Letter Report on the Compliance of Teck Gourmet Five, LLC with its Sublicense Agreement to Operate Douglaston Manor

LETTER REPORT IN BRIEF

Introduction

On May 19, 2004, the Department of Parks and Recreation (Parks) entered into a 20-year license agreement with Douglaston Golf to renovate, operate, and maintain an 18-hole golf course, clubhouse, and catering/restaurant facility at Douglaston Golf Course in Queens, New York. On June 2, 2005, Douglaston Golf entered into a sub-license agreement with Teck to renovate, operate, and maintain the catering/restaurant facility known as Douglaston Manor.

Our audit objective was to determine whether Teck properly calculated its gross receipts and license fees due to the City and paid license fees on time, and complied with certain other major requirements of its sub-license agreement (i.e., capital improvement, insurance coverage, security deposit, and utility charges).

Results

The audit found that while Teck is operating a catering facility, it is not operating a restaurant as required by the agreement. In addition Teck’s internal controls over the recording of special event revenue need to be enhanced. Despite these weaknesses, it is unlikely that additional fees would be due the City because Teck revenue is far below the threshold that would require it to pay percentage-based license fees to the City.

Audit Recommendations

We recommend that Parks and Douglaston Golf require Teck to:

• Operate a restaurant as required by its contract; and
• Strengthen its internal controls over the financial operations by purchasing press-printed pre-numbered guest checks, issue these guest checks in sequential order, and ensure that all special event guest check revenue is accounted for and accurately reported in its books and records. 

We received written responses from Parks, Teck, and Douglaston Golf. All three responses indicated agreement with our findings and recommendations.