Audit Report on the Operating and Financial Practices of the Mayor’s Office of Film, Theatre and Broadcasting

Audit Report on the Operating and Financial Practices of the Mayor’s Office of Film, Theatre and Broadcasting

EXECUTIVE SUMMARY

The Mayor’s Office of Film, Theatre and Broadcasting (MOFTB) was created to make film production easier in the City by providing one office where film production companies can obtain all of the necessary permits to film at locations throughout the City. Through these permits, production companies obtain, among other benefits, parking for their trucks, street and sidewalk closures, and police assistance.  MOFTB also coordinates with various City agencies to provide free exterior locations and the assistance of the New York City Police Department (NYPD) Movie/TV Unit for film production.  This audit focuses on the extent to which the fees charged for permits by MOFTB enable the City to recoup costs incurred for filming activities.

Audit Findings and Conclusion

In Fiscal Year 2013, the direct costs incurred by the City to provide services to film production companies were at least $3.9 million ¹.   However, MOFTB only collected $1 million from the $300 per project fee charged ²,  resulting in a deficit of $2.9 million which was absorbed by the City.  Had MOFTB charged a fee of $593, the cost associated with each project that was identified in a cost analysis conducted by MOFTB and approved by OMB, it would have generated another $1 million in revenue to the City.  In addition, MOFTB did not bill $1.9 million to the film production companies in police assistance costs incurred during filming. 

Our audit also noted that in addition to providing lower permit fees to the film companies and absorbing a significant portion of the film services cost, the City provided over $3 million in free advertising, but only required the production companies to donate approximately $98,000 to cultural institutions. 

Audit Recommendations

MOFTB should:

• Consider structuring permit fees on a sliding scale taking into consideration the size and duration of the projects.
• Consider increasing the permit fees so that application and police assistance costs incurred by the City are recovered.
• Determine the best method for recouping costs associated with the NYPD Movie/TV Unit.
• Reevaluate its program offering free advertising; if the program goes forward, consider tying advertising discounts to a comparable donation to charitable institutions.

Agency Response

In its response, MOFTB notes that while none of the findings in the report reflect any financial or operational discrepancies or deficiencies, MOFTB “is always looking for ways to improve service and reduce costs and . . . will consider the audit recommendations as [it] continue[s] to review the services of the program with respect to the overall fee structure and intent.”  Further, MOFTB notes that “[i]t’s been a long standing policy of the City to streamline processes and not impose fees to the extent possible in order to encourage film and television production in New York City based on a commonly accepted understanding that such activity inures to the overall economic well-being of the City. Nevertheless the report did set forth several policy recommendations to allow the City to recoup costs for film and television production activities.”   

We note that the report’s findings did identify several issues that inhibit the City from recouping associated costs for film and television production activities. We are glad that MOFTB responded that it will consider the audit recommendations as it continues to review the services of the program with respect to the overall fee structure and intent.

Finally MOFTB observed in its response that we had added language to our stated audit objective.  This is consistent with §6.07 of generally accepted government auditing standards, which notes that “[p]lanning is a continuous process throughout the audit.  Therefore, auditors may need to adjust the audit objectives…as work is being completed.”