Audit Report on Parks and Recreation Controls over the Processing of Permits and the Collection of Fees for Athletic and Special Events

Audit Report In Brief

The Department of Parks and Recreation (Parks) maintains a 28,000-acre park system distributed throughout the five boroughs of New York City. Most facilities are available to the public without fees or permits. However, organized sports leagues and schools are required to obtain permits before they use the athletic fields (ballfields) in the parks for activities such as softball, baseball, football, and soccer. Permits are also required for other activities such as tennis, lawn bowling, cricket, volleyball, croquet, lacrosse, and special events. Our audit objective was to review the internal controls of Parks over the processing of permits and the collection of permit revenue for ballfield, tennis, and special events.

Our review of the processing of athletic and special event permits by Parks disclosed significant internal control weaknesses. Overall, Parks has failed to institute agency-wide controls necessary to ensure that all applicable permit fees are charged, collected, and deposited. The Parks offices involved in issuing permits are decentralized, and each office follows its own procedures and maintains its own records. Moreover, there are no written procedures regarding the processing of ballfield and special event permits or the collection and deposit of the related fees.

Many of the computer and manual systems used by Parks have processing and reporting deficiencies. In addition, there is no compatibility in the computer (or manual) systems used by the offices in processing ballfield and special event permits; more important, even when the system used is the same, in many cases, its capabilities differ from office to office.

The number of permits issued and the amount of permit fees collected are not reconciled. As a result, there are often discrepancies between the amounts that should have been collected and the amounts that were actually collected and deposited. In addition, processing functions are not properly segregated. In many instances, the person who processes the applications and permits and records the related information also collects the permit fees. This control weakness is further compounded by the lack of supervisory review of permit issuers. We also found that the Parks offices do not make regular daily or weekly bank deposits. As a result, permit fees remain at some offices for weeks or months before they are deposited.

In addition, Parks has no written agreement with Paragon Sporting Goods, which issues tennis permits and single-play and reservation tickets, or with Central Park Tennis Center, which sells single-play and reservation tickets only. These private entities submit to Parks fees collected for issuing permits and selling single-play tickets and reservations. If these entities were to go out of business or change ownership, there is no assurance that Parks would obtain the fees that it is entitled to.

The report makes 25 recommendations, some of which are listed below. Parks should:

• Prepare and issue uniform written procedures for processing ballfield and special event permits and collecting the fees.
• Upgrade the Class computer system so that cash receipt reports can be generated by each office that list the permits issued and the fees collected. The reports should include the permit numbers, permit holders’ names, fee amounts, and payment dates. After the upgrade, Parks should require a daily reconciliation of cash receipts to permits issued.
• Provide the tennis issuers-cashiers with the capability to generate reports by permit numbers as well as by receipt numbers. In addition, require them to keep records of computer failures, skipped permit numbers, voids, and other computer-related processing problems so that all permits issued can be accounted for and processing problems can be identified and corrected.
• Require that all databases used by the special event permit offices have the same capabilities.
• Require a reconciliation of ballfield and special event permits issued with fees collected. Until the computer systems are upgraded, supervisors should review daily cash receipts data and related reconciliations and sign off on the validity of the information.
• Ensure that all tennis permit issuers perform a daily reconciliation of permits issued and fees collected.
• Ensure that permit issuers are adequately supervised and processing functions appropriately segregated.
• Require that fees be submitted to the cashier daily or weekly and that the cashier deposits fees daily or weekly.
• Prepare written agreements with both Paragon and Central Park Tennis Center that spell out their contractual obligations. Both Parks and the corporations’ officials should sign these agreements.

The matters covered in this report were discussed with Parks officials during and at the conclusion of this audit. A preliminary draft report was sent to Parks officials on May 8, 2003, and was discussed at an exit conference on May 27, 2003. We submitted a draft report to Parks officials on May 29, 2003, with a request for comments. We received a written response from Parks on June 12, 2003.

Parks agreed with 23 of the 25 recommendations. It disagreed with Recommendation 6, that Parks should provide the tennis issuers-cashiers with the capability to generate reports by permit numbers as well as by receipt numbers. Parks partially disagreed with Recommendation 15, that Parks require its staff to discontinue the practice of accepting cash in payment for permits, stating that it plans to continue accepting cash at a limited number of sites.