Computer Equipment Disposal in Central New York

Transcription

1 O FFICE OF THE NEW YORK STATE COMPTROLLER DIVISION OF LOCAL GOVERNMENT & SCHOOL ACCOUNTABILITY Computer Equipment Disposal in Central New York 2010-MR-3 Thomas P. DiNapoli

2 Table of Contents AUTHORITY LETTER 2 Page INTRODUCTION 3 Background 3 Objective 4 Scope and Methodology 4 Comments of Local Officials 4 DISPOSAL OF COMPUTER EQUIPMENT 5 Internal Controls 7 Efficient Disposal Procedures 9 Recommendations 10 APPENDIX A Responses From Local Officials 11 APPENDIX B Audit Methodology and Standards 12 APPENDIX C How to Obtain Additional Copies of the Report 13 APPENDIX D Local Regional Office Listing 14 DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 1

3 State of New York Division of Local Government and School Accountability September 2010 Dear Local Officials: A top priority of the is to help local government officials manage government resources efficiently and effectively and, by so doing, provide accountability for tax dollars spent to support government operations. The Comptroller oversees the fiscal affairs of local governments statewide, as well as compliance with relevant statutes and observance of good business practices. This fiscal oversight is accomplished, in part, through our audits, which identify opportunities for improving operations and governance. Audits also can identify strategies to reduce costs and to strengthen controls intended to safeguard local government assets. Following is a report of our audit titled Computer Equipment Disposal in Central New York. This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the State Comptroller s authority as set forth in Article 3 of the General Municipal Law. This audit s results and recommendations are resources for local government officials to use in effectively managing operations and in meeting the expectations of their constituents. If you have questions about this report, please feel free to contact the local regional office for your county, as listed at the end of this report. Respectfully submitted, Offi ce of the State Comptroller Division of Local Government and School Accountability 2 OFFICE OF THE NEW YORK STATE COMPTROLLER

4 Introduction Background Rapidly changing technology produces an inherently short useful life for computer equipment because of the need to stay current with emerging improvements. Computer equipment contains hazardous materials that require proper disposal. According to the United States Environmental Protection Agency (EPA), lead, mercury, brominated flame retardants and cadmium are substances of concern in electronics. Cathode ray tube (CRT) monitors contain between two and seven pounds of lead. Lead solder is also used in circuit boards found in virtually all computer equipment. Mercury is used in bulbs in small amounts to light flat panel and laptop computer displays. Brominated flame retardants and cadmium were widely used in older plastic cases and laptop batteries. If disposed of improperly in incinerators or landfills, these hazardous materials may leach into groundwater and contaminate the air, thereby posing health risks to humans. To avoid onerous requirements of handling hazardous waste, the New York State Department of Environmental Conservation (DEC) provides a mechanism for government entities to dispose of computer equipment with recyclers. 1 Government entities may send their computer equipment wastes to recycling facilities and file a document with the DEC claiming a scrap metal exemption. In order to qualify for this exemption, the government entities notify the DEC of their intent to claim the exemption, known as a c7 notification. 2 Once the DEC is notified, the government entities and subsequent handlers are subject to potential inspection by the DEC. We audited four local government entities including Madison County, the Onondaga-Cortland-Madison Board of Cooperative Educational Services (OCM BOCES), the Herkimer County Community College, and the Jamesville-DeWitt Central School District. Local governments have several options for the disposal of unneeded computer equipment. Many recycling vendors 1 Beginning April 1, 2011, manufacturers are required to accept electronic waste for collection, handling and recycling or reuse (New York State Environmental and Conservation Law Article 27 Title 26). 2 If the generator, in this case a local government entity, is not a Conditionally Exempt Small Quantity Generator (CESQG), both the generator and subsequent handlers in New York State are required to submit a c7 notification to DEC, giving certain basic information, such as the locations of the generating and receiving facilities. CESQGs are not required to submit a c7 notification. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 3

5 and some county waste departments or waste authorities accept unwanted computer equipment from businesses at various costs. In addition, government entities may be able to donate surplus computer equipment to not-for-profit agencies. Objective The objective of our audit was to examine computer equipment disposal practices. 3 Our audit addressed the following related questions: Are local government entities safely disposing of their computer equipment when it is taken out of service? Are the disposal methods safe, efficient, and economical? Scope and Methodology We examined the computer disposal practices of four local government entities for the period January 1, 2007 to December 31, The Herkimer Community College had no computer disposal activity during that period, so we included disposals made by that unit in We conducted our audit in accordance with generally accepted government auditing standards (GAGAS). More information on such standards and the methodology used in performing this audit is included in Appendix B of this report. Comments of Local Officials The results of our audit and recommendations have been discussed with local government officials and their comments, which appear in Appendix A, have been considered in preparing this report. Local officials generally agreed with our findings and recommendations. 3 For the purposes of this report, computer equipment is defined as central processing units (CPUs), monitors and laptops. 4 OFFICE OF THE NEW YORK STATE COMPTROLLER

6 Disposal of Computer Equipment Because computer technology is an integral part of operations, local governments are continuously upgrading computer equipment to stay current with the emerging technologies, to provide up to date training to students, and to replace obsolete or broken items. The computer equipment items that the local government entities disposed of in 2007 were generally about five years old. This obsolete computer equipment is also referred to as e-waste or electronic waste. Computer equipment typically qualifies as hazardous waste under the DEC hazardous waste regulatory program. According to a 2005 report by the U.S. Government Accountability Office (GAO), 100 million computers, monitors, and televisions become obsolete each year. Of this amount, it is estimated that only 40 million central processing units (CPUs), monitors, and printers are properly de-manufactured to safely dispose of their hazardous waste. These numbers are expected to continue to grow at a rapid pace. By 2010, it is expected that e-waste will include 1 billion units of computer equipment. Consequently, all local government entities are going to have to address many issues, including space and toxicity, which will increasingly arise from this massive amount of e-waste. Local government entities have several environmentally safe options for disposing of unneeded computer equipment. Recycling companies and some county waste departments or waste authorities accept computer equipment for recycling. Government entities may also be able to dispose of working computer equipment by donating it to not-for-profit agencies. Generators of hazardous waste may claim a scrap metal exemption for hazardous waste by recycling unneeded computer equipment. In order to ensure that unneeded computer equipment does not ultimately contaminate the groundwater, government entities should use legitimate recyclers when disposing of unneeded computer equipment. Dismantlers and recyclers of used electronics are required to notify the DEC of their intent to claim the scrap metal recycling exemption. If government entities do not recycle computer equipment, they must determine whether the waste has toxic characteristics and handle any hazardous waste accordingly. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 5

7 We found that the local government entity officials are aware of the hazardous content in computer equipment and they have taken steps to dispose of the equipment in an environmentally safe manner. While each of the four entities recycles computer equipment, there are differences. For example, the Herkimer County Community College uses a local waste authority, which is a permitted household hazardous waste facility, for disposal of its computer equipment. Madison County operates its own solid waste department that collects both unneeded County-owned computer equipment as well as residential e-waste. 4 Madison County, the OCM BOCES and Jamesville DeWitt Central School District dispose of unneeded computer equipment with a commercial recycler. We found the commercial recycler used by these entities was listed on the DEC web site as a c7 notified recycler. We reviewed disposal manifests and invoices to verify that the local government entities recycled computer equipment and found that, in total, the four entities recycled 3,073 monitors, 2,671 CPUs and 57 laptop computers, as shown in the following table. We reviewed donation documentation and found that the Herkimer County Community College also donated 18 CPUs and five monitors in By recycling computer equipment, the entities prevented over 12,000 pounds of lead 5 from entering landfills. COMPUTER EQUIPMENT RECYCLED Government Lead Recovered Monitors CPUs Laptops Entity (in pounds) OCM BOCES 2,078 2, ,312 Madison County ,432 Herkimer County Community College* Jamesville- DeWitt Central School District Total 3,073 2, ,292 *The College did not recycle computer equipment during the audit period (2007); however it recycled computer equipment during 2006 that we included in this report. 4 In 2004, Madison County banned monitors from its landfills. While CPUs are not banned from landfill disposal, residents are encouraged to deliver them to County operated transfer stations for recycling. 5 We based our estimate of lead prevented from entering landfills on the EPA estimate of monitors having four pounds of lead, on average. 6 OFFICE OF THE NEW YORK STATE COMPTROLLER

8 Internal Controls Governmental entities should have a system of internal controls to ensure the safe disposal of e-waste. Effective controls over e-waste include the establishment of policies and procedures that provide guidance as to how it should be disposed of (i.e., recycled, sold, donated, etc.) and standards for the selection of hazardous waste disposal service providers. While there is no requirement for governing boards to adopt formal policy guidance or standards relating to the environmentally safe disposal of e-waste, adopting a formal policy will provide direction for making such disposals while protecting the environment. Although it is likewise not a requirement, good business practices prescribe that governing boards should have policies addressing accountability for computer equipment from purchase through disposal and the authorization required to dispose of municipal assets. Having an appropriate computer disposal policy and procedures in place and reliable accountability for the equipment can ensure that e-waste disposals are made in an environmentally safe manner. We identified opportunities for improving controls over the disposal of computer equipment by improving policy and procedural guidance and better monitoring the disposal authorizations and recordkeeping. While each entity had policies that address fixed assets, none were specific with regard to how hazardous computer equipment waste should be handled. The lack of management guidance on handling computer equipment as hazardous waste increases the risk that the entities could dispose of computer equipment through unsafe channels without detection. Each entity s board has established policies over fixed assets which provide guidance for staff about recordkeeping; however, we found that inventory records were not always up-to-date and did not always include the final disposition of computer equipment. Two of the entities (the Herkimer County Community College and Jamesville-Dewitt Central School District) maintain both official fixed asset records that include computer equipment, as well as information technology (IT) department records. The official records have higher dollar thresholds and therefore do not always include all computer equipment. The records maintained by the IT departments are essentially spreadsheets for maintaining computer equipment inventories. The IT departments records generally include most computer equipment; however the Herkimer County Community College departmental records do not include every department 6 and they do not include network equipment such as servers. 6 The IT Department does not maintain records for three departments that have about 70 computers. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 7

9 We tested each entity s records by tracing computer items from their physical location, official and departmental records and purchase invoices and found instances where computers were not recorded, could not be located and disposals that were not documented. When entities do not have complete records to track computer equipment from purchase through disposal, there is an increased risk that the equipment can be disposed of in an improper manner. Our tests disclosed the following exceptions: The OCM BOCES did not update its inventory record to include all computers purchased and to ensure disposals were recorded. Our test of 10 computer systems purchased by the BOCES during the fiscal year found that none of the 10 had been added to the asset inventory records. We also reviewed the status of 50 computer systems purchased by the OCM BOCES during the fiscal year. We verified that one system was still in use and 28 were properly documented as having been recycled. However, BOCES officials could not locate or verify the final disposition for 21 of the selected computer purchases. The BOCES Asset Manager informed us that staff at a school district to which 17 of the computers had been delivered told him that the computers had been recycled. However, we determined that none of the 17 computers were included on listings of computers sent to the recycler by the school district. Of the 38 computer systems we tested from the Jamesville-Dewitt School District s purchasing records that were still in use, 13 systems (34 percent) were not included in either the official fixed asset records or the IT department s inventory records. Madison County officials could not locate or account for the disposal of two of the 10 computer systems we tested from inventory records. These computer systems were acquired in 1998 and 2001 and, based on their age, the systems may have been disposed of because they were broken or obsolete. However the County had no record of their disposal. The local government entities we audited established policies and/or procedures for authorizing the disposal of entity assets and they generally complied with their policies and procedures. However, we found that officials in Madison County did not monitor compliance with the Board s Capital Asset Management 8 OFFICE OF THE NEW YORK STATE COMPTROLLER

10 Policy. This policy requires that equipment asset disposals be reported to the County Treasurer s Office on an asset disposal form and that the disposal be approved by the County purchasing agent. In practice, the County s IT department personnel are determining whether to dispose of surplus computer equipment based on IT department procedures. Those disposals are not being reviewed and approved by the purchasing agent. The purchasing agent and IT department officials told us that they were not aware that the purchasing agent s approval was a Board requirement. Because the governing boards have not included provisions for the environmentally safe disposal of e-waste in asset disposal policies and have not adequately monitored compliance with their requirements for recordkeeping and/or disposal authorizations for computer equipment, the entities are at an increased risk that e-waste could unnecessarily be disposed of, be inappropriately taken for personal purposes, or disposed of in a manner that is not environmentally safe. Efficient Disposal Procedures A system of internal controls designed to help ensure that District-owned equipment assets are deployed effectively should include the establishment of policies and procedures for identifying underutilized or obsolete items for redeployment or disposal in a timely manner. If serviceable and underutilized computer equipment is not effectively managed, there is a risk that District management may expend resources unnecessarily to procure new computer equipment while useable equipment is already available. Prompt disposal of surplus equipment helps reduce storage costs. Most of the local government entities did not have an excessive amount of old computers awaiting disposal; however, the Herkimer County Community College does not routinely dispose of computer equipment and had over 100 computer systems in storage awaiting final disposition. Both the OCM BOCES and Madison County have routine disposals due to their higher volume of disposal. They have an arrangement where a trailer is kept on-site and, once it is filled, the commercial computer recycler picks up the load and provides another empty trailer. The Jamesville-Dewitt School District evaluates its computer equipment and makes disposals at the end of the school year. Each of the local government entities told us that they redeploy useable computer equipment where practical. For example, Madison County and OCM BOCES will move good computer equipment to other users when there is a need. The Herkimer County Community College and Jamesville-Dewitt School DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 9

11 District will relocate some computers to computer labs or other staff as needed. Our audit identified significant differences in the pricing methods and structures used by the various disposal entities we reviewed, which made direct price comparisons impracticable. However, based on a comparison to the costs incurred by the entities we reviewed and the relative immateriality of the total expense, 7 we concluded that the local governments costs for disposing of unneeded computer equipment were reasonable. Recommendations 1. Local officials should continue to dispose of their computer equipment in an environmentally safe manner. 2. Governing boards should provide policy guidance related to the environmentally safe disposal of e-waste. 3. Governing boards should monitor compliance with their existing policy and procedures related to the management and disposal of computer equipment assets including recordkeeping requirements and authorization of disposals. 7 Costs ranged from $148 for the Jamesville-Dewitt School District to recycle 61 monitors, 35 CPUs and one laptop to $2,674 for Madison County to recycle 858 monitors, 442 CPUs, five laptops and various other items. 10 OFFICE OF THE NEW YORK STATE COMPTROLLER

12 APPENDIX A RESPONSES FROM LOCAL OFFICIALS We provided a draft copy of this global report to each of the four entities we audited and requested responses. The following comments were excerpted from the three responses we received. Herkimer County Community College will continue to dispose of computer equipment in an environmentally safe manner. Herkimer County Community College will develop a formal policy and written procedures regarding the management and disposal of computer equipment assets. This policy and the accompanying procedures will address complete recordkeeping, identification and disposition of underutilized or obsolete items and acceptable methods of disposition in accordance with the recommendations of the. We agree with your assessment that the Jamesville-Dewitt Central School District disposes its computer equipment in an environmentally safe, efficient and economical manner... We also agree that although it is not a requirement, it is sound business practice to initiate an administrative regulation that will define our standard operation procedures for our disposal of e-waste. OCM BOCES is pleased that the draft report states that BOCES disposes of its computer equipment in an environmentally safe and economical manner. We appreciate the feedback and guidance that has been received from the Comptroller s audit relating to opportunities to improve controls over the disposal of assets and BOCES generally agrees with the Comptroller s recommendations as a way to continue to improve our practices. OCM BOCES is proud of its long history of environmentally save disposition of computer equipment and will continue to dispose of assets in this manner. The Board Policy Committee will review proposed changes to policy 4320 BOCES Personal Property Accountability to include language that requires the disposal of hazardous computer equipment waste in an environmentally safe manner and requires the selection of a hazardous waste disposal service that is approved by the NYS Department of Environmental Conservation and can accommodate the disposal needs of OCM BOCES in the most cost-effective manner possible. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 11

13 APPENDIX B AUDIT METHODOLOGY AND STANDARDS We examined the local government entities computer equipment disposal practices by reviewing policies and procedures, interviewing appropriate officials and employees about computer equipment management and disposal practices, and reviewing relevant equipment inventory, procurement, disposal, and donation records. Disposal records included local government records as well as invoices from the local waste authority and commercial recycler, and c7 notification forms and certificates of recycling. We conducted this performance audit in accordance with generally accepted government auditing standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 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. 12 OFFICE OF THE NEW YORK STATE COMPTROLLER

14 APPENDIX C HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT To obtain copies of this report, write or visit our web page: Public Information Office 110 State Street, 15th Floor Albany, New York (518) DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 13

15 APPENDIX D OFFICE OF THE STATE COMPTROLLER DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY Steven J. Hancox, Deputy Comptroller John C. Traylor, Assistant Comptroller LOCAL REGIONAL OFFICE LISTING ALBANY REGIONAL OFFICE Kenneth Madej, Chief Examiner 22 Computer Drive West Albany, New York (518) Fax (518) Muni-Albany@osc.state.ny.us Serving: Albany, Columbia, Dutchess, Greene, Schenectady, Ulster counties HAUPPAUGE REGIONAL OFFICE Ira McCracken, Chief Examiner NYS Office Building, Room 3A10 Veterans Memorial Highway Hauppauge, New York (631) Fax (631) Muni-Hauppauge@osc.state.ny.us Serving: Nassau, Suffolk counties BINGHAMTON REGIONAL OFFICE Patrick Carbone, Chief Examiner State Office Building, Room Hawley Street Binghamton, New York (607) Fax (607) Muni-Binghamton@osc.state.ny.us Serving: Broome, Chenango, Cortland, Delaware, Otsego, Schoharie, Sullivan, Tioga, Tompkins counties BUFFALO REGIONAL OFFICE Robert Meller, Chief Examiner 295 Main Street, Room 1050 Buffalo, New York (716) Fax (716) Muni-Buffalo@osc.state.ny.us Serving: Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming counties NEWBURGH REGIONAL OFFICE Christopher Ellis, Chief Examiner 33 Airport Center Drive, Suite 103 New Windsor, New York (845) Fax (845) Muni-Newburgh@osc.state.ny.us Serving: Orange, Putnam, Rockland, Westchester counties ROCHESTER REGIONAL OFFICE Edward V. Grant, Jr., Chief Examiner The Powers Building 16 West Main Street Suite 522 Rochester, New York (585) Fax (585) Muni-Rochester@osc.state.ny.us Serving: Cayuga, Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne, Yates counties GLENS FALLS REGIONAL OFFICE Karl Smoczynski, Chief Examiner One Broad Street Plaza Glens Falls, New York (518) Fax (518) Muni-GlensFalls@osc.state.ny.us Serving: Clinton, Essex, Franklin, Fulton, Hamilton, Montgomery, Rensselaer, Saratoga, Warren, Washington counties SYRACUSE REGIONAL OFFICE Rebecca Wilcox, Chief Examiner State Office Building, Room E. Washington Street Syracuse, New York (315) Fax (315) Muni-Syracuse@osc.state.ny.us Serving: Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, St. Lawrence counties 14 OFFICE OF THE NEW YORK STATE COMPTROLLER