Audit Report on Off-Track Betting Corporation Controls over General Expenses and Reimbursements

Audit Report In Brief

In 1970, a New York State law established the New York City Off-Track Betting Corporation (OTB) as a public benefit corporation to operate a pari-mutuel horseracing betting system within the City. OTB generates revenues from wagers, surcharges, and “breakage,” which result from the rounding of winning payoffs. OTB distributes portions of its revenue to the State and the racing industry. OTB also retains a portion of its revenue for capital acquisitions. After paying its administrative expenses, OTB’s remaining net revenue is deposited in the City General Fund. According to OTB financial statements, its expenses for Fiscal Year 2002 totaled $124,068,000.

This audit determined whether OTB had sufficient internal controls in place to ensure that employee personal expense reimbursements and its General Expenses are reasonable, justified, and properly recorded. We also determined whether OTB adhered to applicable OTB and City procurement guidelines.

Apart from the minor exceptions noted in this report, we found that OTB had adequate internal controls in place to ensure that employee personal expense reimbursements and charges for General Expenses were reasonable and justified. OTB generally complied with its Corporate Guidelines for Expense Accounts and its Corporate Procedures for Expense Reports when processing employee personal expense reimbursements. Furthermore, our review of General Expenses found that OTB generally complied with its requisitioning procedures, purchasing matrix, and applicable City procurement guidelines.

However, OTB did not provide adequate documentation to support $14,198 in expenses, as follows:

• Reimbursements totaling $9,879 were made to employees in 33 instances, without sufficient documentation, without detailed travel information, or without having obtained advance approval for travel.
• Five employee expense reimbursements totaling $1,807 that could not be found.
• Purchases totaling $1,778 were made for items that were unrelated to day-to-day OTB operations. These purchases included flowers and fruit baskets.
• Six instances for meal purchases totaling $734 for which there was no documentation that indicated the meals were business-related.

We recommend that OTB: ensure that all reimbursements to employees are for appropriate business-related expenses; obtain appropriate documentation before processing reimbursements to employees; and maintain all voucher packages on file.

OTB officials responded that they generally agreed with the audit recommendations and described the process in place to ensure that employee reimbursements are appropriately documented.