Audit Report on Pier 70 Cafe’s Internal Controls Over Cash Receipts and its Compliance With its Department of Parks and Recreation Permit Agreement

The audit determined whether the Riverside Beach Restaurant Corporation, doing business as Pier 70 Café (the Café), had adequate internal controls over cash receipts, properly reported gross receipts, properly calculated the fees due the City, and complied with certain provisions of its Permit Agreement (the Agreement) with the Department of Parks and Recreation (Parks).

Audit Findings and Conclusions

Based on our interviews with the concessionaire and bookkeeper as well as an examination of the available books, records, and documents, we determined that the Café had inadequate internal controls over its cash receipts. As a result, the concessionaire may not have properly calculated the total gross receipts and may not have reported the correct amount of gross receipts to the City.

Although the concessionaire complied with the provisions of the Agreement regarding required insurance and the sale of alcoholic beverages, he failed to comply with many other provisions. Specifically, the concessionaire failed to keep complete and accurate records; he did not maintain records of daily cash receipts and keep these receipts segregated from other business matters. Moreover, the concessionaire failed to deposit daily cash receipts in the bank-in fact, making no deposits for four months of the five-month period of the Agreement. He also failed to maintain adequate inventory controls. The documents that should have been maintained by the concessionaire include, at a minimum, sales slips, daily dated cash register receipts, and records of daily bank deposits of all receipts. In addition, cash receipts from the Café were deposited in the same bank account as cash receipts from the second concession, making it impossible to determine the total cash receipts generated by the Café.

Overall, the concessionaire’s method of maintaining his books and records required an overhaul and the establishment of a set of internal controls suitable for an independent audit to ensure that the correct amount of gross receipts were reported to the City and that the appropriate fees were paid to the City.

After we issued the preliminary draft report to Parks and to the concessionaire, we were informed by Parks in a May 13, 2005 letter (see Attachment) that the Riverside Beach Restaurant will no longer manage this site; instead, another vendor has been selected. Since the recommendations included in the preliminary draft report no longer apply, we have eliminated them in this report.

In addition, Parks stated that as a result of this audit and our prior audit of the Hudson Beach Café, which was also managed by the Riverside Beach Restaurant (Audit # MH05-075A issued on May 2, 2005), it has implemented tighter accounting controls for Hudson Beach Café and will initiate close monitoring of the Pier I/Hudson River snack bar concession previously run by the Café and now operated by another vendor under a newly awarded contract.