Audit Report on the Financial and Operating Practices of the Columbus/Amsterdam Business Improvement District
EXECUTIVE SUMMARY
The Columbus/Amsterdam Business Improvement District (BID) was incorporated in the State of New York on August 3, 1983, by property owners, business owners, and not-for-profit groups with an interest in the area. As required by BID legislation, the majority of the BID Board of Directors are representatives of property owners and business owners within the BID’s defined district. The Board also includes commercial tenants and residential representatives, as well as ex-officio members representing various elected officials, including the Mayor, the Comptroller, the City Council, and the Manhattan Borough President.
Under City legislation, BID assessments are collected by the City and then returned in their entirety to the BID. These monies are used to purchase services and improvements supplemental to the services already provided to the area by the City, and to enhance and promote the business district. By law, those services and improvements can include capital improvements, enhanced sanitation services, enhanced security services, promotional services to advertise activities within the district, and seasonal and holiday decorations and lighting.
Measured by revenue from assessments, the Columbus/Amsterdam BID ranked 31st out of 44 BIDs in New York City in fiscal year 2002. According to its certified financial statements for fiscal year 2000, the BID had revenues of $190,847 and expenditures of $182,829.
The objectives of this audit were to:
- Determine whether the BID has provided the services called for in its District Plan;
- Assess the BID’s compliance with certain provisions of its contract with DBS; and
- Evaluate the adequacy of the BID’s internal controls over its funds and operations
The scope of our audit was fiscal year 2000. To meet the audit objectives, we reviewed the BID’s District Plan, bylaws, and certified financial statements for fiscal years 1999 and 2000. We reviewed the minutes of Board meetings and annual meetings for the same period. We also interviewed the BID’s manger, accountant and CPA, as well as members of the Board of Directors.
To determine business owners’ level of satisfaction with BID’s services, we conducted a door-to-door survey of 104 businesses in the BID area. We also contacted 46 BID property owners or managing agents to determine their satisfaction with BID operations.
To determine whether the BID is in compliance with DBS requirements, we reviewed BID annual reports submitted to DBS for fiscal years 1999 and 2000, documentation pertaining to the bidding for purchases that required bidding, and insurance documents maintained by the BID.
To assess the BID’s internal controls, we compared its procedures to internal control standards set forth in the New York City Comptroller’s Directives and its contract with DBS. In addition, we interviewed BID officials to determine whether responsibilities were adequately segregated, assets were safeguarded and authorization and approval requirements were met. We also reviewed the timekeeping procedures of the BID to determine the extent of controls the BID maintained over its personnel.
To determine whether transactions were valid and properly recorded, we tested a sample of receipts and disbursements made from December 1999 through February 2000.We examined contracts, invoices, supporting documentation for expenditures, bank statements, and canceled checks. We also reviewed the BID’s annual reports, financial statements, general ledger, cash receipts and cash disbursement journals.
The Columbus/Amsterdam BID has provided supplemental sanitation services and has introduced a variety of programs and projects, in accordance with its District Plan. These programs have enhanced the community environment of the BID area.
To determine business owners’ level of satisfaction with the BID’s services, we conducted a door-to-door survey of 104 businesses in the BID area. A total of 40 participants (38%) responded to our survey and the overall response was positive. (See Appendix I for a listing of questions and a summary of responses obtained from our questionnaires.) Of the 40 respondents (excluding those who answered "no opinion") 89 percent felt that the BID area is cleaner; 88 percent felt satisfied with the services provided by the BID.
Although the responses regarding overall BID services were positive, some participants stated that they were not made aware of the BID’s services. In our survey of 40 businesses, 13 respondents (33%) said they did not know of the BID or did not know the BID manager. Nineteen respondents (48%) said that the BID did not provide them with a sufficient amount of information on its services.
We attempted to contact 46 property owners and managers but were able to speak to only 18. Of those, six were no longer involved with the property, three were not aware of the BID, and five felt that the BID did not provide enough information on its services.
At the exit conference, the BID manager told us that he is creating a "Welcome Wagon" package that will provide information to all BID businesses on BID activities, as well as information on various City agencies. He anticipates having this package ready by April 2002.
The BID’s sanitation service consists of a crew of three part-time individuals who sweep the BID sidewalk area from 8 a.m. to 12:30 p.m., Monday through Saturday.
According to the Sanitation Department area supervisor, the BID is doing a good job keeping the area relatively clean with a limited number of employees.
The BID’s promotional and advertising activities are designed to highlight the assets and activities in its area and to make it attractive to shoppers as well as area businesses. As part of these activities, the BID has published monthly calendars that listed all the activities within the BID area; installed 56 iron tree guards around tree-pits along Columbus and Amsterdam Avenues and on some of the side streets; published a Holiday Wish List describing the activities and needs of social services organizations in the district; erected banners on lampposts throughout the BID area; and conducted a "Plantathon" to plant flowers in the tree-pits.
The BID’s District Plan does not require it to provide security services to the area. However, the BID has participated in a Con Ed-sponsored program, "Brighten the Night," in which Sylvania, a Con Ed contractor, installed security lighting in the BID area. Since 1998, 46 lights have been installed—the majority of them (36) during 1999.
To communicate local concerns and issues, the BID also participated in a series of meetings with the Westside Crime Prevention Program, the 24th Precinct, the District Attorney’s Office, and Manhattan North Narcotics.
The BID’s mailing list of property owners and managers lacked some telephone information and was out of date. Telephone numbers were missing for 20 individuals. Telephone numbers for 15 of the 46 persons (33%) on the list whom we attempted to contact had been changed or disconnected; and 6 persons on the list were no longer involved with property in the BID.
The BID is in compliance with its DBS contract regarding insurance coverage and submission of reports. However, the BID does not fully comply with DBS contract requirements regarding the bidding process in selecting outside vendors. It does not maintain documentation pertaining to the bidding process for its contracts.
The BID manager stated that he follows the DBS guidelines on the bidding process. However, due to lack of documentation, we were unable to verify this.
At the exit conference, the BID manager stated that he had started maintaining files that document the bidding process.
There were no material weaknesses in the BID’s internal control system that would affect the BID’s control over its operations. Specifically, the BID had adequate segregation of duties; revenues and disbursements were properly recorded; bank reconciliations were performed regularly, and the BID maintained control over its personnel through its timekeeping function.
However, four out of seven Requests for Reimbursement forms had no authorization signatures; the BID did not place a bank stop on two lost checks; four checks, totaling $2,990 had only one signature; and the BID does not keep its checkbooks in a secure location.
At the exit conference, the manager told us that the BID now keeps its checkbooks in a locked cabinet.
To ensure that the BID is operating in compliance with its bylaws, we reviewed the minutes of (1) the Board of Directors meetings, (2) the BID annual meeting, and (3) the BID’s standing Committee meetings. In addition, we contacted those members of the Board of Directors who served on a number of other committees to determine their views of, and the extent of their involvement in, the BID’s operations. We found no weaknesses in any of the areas that we reviewed, all of which were related to the Board’s oversight and management of the BID.
This audit makes seven recommendations, the most significant of which are listed below, that BID officials should:
- Contact all business owners and property owners and management in an effort to include them in BID activities.
- Ensure that the BID maintains a complete and accurate mailing list of business and property owners in the BID area.
- Retain all documents pertaining to the bidding process for its contracts.
The matters covered in this report were discussed with officials from the Columbus/Amsterdam BID during and at the conclusion of this audit. A preliminary draft report was sent to the Columbus/Amsterdam BID officials on January 23, 2002, and was discussed at an exit conference on February 19, 2002. On February 28, 2002, we submitted a draft report to Columbus/Amsterdam BID officials with a request for comments. We received a written response from the Columbus/Amsterdam BID on March 27, 2002. The BID generally agreed with the audit’s overall assessment and recommendations. However, it only responded specifically to the two audit recommendations it considered the "most important".
In his response, the Columbus/Amsterdam BID’s District Manager stated:
" We appreciate your view of our operations. Your audit confirms our view that we are an efficient small BID producing high quality, innovative programs. It has also made us aware of some areas needing improvement, which we have either addressed or made plans to address."