Audit Report on the Internal Controls

Over Cash Receipts by the Hudson

Beach Café and Its Compliance with Its
Permit Agreement with the
Department of Parks and Recreation

MH05-075A

May 2, 2005
 Table of Contents

AUDIT REPORT IN BRIEF

Audit Findings and Conclusions .......................................................................................... 1

Audit Recommendations ....................................................................................................... 2

INTRODUCTION............................................................................................................................ 3

Background ............................................................................................................................ 3
Objectives............................................................................................................................... 3
Scope and Methodology........................................................................................................ 4
Scope Limitation .................................................................................................................... 4
Discussion of Audit Results .................................................................................................. 5

FINDINGS … ........................................................................................................................ 6

Underreporting of Gross Receipts ........................................................................................ 6

Daily Records of Operation Not Maintained ....................................................................... 8
Cash Receipts Deposited In Bank Does
Not Reconcile With Cash Sales Recorded........................................................................ 9
Cash Receipts from one Concession are
Commingled with Cash Receipts of a Second Concession ........................................... 10
Inventory Records of Food and Beverages Not Maintained ............................................. 11
Monthly Gross Receipts Not Reported to Parks..............................................................11
Other Matters ....................................................................................................................... 12

RECOMMENDATIONS .............................................................................................................. 12

ADDENDUM I – Riverside Beach Restaurant Corporation Response

ADDENDUM II – Department of Parks and Recreation Response

 City of New York
Office of the Comptroller
Bureau of Management Audit

Audit Report on the Internal Controls Over

Cash Receipts by the Hudson Beach Café
And Its Compliance with Its Permit Agreement
With the Department of Parks and Recreation
MH05-075A

AUDIT REPORT IN BRIEF

The audit determined whether the Riverside Beach Restaurant Corporation, doing
business as Hudson Beach Café (the Café), had adequate internal controls over cash receipts,
properly reported gross receipts, properly calculated the fees due the City, and complied with
certain provisions of its Permit Agreement (the Agreement) with the Department of Parks and
Recreation (Parks).

Audit Findings and Conclusions

Based on interviews with the Café’s proprietor, bookkeeper, and accountant, as well as an
examination of the available books, records, and documents, we determined that the Café has
inadequate internal controls over its cash receipts. As a result, the Café may not have properly
calculated the total gross receipts and may not have submitted the correct amount of fees due the
City.

Despite the scope limitation caused by the lack of source documents, we were able to
estimate that a minimum of $1,467 for the 2003 season and a minimum of $4,181 for the 2004
season are due the City. However, based on our review of limited source documents for
September 2004, we estimate that those figures could very well be higher.

Although the Café complied with the provisions of the Agreement regarding payment of
water and electric bills; renovation, maintenance of premises and bathrooms; and required
insurance, it failed to comply with many other provisions. Specifically, the proprietor routinely
discarded such original source documents as tapes of credit card transactions and closeout tapes
from the cash register. Moreover, cash receipts were not deposited regularly, inventory records
of food and beverages were not maintained, statements of gross receipts were not forwarded to
Parks each month, and cash receipts and purchases from one concession were commingled with
cash receipts from a second concession.

1 Office of New York City Comptroller William C. Thompson, Jr.

Audit Recommendations

Based on our findings, we make 11 recommendations, seven recommendations addressed

to Riverside Beach Restaurant Corporation and four to Parks, including the following:

 Riverside Beach Restaurant Corporation should immediately pay the City any
additional fees due, including any accrued late fees from the operation of the Café
during the 2003 and 2004 season.

 Riverside Beach Restaurant Corporation should retain all records of operation,

including cash receipt tapes, credit-card batch tapes, guest checks, purchase invoices,
etc., for at least six years.

 Riverside Beach Restaurant Corporation should deposit all cash collections in a bank
account on a regular basis. All deposit amounts indicated on the books of the Café
should be reconciled with the deposit amounts indicated on the monthly bank
statements.

 Riverside Beach Restaurant Corporation should maintain inventory records of all

beverages and food items purchased and sold. The inventory records should be
maintained separately for each concession.

 Riverside Beach Restaurant Corporation should submit statement of gross receipts to

Parks on a monthly basis, no later than the 15th day of the following month, and pay
the applicable fee when the threshold has been reached

 Parks should better monitor the concessionaire overall to ensure that the terms of the
permit agreement are followed.

 Parks should ensure that Riverside Beach Restaurant Corporation implements the
report’s recommendations. If Riverside Beach Restaurant Corporation does not
implement the recommendations, Parks should consider not renewing the agreement.

2 Office of New York City Comptroller William C. Thompson, Jr.

 INTRODUCTION
Background

The Department of Parks and Recreation (Parks) has approximately 600 concessions
throughout the City; total revenue from all concessions reached $63 million in Fiscal Year 2004.
These concessions fall into two categories: food service and recreational activities. Food service
concessions include everything from hot dog and pretzel vendors to small cafes and large
restaurants like Tavern on the Green and Café on the Green. Recreational concessions include
miniature golf courses, bubbled tennis courts, golf courses, marinas, stables, and rowboat and
bicycle rental firms.

In March 2003, Parks entered into a Permit Agreement (the Agreement) with Riverside
Beach Restaurant Corporation, doing business as Hudson Beach Café (the Café), to operate a
portable outdoor café consisting of chairs and tables with umbrellas, food preparation equipment,
and bar facilities. The Café is at the Hudson Beach Volleyball Courts, Riverside Park, West
105th Street, and is open for business from April through October. It is a casual, family-
oriented, bi-level outdoor restaurant open seven days a week, weather permitting. The Café also
offers a range of options for private parties.

The Agreement covers a four-year period beginning April 1, 2003, and calls for a
minimum payment to the City of $23,000 in 2003 and $24,000 in 2004 or 11 percent of gross
receipts, whichever is higher. The fees are increased to $25,000 and $26,500 or 12 percent of
gross receipts, whichever is higher, for 2005 and 2006 respectively. The Agreement requires
that the Café submit, in a form acceptable to Parks, no later than the 15th day of each month, a
statement of gross receipts for the preceding month’s operation. The Agreement also requires,
among other things, that the Café pay all electric, oil, gas, water, and other costs relating to this
concession.

The Café is responsible for renovating bathrooms, repainting and repairing storage room
walls, floors and ceilings, patching all paving to eliminate the danger of tripping, and regularly
cleaning and maintaining bathrooms. The Café is also required to maintain proper levels of
insurance coverage. This includes Personal Injury Liability ($500,000); Property Damage Liability
($50,000), and Workers’ Compensation.

The Café reported total gross receipts of $223,707 for the 2003 season and $272,571 for
the 2004 season. As of January 4, 2005, the Café paid the City $24,607 (this includes the
minimum fee of $23,000 and an additional $1,607 over the minimum fee) for the 2003 season,
and $29,983 for the 2004 season (this includes the minimum fee of $24,000 and an additional
$5,983 over the minimum fee).

Audit Objectives:

The objectives of this audit were to determine whether the Café:

 Has adequate internal controls over cash receipts,

3 Office of New York City Comptroller William C. Thompson, Jr.

  Properly reports gross receipts and calculates the fees due the City, and

 Complies with certain provisions of its Permit Agreement with the Department
of Parks and Recreation.

Scope and Methodology

The scope period of this audit was April 1, 2003, through October 31, 2004.

To achieve our audit objectives, we reviewed Café records kept on file at Parks, which
included the Agreement, gross receipts statements, license fee payments, and other related
documents for the Café. We also reviewed and analyzed Parks’s Concessionaire Ledger for the
amounts paid to the City, and verified whether those amounts were paid monthly as required.

To evaluate the Café’s internal control over cash receipts, we interviewed the proprietor,
the bookkeeper, and the Café’s accountant, and conducted observations of the operation. We
obtained an understanding of the procedures used for recording and reporting gross receipts. We
made a complete examination of documentation that was available to us for the 2003 and 2004
operating seasons to calculate the gross receipts generated by the Café and the fees due the City.

To determine whether the Café properly reported its gross receipts, we compared the
amounts in the monthly reports of gross receipts submitted to Parks and the amounts in the
Café’s sales journal and credit-card statements. We reviewed the Café’s federal income tax
return for the Fiscal Year 2004 (operating year 2003), and its sales tax returns for May 2003
through August 2004.

We also conducted eight unannounced observations at the Café during August 2004 to
observe the maintenance of the facilities and to learn whether the staff processed and entered
sales in the register. We also conducted two unannounced observations at the Café, on September
16, 2004, and on October 1, 2004, to obtain an understanding of the closeout procedures.

In addition, to determine whether the Café complied with other provisions of the
Agreement, we reviewed copies of insurance certificates and payments for utility and water bills.

Scope Limitation

We attempted to verify the accuracy of the gross receipts reported to Parks but were
unable to do so because—except for September 2004—all source documents, such as cashier’s
closeout sheets, guest checks, cash register closeout tapes, credit-card, tip, and batch reports were
discarded by the concessionaire.

We requested that the Café provide specific records, detailed information regarding the
reporting, and verification of its gross receipts to Parks. Those requests included all back-up
documentation for sales receipts for the 2003 and 2004 operating seasons. The concessionaire

4 Office of New York City Comptroller William C. Thompson, Jr.

could not provide the original source documentation needed to substantiate the gross receipts
reported to Parks (specifically cashier’s closeout sheets, closeout tapes, and credit-card batch
reports) because the concessionaire discarded those documents once the information had been
entered in the sales journal.

In addition, we could not determine gross profits of the Café since the owner commingled
the purchases of food and beverage supplies of the Café with purchases for Pier 70, a second
concession awarded to Riverside Beach Restaurant Corporation, and had not maintained
inventory records indicating beginning and ending items for each entity.

This audit was conducted in accordance with generally accepted government auditing
standards (GAGAS) and included tests of the records and other auditing procedures considered
necessary. The audit was performed in accordance with the audit responsibilities of the City
Comptroller as set forth in Chapter 5, §93, of the New York City Charter.

Discussion of Audit Results

The matters covered in this report were discussed with Riverside Beach Restaurant
Corporation officials during and at the conclusion of this audit. A preliminary draft report was
sent to Riverside Beach Restaurant Corporation and Parks officials on January 27, 2005, and was
discussed at an exit conference on February 15, 2005. On February 28, 2005, we submitted a
draft report to Riverside Beach Restaurant Corporation and Parks officials with a request for
comments. On March 11, 2005, we received a written response from the Parks Department, and
on March 14, 2005, we received a written response from the proprietor of Riverside Beach
Restaurant Corporation.

In their response, Parks officials agreed to implement all four recommendations

addressed to them and sent a “Notice To Cure” to the Riverside Beach Restaurant Corporation
that required the Café to implement all seven audit recommendations addressed to it, stating,
“Failure of the Café to implement the corrective action recommended in the audit report will
result in the termination of your permit.”

In his response, the Café’s proprietor agreed to implement all seven recommendations.
However, he disagreed with the statement in the audit that the amounts due the City could be
higher stating, “At our meeting of February 15th, I indicated that an error was made by a double
entry of tips. I am of the opinion that this will greatly reduce the over-reporting of figures in my
journal.” As the proprietor is aware, the amounts quoted in this report have already been reduced
to correct the error made by the double entries; therefore, we believe the amounts owed could
still be higher.

The full texts of the Parks Department’s and Riverside Beach Restaurant Corporation’s
responses are included as addenda to this report.

5 Office of New York City Comptroller William C. Thompson, Jr.

 FINDINGS
Based on interviews with the Café’s proprietor, bookkeeper, and accountant as well as an
examination of the available books, records, and documents, we determined that the Café has
inadequate internal controls over its cash receipts. As a result, the Café may not have properly
calculated the total gross receipts and may not have submitted the correct amount of fees due the
City.

Despite the scope limitation and the lack of source documents, we were able to estimate
that a minimum of $1,467 for the 2003 season and $4,181 for the 2004 season are due the City.
However, based on our review of limited source documents for September 2004, we estimate
that these figures could very well be higher.

Although the Café complied with the provisions of the Agreement regarding payment of
water and electric bills; renovation, maintenance of premises and bathrooms; and required
insurance, it failed to comply with many other provisions. Specifically, the proprietor routinely
discarded such original source documents as tapes of credit card transactions and closeout tapes
from the cash register. Moreover, cash receipts were not deposited regularly, inventory records
of food and beverages were not maintained, statements of gross receipts were not forwarded to
Parks monthly, and cash receipts and purchases from one concession were commingled with
cash receipts from a second concession.

Overall, the Café needs to institute a set of internal controls that will include, among
other things, maintenance of books and records that clearly and accurately represent the activities
of the Café and to retain all supporting documents for examination, audit, and review by Parks
and by the Office of the Comptroller. In addition, Parks must better monitor the concession to
ensure that the provisions of the Agreement are being followed.

Our findings are discussed in greater detail in the following section of this report.

Underreporting of Gross Receipts

The Café is required to pay the City a minimum annual fee of $23,000 for 2003 and
$24,000 for 2004 or 11 percent of its gross receipts, whichever is greater. Based on our
calculations of the gross receipts recorded in the Café sales journal, we estimate that the Café
owes the City an additional $1,467 for the 2003 season.1 Based on our calculations of the gross
receipts recorded in the Café sales journal and credit-card statements, we estimated that an
additional $4,181 is owed for the 2004 season.2 However, based on our review of limited source
documents for September 2004, we estimate that these figures could very well be higher.

1
Based on our calculation of $237,042 gross receipts recorded in the journal, the Café fees for 2003 come
to $26,074. Since the Café had paid the City $24,607, an additional $1,467 is owed to the City.
2
Based on our calculation of $310,580 gross receipts recorded in the journal and the credit card statements,
the Café fees for 2004 come to $34,164. Since the Café had paid the City $29,983, an additional $4,181 is
owed to the City.

6 Office of New York City Comptroller William C. Thompson, Jr.

 Riverside Beach Restaurant Corporation Response: The proprietor in his response
states, “I disagree with your statement as to the fact that the figures could well be higher.
At our meeting of February 15th, I indicated that an error was made by a double entry of
tips. I am of the opinion that this will greatly reduce the over-reporting of figures in my
journal.”

Auditor Comment: The amounts quoted in this report have already been reduced to
correct the error made by the double entries, as the proprietor is aware. After the exit
conference, we reviewed the credit-card statements and the proprietor’s journal and
identified the double entries. We then adjusted the amounts that had been previously
reported in the preliminary draft report and reported the new amounts. As a result of the
changes, the estimated amount due reported in the draft report was lower than the amount
previously reported in the preliminary draft report.

In addition, we compared the monthly gross receipts amounts reported to Parks with the
monthly gross receipts amounts recorded in the sales journal for the 2003 season and with the
credit-card statements and sales journal for the 2004 season. We found that the owner
underreported the gross receipts by $13,335 for the 2003 season and by $38,010 for the 2004
season.

The following tables show the discrepancies between the monthly gross receipts reported
to Parks with the monthly gross receipts recorded in the sales journal during the 2003 season and
the credit-card statements and sales journal for the 2004 seasons:

Table I

Comparison of Gross Receipts*Recorded in Sales Journal

With Gross Receipts Reported to Parks
2003 Season

Amount Recorded Amount Reported to Over/Under Reported

Month
in Sales Journal Parks Amount
May $11,188 $9,661 ($1,527)
June $46,694 $45,896 ( $798)
July $70,050 $62,577 ($7,473)
Aug. $65,041 $61,662 ($3,379)
Sept. $44,069 $39,171 ($4,898)
Oct. $0.00 $4,740 $4,740
Totals $237,042 $223,707 ($13,335)
*Gross receipts are net of New York City and New York State Sales Tax

7 Office of New York City Comptroller William C. Thompson, Jr.

 Table II

Comparison of Gross Receipts* Recorded in Sales Journal and Credit-Card

Statements with Gross Receipts Reported to Parks
2004 Season

Amount Recorded Amount Reported to Over/Under Amount

Month
in Sales Journal Parks Reported
April $ 9,144 $ 6,015 ($ 3,129)
May $69,725 $48,621 ($21,104)
June $81,010 $62,154 ($18,856)
July $60,305 $46,634 ($13,671)
Aug. $47,280 $43,429 ($ 3,851)
Sept. $36,250 $51,697 $15,447
Oct. $ 6,866 $14,021 $ 7,155
Totals $310,580 $272,571 ($38,010)
*Gross receipts are net of New York City and New York State Sales Tax and tips

While there are questions as to the validity of the amounts of gross receipts recorded in
the sales journal, which are discussed in subsequent sections of the report, Parks should require
the owner to report the correct amount of gross receipts and make sure the correct fees are paid
to the City.

Daily Records of Operation Not Maintained

According to the Agreement (Provision 22, §g), “related records of the operations should
be retained for a period of at least six (6) years.” According to the owner of the Café once he
enters the cash sales and credit-card sales information into the sales journal all the back-up
documentation supporting the gross receipts are discarded. As a result, we could not determine
whether the amounts recorded in the sales journal reflect all the gross receipts generated by the
Café during the entire 2003 and 2004 season.

Nevertheless, at the end of September 2004, we obtained back-up documents of gross

receipts generated by the Café for September since, according to the owner, September’s back-
up documents had not yet been discarded. The documents included the daily closeout sheets
prepared by the Café’s manager, register tapes, tapes of credit-card batch totals, and guest
checks. We compared the total amounts listed on the credit-card tapes and register tapes to the
daily total amount entered in the sales journal and found discrepancies. Approximately $2,363
(10%) of the credit-card sales and from $1,874 to $2,867 (11% to 18%) of cash sales were not
included in the sales journal. In addition, seven-days’ worth of cash register tapes and four
credit-card batch tapes were missing.

8 Office of New York City Comptroller William C. Thompson, Jr.

 During the audit period the owner assured us that he maintained the documents he was
supposed to and that they were readily available. After numerous inquiries and trips to his
restaurant on 72nd Street to pick up documents, it became clear that we would not obtain a
complete set of records to verify the figures recorded in the Café’s sales journal.

Cash Receipts Deposited in Bank Does

Not Reconcile with Cash Sales Recorded

According to the Agreement (Provision 22, §e), “Cash receipts from the operation under
this Permit must be deposited regularly . . . and reconciled with the sales reports.” Based on our
review of the bank deposits and cash receipts recorded in the sales journal during the 2003 and
2004 seasons, cash deposits from the operation of the Café were not regularly deposited in the
bank.

In addition, we found that the cash recorded in the sales journal never matched the
amount of cash and checks deposited in the bank during each month. As a result, we could not
reconcile the cash sales recorded in the sales journal with the bank deposits, nor could we
determine whether the cash deposited came from sales activities of the Café. The following
tables show the discrepancies between the monthly amounts of cash receipts recorded in the sales
journal to the monthly cash and checks deposited in the bank account:

Table III

Comparison of Monthly Cash Receipts with

Deposits Made to Bank Account
2003 Season

Difference
Cash Cash Between Cash
Month Recorded in Deposited in Recorded and
Sales Journal Bank Account Cash
Deposited
May $1,057 $12,261 $11,204
June $9,644 $9,149 ($495)
July $8,032 $6,311 ($1,721)
August $35,051 $23,547 ($11,504)
September $22,352 $6,000 ($16,352)
October $0 $8,850 $8,850
November $0 $10,018 $10,018
Total $76,136 $76,136 $0

9 Office of New York City Comptroller William C. Thompson, Jr.

 Table IV

Comparison of Monthly Cash Receipts with

Deposits Made to Bank Account
2004 Season

Difference
Cash Cash Between Cash
Month Recorded in Deposited in Recorded and
Sales Journal Bank Account Cash
Deposited
April $2,102 $0 ($2,102)
May $16,137 $165 ($15,972)
June $13,793 $13,393 ($400)
July $6,542 $0 ($6,542)
August $10,596 $0 ($10,596)
September $10,553 $9,815 ($738)
October $7,062 $18,834 $11,772
Total $66,785 $42,207 ($24,578)

As shown above, during the 2003 season cash receipts were deposited regularly in the
bank, but during the 2004 season cash receipts were not deposited in three of the seven months
of operation. In addition, by the end of November 2003 the proprietor deposited $10,018,
thereby reconciling the total amount of sales recorded in the sales journal with the total amount
deposited in the bank. The proprietor continued to make deposits totaling $11,410 through
March 2004, even while the Café was closed for business. As of October 31, 2004, there still
remained a discrepancy of $24,578 between the amount recorded in the journal and the amount
deposited in the bank.

Riverside Beach Restaurant Corporation Response: The proprietor provided additional

information to account for the $24,578 difference shown in Table IV above and stated,
“Attached please find copies of deposit slips for amounts deposited.” The response stated
that $10,576.40 was deposited in November 2004 and $10,906.04 in December 2004.

Auditor Comment: We reviewed the attached documents and found that they were not
deposit slips but rather bank statements. These bank statements show deposits of only
$12,100 for both months combined. Therefore, there still is a difference between the
cash recorded in the journal and the amount of cash deposited in the bank.

Cash Receipts from One Concession Are

Commingled with Cash Receipts of a Second Concession

In May 2004, the Riverside Beach Restaurant Corporation obtained an additional permit
to operate a concession at Pier 70. During our examination of the Café’s bank statements, we
found that the cash receipts for Pier 70 were commingled with cash receipts from the Café and

10 Office of New York City Comptroller William C. Thompson, Jr.

were deposited in one bank account. This is contrary to the provisions of the Agreement, which
require a separate bank account for Café operations. When we brought this to the attention of the
proprietor and his accountant, they said that the reason the cash receipts were commingled in one
bank account was that they did not have enough time to open a second bank account for Pier 70.

In fact, each concession has its own credit-card account. A separate bank account for Pier
70 could have been opened at the time the credit-card account was established. Moreover, the
Agreement allows no exceptions for time constraints.

Inventory Records of Food

And Beverages Not Maintained

The Agreement (Provision 22, §b) states that the Café must maintain inventory records of
products purchased and sold by the concession and perform a physical count on a regular basis.
We asked the Café’s proprietor for his inventory records and were told that he does not maintain
any inventory records of food and beverages bought and sold by the Café.

Upon further examination of the records for the 2004 season, we noted that food and
beverage supplies were purchased by the Café for both the Café and Pier 70. Those items are
kept in one storage facility at the Café at 105th Street. Records are not maintained to separate the
food and beverage supplies purchased and issued to Pier 70.

Monthly Gross Receipts

Not Reported to Parks

Under the Agreement, the concessionaire is required to submit a statement of gross

receipts no later than the 15th day of each month for the preceding month’s operation. In this
way, if at any time during the year the gross receipts exceed the minimum, the concessionaire
must pay Parks an additional percentage of gross receipts. The monthly statement also helps
Parks to keep better track of fees due. We examined the Café’s file maintained by Parks and
found that the Café was not complying with this requirement.

As of August 24, 2004, the Parks file showed that only one statement of gross receipts for
the 2003 season was forwarded by the Café. This statement was dated November 24, 2003, and
itemized the monthly gross receipts for May through August 2003.

Moreover, as of August 2004, Parks had not received any statement of gross receipts for
the 2004 season. According to the proprietor, he was unaware of this requirement despite the fact
the Parks files indicated that Parks had sent monthly reminders of this requirement to the owner.
After we brought this matter to the proprietor’s attention, he began submitting monthly gross
receipt statements.

11 Office of New York City Comptroller William C. Thompson, Jr.

Other Matters

The Agreement between Parks and the Café had the wrong General Provisions attached.
Those General Provisions would apply to a pushcart or concession stand, not to the operation of
a restaurant such as the Café. Other agreements for restaurants that we reviewed contain a legal
provisions rider that clearly specifies the type of back-up documents that must be maintained by
the concession, such as dated cash register receipts, deposit slips, and sales slips and books,
among others. Those requirements are not specified in the Agreement with the Café. The
proprietor told us he believed that his sales journal fulfilled the requirement for maintaining sales
information, and he therefore discarded all other daily supporting documents.

RECOMMENDATIONS
Riverside Beach Restaurant Corp. should:

1. Immediately pay the City any additional fees due, including any accrued late fees
from the operation of the Café during the 2003 and 2004 season.

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating:

“The Café has paid all outstanding fees to the Parks Department as follows: $1,467 for
2003 and $4,181 for 2004, these amounts were paid in March 1st, 2005.”

2. Retain all records of operation, including cash receipt tapes, credit-card batch tapes,
guest checks, purchase invoices, etc., for at least six years.

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating:

“The Café will retain all records of operation, including cash receipt tapes, credit card
batch tapes, guest checks, purchase invoices, etc. for at least six years.”

3. Look into the feasibility of installing a point-of-sale cash register. This register
would automatically record all cash and credit-card transactions and eliminate the
need for a manual system of entries.

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating: “I

have the following concerns: a) absence of telephone lines at The Café, b) cost of the
equipment, . . . and c) The Café was broken into on several occasions, this system would
be further incentive for theft. I would like to further discuss this option.”

4. Deposit all cash collections in a bank account on a regular basis. All deposit amounts
indicated on the books of the Café should be reconciled with the deposit amounts
indicated on the monthly bank statements.

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating:

“The Café will deposit all cash collections in a bank account on a regular basis. All

12 Office of New York City Comptroller William C. Thompson, Jr.

 deposit amounts indicated on the books of the Café will be reconciled with the deposit
amounts indicated on the monthly bank statements.”

5. Maintain separate bank accounts for each concession.

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating:

“Separate bank accounts will be established for each concession.”

6. Maintain inventory records of all beverages and food items purchased and sold. The
inventory records should be maintained separately for each concession

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating:

“Beverage and food items that will be purchased and sold for each concession will be
recorded separately.”

7. Submit statement of gross receipts to Parks on a monthly basis no later than the 15th
day of the following month, and pay the applicable fee amount when the threshold
has been reached.

Riverside Beach Restaurant Corporation Response: The proprietor agreed, stating:

“The Café will submit a statement of gross receipts to Parks Department on a monthly
basis, no later than the 15th day of the following month and pay the applicable fee
amount when the threshold has been reached.”

Parks should:

8. Better monitor the concessionaire overall to ensure that the terms of the Agreement
are followed.

Parks Response: Parks agreed, stating: “DPR [ Parks] will continue to ’Notice’ the Café
to remedy permit violations and based on the audit findings, will ensure that proper
accounting and internal control practices are implemented. The café will be monitored
very closely.”

9. Ensure that the correct legal provisions rider is attached to this permit agreement.

Parks Response: Parks agreed. In her response, the Assistant Commissioner stated that
she is requesting that the Parks General Counsel “draft more suitable ‘Records of Sales’
contract language to substitute in future ‘Snack Bar,’ and ‘Restaurant,’ permits/licenses
as replacement for the current boilerplate.”

10. Consider adding a penalty clause to the Agreement if back-up documentation is

destroyed prior to the six years requirement for retention.

Parks Response: Parks agreed. In her response, the Assistant Commissioner stated that
she is requesting “the legal division examine the feasibility of implementing a penalty

13 Office of New York City Comptroller William C. Thompson, Jr.

 clause that would be applicable if records are not retained for the required six-year
period.”

11. Ensure that Riverside Beach Restaurant Corporation implements the report’s
recommendations. If Riverside Beach does not implement the recommendations,
Parks should consider not renewing the agreement.

Parks Response: Parks agreed, stating: “This recommendation has been addressed by
issuance of the NTC [Notice To Cure] and the planned internal audit follow-up.”

14 Office of New York City Comptroller William C. Thompson, Jr.