Audit Report on the Compliance of Flushing Golf Corporation, Inc., With Its License Agreement and Its Payment of License Fees Due the City
AUDIT REPORT IN BRIEF
The Comptroller’s Office conducted an audit on the Compliance of Flushing Golf Corporation, Inc. (Flushing Golf) with its license agreement, awarded by the Department of Parks and Recreation (Parks), for the renovation, operation, and maintenance of an outdoor pitch-and-putt golf facility, an 18-hole miniature golf course, a snack bar, and a food cart at Flushing Meadows-Corona Park, Queens. The agreement requires that Flushing Golf pay the City minimum annual fees ranging from $140,000 in the first year, escalating to $170,000 in the 12th year, or 20 percent of gross receipts generated at the facility, whichever is greater. For the two-year audit period––May 1, 2000–April 30, 2002––Flushing Golf reported gross receipts amounting to $1,488,578, and paid the City $308,099 in license fees.
Flushing Golf generally adhered to the provisions of its license agreement. It recorded its revenue fairly in its books and records, and generally paid its corresponding license fees in compliance with the terms of the license agreement. Finally, in our opinion, Flushing Golf had an adequate system of internal controls over its revenue collection and recording functions, apart from the exception noted below.
Flushing Golf did not maintain adequate records to support the amounts reported to Parks for revenue from its mobile food-and-beverage cart. Flushing Golf maintained neither an inventory of the various items stocked in the cart nor a written record of the items sold. Instead, cash collected by employees was submitted to Flushing Golf officials at the end of the shift, and the revenue amount was recorded on an envelope. Maintaining a perpetual inventory of items purchased and sold and keeping written records of all sales would provide for adequate internal controls over the cash collected.
Flushing Golf generally adhered to certain non-revenue-related requirements of its license agreement (i.e., made the required capital improvements and paid the design review fee; carried the proper types and amounts of insurance that named the City as an additional insured; maintained the proper security deposit; and, paid its utility bills).
Audit Recommendations
We recommend that Flushing Golf maintain detailed inventory and sales records of all food-and-beverage cart items. In addition, we recommend that Parks ensure that Flushing Golf complies with this report’s recommendation.
Flushing Golf responded that it agreed with the audit report, and that it will implement the report’s recommendation by maintaining a detailed inventory and record of all sales from its mobile food-and-beverage cart. Parks stated that it issued a Notice To Cure to Flushing Golf requiring that it implement the report’s recommendation.