Bureau of Audit
Follow-up Audit Report on the License Fees Due from Central Park Boathouse, LLC, and Its Compliance with Certain Provisions of Its License Agreement
February 1, 2012
AUDIT REPORT IN BRIEF
Download the Complete Report (pdf 2,069 KB)
This follow-up audit determined whether the 36 recommendations made in the prior audit entitled Audit Report on the License Fees Due from Central Park Boathouse, LLC, And Compliance with Certain Provisions of Its License Agreement (Audit No. FP05-128A, issued March 28, 2007) were implemented. Twenty-two of these recommendations were made to the Central Park Boathouse, LLC (the Boathouse), and 14 were made to the New York City Department of Parks and Recreation (Parks).
The prior audit determined whether the Boathouse accurately reported its total gross receipts, properly calculated the license fees due Parks, paid the license fees on a timely basis, and complied with certain other non-revenue-related requirements of the license agreement.
The prior audit found that the Boathouse did not accurately report a total of $2,392,669 in gross receipts for the period from January 1, 2004, through December 31, 2005. Specifically, the Boathouse underreported catering, film-shoot, and bicycle-rental sales; improperly deducted gratuities to pay for salaries, commission, and wages relating to catered affairs; and did not report gift-card sales and value of employee meals and complimentary meals. As a result, the Boathouse owed Parks $381,070 in license fees, plus late charges. Moreover, the prior audit found that the Boathouse lacked adequate controls over gondola-ride sales and did not operate a Park Activity and Resource Center as required by the license agreement. Furthermore, the Boathouse did not have sufficient safeguards over password access to its computerized point-of-sale (POS) system.
On November 24, 2009, Boathouse and City officials negotiated a fifth amendment to the license agreement. Under this amendment, both parties agreed to extend the terms of the license agreement and exclude additional items from gross receipts. They also agreed that the Boathouse will spend an additional $2 million on capital improvements.
Audit Findings and Conclusions
This follow-up audit determined that of the 36 recommendations originally made, 17 were implemented, 10 were not implemented, eight were no longer applicable, and one was partially implemented. As a result, the Boathouse has complied and paid for underreported catering, film-shoot, and bicycle-rental sales, for unreported gift-card sales, and for the value of employee meals and complimentary meals. In addition, the Boathouse has improved on its internal controls over catering, film-shoot, and gondola-ride sales, which were cited in the previous report. However, the Boathouse still does not include the payments when received for catering events and gift cards within its gross receipt reports. Therefore, the Boathouse continues not to report gross receipts to Parks in accordance with the license agreement. Moreover, the Boathouse has not corrected the internal control weaknesses over bicycle-rental sales, does not operate a Park Activity and Resource Center, and does not have sufficient safeguards over password access to its computerized point-of-sale system.
To address the outstanding issues from the previous audit that still exist and the new issue, we recommend that the Boathouse should:
- Include all payments when they are received in the monthly gross-receipts reports.
- Install a register that is linked to the point-of-sale system to ensure that bicycle-rental sales are accurately recorded and reported.
- Operate a Park Activity and Resource Center as required by the license agreement.
- Implement policies and procedures to ensure that all employee passwords are periodically changed and inactive user accounts are timely deleted to prevent unauthorized access to the point-of-sale system.
Also, Parks should:
- Require the Boathouse to report gift certificate receipts and banquet deposits at the time of sale and until it does, require the Boathouse to submit a monthly list of outstanding gift cards and deposits to ensure that the Boathouse accurately reports receipts.
- Ensure that the Boathouse implements the recommendations outlined above and complies with all the provisions in the license agreement.
Boathouse officials disagreed with certain aspects of the report’s findings and did not address the recommendations. Conversely, Parks’ officials agreed with the report’s findings and recommendations and stated that it will work with Boathouse officials to comply with the follow-up report’s recommendations.