State of Office of the State Comptroller Division of Management Audit and State Financial Services

OFFICE OF PARKS, RECREATION AND HISTORIC PRESERVATION

RIVERBANK

COMPLIANCE WITH MISSION STATEMENT AND SELECTED FINANCIAL MANAGEMENT PRACTICES

REPORT 99-S-35

H. Carl McCall Comptroller State of New York Office of the State Comptroller

Division of Management Audit and State Financial Services

Report 99-S-35

Ms. Bernadette Castro Commissioner NYS Office of Parks, Recreation and Historic Preservation Empire State Plaza, Agency Building #1 Albany, NY 12238

Dear Commissioner Castro:

The following is our audit report on compliance with mission requirements and selected financial management practices at Riverbank State Park.

The audit was performed pursuant to the State Comptroller’s authority as set forth in Article V, Section 1 of the State Constitution, and Article II, Section 8 of the State Finance Law. Major contributors to this report are listed in Appendix A.

August 31, 2000

OSC Management Audit reports can be accessed via the OSC Web Page : http://www.osc.state.ny.us. If you wish your name to be deleted from our mailing list or if your address has changed, contact the Management Audit Group at (518) 474-3271 or at the Office of the State Comptroller, Alfred E. Smith State Office Building, 13th Floor, Albany, NY 12236. Executive Summary Office of Parks, Recreation and Historic Preservation - Riverbank State Park Compliance with Mission Statement and Selected Financial Management Practices

Scope of Audit Riverbank State Park (Riverbank) is a 28-acre multilevel landscaped recreational facility located on the rooftop of the North River Water Pollution Control Plant (NRWPCP) at Riverside Drive between 137th and 145th Streets in West Harlem, . Opened in 1993, Riverbank is a year-round recreation-intensive park with indoor and outdoor facilities for swimming, skating, athletics, and field games. Other amenities include landscaped areas for picnics and other passive activities, as well as areas for indoor and outdoor cultural events.

Riverbank opened in 1993, at a cost of $129 million. Annual expenses and revenue are about $6.5 million and $500,000, respectively. These revenues are derived from admission and other fees generated through swimming, skating, athletic and cultural activities. In October 1999, Riverbank employed about 127 full-time employees and 97 seasonal staff.

Our audit addressed the following questions about Riverbank’s operations for the period April 1, 1997 through December 31, 1999:

! Has Riverbank fulfilled its mission and commitment to the local community?

! Does Riverbank have adequate internal controls over cash collection and the payroll and personnel functions?

Audit Observations Riverbank has generally fulfilled its mission by providing the facilities, and Conclusions amenities, and recreational activities outlined in the 1980 Facility Plan, which included diagrams, schematics, architectural drawings, a list of features that Riverbank should offer, and funding sources. We concluded that with few exceptions (e.g., the skating rink is not enclosed), the park was built in accordance with the Facility Plan and that it provides numerous activities and programs. One area of concern, however, is the restaurant, which is not in use. Riverbank officials estimate a cost of $1.8 million in improvements to make it more marketable. We recommend that Riverbank officials explore alternative use of this space or methods to finance the improvements. For example, the Office of Parks, Recreation and Historic Preservation (OPRHP) could explore relocating its regional office into rehabilitated space, could expand the fitness center or obtain a food service tenant who would pay for the capital improvements as part of a lease. Riverbank should revisit its mission statement and develop a new one that reflects goals specific to its operations. (See pp. 5-8)

Riverbank officials develop recreational courses based on the experience of staff. However, we determined that there were no summary reports about the courses such as number of persons enrolled, classes with low enrollment or revenues per class. As a result, management did not have information that could be used to analyze trends in attendance and revenue by program for future planning. Management also did not have reports on any input from community customers as to the activities/programs that were of interest to them. We recommend that management collect such statistics on an ongoing basis, consider community input and conduct a study to determine ways to increase public utilization and participation at the facility. A marketing plan should be developed and implemented using the results of the study. (See pp. 8-10)

We found that some of Riverbank’s control systems do not meet acceptable standards for internal controls over cash. For example, cashiers who receive cash receipts also cleared the register at the end of the day, recorded summary totals in the daily record and prepared and made bank deposits. Allowing these activities to be in the control of one person increases the opportunity and risk that funds could be diverted. The records maintained at Riverbank showed that staff do perform surprise cash counts, however, we have no assurance that all revenue is recorded and properly accounted for. We also noted that Riverbank had a $40,000 accounts receivable balance because officials allowed permit holders to use its facility prior to making payment. Riverbank needs to strengthen its internal controls related to the collection, recording and transmission of State revenues. (See pp. 13-16)

Finally, Riverbank management does not put concession services out to bid. Rather, they issue permits selectively to local vendors who operate the snack bar and food carts. OPRHP officials could not tell us how they arrived at their determination not to bid concessions or how they derived their current fee schedule. (See pp. 16-17)

Comments of We provided OPRHP officials draft copies of this report for their review and OPRHP Officials comment. They generally agreed with most of our conclusions and indicated that they will implement most of the recommendations. Contents

Introduction Background ...... 1 Audit Scope, Objectives, and Methodology ...... 2 Internal Control and Compliance Summary ...... 3 Comments of OPRHP Officials ...... 3 Mission Statement ...... 5 Compliance with Components of 1980 Facility Plan ...... 6 Mission Statement Recreational Activities/Programs ...... 8 Notification of Recreational Activities ...... 9 Facility Utilization ...... 10 Recommendations ...... 11 Cash Controls ...... 13 Internal Controls Revenue Office ...... 13 over Revenue Permits ...... 14 Registration Fees ...... 16 Concession Permits ...... 16 Recommendations ...... 17

Equipment/ ...... 19 Purchasing Recommendations ...... 20 Payroll Check Distribution ...... 21 Internal Controls Paycheck Count ...... 22 over Payroll and Time and Attendance Practices ...... 23 Overtime ...... 24 Personnel Functions Recommendations ...... 25

Exhibit A Riverbank Suggested Features

Exhibit B Design Modifications

Appendix A Major Contributors to This Report

Appendix B Comments of OPRHP Officials Introduction

Background Riverbank State Park (Riverbank) is a 28-acre multilevel landscaped recreational facility located on the rooftop of the North River Water Pollution Control Plant (NRWPCP) at Riverside Drive between 137th and 145th Streets in West Harlem, Manhattan. Riverbank is a year-round recreation-intensive park with indoor and outdoor facilities for swimming, skating, athletics, and field games. Other amenities include landscaped areas for picnics and other passive activities, as well as areas for indoor and outdoor cultural events.

With State support, (City) authorities decided in June of 1968 to locate the NRWPCP in West Harlem. The project was controversial from the start, as the choice of location engendered opposition and controversy that persist to this day. However, the City was obligated to comply with State and Federal water quality mandates, so the project was initiated. Because of the community’s intense concern about the siting of the Plant and the political strife that resulted, the State committed itself to participation in the development of a full-service, year-round park on top of the new facility. Governor Nelson Rockefeller formally proposed Riverbank as a State park project on August 29, 1969. In 1973, the State Legislature appropriated $24 million for construction, based on one of several proposals prepared during the 1970s. A 1979 Court-ordered decree set time frames for the park’s construction. Ultimately, after a year-long collaboration among representatives of the Office of Parks, Recreation and Historic Preservation (OPRHP), a consultant team, and a special community-based park study team, the 1980 Facility Plan (Plan) was issued, outlining the facilities and amenities to be built. At that time, the cost of developing the park was estimated at $100 million.

When Riverbank opened in 1993, it was estimated that the construction cost was $129 million (Federal, $24 million; State, $58 million; and City, $47 million).

At present, Riverbank generates revenue from several sources, primarily from admission and other fees generated through swimming, skating, athletic, and cultural activities. Riverbank incurs personal service and other-than- personal-service expenses to operate its facilities and related recreational activities. Its revenues and expenses have decreased from 1997-98 to 1998- 99, as follows: 1997-98 1998-99 Revenue $540,476 $492,488 Expenses $6,594,850 $6,477,104

The number of employees at Riverbank changes throughout the year, as the number of seasonal workers hired fluctuates to meet seasonal demands. In October 1999, Riverbank employed about 127 permanent and 97 seasonal employees, some of whom work just one day or weekends only. We note, in contrast, that the 1980 Facility Plan had estimated that Riverside’s operations would require approximately 90 permanent and 26 seasonal jobs.

Audit Scope, We audited compliance with mission requirements and selected financial Objectives, and management practices at Riverbank for the period of April 1, 1997 through December 31, 1999. The objectives of our program and financial-related Methodology audit were to determine whether Riverbank has complied with its mission and goals, including its commitment to the local community; whether its internal control structure is adequate, and whether it conducts its transactions related to payroll, personnel, revenue, and equipment inventory in a proper manner.

To accomplish these objectives, we reviewed the policies and procedures of OPRHP and Riverbank, reviewed applicable rules and regulations, interviewed OPRHP and Riverbank management and staff, and reviewed appropriate documentation.

We conducted our audit in accordance with generally accepted government auditing standards. Such standards require that we plan and perform our audit to adequately assess those operations of Riverbank which are included in our audit scope. These standards also require that we understand Riverbank’s internal control structure and its compliance with those laws, rules and regulations that are relevant to Riverbank’s operations included in our audit scope. An audit includes examining, on a test basis, evidence supporting transactions recorded in the accounting and operating records; and applying such other auditing procedures as we consider necessary in the circumstances. An audit also includes assessing the estimates, judgments and decisions made by management. We believe that our audit provides a reasonable basis for our findings, conclusions and recommendations.

We use a risk-based approach when selecting activities to be audited. This approach focuses our audit efforts on those operations that have been identified through a preliminary survey as having the greatest probability for needing improvement. Consequently, by design, finite audit resources are used to identify where and how improvements can be made. Thus, little audit effort is devoted to reviewing operations that may already be relatively

2 efficient or effective. As a result, our audit reports are prepared on an “exception basis.” This report, therefore, highlights those areas needing improvement and does not address activities that may be functioning properly.

Internal Control Our consideration of Riverbank’s internal control structure was limited to and Compliance selected cash, payroll, and equipment/purchasing functions. We identified Summary weaknesses in cash collection and paycheck distribution practices.

Comments of We provided OPRHP officials with a draft copy of this report for their OPRHP Officials review and comment. They generally agreed with most of our conclusions and indicated that they would implement most of the recommendations. Their comments were considered in preparing this final report and are included, in their entirety, as Appendix B.

Within 90 days after final release of this report, as required by Section 170 of the Executive Law, the Commissioner of the Office of Parks, Recreation and Historic Preservation shall report to the Governor, the State Comptroller, and the leaders of the Legislature and fiscal committees, advising what steps were taken to implement the recommendations contained herein and where recommendations were not implemented, the reasons therefor.

3 4 Compliance with Mission Statement

Mission Statement The adoption of a mission statement and related goals is an important step in defining the purpose and direction of any organization. The exercise of developing such a statement enables an entity to measure its achievements and the level of success it has had in fulfilling its responsibilities. In its seasonal brochure, Riverbank includes the following mission statement:

New York State Parks is committed to delivering the highest quality of programs and organized activities, including the use of both indoor and outdoor facilities to the entire New York community, with special emphasis on cultural organizations, youth groups, senior citizens, the physically challenged, toddlers and their parents.

Riverbank is a unique and complex facility that is opened year-round. Functioning more like a community center than other parks in the State, it accounts for 70 percent of the OPRHP’s expenses and revenues in the New York City Region, which includes all five boroughs. OPRHP reported the following expenses and revenue totals:

Category 1997-98 1998-99 Expenses: Riverbank $6,594,850 $6,477,104 NYC Region 9,403,652 9,241,942 Riverbank/NYC Percentage 70% 70% Revenue: Riverbank $540,476 $492,488 NYC Region 705,289 707,176 Riverbank/NYC Percentage 77% 70%

Note: Regional State parks in New York City include Riverbank (Manhattan), Roberto Clemente (Bronx), Empire Fulton (), Gantry Plaza (), Clay Pits (), and Bayswater Point State Park (Queens).

OPRHP recently reported declines in yearly attendance figures for Riverbank – from 4,656,780 in fiscal year 1997-98 to 3,264,954 in fiscal year 1998-99. Nevertheless, Riverbank is still a large operation, with attendance of more than 3 million each year. We found that Riverbank has generally complied with its mission statement, providing the intended facilities, amenities, and recreational activities as

5 outlined in the 1980 Facility Plan. We also found, however, that Riverbank needs to provide the public with more timely notification concerning the recreational activities/programs that are available at the park, and should conduct a study to determine ways to increase public utilization and participation at the facility. We believe Riverbank should revisit its mission statement and develop a new one that reflects goals specific to its operations. These goals could then be translated into a marketing plan with specific achievable objectives in terms of service to the community and cost-effective operations.

In addition, because of its uniqueness, Riverbank should have a detailed expense report. Annually, the New York City Region is allocated funds to cover the hiring of temporary (seasonal) workers, the purchase of non- personal services e.g., (gasoline, utilities, supplies) and the payment of overtime/holiday pay. The New York City regional office determines how these funds are distributed among the various State park facilities in the City, with separate allocations for equipment and capital improvements. A separate accounting for expenses would provide stronger control, monitoring, and oversight of the activities at Riverbank, as well as more accountability to the community it was designed to serve.

Components of The creation of Riverbank was governed by the Facility Plan, approved on 1980 Facility Plan September 19, 1980, by the New York State Department of Environmental Conservation in its role as grant administrator for the U.S. Environmental Protection Agency (EPA). The budget accompanying the Plan was developed through a complicated agreement with EPA, the New York State Department Environmental Conservation (DEC), and the City. At that point, EPA agreed to fund the “aesthetic treatment component” based on cost estimates that escalated continuously right up to the actual date of construction. According to the Plan, the project would be financed through a multi-source grant of $27 million (EPA, 75 percent; the Pure Waters Bond, 15 percent; and the City, 10 percent). The value of this grant escalated over the next five years to $42 million, but then policy changes severely reduced the availability of Federal funds. Not only was the Federal contribution capped at $31.8 million in 1985, the State’s initial 1973 appropriation of $24 million remained the same.

When the City and State signed an agreement on construction of the facility on August 6, 1986, they agreed that a value engineering study should be conducted by an independent team of consultants specializing in cost-reduction reviews. In June 1988, such a team submitted a revised Plan to the New York State Office of General Services (OGS), with final costs estimated at more than $146 million.

The Plan includes discussions about the quality of the park; and provides diagrams, schematics, and architects’ renderings of the proposed facility and

6 its amenities as well as some suggested recreational programs. Working with a subcommittee of the Riverbank State Park Study Committee, OPRHP developed an extensive list of suggested features Riverbank should offer the neighborhood. (See Exhibit A.)

Towards the end of the Riverbank construction, OPRHP added a carousel to the park’s features, even though it was not part of the Plan.

To determine whether Riverbank has complied with its public commitment, we looked at various Riverbank documents such as a court decree, the Plan, summary of the value-engineering modifications, public hearing testimony and correspondence during the life of the project. We also spoke to individuals overseeing the construction of the park. We conclude that, in general, the park has been built in accordance with the Plan and subsequent value- engineering changes. In November 1996, OGS officials also responded to questions regarding the planning and construction of Riverbank, indicating that each of the structures the Plan called for had been built and is being utilized.

Alarmed by the projected costs of the facility, OPRHP, OGS, Division of the Budget (DOB), and DEC met to discuss construction of the park as outlined in the Plan but without relying on increased funding by the State. In the interest of controlling costs and moving ahead with construction, DOB directed OGS to assume total project responsibility. Meanwhile, the consultant team undertook another value-engineering effort with an eye to reducing costs. The team’s proposal, completed in early 1989, recommended design modifications with estimated cost reductions totaling $15.2 million. (See Exhibit B.)

In response to concerns about changes in the Plan, government officials held a series of meetings with the local community board in May and June 1989, culminating with a public hearing at which members of the public stated their opposition to any reductions in the facility’s features. In fact, community representatives argued that additional amenities should be included. While opposing any cutback in programs or features, other speakers favored pressing forward with the project to prevent further escalation of cost. Despite public comments that opposed changes or reductions, the final, modified, plan - a process for moving ahead - was dictated and a Special Master (Judge) was assigned to monitor the project.

Although the original plan called for an enclosed skating rink, the rink was constructed with a roof but without side enclosures. As a result, the rink, which is a primary potential source of revenue at Riverbank, is closed frequently because the sun melts ice from the southern exposure and the area is impacted by severe weather conditions. We believe management needs

7 to take corrective action to fulfill the original intent of the 1980 Facility Plan and to increase utilization and collection of potential revenues. If complete enclosure is still too costly, OPRHP should explore other cost-effective alternatives that could protect the area from the cold, wind, rain, and sun.

The restaurant is 6,935 square feet and has a dining capacity of 145. There were three attempts at operating a restaurant in March 1993 that lasted until March 1995; then August 1995 and finally in April 1996. It has been vacant since 1996. Riverbank officials told us that to make the restaurant more marketable, they must expand the kitchen and dining space at a projected cost of $1.8 million. We question this plan based on their previous experience with unsuccessful attempts to operate a full-scale restaurant. In addition, even after improvements are made there would still be a lack of parking in the area that would clearly have a negative impact on the success of any future restaurant. Instead, Riverbank may wish to consider other alternative financing or uses for the space. For example, they could consider expanding the fitness facility; relocating the administrative offices; or obtaining a food service tenant who would pay for the capital improvements as part of a lease. We also note that OPRHP is considering the construction of a new regional office on the Riverbank site at a cost of $2.7 million. Taken together, these alternatives could result in cost savings. If the choice were to use the space to expand the fitness program this would serve the community because in fiscal 1998-99 membership of this program was cut in half due to overcrowding caused by a lack of space at the current location of the fitness facility. This reduced fiscal year 1998-99 revenues by about $43,000. Riverbank management agreed that alternative use of the restaurant space should be considered. We believe that OPRHP management should evaluate and document the results of the various options to determine the best use of the space.

Recreational Riverbank offers a variety of programs and activities to the general public, Activities/Programs who pay nominal fees to participate. As indicated in the Plan, there are scheduled activities specifically related to each structure, as well as recre- ational programs for individuals of all ages and needs, including senior citizens, the handicapped, pre-schoolers, teenagers, and adults. Classes usually meet once a week for a period of one to three months.

According to Riverbank officials, the choice of activities is made by the staff based on their experience, and has been refined over the years. Offered in the 1999-00 fall-winter schedule are; aquatics — including water exercises and synchronized swimming; sports/athletics — including gymnastics, basketball, baseball, fencing, and volleyball; cultural activities such as dance, visual arts, and ballet; and ice skating. In addition, the schedule of recreational classes

8 is enhanced with Riverbank’s special events and a monthly cultural series that involves a children’s performing art series, movie nights, senior socials, and concerts.

Notification of To maximize the public’s participation in its recreational activities, Riverbank should distribute program information by either mail or by other means. At Recreational present, the public can obtain program information in Riverbank’s lobby; by Activities calling its telephone answering tapes; or by watching a weekly cable television program produced by Riverbank. We found that Riverbank officials need to do a better job of distributing their brochures more widely. To make sure the public knows what Riverbank has to offer in time to participate, officials should issue them timely and use its mailing lists for local community groups, libraries, churches, schools, colleges, Young Mens Christian Association and Hebrew Association, as well as the separate mailing lists maintained by Riverbank’s cultural and skating departments.

Although Riverbank lists many activities in its seasonal brochure, the publication is not always prepared and distributed to the community in a timely manner. At times, because it is finalized late, it is not mailed at all. In these instances, to obtain a copy in time to register for an activity, one must go in person to the facility and pick it up there. Riverbank officials acknowledge that such brief notice leaves little time for individuals, families, or groups to properly plan and coordinate their participation in the activities they care about. To help alleviate this problem, Riverbank could make brochures available at the booth of the entrance to the park, or distribute packets of brochures to organized groups in the service area. A public information effort could be made through the Internet if the facility developed its own web site and then alerted teachers, librarians, etc., so they could encourage both adults and children to use the site through their public- access computers. A well-maintained site could be updated with less effort and expense than a printed brochure.

Facility Utilization It is possible that the more people know about Riverbank programs, the more they will participate in them. To determine the level of recent participation, we analyzed the fall/winter 1999 activities brochure, observed some classes in progress, and reviewed available attendance records to collect data for the following table:

9 Number of Number of Classes with Classes with Total Registration Registration of Fall/Winter 1999 Classes of 10 or less more than 10

Aquatics 31 16 15

Cultural 37 22 15

Athletic 34 10 24

Skating 5 4 1

We were able to collect the data displayed in the table only by examining various Riverbank records such as ledgers, books, and loose sheets of paper. Riverbank officials do not require a regular summary of this type of information; thus management does not receive periodic summary reports that could be used to analyze trends in either attendance or revenue by source or program.

Although various factors are involved in attendance, Riverbank needs to determine what it can do to achieve full participation. (Both maximum and minimum attendance levels should be set for each activity and each class.) For example, a comprehensive study could be conducted to determine which programs and schedules are preferred by the community the facility was intended to serve. Studies should be conducted periodically to ensure that changing community needs and choices are met. Program managers should meet regularly with residents of the area to discuss recreational activities and solicit ideas for new programs.

Riverbank officials have indicated that they hope to develop more programs, activities, and events, possibly forming leagues for certain sports. Recently, discussions have been held regarding the establishment of a junior hockey league, a gymnastics program, and canoe instruction. Riverbank should ensure that the community customers have some input in these decisions.

10 Recommendations

1. Expand or refine the current mission statement so that it is more specific to Riverbank’s operations.

(OPRHP officials replied to our draft report that they plan to meet with the public to review the current mission statement.)

2. Evaluate options and document the results for using the restaurant space and for enclosing the skating rink.

(Responding to our draft report, OPRHP officials have agreed to explore alternatives to enhance the operations of the skating rink. They also intend to meet with a delegation of local officials to resolve issues regarding the restaurant.)

3. Improve outreach and distribution efforts to inform the residents of Riverbank’s service area more timely and effectively about programs and activities at the park, such as making registration materials available at the 145th Street entrance to the park and establishing a New York State Office of Parks, Recreation and Historic Preservation web site for Riverbank.

(OPRHP replied to our draft report that Riverbank now offers brochures and schedules at the 138th and 145th Street entrances, and has a web page.)

4. Develop periodic summary reports that show levels of attendance and revenues by both program and activity.

(OPRHP officials replied to our draft that beginning in April 2000, Riverbank’s information system began providing summary information.)

5. Conduct a study to determine ways to increase public utilization and participation in activities and programs at the facility. The study should include an analysis of the most popular activities and programs. Document and use the results to develop a marketing plan for programs that incorporate the interests of the community served by Riverbank.

11 Recommendations (Cont’d)

6. Establish a separate expense report for Riverbank.

(OPRHP officials replied to our draft report that they will use OSC’s Central Accounting System as their expense report in lieu of establishing their own report.)

12 Internal Controls over Revenue

Cash Controls Riverbank collects fees generated through group permits, program registra- tions, and other uses of the facility’s resources. These fees are usually nominal charges intended to partially offset the cost of operations. Senior citizens and the physically-challenged participants are not charged. The following is a breakdown of Riverbank’s receipts for the two years ended March 31, 1999:

FY 1997-1998 FY 1998-1999

Ice/Roller Rink $180,743 $181,224

Other Fees 168,035 162,756

Swimming Pool 93,962 96,658

Fitness Center 86,775 43,100

Concessions 10,961 8,750

Total $540,476 $492,488

Attendance and corresponding revenue dropped at the Fitness Center during this period because some of the users complained that the fitness room was overcrowded at certain hours. In response, the interim Park Director decided that the number of individuals authorized to use that room would be reduced by 50 percent in the next registration period.

Revenue Office Strict controls over cash are essential for the protection of State resources. Organizations that handle cash should establish practices and procedures that will enable them to avoid losses and establish accountability for the funds. Cashiers should record cash receipts immediately, and should have no other cash-recording duties or access to the accounting records. Without this critical separation, funds could be diverted illegally and the records adjusted to cover any misappropriation.

We found a lack of separation of cash-handling duties in Riverbank’s Revenue Office, which employs three cashiers, two calculation clerks, and a Principal Account Clerk (supervisor) — all of whom collect cash, and post and maintain records. The cashiers count cash, thus performing a control measure that should be performed by employees other than cashiers. We also observed that the Principal Account Clerk and other clerks working in this office frequently perform a variety of overlapping duties: they receive cash, issue program registration cards, record receipts on the cash register,

13 clear the register at the end of the shift, record summary totals in the daily record, prepare and transmit revenue reports to OPRHP’s Central Office, and prepare and make bank deposits. Although the records Riverbank maintains indicates that Riverbank staff do perform surprise cash counts, we have no assurance that all revenue is recorded and accounted for properly.

Permits Organized groups of 15 or more individuals can reserve all or part of a specific facility at Riverbank if they complete a permit application and apply for the permit at least two weeks prior to the event. Riverbank’s manage- ment reviews the application and determines the fee based on rate informa- tion provided by OPRHP. Organizations can also request a Park Use Permit by completing and submitting a permit application 90 days before the date of the event, and paying a $25 permit-processing fee, in addition to the fee. OPRHP requires that all fees be paid before the event occurs. Yet at the end of the 1998-99 ice-skating season, accounts receivable of about $39,000 were owed by groups that had been permitted to use the rink for their own events but had not been required to pay all of the fees in advance. (These fees were for the second half of the hockey season and were collected at the end of the season.)

We found that Riverbank has poor internal controls over its permit issuance process. Not only does it not use press-numbered receipts; until recently, the managers were issuing permits for use of their own part of the complex (e.g., athletic, skating, aquatics) and collecting the revenues themselves. Since March 1999, the skating rink manager and the Permit Office are authorized to issue permits. This problem could be alleviated if Riverbank established one cash collection site.

Riverbank’s management does not have an accounts receivable policy for permits; however, it allowed permit holders to use the facility even if they have not paid all fees in advance. Thus, Riverbank had an accounts receivable balance as of October 21, 1999 of $40,000. In 1998, the Riverbank Revenue Office started using a permit ledger book that indicates the amount charged for each permit and the payment received. We reviewed the records to determine whether the balances were correct. After we made adjust- ments to the accounts for unrecorded receipts that we identified, we determined that 25 accounts were responsible for the $40,000 receivable balance. We sent accounts receivable confirmations to the 14 organizations responsible for 14 of these accounts, with total receivables of $32,147. (We did not send confirmations to the remaining 11 organizations either because the files were unavailable, or because we considered the amounts of the receivables to be immaterial.) We received responses from 6 of the 14 organizations; 2 of them agreed that they owed the amount indicated, and 4 others indicated the amounts were incorrect. We referred one of the organizations to the Permit Office. Riverbank eventually received the full

14 amount due — $7,404 — approximately 17 months after the group’s event had occurred. Four of the organizations we contacted indicated that they did not owe their share of $4,780 as indicated on Riverbank’s records. Neither OPRHP’s Central Office nor Riverbank employees regularly sent billings, issued monthly statements, or made telephone calls. Perhaps if Riverbank established an accounts receivable policy, attempting to collect outstanding balances would be more structured, documented, and successful.

We also reviewed Riverbank’s records concerning 152 permits issued during the fiscal year ended March 31, 1999. Riverbank’s management could not provide us with copies of 13 of these permits, and there was no information for 6 of the numbers in the 152-number sequence. Riverbank management explained that these numbers may not have been used or that they might have been voided. There were no invoices for 65 of the permits, but Riverbank officials told us that before March 1999 the Permit Office did not issue these invoices. Without an invoice or a signed contract, no determination can be made about whether there should have been a charge for facility use or the amount charged was correct. It also was not possible to determine how much the fees should have been because the file contained insufficient information. As a result, Riverbank may not have collected all of the revenues that it could have for the use of its facilities. These revenues represent an offset of Riverbank’s operating costs.

In 11 instances, the records indicate that the Revenue Office received the processing fees after the events occurred; in 3 other cases, the permits were issued after the events occurred; and, in 4 cases, permit fees totaling $2,450 were not deposited for an average of 157 days after the dates the checks were received. In addition, in one case, an organization obtained a permit to hold an event at Riverbank on July 3, 1999. The total costs associated with this permit were $5,313. The organization issued several checks on July 2 in partial payment of the charges; and on July 3, the date of the event, the Revenue Office issued a receipt for $273, representing charges for the non- refundable park use permit fee and rental of a sound system and chairs. However, the Revenue Office did not send two checks dated July 2, 1999 — one in the amount of $4,800 for police overtime and the other for $160 to compensate two technicians — to the OPRHP office in Albany until October 5, 1999, which in turn did not process the checks until January 31, 2000. Revenue collections should be processed promptly, both to reduce the risk of theft or loss and to allow checks to clear quickly so the funds can be used.

Registration Fees Riverbank accepts registrations four times a year for its programs and activities. Participants usually pay a nominal registration fee for each program or activity, ranging from $10 to $50. In addition, Riverbank patrons must pay a $5 charge for an annual photo I.D. registration card, which can be produced with the applicant’s own photos or with photos taken on the

15 premises for a nominal charge. Applicants must complete a registration form, submit two photos, and remit the registration fee plus the activity fee in cash, certified check, money order, or credit card. Personal checks are not accepted.

We observed a lack of separation of duties in the Revenue Office during the registration of late applicants for activities. During this period, the same Revenue Office employee who registered the late applicants, collected and recorded fees and maintained the records. We found there are no written procedures for the registration process. Also, the Revenue Office does not maintain logs, and does not record the issuance of the program registration cards in numerical order.

Concession Permits Riverbank also issues permits to vendors who operate the two snack bars and six food carts that sell ice cream, hot dogs, etc., at the park. For fiscal year 1998-99, one snack bar vendor contracted to pay $4,500 per year for the concession right; the other was supposed to pay an annual fee of $4,000. Each cart vendor was expected to pay $2,500 for the right to operate at Riverbank between June 1, 1999 and September 30, 1999. OPRHP officials could not tell us how they arrived at any of these contract fees. For the two fiscal years ended March 31, 1999, plus the nine months ended December 31, 1999, Riverbank received the following permit revenues from its food- related concessions:

FY 1997-1998 FY 1998-1999 4/1-12/31/99

Snack Bars $ 3,375 $-0- $ 6,500

Food Carts $15,000 $10,000 $15,000

Total $18,375 $10,000 $21,500

For the fiscal year ended March 31, 1999, concession contracts were in force for four carts. Riverbank had let a contract to a vendor who was to operate a snack bar in exchange for the payment of $4,000 during the four- month period June 1, 1999 to September 30, 1999. However, the vendor had paid only $2,000 as of December 31, 1999.

Riverbank officials told us that the same snack bar concessionaire had operated near the skating rink since 1994. However, they could not provide us with a contract for fiscal 1998-99; they said the concession was closed for that period. Although some of the cart vendors renew their permits each year, management does not put the contracts out for bid or advertise their availability. This process does not allow for competition among the vendors. We believe that all concession contracts should be awarded in a manner

16 which fosters competition, such as an RFP or bid to obtain the best combination of a good operator and a reasonable fee.

Recommendations

7. Implement internal controls over cash receipts, providing for adequate separation of duties in the handling of cash receipts, bank deposits, record-keeping, and registration cards.

8. Establish one cash collection site whereby numbered cash receipts will be recorded and distributed for all cash collected.

(OPRHP officials indicated in response to our draft report that they have established a central cashier location for collecting cash, thus eliminating the need for Revenue Office employees to handle cash.)

9. Establish an accounts receivable policy so that attempting to collect outstanding balances is uniform and documented.

(In reply to our draft report, OPRHP officials stated that the agency policy is that fees are due upon service delivery. They also indicated that they are in the process of correcting the practice where certain organizations were allowed to “settle-up” on fees outstanding after the permitted event or activity without establishing accounts receivable procedures. In addition, they intend to develop a new accounts receivable process.)

17 Recommendations (Cont’d)

10. Reconcile the accounts receivable ledger balances to permits issued and cash receipts. Collect all outstanding balances.

(OPRHP officials replied to our draft report that Riverbank updated its records which now indicate an accounts receivable balance of $3,657, which they are in the process of collecting.)

11. Recommendation deleted.

12. Revise the process used to award concession contracts using a method such as RFP or open bid which fosters competition and may obtain better prices for the concessions. Advertise the availability of these concession contracts.

(OPRHP officials replied to our draft report that permits were advertised locally and awarded by lottery, in response to community concerns for local economic opportunity.)

Auditors’ Comments: We continue to believe that the effort to address the “concerns for local opportunity” does not exclude the use of contracting methods that foster competition. As a result, OPRHP officials should make every effort to address both issues for their concession contracts.

18 Equipment/Purchasing

According to the New York State Accounting System User Procedure Manual (Manual), Volume XI, Section 3.0400, the fundamental objectives of a system of equipment controls are to provide a safeguard against loss and to facilitate effective utilization, including the determination of need and identification of surplus. All items of equipment to be brought under control are supposed to be identified by a serial number affixed to each item. Equipment control records should be maintained for each item of equipment identified by a serial number, and a property control manager should take periodic physical inventories of the equipment assigned to each location.

The Manual also contains guidelines for the assignment of responsibility for its equipment control system, valuation of equipment, and basic records prescribed for an equipment inventory system. In addition, the Manual’s guidelines addressing equipment security should be incorporated into an agency’s own public safety or building security manuals, and should include provisions for employing special precautions such as lock-down pads for securing valuable portable equipment — e.g., microcomputers, or video equipment.

In 1991, the Office of General Services purchased $4.7 million of equipment and furniture on behalf of Riverbank. Although some of these items (lockers, water fountains) were permanently secured, as of October 31, 1999, Riverbank has yet to establish controls over some of these items. It has not prepared a master inventory list of equipment items. Although Riverbank does not take periodic physical inventories of all equipment items, it has inventoried Park Police equipment, motor equipment, and computers.

Using the list of computers being used at the Riverbank, we selected ten pieces of equipment, as well as five of the mobile machines (e.g., scooters), and tried to locate them. We found or accounted for all of the items, but we noted that a tag indicating ownership had not been attached to one of the monitors and two of the monitors’ tag numbers had been recorded incor- rectly. During our verification, we identified two additional computers that were not on Riverbank’s list.

We found three television sets that Riverbank received in April 1998 for a program that never started. They had not yet been tagged to indicate ownership and were still in the original packing.

19 Recommendations

13. Establish a comprehensive inventory system that includes but is not limited to:

! developing a master inventory list of equipment items,

! taking periodic physical inventories of equipment items, and

! designating a property control manager.

14. Enforce the requirement that identifying tags are to be attached to all equipment items.

20 Internal Controls over Payroll and Personnel Functions

Riverbank has 127 full-time employees and 97 seasonal employees. Personal service costs for the 1997-98 and 1998-99 fiscal years were $5.4 million and $5.5 million, respectively. To determine the effectiveness of Riverbank’s payroll practices, we interviewed officials and staff, observed paycheck distribution procedures, conducted floorchecks, and reviewed time and attendance records and overtime. We found that Riverbank needs to improve its internal controls over payroll check distribution, time and attendance practices, payroll changes, and overtime. As Riverbank does not have its own Personnel Department, personnel matters are handled by OPRHP’s New York City regional administrative staff, whose headquarters are located at Riverbank.

Payroll Check Proper internal control procedures require that paychecks be distributed by Distribution a Business Office employee not otherwise connected with any steps of the payroll process. This would satisfy the internal control requirement that employees responsible for processing payroll information do not have access to the payroll checks.

At Riverbank, the paycheck distribution is the responsibility of the Regional Personnel Department (Personnel). Personnel staff receive the paychecks from OPRHP’s Central Office in Albany and sort them according to departments and the other City parks. These employees also process information that places employees either on or off the payroll. Although we did not find any such occurrences, it would be possible for them to put a fictitious person on the payroll, then remove the paycheck during the sorting process.

Riverbank employees’ time and attendance records are approved by their respective department manager. After the initial sorting, paychecks are sent to each department manager or representative for distribution to the individual employees. This practice is in direct violation of the Manual, which requires that paychecks be distributed by someone who is not responsible for time and attendance reporting.

Department managers sign for a total number of checks rather than a list that indicates whose paychecks they are receiving. They also receive a Check Sort Sheet that lists the names and item numbers of the employees in their department. Upon distribution of the checks to their staff, department managers will have employees sign this Check Sort Sheet next to their

21 preprinted names, acknowledging that they have received their paychecks. All departments are to return their signed sheets to the Personnel office, where they are gathered together and placed loosely in folders without any apparent order — filed neither by department nor period. We also noted that the employee names listed on the sheet are not updated regularly, and usually do not reconcile to the number of checks picked up by the department manager.

Checks that were not distributed are to be returned to the Revenue Depart- ment for placement in the safe. OPRHP policy is to return any undistributed checks to the Central Office two weeks after the check issuance date. Checks still unclaimed at the end of 30 days must be returned to the New York State Department of Taxation and Finance, Division of the Treasury.

We found that Riverbank had held paychecks for 4 individuals beyond the 30- day period. One of the four individuals resigned, but continued to receive paychecks. Even though this employee had been terminated as of July 2, 1999, his supervisor had failed to notify the Personnel Department. He remained on the payroll through November 10, receiving nine paychecks, valued at a total of $11,561, beyond his resignation date. The employee returned four checks totaling $5,695, and was entitled to a lump sum distribution of $3,443 for his accrued leave time. Thus, he had received $2,423 to which he was not entitled.

In addition, we noted that one employee whose last work day was July 7, 1999, had been allowed to use his combined leave time (sick, personal, and vacation days) until August 17. By doing so, he was able to reach his anniversary date of August 11, and thus accrue an additional 40 hours each of vacation leave and personal leave. He then charged his replenished 40 hours immediately, on the days of August 13 to 16.

We used a software program to determine the status of employees’ social security numbers, and found that an inactive social security number was on file for one employee. We shared the details of this finding with Riverbank officials, and asked them to look into the matter.

Paycheck Count We counted the number of paychecks received by Riverbank employees on October 26, 1999; and reconciled the total to the Check Advice Sheet. We had counted 301 checks, but 303 employees’ names were listed on the sheet. Two of the 303 employees whose names were listed on the sheet apparently did not belong on this payroll; there were no paychecks for them. Because one of these individuals works at in Nassau County and the other works at Fahnestock State Park in Putnam County, they should not have been on the New York City regional payroll.

22 We also found two paychecks for two employees not listed on the New York City regional Check Advice List. They work out of the OPRHP’s main office in Albany, but their checks were available for distribution because they were stationed at sites in the City (one at Riverbank and the other in an OPRHP office in lower Manhattan).

The Check Advice Sheet accompanying this group of paychecks was prepared for the New York City region; the employee names on the list are not grouped according to the specific parks to which they are assigned. We were told that the Regional Personnel Office employees who need to refer to the list are familiar with the names, and know where each person works. However, Personnel could not provide documentation that would identify the work assignment of each person named on the list. Consequently, we performed site visits (floorchecks), to verify that all of the employees named did exist and were on the job. Our visits included the other parks and offices in the region (Roberto Clemente, Gantry Plaza, Clay Pit Ponds, etc.), and located all of the employees whose names appeared on the list.

Time and According to the Manual, accurate reporting of employee attendance is a Attendance supervisory function. The supervisor is responsible for certifying the accuracy of each employee’s claimed work hours before submitting the Practices record to the Personnel office. Properly performed, this practice will prevent or detect abuses.

All employees are required to sign in and out each day, including their lunch break. Their immediate supervisors are responsible for certifying and signing each employee’s Accrual Time Record (time sheet), then forwarding it to Personnel. We found that required time and attendance procedures were not being followed in all instances.

We found that paychecks were distributed to employees regardless of whether their corresponding time sheets were submitted to either the Regional and Central offices. For the period ended September 29, 1999, we found that 14 employees’ time sheets had still not been submitted by October 13. Twelve of the 14 employees received their paychecks; the other two checks were made out to employees who no longer worked for Riverbank and were payments other than salary.

Our December 6, 1999, review of the Regional Office’s list of outstanding time sheets indicated that many time sheets had not been submitted, as indicated in the following table:

23 Number of Employees Time Sheets Time Period Ended Not Submitted August 4, 1999 18 September 1, 1999 5 September 29, 1999 2 October 27, 1999 26

The failure to submit time sheets timely increases the risk of inaccurate reporting and improper time charges, as well as the risk that employees will be paid for work they did not do.

Overtime Overtime is assigned at the discretion of the immediate supervisor and must be approved by the Regional Deputy Director before payment is made. Overtime hours are submitted biweekly to the Central Office on a form known as FIN 100. Seasonal overtime hours are entered directly into the Human Resources Information System at the Regional level. We were told that supervisors are responsible for reconciling overtime hours that are reflected on an employee’s time sheet against hours submitted on a FIN 100.

Riverbank has incurred overtime expenses as follows:

Overtime FY 1997-98 FY 1998-99 Regular $282,780 $314,660 Temporary/Seasonal 23,786 43,086 Total $306,566 $357,746

We selected a judgmental sample of 15 of 209 employees who had incurred overtime from November 1998 to November 1999. Their total overtime earnings for this period ranged from $2,208 to $24,716. We selected a pay period for each employee to verify that the overtime had been necessary and had been authorized properly; and that it reconciled with the employee’s time sheet. Reviewing the FIN 100 form submitted for each of the 15 employees, we noted:

! No Regional approval for six, four of whom were park police;

! No supervisory approval for four of the employees, three of whom were park police; and

24 ! No reason indicated for overtime for ten of the employees. Five of these were members of the park police.

Riverbank officials explained that the Park Police Department (Department) had been reorganized to report to a Director of Law Enforcement, rather than to the Regional Director. The Department does maintain its own records that reflect approvals and the reasons for overtime. Riverbank administration subsequently obtained these records of the remaining four employees and found that approvals and reasons had been listed appropriately for all of them.

We also compared each employee’s time sheet with the FIN 100 and found discrepancies in the amount of overtime hours. More time had been recorded on the FIN 100 filed for four of the employees than was recorded on their time sheets. In contrast, less time had been recorded on the FIN 100 filed for three other employees than was recorded on their time sheets.

Recommendations

15. Assign the duties of sorting and distributing payroll checks to employees who are not involved in the payroll process.

16. Enforce the requirement that departments return undistributed paychecks promptly to the Payroll Office. Return payroll checks that are more than 30 days old to the New York State Department of Taxation and Finance.

17. Promptly remove the names of terminated employees from the payroll.

18. Recoup the overpayment cited in this report.

(OPRHP officials replied to our draft that this overpayment is being recouped.)

25 Recommendations (Cont’d)

19. Remove from the New York City regional payroll the names of employees who do not work in the region.

(Responding to our draft report, OPRHP officials advised that they are correcting the situation.)

20. Enforce the requirement that time sheets be submitted timely.

21. Enforce the requirements that all overtime be necessary and properly authorized, and that the reasons for the overtime be indicated on the FIN 100. Reconcile the numbers of hours reported on employees’ time sheets and the FIN 100 forms.

26 RIVERBANK SUGGESTED FEATURES

1) Swimming Pools 2) Multi-Purpose Gym/Athletic Building 3) Ice/Roller Skating Rink 4) Multi-Purpose Cultural Building 5) Restaurant 6) Pedestrian Entrance — 137th Street 7) Court Games 8) Ball Fields 9) Water Play Area 10) Track and Field Surfaces 11) Amphitheater 12) Courtyard 13) Picnic Area 14) Boat-Launching/Fishing Pier, Accommodations for Transient Boats 15) Promenade 16) Vehicular/Pedestrian Entrance — 145th Street

Exhibit A DESIGN MODIFICATIONS

A) Skating Rink: Defer the construction of the roof enclosure. Support structure will remain.

B) Roof Redesign: Eliminate roof trusses, translucent skylights, and motorized shades. Substitute flat roof on long-span steel joists. Provide pyramidal skylights at corners.

C) Wall System Redesign: Substitute with horizontal ribbed steel panels.

D) Landscaping: Eliminate trellises and re-program landscaping on a phased-growth basis.

E) Bleachers: Reduce by approximately 30 percent around corners of playing fields.

F) Elevated Enclosed Replace with a covered breezeway between athletic building and swimming pool Walkway: complex.

G) Exterior Raised Deck: Reduce area of raised deck outside swimming pool complex, increase grass area.

H) Amphitheater: Replace structure with a stepped amphitheater and landscaped lawn area.

Exhibit B Major Contributors to This Report

Frank Houston Carmen Maldonado Dominick Vanacore John Gimberlein David Louie Harry Maher Marie Farrington Mostafa Kamal Gennaro Petillo James Pugliese Huang Zhang Marticia Madory

Appendix A Appendix B B-2 B-3 B-4 B-5 * Note

*This recommendation was deleted based on OPRHP’s reply to our draft report.

B-6 B-7 B-8