Audit finds lack of cash controls at Rec Department

The city cannot account for approximately $86,000 in cash receipts at the Recreation Department and thousands of dollars collected at the city’s beach entrances, according to a state audit released last week that uncovered numerous financial missteps under the previous administration.

Upon taking office in 2012, city officials said they were concerned about how cash and other finances were handled at the department, which oversees the beach park, the Recreation Center and the Ice Arena and took in $5.5 million in revenue for fiscal year 2011-12.

“We wanted to know where our liabilities were, and we heard about all of these troubles at the beach park,” City Manager Jack Schnirman said. “Clearly, the prior administration did not properly budget revenues and expenses, nor did they have adequate cash controls in place.”

According to the audit, which covered fiscal years 2008-09 through 2011-12, the city had not formalized policies and procedures for Recreation Department cash collections.

The state said it reviewed over $1.2 million in cash receipts and found discrepancies between recorded amounts and actual cash collected. Some records were lost or destroyed.

Auditors also identified significant weaknesses in internal control over cash receipts at the beach park, which collected $3.8 million in revenue for fiscal 2011-12. Cashiers selling daily passes in the boardwalk kiosks and at other entrances do not issue duplicate receipts, the audit found, and managers responsible for reconciling the cash collected and the number of passes sold did not investigate or report unaccounted revenue to the city’s comptroller.

In May 2012, auditors said, the Rec Department began tracking the discrepancies, but the differences were not investigated, and between May 26 and July 8, shortages totaling $11,102 and overages of $5,630 were recorded. In one instance, a cashier was short $2,400 in a single shift.

Auditors also reviewed about $1.1 million in cash receipts for season beach passes sold in July 2010, May and June 2011 and one week in June 2012, and identified a total difference of more than $60,000 between sales recorded on cash register tapes and the amounts deposited. The department’s management and the city’s comptroller could not explain the differences.