Audit Report on the License Fees Due from Central Park Boathouse, LLC, and Compliance with Certain Provisions of Its License Agreement

AUDIT REPORT IN BRIEF

This audit determined whether the Boathouse accurately reported its total gross receipts, properly calculated the license fees due Parks, paid the license fees on a timely basis, and complied with certain other non-revenue-related requirements of the license agreement.

The Boathouse generally complied with the non-revenue requirements of the license agreement. We verified that the Boathouse remitted a letter of credit to cover the security deposit to Parks, paid all its utility bills, paid late fees assessed by Parks, operated a shuttle service to and from the Boathouse, had the certificates of occupancy and incorporation on file, provided 24-hour security, supplied 100 new rowboats and bicycles for rental, maintained required insurance coverage, and named the City as an additional insured.

However, the Boathouse did not accurately report a total of $2,392,669 in gross receipts. As a result, it owes Parks $381,070 in license fees, plus late charges. Specifically, that amount includes:

• $412,012 in gross receipts from catering, film shoots, and bicycle-rental sales was underreported by the Boathouse. Accordingly, the Boathouse owes $65,922 in license fees, plus late charges. It should be noted that an additional $190,611 of bicycle-rental sales may have been underreported based on non-projectable estimates. These could result in an additional $30,498 in license fees, plus late charges.

• $1,513,950 was improperly deducted from reported gross receipts. Accordingly, the Boathouse owes $241,911 in additional fees, plus late charges.

• $255,302 for the value of employee meals and complimentary meals was not reported in gross receipts. Accordingly, the Boathouse owes $40,798 in additional fees, plus late charges.

• $185,988 in gross receipts was recorded on Boathouse records but not posted to the monthly gross receipt report submitted to Parks. This includes $47,214 in catering revenue that was unreported for three months in 2005 and $138,774 in revenue between December 2001 and February 2002 and for the month of December 2003. Accordingly, the Boathouse owes $28,372 in additional fees, plus late charges.

• $25,417 from gift certificate sales that was not reported in gross receipts. Accordingly, the Boathouse owes $4,067 in license fees plus late charges.

Further, the Boathouse lacks adequate controls over gondola-ride sales, and does not have sufficient safeguards over password access to its computerized point-of-sale system.

We made 36 recommendations, 22 to the Boathouse and 14 to Parks, concerning the operation of the Boathouse and the oversight of this concession by Parks. Compliance with these recommendations will ensure that Parks collects from the Boathouse all license fees that are due; controls over the operations of the Boathouse are adequate to ensure that all gross receipts collected by the Boathouse are reported to Parks; and the Boathouse deducts from gross receipts only those amounts from items specified in the license agreement.