Audit Report on the Compliance of American Golf Corporation d.b.a. South Shore Golf Course with Its License Agreement and Its License Fees Due the City

The Department of Parks and Recreation (Parks) has a license agreement with the American Golf Corporation (American Golf) d.b.a., South Shore Golf Course, to operate and maintain the South Shore Golf Course in Staten Island. The agreement also requires that American Golf expend $1,179,593 on specific capital improvements at the facility, remit a security deposit of $131,250 to the Comptroller’s Office, maintain certain types and amounts of insurance coverage that names the City as an additional insured party, pay all required taxes and utilities charges related to the facility. According to the license agreement, gross receipts are defined as all funds received by licensee, without deduction or set-off of any kind, from the sale of wares, merchandise, or services of any kind, provided that gross receipts shall exclude the amount of any federal, state, or City taxes.

This audit determined whether the American Golf accurately reported its total gross receipts to Parks, properly calculated license fees due the City, paid fees on time, and complied with certain non-revenue-related requirements of the license agreement.

Audit Findings and Conclusions

American Golf generally maintained adequate controls over the recording and reporting of its gross revenues, properly calculated fees due, and paid those fees in a timely manner to the City. In addition, American Golf maintained the required liability insurance that named the City as additional insured party, maintained the required security deposit, and paid utility charges. However, American Golf does not use pre-numbered golf event agreements. Pre-numbered agreements help assure that all revenue from golf events are reported to Parks, and that appropriate rent was paid to the City. American Golf also did not submit its annual report on community and youth programs, as required by its license agreement. As a result, Parks cannot accurately evaluate the success of the community and youth programs that American Golf is required to provide under its license agreement.

Audit Recommendations

The audit makes a total of five recommendations – three to American Golf and two to Parks. The major recommendations are that American Golf should:

• Establish and implement adequate internal controls over its golf event agreements. These controls should include issuing pre-numbered golf event agreements and accounting for all numbers issued, even if golf event agreements are cancelled or voided.
• Establish and implement a system to record and report on its community and youth programs and submit its annual report within 30 days of the end of the operating year, as required by its license agreement.

Parks should:

• Evaluate American Golf’s community and youth programs and determine whether it is providing sufficient, high quality services to the community. In that regard, Parks should work with American Golf to identify specific community and youth programs and define performance indicators to help Parks measure the success of these programs.

Agency Responses

In their responses, American Golf and Parks officials generally agreed with the report’s recommendations and described the actions American Golf has taken or will take to address the report’s recommendations.