Follow-up Audit Report on the Compliance of Central Park Tennis Center, Inc., with Its License Agreement and Payment of License Fees Due the City

AUDIT REPORT IN BRIEF

REPORT IN BRIEF

This follow-up audit determined whether 14 recommendations made in a previous audit entitled Audit Report on the Compliance of Central Park Tennis Center, Inc., With Its License Agreement and Payment of License Fees Due the City (Audit No.FP08-096A, issued March 10, 2009) were implemented. Ten of these recommendations were made to the Central Park Tennis Center, Inc. (CPT) and four were made to the New York City Department of Parks and Recreation (Parks).

The prior audit evaluated whether CPT accurately reported its total gross receipts, properly calculated the license fees due the City, paid its license fees on time, and had sound internal controls. It also determined whether CPT complied with other major terms of its license agreement (i.e. carried the proper types and amounts of insurance, maintained the proper security deposit, and paid for its utilities).

The prior audit, which covered the period January 1, 2006, through December 31, 2007, found that CPT owed $110,347 in additional license fees and late charges for underreporting gross receipts. CPT also had significant internal control weaknesses over the financial operations of the tennis center. Therefore, it could not be determined whether all the revenue received was in fact recorded and reported to Parks. Additionally, the report found that CPT lacked the proper insurance and had unpaid utility bills due the City.

Audit Findings and Conclusions

This follow-up audit determined that of the 14 recommendations originally made (10 recommendations made to CPT and 4 recommendations made to Parks), 11 were implemented and three were partially implemented. As a result, CPT has now corrected the internal control weaknesses cited in the previous report and currently maintains the required insurance and pays for its utility usage. However, Parks did not bill and CPT therefore has not paid $67,071 of the $110,347 in additional license fees and late charges for underreporting gross receipts and did not pay for all of its past utility usage.

Audit Recommendations

To address the outstanding issues from the previous audit that still exist, we recommend that CPT should:

• Pay the remaining balance of $67,071 in additional license fees and late charges for underreporting gross receipts as identified in the original audit;

• Pay for prior utility usage from the beginning of the original contract in 2002 to April 2007;

In addition, we recommend that Parks should:

• Require CPT to pay the remaining balance of $67,071 in additional license fees and late charges for underreporting gross receipts which was identified in the original audit.

• Require CPT to pay for its prior utility usage from the beginning of the original contract in 2002 to April 2007.

Agency Response

The matters covered in this report were discussed with CPT and Parks officials during and at the conclusion of this audit. A preliminary draft report was sent to these officials and discussed at an exit conference on August 24, 2011. On August 26, 2011, we submitted a draft report to CPT and Parks officials with a request that comments be submitted by September 12, 2011. We did not receive a written response from either CPT or Parks nor a request for an extension of the draft response due date. Therefore we are issuing this final report.