they need to uphold those principles,” City Hall spokesperson Sam Raskin said. “This report reflects the situation from the Adams administration and does not represent the Mamdani administration’s current practices.”

“We have taken steps to strengthen audit and oversight functions across city government, including reaffirming oversight responsibilities, increasing resources for the Department of Investigation, and relaxed hiring protocols to give agencies the flexibility to fill critical positions,” he added. 

City Hall also noted that 10 of the 50 responding agencies were non-mayoral entities, and that two agencies that reported having zero active audit staff were either newly created and not yet staffed or were actively interviewing for those positions. 

The administration pointed to dedicated internal audit staff within the Mayor’s Office of Risk Management and Compliance, which it said is responsible under an existing executive order for establishing internal audit standards for city agencies and communicating findings to DOI and other agencies when appropriate. 

City Hall also said DOI’s FY27 budget was increased by $6.2 million at adoption, including $624,000 in FY27 for six staffers, growing to 11 staffers and $1.14 million annually thereafter.

DOI also said it shared the report with City Hall just prior to publication. According to DOI, City Hall “reviewed and acknowledged receipt” of the report and DOI’s general recommendations that city agencies conduct consistent audits and consider creating internal audit plans where they lack them.

Questions over what has changed

But Rauh said the city still needs more information about whether the audit gaps identified by DOI have been fixed.

“I think this is why an oversight hearing in the City Council is needed here,” Rauh said. “We need to better understand was it the hiring freeze that was responsible or led to a reduction in internal audit staffers across city agencies? And now that it’s been lifted, has there been an improvement in that?”

Internal audits can sound bureaucratic, but Ruah says they are a basic safeguard for taxpayer dollars and city operations.

“As a baseline, there needs to be strong and effective audit infrastructure in place to ensure that potential problems are caught before they become big problems,” Rauh said.

She said internal auditors can review contracts, programs and financial transactions, while the presence of an audit function can itself deter misconduct.

“Even the presence of an internal audit function or team can serve as a deterrent because the staff at that agency would know, even if it’s not happening all the time, there is always the possibility that the audit team might take a look at a certain program or contract or set of activities,” Rauh said.

The Comptroller’s Office also said internal audits are essential to ensuring anti-corruption controls work.

“It is essential that agencies regularly conduct internal audits and reviews to ensure that measures designed to reduce risk of corruption as well as fraud, waste, and abuse are actually working as intended,” a spokesperson for the Comptroller’s Office said. “That means conducting periodic risk assessments to identify areas and processes most at risk of corruption, as well as effective internal controls to mitigate that risk.”

DOI’s report does not accuse agencies of wrongdoing. It says the annual anti-corruption report is different from most DOI reports because it relies primarily on agency questionnaire responses rather than DOI investigative findings.

Still, DOI Commissioner Nadia Shihata, appointed by Mamdani and confirmed by the Council earlier this year, said in the report’s release that audits are a “cornerstone of good government” and a “fundamental anti-corruption tool,” especially as the city faces budget challenges.

“As the City grapples with budgetary challenges, audits remain a fundamental anti-corruption tool, identifying potential red flags that might lead to inefficiencies or more serious failures,” Shihata said.

The latest findings are part of a series of DOI annual anti-corruption reports covering the Adams era that have raised concerns about the city’s anti-corruption infrastructure.

DOI’s 2022 report, issued under then-Commissioner Jocelyn Strauber, focused on recruitment and retention challenges. It found that two-thirds of responding agencies said understaffing had either hurt anti-corruption activities or created risks to those efforts, including reductions in oversight, auditing and internal-control functions.

The 2023 report focused on data integrity and found that 18 of 48 responding agencies had no written data-integrity policies, while eight reported having no staff or units responsible for analyzing, monitoring or auditing data in the databases they identified.

The 2024 report examined corruption risks created by complex and burdensome regulations and enforcement systems. It warned that overcomplicated rules can create incentives for people to avoid compliance, including through corrupt or illegal means, and said several agencies reported needing additional staff for oversight, audit, fraud detection and prevention duties.

Rauh said the latest report is especially timely because Mamdani’s Commission on Government Efficiency, or COGE, is examining ways to make city government work better and reduce waste.

COGE’s preliminary report does not specifically address agency internal audit staffing or audit plans, but it says efficiency includes making sure taxpayer dollars are used wisely, waste is rooted out, and government has internal controls that keep it free from waste and corruption.

Citizens Union plans to raise the DOI findings with the commission at its next hearing, she said.

“Having a strong internal audit team across city agencies feels very foundational to that work,” Rauh said.

Citizens Union has also criticized the recently adopted city budget as insufficient for watchdog agencies, arguing that DOI and the Conflicts of Interest Board should receive guaranteed minimum funding rather than depend on annual negotiations with the officials they oversee.

In a July 1 statement, Citizens Union said it was “disappointed the adopted budget continues to underfund the City’s watchdog agencies responsible for rooting out corruption, waste, fraud, and conflicts of interest.”

For now, the DOI report leaves a central question unanswered: which agencies lacked internal audit staff or plans, and whether those gaps still exist.

“The DOI anti-corruption report is super important,” Rauh said. “They put this issue forward, and our view is that it needs to be explored more.”

A City Council spokesperson did not immediately respond to questions about whether the Council would hold an oversight hearing on the report.