Audit Report on the Financial and Operating Practices of the Times Square Business Improvement District

AUDIT REPORT IN BRIEF

This audit of the Times Square Business Improvement District (BID) covered the organization’s provision of services, compliance with its City contract, and adequacy of internal controls over funds and operations. The Times Square BID is funded by special assessments levied against district property owners and uses these moneys to enhance and promote the district. The City Department of Business Services (DBS) supervises and oversees the Times Square BID.

The Times Square BID provides supplemental services, such as sanitation, security, social services and promotion, as well as additional services, as called for in its District Plan. The BID generally complies with the key provisions of its contract with DBS. The BID maintains complete and accurate financial records, submits annual reports to DBS, and has its annual financial statements certified by an independent certified public accountant. The BID also complies with the procurement procedures of its contract with DBS.

In addition, the BID maintains adequate accountability over its receipts and disbursements, has an adequate segregation of duties, and properly records and authorizes transactions. The BID had no major weaknesses in corporate governance. However, there was a weakness in the BID’s internal control system concerning the safeguarding of assets. Specifically, the BID had funds on deposit that were not covered by FDIC insurance, and it did not maintain an inventory of its equipment. In addition, during Fiscal Year 2001, the BID did not maintain daily time records for its central staff. Consequently, we were unable to determine the number of hours that these employees worked. As of January 2002, central staff are required to fill out and hand in weekly timesheets.

To address these issues, we make three recommendations, namely, that the Times Square BID:

• Place its funds in collateralized accounts.
• Maintain inventory records and perform physical inventories periodically.
• Continue to require its central staff to submit weekly timesheets.

The matters covered in this report were discussed with officials from the Times Square BID during and at the conclusion of this audit. A preliminary draft report was sent to Times Square BID officials on January 31, 2003, and was discussed at an exit conference on February 13, 2003. We submitted a draft report to BID officials on February 25, 2003, with a request for comments. We received a written response from BID officials on March 11, 2003. The BID generally agreed with our findings and observations.