Town of Hamburg - Woodlawn Beach State Park Receipts (2019M-79) (full text)

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY REPORT OF EXAMINATION | 2019M-79 Town of Hamburg Woodlawn Beach State Park Receipts JUNE 2019

Contents Report Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Woodlawn Beach State Park Receipts . . . . . . . . . . . . . . . . . . 2 How Should Officials Account for Park Receipts?. . . . . . . . . . . . 2 Officials Did Not Establish Sound Procedures for Park Receipts . . . . 3 Vehicle Entrance Fees Were Not Properly Recorded . . . . . . . . . . 3 Rental Contract Fees Were Not Accurately Recorded. . . . . . . . . . 4 What Do We Recommend? . . . . . . . . . . . . . . . . . . . . . . . 5 Appendix A – Response From Town Officials . . . . . . . . . . . . . . 6 Appendix B – Audit Methodology and Standards . . . . . . . . . . . . 8 Appendix C – Resources and Services. . . . . . . . . . . . . . . . . . 9

Report Highlights Town of Hamburg Audit Objective Background Determine whether officials properly accounted for Woodlawn Beach State Park receipts. The Town of Hamburg (Town) is located in Erie County. The Town is governed by Key Findings an elected five-member Board composed of four Board members and the Town ll Daily tally and gate summary sheets for Supervisor (Supervisor). The Board is entrance fees were not accurately completed. responsible for managing operations. As a result, we were unable to determine whether employees properly collected fees for The Director of Youth, Recreation, all tags issued. and Senior Services (Director) and a recreation supervisor oversee the ll Rental fees were not accurately entered in Woodlawn Beach State Park (Park). The the financial system, as the rental agent does Town entered into an agreement with not provide copies of rental contracts to the New York State in 2010 to operate the recreation department office. Park. The Park covers one mile of Lake Erie beach within the Town. The Park is Key Recommendations typically open from Memorial Day through Labor Day. The Town operates the Park ll Provide training to employees on how to as a generally self-sustaining operation, complete daily tally sheets and ensure that primarily funded by vehicle entrance and sheets are completed accurately. rental fees. ll Provide copies of rental contracts to the recreation department office to ensure that All revenues generated from the Park are rental fees are accurately entered in the retained by the Town for the sole purpose financial system. of maintaining the Park. If surplus revenues remain at the termination of the Town officials agreed with our recommendations contract, these funds must be paid to the and indicated they planned to initiate corrective State. action. Quick Facts 2018 Park Appropriations $482,000 2017 and 2018 Entrance Fees $236,000 2017 and 2018 Rental 220 Contracts 2017 and 2018 Rental Fees $93,000 Audit Period January 1, 2017 – January 22, 2019 Of f ic e of t he New York State Comptroller 1

Woodlawn Beach State Park Receipts Patrons pay a vehicle entrance fee at a booth located at the Park entrance and receive a tag. The booth is operated by part-time and seasonal employees. Payment is accepted in cash or by credit card. Fees collected are handwritten on a daily tally sheet. Complimentary tags are issued to vehicles with a handicap permit or to senior citizens1 on non-holiday weekdays. The entrance booth employees prepare a bank deposit at the end of each day, and one employee deposits the receipts at the bank three times each week. Daily tally sheets, gate summary sheets and deposit receipts are provided to the recreation attendant at the recreation department office to be entered into the financial system. On behalf of the Town, the rental agent2 enters into rental contracts with patrons for Park facilities and beach ceremonies. These contracts indicate the type of services being contracted (i.e., lodge or picnic area rentals, beach ceremonies, etc.). At the recreation department office, the recreation attendant enters the contract details into the financial system and collects rental fees. How Should Officials Account for Park Receipts? A board, in consultation with Park officials, is responsible for adopting written policies and developing adequate procedures for the collection of entrance and rental fees. These should include a board-adopted fee schedule, the conditions for providing complimentary or discounted fees and the method to document these discounts. To ensure the fees are properly collected, deposited and recorded, the Director and the recreation supervisor should provide timely supervision of those charged with handling cash. They, or a designee, should compare the deposits with the amounts recorded on daily sheets and in the financial system. Employees should be trained to accurately complete daily tally sheets for entrance fees, documenting starting and ending tag numbers for each day and information on complimentary or discounted tags issued. In addition, the Director and recreation supervisor should require that the rental agent provides copies of all rental contracts to the recreation department office so patrons can be properly billed. Receipts should be reconciled to rental contracts to ensure that contracts are paid in full and for the correct amount. 1 Aged 60 and older 2 The Town employs one rental agent for the Park. During our audit period, there were two different rental agents employed by the Town, one during the 2017 season, and one during the 2018 season. The rental contracts we reviewed as part of our audit testing were contracts entered into by the rental agent from the 2017 season. 2 Of f ic e of t he New York State Comptroller

Officials Did Not Establish Sound Procedures for Park Receipts The Board and officials did not develop written policies or procedures for how entrance and rental fees should be recorded, deposited and reconciled or provide guidance for Park employees issuing complimentary or discounted tags. Although officials have a basic employee handbook for Park employees, the handbook does not explain how entrance fees are to be recorded and reported or make any reference to rental fees. In addition, while department staff told us that there is a discussion at employee meetings at the beginning of each season on how entrance fees are to be handled and recorded, officials do not provide any formal training on how to accurately complete the daily tally and gate summary sheets. While daily tally sheets, gate summary sheets and deposit slips are provided to the recreation attendant to record entrance fee collections in the financial system, no one independent of the receipts process compared deposits to recorded amounts or confirmed the number of complimentary or discounted tags issued. The Board has not adopted a fee schedule for rental fees. During fieldwork, the recreation attendant provided us with several different fee schedules, which showed different fees for the same rental services, and in some cases, did not include a fee for certain rental services, such as beach ceremonies or picnic area rentals. The recreation attendant told us that she believed different rental agents used different fee schedules and she was not sure which schedule the current rental agent was using. Further, the rental agent did not provide rental contracts to the recreation attendant to record in the financial system. Rather, patrons verbally indicated to the recreation attendant the services included in the contract when they made the first payment. The recreation attendant used that information to enter rental fees into the financial system. While the rental agent is responsible for following up with patrons to ensure that any balances due are paid before the date of rental, no invoices are sent to patrons. Instead, the rental agent phones patrons to remind them of amounts due, based on a report provided by the recreation attendant. Due to these control weaknesses, officials cannot be certain that all receipts are properly collected, deposited and recorded. Vehicle Entrance Fees Were Not Properly Recorded We found that daily tally sheets were not accurately completed. Officials told us that starting and ending tag numbers should be recorded on the daily tally sheets, with the gate summary sheet attached showing the tag numbers that were discounted or issued as complimentary tags. Of f ic e of t he New York State Comptroller 3

We reviewed all 201 daily tally sheets for the 2017 and 2018 seasons and found that the starting and ending tag numbers were not recorded for 161 days (81 percent). In addition, the gate summary sheets did not support all the complimentary and discounted tags reported on the daily tally sheets. For example, for complimentary tags issued to senior citizens, both the issued tag number and the vehicle license plate number should be recorded on the gate summary sheet. However, in some instances, both the license plate number and tag number were recorded on the gate summary sheet, but shown as separate tags issued on the daily tally sheet rather than as one complimentary tag. Because the daily tally sheets and gate summary sheets were inaccurate and incomplete, we were unable to determine whether employees properly collected fees for all tags issued. For the daily tally sheets prepared for the 40 days that included starting and ending tag numbers, we recalculated the total number of tags which should have been recorded and found that 73 tags, totaling $511, appear to have been issued but not recorded. We recalculated the total number of complimentary and discounted tags issued based on the gate summary sheets, and found that 231 tags totaling $1,617 should not have been complimentary, and 287 tags totaling $574 should not have been discounted. For example, senior citizens were issued complimentary tags on weekends or holidays, or the number of complimentary and discounted tags recorded on the gate summary sheets did not match the totals on the daily tally sheets. As a result, there was total potential lost revenue of $2,702. However, due to the incomplete and inaccurate daily tally and gate summary sheets, there could potentially be additional lost revenue, which we were unable to identify. Because starting and ending tag numbers and complimentary and discounted tag numbers were not always recorded or supported, officials cannot ensure that employees properly collected, deposited and recorded Park receipts. As a result, there is an increased risk that money could be collected and not deposited or recorded and receipts could be inaccurately reported. Rental Contract Fees Were Not Accurately Recorded We reviewed 17 rental contracts totaling $9,450 to determine whether the correct rental services were entered into the financial system.3 We reviewed and compared the contract terms to the financial system records to determine whether the contracts were properly recorded. We found that three contracts ($600) appeared to be properly entered into the financial system and three contracts ($2,050) were not available for our review 3 See Appendix B for information on our sampling methodology. 4 Of f ic e of t he New York State Comptroller

from the rental agent. The remaining 11 contracts ($6,800) had rental services that were improperly entered into the financial system. Five contracts showed services such as beach ceremonies, picnic area rentals and tent rentals selected, but those services were not included in the financial system. Six contracts were entered in the financial system for the wrong type of rental. For example, a contract would indicate a peak-season weekend rental, but a peak-season weekday rental was entered. The difference between the weekday and weekend rates varied from $100 to $300 per day. We attempted to determine whether the correct rental fees were charged; however, based on the fee schedules provided to us by the recreation attendant, we were unable to determine whether the fees entered in the financial system were accurate. Based on the financial system records, the amount collected on the 17 rental contracts totaled $9,450. When we compared the amount collected with the rental fees based on one fee schedule, it appeared that patrons were undercharged by at least $550, while based on another fee schedule, patrons were undercharged by at least $1,350. Because the recreation supervisor did not review rental contracts, rental fee schedules were unreliable and the recreation supervisor did not ensure that all contracts were provided to the recreation attendant for entry into the financial system, officials cannot be sure that the fees are accurately recorded and that the appropriate amount of fees are collected for rental contracts. What Do We Recommend? The Board should: 1. Develop written policies and procedures for collecting and recording Park entrance and rental fees. 2. Adopt a rental fee schedule. The Director and Recreation Supervisor should: 3. Provide training to employees on how to properly complete daily tally and gate summary sheets. 4. Review the daily tally and gate summary sheets for completeness and accuracy. 5. Ensure that a comparison of deposits to recorded amounts is performed including a reconciliation of tags issued to receipts collected. 6. Provide copies of rental contracts to the recreation attendant to ensure that rental fees are accurately recorded and properly invoiced. Of f ic e of t he New York State Comptroller 5

Appendix A: Response From Town Officials4 4 The Town’s response letter also addresses the recommendations from a separate audit report, Town of Hamburg – Fuel Operations (2019M- 75). This audit report can be found at: https://www.osc.state.ny.us/localgov/audits/index.htm. 6 Of f ic e of t he New York State Comptroller

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Appendix B: Audit Methodology and Standards We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. To achieve the audit objective5 and obtain valid audit evidence, our audit procedures included the following: ll We interviewed Town officials and employees to gain an understanding of the policies and procedures in place over receipts for Woodlawn Beach State Park (Park) rental and entrance fee receipts. ll We reviewed daily gate summary reports for the entire population of entrance fee receipts for the 2017 and 2018 Park seasons for accuracy and completeness, comparing them to supporting gate detail reports, deposit slips, credit card settlement reports and bank statements. ll We reviewed a judgmental sample of 17 rental contracts for the Park from the 220 contracts issued during our audit period, totaling $93,000. Our sample consisted of the 17 contracts for which one or more payments were made in June 2018. These contracts were entered into during the 2017 season for the 2018, 2019, and 2020 seasons. We obtained copies of receipts for all payments made on these contracts to determine whether the correct rates were charged, collected and recorded. We conducted this performance audit in accordance with GAGAS (generally accepted government auditing standards). Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. Unless otherwise indicated in this report, samples for testing were selected based on professional judgment, as it was not the intent to project the results onto the entire population. Where applicable, information is presented concerning the value and/or size of the relevant population and the sample selected for examination. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of General Municipal Law. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make the CAP available for public review in the Town Clerk’s office. 5 We also issued a separate audit report, Town of Hamburg – Fuel Operations (2019-75). 8 Of f ic e of t he New York State Comptroller

Appendix C: Resources and Services Regional Office Directory www.osc.state.ny.us/localgov/regional_directory.pdf Cost-Saving Ideas – Resources, advice and assistance on cost-saving ideas www.osc.state.ny.us/localgov/costsavings/index.htm Fiscal Stress Monitoring – Resources for local government officials experiencing fiscal problems www.osc.state.ny.us/localgov/fiscalmonitoring/index.htm Local Government Management Guides – Series of publications that include technical information and suggested practices for local government management www.osc.state.ny.us/localgov/pubs/listacctg.htm#lgmg Planning and Budgeting Guides – Resources for developing multiyear financial, capital, strategic and other plans www.osc.state.ny.us/localgov/planbudget/index.htm Protecting Sensitive Data and Other Local Government Assets – A non- technical cybersecurity guide for local government leaders www.osc.state.ny.us/localgov/pubs/cyber-security-guide.pdf Required Reporting – Information and resources for reports and forms that are filed with the Office of the State Comptroller www.osc.state.ny.us/localgov/finreporting/index.htm Research Reports/Publications – Reports on major policy issues facing local governments and State policy-makers www.osc.state.ny.us/localgov/researchpubs/index.htm Training – Resources for local government officials on in-person and online training opportunities on a wide range of topics www.osc.state.ny.us/localgov/academy/index.htm Of f ic e of t he New York State Comptroller 9

Contact Office of the New York State Comptroller Division of Local Government and School Accountability 110 State Street, 12th Floor, Albany, New York 12236 Tel: (518) 474-4037 • Fax: (518) 486-6479 • Email: [email protected] www.osc.state.ny.us/localgov/index.htm Local Government and School Accountability Help Line: (866) 321-8503 BUFFALO REGIONAL OFFICE – Jeffrey D. Mazula, Chief Examiner 295 Main Street, Suite 1032 • Buffalo, New York 14203-2510 Tel (716) 847-3647 • Fax (716) 847-3643 • Email: [email protected] Serving: Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming counties Like us on Facebook at facebook.com/nyscomptroller Follow us on Twitter @nyscomptroller