Nassau’s Office of Consumer Affairs failed to inspect and license local businesses, costing the county nearly $3 million in potential revenue, according to a new audit by County Comptroller George Maragos.

The report contends that Consumer Affairs has poor internal controls and oversight to reduce waste and fraud and is underfunded, with staffing down from 33 employees in 2012 to 25 at the end of 2016.

“Consumer Affairs is deficient in its mission to protect residents through adequate inspections of business establishments and to collect fees and fines,” said Maragos, a Democrat running for county executive. “It would seem that nothing less than a complete overhaul of the department’s control processes would be required to improve efficiency, strengthen enforcement and instill public confidence.”

In an unsigned response to the audit, Consumer Affairs called Maragos’ findings “erroneous” and insisted the department complied with all laws.

“Even with the limitations imposed by staffing, computer software of limited utility and difficulties with supervisors, every consumer compliant received by the office . . . was investigated,” the response said.

Auditors estimate the department failed to collect $2.9 million in potential fines and fees from Jan. 1, 2103 through Dec. 31, 2015. Consumer Affairs generated $5 million in revenue in 2015 and enforces 28 local laws.

Maragos said 12 major businesses, with a combined 72 locations, had failed to apply for a waiver that would allow them to avoid the expense of individually pricing every item for sale, costing the county $1.5 million in potential revenue.

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But department officials said Maragos’ revenue number was inflated as not all businesses would seek the voluntary waiver.

The report identified a combined $1.34 million in revenue that is at risk because of invoices that could not be substantiated or past violations that appear to be unresolved.

Consumer Affairs Commissioner Madalyn Farley said she “will review [Maragos’] findings and respond accordingly.”

Auditors found that 76 of 95 businesses randomly identified through online searches — dry cleaners, laundries, locksmiths, scrap metal processors and storage warehouses — had not been properly licensed by Consumer Affairs, costing the county $36,000 in revenue.

The department is expected to begin licensing pet groomers and health clubs later this year but auditors suggested that the department “will be unable to enforce and collect” those fees because of staffing.

The review also found 15 percent of businesses using weights and measuring devices, such as supermarkets and gas stations, visited by auditors had not received mandatory inspections to ensure their equipment was accurate.

Consumer Affairs also failed to fingerprint home improvement contractors as required in the county’s code. But the department contends that finger printing is the responsibility of the police department and that Nassau’s provision could violate superseding state law.