BOARD OF SUPERVISORS

BUDGET ANALYST

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642

FAX (415) 252-0461

May 12, 2008

Honorable Jake McGoldrick, Chair, Budget and Finance Committee
and Members of the Board of Supervisors
City and County of San Francisco
Room 244, City Hall
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102-4689

Dear Supervisor McGoldrick and Members of the Board of Supervisors:

The Budget Analyst is pleased to submit this Audit of the Recreation and Park Department's Cash Handling Practices, which was conducted by the Budget Analyst, pursuant to the Board of Supervisors powers of inquiry as defined in Charter Section 16.114. The purpose of this follow-up audit regarding cash handling within the Recreation and Park Department has been to (i) determine the extent to which the Department has implemented the cash handling recommendations of the 2006 Recreation and Park Department Audit Report conducted by the Office of the Budget Analyst, and (ii) examine, evaluate, and report any additional cash handling shortcomings or deficiencies disclosed during the course of this follow-up audit.

This follow-up audit was conducted in accordance with Governmental Auditing Standards, July 2007 Revision, issued by the Comptroller General of the United States, U.S. Government Accountability Office. The audit staff presented draft report findings and recommendations to the Recreation and Park Department on April 8, 2008. Subsequent to careful consideration of the additional information provided by the Department after submission of our draft report findings and recommendations, the audit staff prepared the final report. The Recreation and Park Department has provided a written response to the Budget Analyst's Audit of the Recreation and Park Department's Cash Handling Practices, which is appended to this audit report beginning on page 70.

Background

During calendar year 2005, the Budget Analyst conducted a comprehensive management audit of the Recreation and Park Department and issued an audit report on January 12, 2006. On July 23, 2007, the Board of Supervisors adopted Motion 07-100 directing the Budget Analyst to perform a follow-up audit of the Department's progress in implementing the 2006 Recreation and Park Department Audit Report's recommendations concerning cash handling practices.

The 2006 Recreation and Park Department Audit Report contained 18 findings, including one finding on cash handling practices, and 169 related recommendations. The Budget Analyst has identified 36 recommendations for additional evaluation that are either directly or indirectly related to cash handling. Section 1 of this audit report discusses the Budget Analyst's evaluation of the status of each of those 36 recommendations included in the 2006 audit, along with pertinent comments from the Recreation and Park Department. Section 1 also contains two additional recommendations concerning the 2006 audit, one addressed to the Recreation and Park Department and one for consideration by the Board of Supervisors. In addition to evaluating the implementation status of the 36 recommendations previously made in the 2006 audit, this audit report contains five additional findings and 24 additional recommendations. Thus, in total, this cash handling audit report contains six findings and 26 recommendations. Therefore a total of 25 recommendations were made to the Recreation and Park Department and one recommendation was made for consideration by the Board of Supervisors.

According to the written response provided by the General Manager, Recreation and Park Department, and beginning on page 70 of this report, the Department agrees with 22 of the Budget Analyst's 25 recommendations developed during the course of this follow-up audit of cash handling and addressed to the Recreation and Park Department, partially agrees with one recommendation, and disagrees with two of those recommendations. As previously stated, one recommendation is addressed to the Board of Supervisors, resulting in a total of 26 recommendations.

The following sections summarize our findings. Our two recommendations concerning the 2006 Recreation and Park Department Audit Report and our 24 new recommendations are listed in the Attachment to this transmittal letter.

1. Status of Cash Handling Recommendations

As noted above, the Budget Analyst's 2006 Recreation and Park Department Audit Report included 18 findings and 169 related recommendations. The Budget Analyst identified 36 of the 169 recommendations as either directly or indirectly related to cash handling. Our examination of the current status of those 36 recommendations disclosed that 10 were implemented, 10 were partially implemented, and 16 were not implemented.

The Budget Analyst recommends that the General Manager, Recreation and Park Department, provide the Board of Supervisors with a schedule for implementing the 26 cash handling recommendations from the 2006 audit that are currently either not implemented or partially implemented.

The Budget Analyst also recommends that the Board of Supervisors schedule a FY 2008-2009 mid-year review in approximately December of 2008 or January of 2009 to determine the status of the Recreation and Park Department's progress on implementing the Budget Analyst's 25 recommendations contained in this cash handling audit report that are addressed to the Department.

2. Unauthorized Recreational Fees

The Recreation and Park Department generates unauthorized revenues and incurs costs from conducting recreational activities that are entirely outside the existing City structure for operating recreational programs. These recreational activities have been in existence for years, have not been approved by the Recreation and Park Commission, and the fees have not been submitted for codification in the Park Code by the Board of Supervisors, as required by Section 2.109 of the City Charter. Further, the revenues and expenditures are not submitted by the Recreation and Park Department for annual appropriation approval by the Board of Supervisors. Total revenue from the unauthorized recreational activities fees for the period of FY 2001-2002 through FY 2006-2007 was $794,421.

Programs operated by the Recreation and Park Department for which fees are collected at the program sites include: (i) two youth soccer programs; Futsol and Seven-a-Side Soccer, (ii) two women's programs; women's volleyball and women's basketball and (iii) a tennis program. The fees for these activities, which are collected on site, are transported to the Parks Trust and credited to Parks Trust accounts established for the benefit of the Recreation and Park Department.

The Parks Trust, founded in 1971 and formerly known as Friends of Recreation & Parks, is a nonprofit organization that supports San Francisco parks, recreation centers and open spaces through funding of major capital projects, such as raising approximately $12 million of the estimated $19.2 million for the reconstruction of the Conservatory of Flowers, funding smaller restoration and renovation projects such as the Golden Gate Park Carrousel and the 6th Avenue entrance to Golden Gate Park. Funding from the Parks Trust affords small park groups the opportunity to make physical improvements and support special projects in neighborhood parks and operating programs such as the annual Opera in the Park, Park Partners program and Golden Gate Park Tours.

The revenues generated by these unauthorized recreational activities and deposited in Parks Trust accounts are disbursed through an informal system that is also used to disburse monies properly deposited in Parks Trust accounts from gifts to the Recreation and Park Department. Total revenues from the unauthorized recreational fees ($794,421) and authorized gifts/ grants ($1,902,747) total $2,697,168 for the period of FY 2001-2002 through FY 2006-2007. Total expenditures for those fiscal years were $3,141,349, or $444,181 in excess of the revenues. The $444,181 was funded by fund balances in Parks Trust accounts carried forward from previous years.

Many of the disbursements from the Parks Trust accounts are for nursery and recreational items such as plants, athletic equipment and trophies. However, the Budget Analyst's review disclosed that a total of $834 was paid for catered lunches and incidental costs for Recreation and Park Department staff, costs that, in the professional judgment of the Budget Analyst, should not be borne by recreational fees or gift or grant revenues.

The Budget Analyst emphasizes that most of the programs paid for by Parks Trust accounts appear worthwhile. However, the expenditures of fees and revenues were never authorized by the Board of Supervisors.

3. Cash Handling Practices

Fee revenues collected at the Department's nine swimming pools are placed in cash lock boxes. Such cash lock boxes are transported regularly by armored transport to McLaren Lodge from each of the swimming pools. Upon arrival, the Recreation and Park Department's Revenue Unit staff transfer the cash from the lock boxes to bank deposit bags and place the bags in a safe located in McLaren Lodge. Because some of the currency is crumpled, the bills must be straightened and flattened prior to being run through a currency counter. Although the Department's policy is to have two staff members to straighten and count the bills and coins, the Budget Analyst's 2006 audit disclosed that there was only one instead of two employees in a cubicle with a large box of bills, straightening and counting the cash.

In response to the Budget Analyst's inquiry on the status of the 2006 recommendation concerning the counting of swimming pool cash collections, the Department stated that it "has implemented a policy requiring two employees to be present as cash is being counted. The revised cash handling policy and CLASS¹ policy both specify procedures for reconciliation." However, during this audit, on two separate occasions one month apart, there were instances where the Budget Analyst observed similar situations as described above in the Revenue Unit's cubicle - only one employee processing a large stack of bills, with no other person in the cubicle and with no oversight. The employee conducting the cash count in the second instance stated that "the staffing of the Revenue Unit was insufficient to provide a two-person, cash processing operation."

Placing an employee in the position of access to hundreds and sometimes thousands of dollars without effective oversight controls is a direct violation of adequate internal control standards. Further, non-compliance with published policies and procedures is detrimental to the maintenance of a quality control environment and the safeguarding of Departmental assets.

Our review of a sample of Z-Out tapes² from both the Recreation and Park Department's Japanese Tea Garden and Tennis Court cash registers revealed instances of non-sequential Z-Out Report numbers. Further, there was no note in the file explaining the reasons for the skipped Z-Out Report deviations. At the request of the Budget Analyst, the Department's Financial Operations Manager conducted an inquiry to determine the reason for the non-sequential deviations and determined that the deviations associated with the Japanese Tea Garden were due to a service maintenance that was performed on the particular cash register. As of the writing of this report, the Financial Operations Manager has not explained the non-sequential deviations in the Z-Out Report numbers for the tennis courts.

In addition to the cash register problems, our audit has disclosed that there are opportunities to achieve economies in the staffing of the Japanese Tea Garden Admissions Section. The hourly rate for the classification 3302, Admission Attendant position, is approximately $19.34, not including mandatory fringe benefits. The Budget Analyst estimates that an average reduction of three work hours per day can be achieved in the Admissions Section, which would result in a savings of approximately 0.6 FTE, valued at approximately $23,930 in salary and mandatory fringe benefits annually.

4. Aquatics Program Issues

The Recreation and Park Department's Aquatics Program, which includes programs such as swimming instruction, water aerobics, and recreational swimming, provides facilities and services to organizations, such as public and private schools and swim clubs, for which no set fees have been established by the RPD. In order to determine the fees paid by such organizations to the Recreation and Park Department, the Budget Analyst surveyed seven organizations that use Aquatics Program facilities.

Initial contact was made with the Athletic Director at the Convent of the Sacred Heart School, who informed the Budget Analyst staff that the school used Hamilton Pool for the period of February through April of 2006 and 2007. The Athletic Director also informed the Budget Analyst that the School had made a single payment for use of the Hamilton Pool to the Permits and Reservations Division of the Recreation and Park Department for the 2007 period, but that in 2006, the swim coach of the Convent of the Sacred Heart presented checks to an Aquatics Program employee at Hamilton Pool every week or every two weeks during February through April of 2006. The Budget Analyst requested copies of the checks and was informed that the School's Business Office was the repository of the checks and that obtaining copies might prove problematic because of the amount of time that had elapsed. The Budget Analyst verified that the Convent of the Sacred Heart School made a payment in April of 2007 to the Permits and Reservations Unit of the Recreation and Park Department in the amount of $644 for use of Hamilton Pool for school swim team practices. The Budget Analyst informed the Aquatics Program Manager concerning the information obtained from the Athletic Director of the Convent of the Sacred Heart who, in turn, informed the Director of Administration and Finance. The Budget Analyst attempted to re-contact the Athletic Director, without success, and has never been provided with copies of the checks from the Convent of the Sacred Heart School or the Recreation and Park Department.

The Director of Administration and Finance stated that the Recreation and Park Department would conduct a follow-up with the Convent of the Sacred Heart and with Department staff. Following a period of approximately three weeks, the Director of Administration and Finance contacted the Budget Analyst concerning the Department's inquiry into the matter. The Director of Administration and Finance provided the Budget Analyst with a summary of the interview with the employee who had reportedly received the checks and also reported that repeated attempts by the Department to contact officials at the Convent of the Sacred Heart were unsuccessful.

A redacted summary of required actions for the Recreation and Park Department to take based on the Hamilton Pool check revelations, provided by the Director of Administration and Finance, is as follows:

While the results of the interview suggest that the department needs to develop a clear policy and fees regarding swim teams and the use of our pools by outside entities, including schools swim teams and other organizations, I do not believe that fraud has taken place at Hamilton Pool. [name] has been tasked with developing a new policy and fees for use of the pools. In addition, he and [name] will follow up with [name] regarding the Hamilton Swim Team and the account for that team. It is clear that RPD staff should never handle money for organizations or programs that are not affiliated with RPD. The corollary to that, of course, is that any program associated with RPD must follow the department's cash handling policies and may not establish accounts outside of the city's accounting system.

During the preliminary survey segment of this follow-up audit pertaining to the Aquatics Program, the Aquatics Program Manager provided background and operational information on aspects of cash handling at the swimming pools. The Aquatics Program Manager demonstrated the process of removing a lock box from its enclosure at the swimming pools in order to transport the lock boxes to McLaren Lodge without actually having access to the cash in the lock box. However, the Aquatics Program Manager also informed the Budget Analyst that he possessed keys to actually access the cash in the lock boxes, and demonstrated that capability. Since the Aquatics Program Manager possesses keys to gain entry to all of the swimming pools, in the absence of a compelling operational need, it is not appropriate for that manager to also have access to the keys that actually open the cash lock boxes. The Budget Analyst notified the Director of Administration and Finance concerning the internal control weakness of entrusting an individual with accesses to both the swimming pool facilities and lock boxes containing the cash at such facilities. The Director of Administration and Finance acknowledged the control weakness and had the Aquatics Program Manager return the lock box lid keys to the Recreation and Park Department Revenue Unit.

5. Permits and Reservations

The Permits and Reservations Unit does not have standard procedures for issuing receipts to patrons, storing copies of receipts, making reservations, issuing permits, or collecting cash. While some uniformity exists across Divisions, the Unit as a whole does not adhere to a uniform set of procedures. For example, while staff in the Athletics Division follow the same procedures, these procedures differ from those followed by staff in the Picnics and Special Events Division. This lack of uniformity leads to various accounting styles and ad-hoc procedures for cash collection, revenue reporting, and revenue deposits.

While a Cash Handling Manual does exist and was issued in 2006 by management of the Recreation and Park Department, none of the Permits and Reservations Unit staff was given a copy of the manual or received any training on cash handling protocol and procedures. Therefore, staff have relied on informal procedures and used personal judgment with respect to proper cash handling methods.

In a review of 50 randomly-selected permit files, the Budget Analyst found that in five cases, or 10 percent, the Permits and Reservations Unit inaccurately reported the total amount of the permit, the type of payment received, or the reservation number on the Daily Report of Cash Receipts (DRCR). In one case, no record could be found on the DRCR for a completed permit reservation.

The Supervisor of the Permits and Reservations Unit transports all deposits to McLaren Lodge in a standard vehicle and no precautionary security measures are taken. Based on the Budget Analyst's observations, deposits could range from approximately $2,000 up to approximately $70,000, depending on time of year. The security of cash transport from the Pioneer Log Cabin to the Revenue Unit at McLaren Lodge should be enhanced by employing an escort or other means.

Permits and Reservations staff do not follow a policy of reconciling revenues at the end of each day, week, or month. While the Athletics Division reconciles revenues on most days and again at the end of every week, and a final time before a deposit is made, the Picnics and Special Events Division does not have a procedure for reconciling revenues. This lack of uniformity across the Permits and Reservations Unit complicates revenue tracking and record keeping among the Unit as a whole and allows for inaccuracies in revenue reporting, as we found in our review of 50 randomly-selected permit files.

The Recreation and Park Department's Cash Handling Manual states that deposits should be made every week or when the total cash on hand reaches $100. While the Permits and Reservations Unit usually makes weekly deposits, the unit does not always adhere to this policy, nor does the Unit make deposits if cash reaches $100 or more. The Unit does not have specific procedures regarding notification of supervisors or management if large payments are received, thus exposing the Unit to excessive losses in the case of a burglary.

Overall, the Budget Analyst found that the lack of controls and security protocol greatly increased the opportunities for theft or inaccuracies in revenue reporting in the Permits and Reservations Unit and that security of cash had not improved since the 2006 Recreation and Park Department Audit Report.

6. Concession Audits

Under the Park Code, Recreation and Park Department properties must be used for recreational purposes. The Recreation and Park Department has 57 lease, license or concession agreements, primarily with for-profit vendors, but also with non-profit organizations. Such agreements generated approximately $25.7 million in General Fund Departmental Revenues in FY 2006-2007. The Department of Parking and Traffic manages four parking garage lease agreements on behalf of the Recreation and Park Department: St. Mary's, Civic Center, Portsmouth Square, and Union Square. The remaining 53 agreements are managed by the Permits and Parking Department's Property Management Unit, which is part of the Recreation and Park Department's Partnerships and Resource Development Division.

The Controller's Office regularly audits the four parking garages, and has audited six of the 53 other concessions since 2000, according to records provided by the Controller through the Recreation and Park Department. As part of this follow-up audit to the Budget Analyst's 2006 Recreation and Park Department Audit Report, the Budget Analyst conducted audits of three concessions, as follows: 1) Fashion House, Inc., as lessee for the lease of real property located at the Japanese Tea Garden, Golden Gate Park; 2) Emporio Rulli, Inc., as Sublessee for the sublease of the Union Square Café; and 3) Stow Lake Corporation, as lessee for Boat Rentals, Bicycle Rentals, and Snack Bar Concession at Stow Lake, of Golden Gate Park. The Budget Analyst had no findings concerning the Japanese Tea Garden and only minor findings concerning Emporio Rulli, Inc. However, the audit of the Stow Lake Corporation resulted in the Budget Analyst disclosing a significant finding concerning the Recreation and Park Department's management of this lease.

The Lease Agreement for Stow Lake had a term of fifteen (15) years, which ended in November 2006. Currently, Stow Lake is operating under a month-to-month holdover period which started in December of 2006. The holdover provisions stipulate that only ten percent (10%) of all gross sales shall be paid to the Recreation and Park Department instead of the significantly higher percentage rent of 31 percent for boat rentals plus 21 percent from snack bar operations, which the Recreation and Park Department had received under the provisions of the original lease.

Had the 31 percent payment provisions of the original Stow Lake lease been in effect during calendar year 2007 instead of the ten percent (10%) holdover rate, the Recreation and Park Department would have received total revenues of $169,767 instead of the actual amount of $57,683 collected, or a difference of $112,084, or 66 percent less than the Recreation and Park Department would have received under the original lease provisions. The lease containing the provision for reduced rent during the holdover period was approved by the Board of Supervisors in November of 1991. The Recreation and Park Department should issue a Request for Proposals for management of the Stow Lake concession and negotiate a new lease as soon as possible in order to achieve significantly improved revenues.

The Recreation and Park Department's Written Response

The Recreation and Park Department provided a written response to the Budget Analyst on May 1, 2008, which begins on page 70 of this audit report. The Department disagrees with two of the 25 recommendations made by the Budget Analyst,, which the Budget Analyst responds to below.

The Department's Disagreement with Recommendation No. 3.3.

Recommendation No. 3.3 recommends that the Recreation and Park Department "Reduce staffing to the minimum level required to effectively perform the cash collection and visitor admission function at the Japanese Tea Garden." The Department has responded by stating that "Current staffing allows the department to provide security in the Tea Garden and maintain appropriate internal controls in the ticket booth. . . ."

1) The Budget Analyst has presented a detailed analysis of Japanese Tea Garden Admissions staffing on page 31 through 35 of this audit report.

The hourly rate for the classification 3302, Admission Attendant position, is approximately $19.34, not including mandatory fringe benefits. Thus, if an average reduction of three work hours per day can be achieved in the Admissions Section, as the Budget Analyst has estimated, savings of approximately 0.6 FTE, valued at approximately $23,930 in salary and mandatory fringe benefits, annually, could be realized.

In the professional judgment of the Budget Analyst, there are opportunities to achieve economic savings in the daily staffing of the Japanese Tea Garden Admissions Section that are not incompatible with the Department's objective "to provide security in the Tea Garden and maintain appropriate internal controls in the ticket booth, while allowing for a relief factor."

The Department's Disagreement with Recommendation No. 3.5.

Recommendation No. 3.5 recommends that the Recreation and Park Department develop or procure an incident reporting system that is used to analyze trends and assist in controlling exposure to burglaries and other unlawful incidents. In its response, the Recreation and Park Department has stated "The limited number of incidents that RPD has experienced does not warrant expenditure of resources to create such a system."

During the course of this cash handling audit, the Budget Analyst received information from Recreation and Park Department employees concerning burglaries of various Recreation and Park Department facilities in the past several years. Facilities reported include the General Manager's Office, Rossi Pool, and the Tennis Courts Office. The Budget Analyst requested that the Department's Director of Operation, who oversees the operations of the Department's Park Patrol, provide a listing of burglaries and attempted burglaries that have occurred in the past few years. However, the Director of Operations has not provided such a listing because, reportedly the information is not readily available.

The purpose of the burglary information request was to determine the extent and severity of burglaries occurring on Recreation and Park Department properties, information that may provide the basis for determining the urgency of a burglary risk assessment and implementation of control activities.

As an example of burglaries occurring on Recreation and Park Department property, in 1996 a Park Patrol Officer, who was found to have extorted money from a tourist, was also found to have been involved in numerous other crimes involving Recreation and Park Department property. Further, the office of the Department's Director of Operations was broken into during the course of the 2006 Recreation and Park Department audit as were the offices of his two primary subordinates.

The Recreation and Park Department's Park Patrol force, excluding the 6.0 FTE positions assigned to Monster Park Stadium, was increased from a total of 5.25 FTE positions in the FY 2006-2007 Annual Salary Ordinance to 15.25 FTE in the FY 2007-2008 Annual Salary Ordinance, an increase of 10 FTE or 190 percent. This increase was consistent with the Department's objectives for the Park Patrol, delineated in the Budget Analyst's 2006 Management Audit Report of the Recreation and Park Department, that included the objective to "Improve communications internally and externally to facilitate the timely exchange of information." In coordination with upgrading the offices of the Park Patrol and developing policies and procedures, developing an incident reporting system, which could be based on a relatively simple Access or Excel program, would enhance the professional capabilities of the Park Patrol, in the professional judgment of the Budget Analyst.

For all of these reasons, the Budget Analyst continues to recommend that the Department develop or procure and incident reporting system.

We would like to thank the General Manager, Recreation and Park Department, his staff, and the Parks Trust staff for their cooperation and assistance throughout this management audit.

Respectfully submitted,

Harvey M. Rose
Budget Analyst

Recommendations

Based on the management audit findings, the Budget Analyst has made 26 recommendations detailed in this Attachment to the transmittal letter.

1. Status of Cash Handling Recommendations

The Recreation and Park General Manager should:

1.1 Provide the Board of Supervisors with a schedule for implementing the remaining cash handling recommendations from the 2006 audit that are currently not implemented or partially implemented and are planned to be implemented.

The Board of Supervisors should:

1.2 Schedule a FY 2008-2009 mid-year review of the Recreation and Park Department's progress on implementing the recommendations of the this cash handling audit report.

2. Unauthorized Recreational Fees

The Recreation and Park General Manager should:

2.1 In accordance with the stated intent, develop and submit to the Board of Supervisors a fee structure and proposed ordinance for currently unauthorized recreational fee activities and then terminate all recreational activities that do not have an approved fee structure.

2.2 Request appropriation authority in the FY 2008-2009 Budget for the gifts, grants and other funds received throughout the year from the Parks Trust for "S.F. Recreation & Park Dept. Programs."

2.3 Request expenditure authority in the FY 2008-2009 Budget for the materials and supplies, consultant and contractor costs and other costs incurred from operating the currently unauthorized recreational activities.

2.4 Direct the Director of Administration and Finance to ensure that approved payment requests to the Parks Trust are for goods or services that benefit fee program activities.

2.5 Direct the Director of Administration and Finance to ensure that the requirements of Chapters 12B and 12C of the Administrative Code, Nondiscrimination in Contracts and Nondiscrimination in Property Contracts, respectively, are complied with.

3. Cash Handling Practices

The Recreation and Park General Manager should:

3.1 Direct the Director of Administration and Finance to enforce the protocol requiring at least two employees present at all cash counts.

3.2 Direct the Director of Administration and Finance to develop detailed policies and procedures covering the operations of the Revenue Unit.

3.3 Reduce staffing to the minimum level required to effectively perform the cash collection and visitor admission function at the Japanese Tea Garden.

3.4 If feasible, schedule armored transport cash pick-ups for late in the afternoon, so that lesser sums of cash will be stored overnight in the Admissions booth.

3.5 Ensure that the Recreation and Park Department develops or procures an incident reporting system and that the system is used to analyze trends and assist in controlling exposure to incidents.

3.6 In accordance with the Controller's 1993 Audit of the Japanese Tea Garden, direct the Director of Administration and Finance to "improve its procedures for recording and reporting free admissions."

4. Aquatics Program Issues

The Recreation and Park General Manager should:

bevelop a clear policy and fees regarding swim teams and the use of City pools by outside entities, including schools swim teams and other organizations.

4.2 Emphasize the importance of keeping posted pool hours as an important part of customer service, especially given that three of nine pools are currently closed for renovations.

5. Permits and Reservations

The Director of Operations should:

5.1 Update the Cash Handling Policy to incorporate the following improvements cited in this audit report section:

5.1.1 All Units should have clear procedures in regard to security of cash throughout the day as well as at night when cash should be properly locked up.

5.1.2 The security of cash transport from the Pioneer Log Cabin to the Revenue Unit at McLaren Lodge should be strengthened.

5.1.3 The Manager of the Permits and Reservations Unit should verify and approve proposed internal controls developed for each unit.

5.1.4 The Manager of the Permits and Reservations Unit should verify that each employee has (a) received a copy of the Department's Cash Handling Policy, and (b) been properly trained on cash handling protocol within the Unit.

5.2 Implement the CLASS system in the Picnics and Special Events Division to eliminate manual data entry and mitigate the opportunities for human error.

5.3 As recommended in the 2006 Recreation and Park Department Audit Report, hire a manager to implement the CLASS system and oversee all operations within the Permits and Reservations Unit and wherever the CLASS system is used within the Recreation and Park Department.

5.4 Direct the current Supervisor of the Permits and Reservations Unit to develop formal protocols requiring (a) daily reconciliation of revenue activities in both divisions, (b) weekly reconciliation of revenue activities before deposits are made, and (c) at least two employees present during transportation of cash from the Pioneer Log Cabin to the Revenue Unit.

The Director of Administration and Finance should:

5.5 Develop a formal policy or set of procedures regarding the reconciliation of revenues once they are received by the Revenue Unit, to ensure that the Permits and Reservations Unit has reported their revenues accurately.

6. Concession Audits

The Recreation and Park General Manager should:

6.1 On an expedited basis, act to implement provisions of a Stow Lake lease that enable the Department to collect revenues based on economic realities and not on the unrealistic provisions of a holdover lease.

6.2 As resources permit, on a priority basis, allocate additional staffing to the authorized Property Management positions.

6.3 As resources permit, task the appropriate primary staff director to develop and oversee a concession audit program that is based on the relative risks of the managed concessions and request that the Controller execute that concession audit program.

1 CLASS is a computerized program registration and facility booking system.

2 Cash register transactions are recorded on register tapes in a non-resettable, sequential manner. The Z-Out process entails activating a key position on the cash register that causes 1) a report of the transaction totals since the last Z-Out to be printed, 2) a sequential number to be assigned to the particular Z-Out report, and 3) a "zero out" of the register in preparation for the next day's or shift's work. The register tape would then record non-resettable sequential transactions since the last Z-Out report.