Audit Report on Collection and Reporting of Revenues by the Board of Standards and Appeals

Executive Summary

This audit determined whether the Board of Standards and Appeals (Board) is correctly accounting for and safeguarding the application fee revenue it receives.

The Board, an independent entity, hears and decides appeals from property owners whose applications to construct or alter buildings, or to establish new uses, have already been denied by another City agency.  The Board generates most of its revenue from application fees, ranging from $275 to $253,000, which applicants must pay when filing for variances and appeals.  In Fiscal Year 2006, Board revenues as reported on the City’s Financial Management System (FMS) totaled $833,048, including $660,755 for variances, $159,032 for appeals, and $13,261 for miscellaneous fees.

Audit Findings and Conclusions

Overall, the Board is correctly accounting for the revenue it receives.  The Board generally charged and collected the appropriate fees, and then forwarded the funds it collected to the Department of Citywide Administrative Services (DCAS), where the funds were deposited and recognized as revenue on FMS.  We also found that the Board appropriately collects fees prior to scheduling a hearing, and hears appeals in accordance with its published agenda.

We found, however, that the board does not adequately safeguard the fee revenue it receives.  We found that the Board did not issue receipts sequentially nor reconcile funds collected with funds deposited; held funds for a month, on average, before forwarding them for deposit; and did not always recognize collected funds as revenue in the appropriate fiscal year.  In addition, we found that the Board’s 2005 Directive #1 filing did not reflect its operating practices.

Audit Recommendations

To address these issues, we make six recommendations, including that the Board should ensure that:

• A daily summary of cash received should be maintained and reconciled against sequentially-issued receipts, as well as deposited checks and money orders;

• All collected funds are forwarded to DCAS for deposit more frequently;

• Its Directive #1 filing accurately reflects its management and fiscal systems and internal control structure.

Agency Response

In its response, the Board agreed with all of the audit’s recommendations.