Audit Report of the Financial and Operating Practices of the Department of Parks and Recreation for the West 79th Street Boat Basin

Audit Report In Brief

The Department of Parks and Recreation (Parks) manages, operates, and maintains the West 79th Street Boat Basin (Boat Basin) in Riverside Park, on the east bank of the Hudson River.  The Boat Basin offers seasonal and transient dockage, seasonal and transient mooring, monthly and daily parking, and storage for kayaks and canoes.  The Parks Marine Division, which is overseen by the Parks Chief of Operations, is responsible for the management of the Boat Basin. Marine Division officials include the Marina Director and the Chief Dockmaster, who is responsible for the overall administration of Marine Division facilities, including the Boat Basin, and enforcement of Parks policies and rules.  Fees collected at the Boat Basin are forwarded to the Parks Revenue Division (Revenue), which is responsible for recording and reporting on Boat Basin accounting transactions. For Fiscal Years 2005 and 2006, reported revenues for the Boat Basin were approximately $874,147 and $949,064 respectively.

Audit Findings and Conclusions

Our review of the Boat Basin’s operations revealed a total disregard for internal controls over the collecting, recording, and reporting of revenues generated from all sources, including seasonal and transient dockage, seasonal and transient mooring, kayak and canoe storage, monthly and daily parking, and boater services.  Moreover, Parks allowed an environment to exist in which irregularities appear to have occurred. During the course of our audit, red flags were raised. The number and magnitude of these red flags, as well as the disregard for internal controls, raise questions of whether fraud may have occurred at the Boat Basin. The following are examples of fraud indicators we found:

• The Chief Dockmaster was responsible for generating word-processed transient dockage or mooring, monthly parking, and kayak or canoe storage agreements, and transient parking passes; accepting payments; and signing agreements. The Chief Dockmaster should not have performed all of these functions because it violates the segregation of duties principle and allows for fraud and misappropriation.

• Twenty-three customers informed us that they paid automobile parking fees totaling $66,250 for calendar year 2005; however, the Boat Basin recorded only $22,750 as being paid by these customers.

• In September 2006, an unauthorized order was placed for a two-year supply of customer receipts. This order was subsequently canceled, and no orders have been placed since then.

• We encountered obstacles and extensive delays in obtaining basic documentation that should have been readily available. These obstacles and delays were highly unusual and far beyond common business practice.

The audit also found that the Boat Basin failed to ensure that its customers maintained proper insurance and registration, as required by the Rules of the City of New York, Title 56, §3-06 and §4-04; Parks failed to institute rates for charter and educational vessels at the Boat Basin; Revenue lacked segregation of duties and a reliable accounts receivable system; and Counsel’s Office lacked controls over the Boat Basin’s waiting list.

Audit Recommendations

To address these issues, we make 26 recommendations, including that Parks should:

• Establish and implement a system of internal controls over the financial operations of the Boat Basin to ensure that all fees are accounted for, collected, and reported to Parks.

• Closely supervise and monitor the Boat Basin’s financial operations, including the collection, recording, and reporting of gross receipts.

• Separate the responsibilities for authorizing transactions, processing and recording transactions, reviewing transactions, and handling any related assets at both the Boat Basin and Revenue.

• Ensure that all vessels entering the Boat Basin are properly insured and registered.

• Institute rates for charter and educational vessels for the Boat Basin.

• Ensure that Revenue receives copies of all agreements and uses them to post customer charges accurately and promptly.

• Ensure that the Counsel’s Office systematically files and maintains all documentation pertaining to the Boat Basin waiting list and removes from the waiting list applicants that defer two offer