Audit Report on License Fees Due From New York Restoration Project, Inc., (New Leaf Cafe) and on Its Compliance With Its License Agreement

Audit Report In Brief

We performed an audit of the compliance of New York Restoration Project, Inc. (NYRP), with its license agreement, awarded by the Department of Parks and Recreation (Parks) for the operation of the New Leaf Cafe. Under the agreement, NYRP pays the City license fees to operate a restaurant, catering facility, and concession stand in Fort Tryon Park, Manhattan. For the two-year audit period—October 1, 2000, through September 30, 2002—NYRP reported gross receipts totaling $1,235,638 and paid the City $155,552 in license fees.

Although NYRP had adequate controls over the recording and reporting of restaurant revenue, it did not have adequate controls over catering and snack bar revenue. Specifically, NYRP maintained neither banquet calendars nor contracts nor records of snack bar receipts. Moreover, NYRP did not properly segregate duties over its catering operation. Such segregation would have provided the necessary checks and balances over the recording and reporting of catering revenue. Consequently, we were unable to determine whether NYRP accurately reported its gross receipts to Parks and paid all fees due. However, from the available records, we found that NYRP underreported its gross receipts by $28,671 and owes the City $2,959 in additional license fees and late charges for the period October 1, 2001, to September 30, 2002.

NYRP generally adhered to certain non-revenue requirements of its license agreement (i.e., maintained the required insurance coverage, remitted the required security deposit to the City, and completed the required capital improvements).

To address these issues, we recommend that NYRP should:

• Pay the City $2,959 in additional license fees and late charges;
• Issue pre-numbered contracts for all banquets held at the facility;
• Maintain banquet calendars and contracts; and
• Segregate responsibilities for arranging banquets, accepting payments from customers, recording revenues received, and making deposits.

Additionally, we recommend that Parks should ensure that NYRP:

• Pay the City $2,959 in additional license fees and late charges; and
• Comply with the internal control recommendations made in this report