Audit of the Ellis-O`Farrell

Transcription

Office of the Controller – City Services Auditor
City and County of San Francisco
SAN FRANCISCO MUNICIPAL
TRANSPORTATION AGENCY:
Audit of the Ellis-O’Farrell Parking
Garage for May 2008 Through June
2010
December 13, 2011
OFFICE OF THE CONTROLLER
CITY SERVICES AUDITOR
The City Services Auditor (CSA) was created in the Office of the Controller through an amendment to
the San Francisco Charter that was approved by voters in November 2003. Under charter
Appendix F, CSA has broad authority to:
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Report on the level and effectiveness of San Francisco’s public services and benchmark the
city to other public agencies and jurisdictions.
Conduct financial and performance audits of city departments, contractors, and functions to
assess efficiency and effectiveness of processes and services.
Operate a whistleblower hotline and website and investigate reports of waste, fraud, and
abuse of city resources.
Ensure the financial integrity and improve the overall performance and efficiency of city
government.
CSA may conduct financial audits, attestation engagements, and performance audits. Financial audits
address the financial integrity of both city departments and contractors and provide reasonable
assurance about whether financial statements are presented fairly in all material aspects in
conformity with generally accepted accounting principles. Attestation engagements examine, review,
or perform procedures on a broad range of subjects such as internal controls; compliance with
requirements of specified laws, regulations, rules, contracts, or grants; and the reliability of
performance measures. Performance audits focus primarily on assessment of city services and
processes, providing recommendations to improve department operations.
CSA conducts audits in accordance with the Government Auditing Standards published by the U.S.
Government Accountability Office (GAO). These standards require:
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Independence of audit staff and the audit organization.
Objectivity of the auditors performing the work.
Competent staff, including continuing professional education.
Quality control procedures to provide reasonable assurance of compliance with the auditing
standards.
Audit Team:
Mark Tipton, Audit Manager
Mary Soo, Associate Auditor
Chris Trenschel, Associate Auditor
Helen Vo, Associate Auditor
Office of the Controller – City Services Auditor
San Francisco Municipal Transportation Agency:
Audit of the Ellis-O’Farrell Parking Garage for May 2008 Through June 2010
December 13, 2011
Purpose of the Audit
This audit determined whether the tenant of the Ellis-O’Farrell Parking Garage (garage), the City of San
Francisco Ellis-O’Farrell Parking Corporation (Corporation), reported and correctly submitted to the San
Francisco Municipal Transportation Agency all revenue collected from garage operations, correctly reported all
operating expenses, and complied with other selected provisions of its lease agreement with SFMTA and
operating agreement with the garage operator. The audit also assessed the adequacy of the Corporation’s
bylaws in addressing the Corporation’s governance.
Highlights
For May 1, 2008, through June 30, 2010, the Corporation reported to SFMTA
net revenue (gross revenue less parking taxes) of $12,144,139, and correctly
reported expenditures of $8,558,591. However, the Corporation did not fully
comply or ensure compliance by its operator, Parking Concepts, Inc. (PCI),
with the operating agreement between the Corporation and PCI, and SFMTA
did not ensure that only approved parking rates were programmed in the
garage’s parking control equipment. As a result, parkers were undercharged
$646,293, of which the Corporation should have remitted $236,140 to
SFMTA but did not.
Recommendations
The audit report includes
eight recommendations for
SFMTA to recover revenue
to which it is entitled and
improve the compliance of
the Corporation and
operator with their
management agreement.
SFMTA should:
For the audit period, the audit found:
 $245,667 was not collected or remitted because of a rolling (or continuous)
grace period used in the garage. This grace period allowed parkers not to
pay for the next time increment (e.g., hour) of their garage stay until seven
minutes after the previous increment ended. Of this amount, $230,032 was
not collected during May 2008 through April 2010, before SFMTA had a
written policy on such grace periods. However, the remaining $15,635 was
due to the continued use of the seven-minute grace period after SFMTA
began allowing a two-minute grace period on May 1, 2010.
 $220,505 was not collected or remitted because neither the Corporation
nor its operator treated unaccounted-for tickets as lost tickets. SFMTA is to
receive the lost ticket charge for each ticket that cannot be accounted for.
 $171,115 was not collected or remitted because of incorrect rates charged
to some parkers in May 2008 through June 2009. The vast majority of the
undercharges resulted from a misapplication of evening rates for evening
hours to parkers who entered the garage during the daytime rate period
and exited during the evening rate period. This was contrary to the rate
schedule approved by SFMTA’s Board of Directors, but occurred with the
approval of former SFMTA staff according to SFMTA.
 The by-laws of the Corporation do not address who may serve on its board
of directors, how long they may serve, how often they must attend board
meetings, or whether the meetings are open to the public.
 Bill the Corporation for
partial or full payment (up
to $220,505) for the
unaccounted-for tickets.
 Bill the Corporation for the
$15,635 in revenue that it
did not collect because of
the unauthorized sevenminute continuous grace
period used in May and
June 2010.
 Instruct the Corporation
that it is jointly
responsible, along with
SFMTA, for verifying that
the garage’s revenue
control equipment is
programmed correctly.
Copies of the full report may be obtained at:
Controller’s Office ● City Hall, Room 316 ● 1 Dr. Carlton B. Goodlett Place ● San Francisco, CA 94102 ● 415.554.7500
or on the Internet at http://www.sfgov.org/controller
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CITY AND COUNTY OF SAN FRANCISCO
OFFICE OF THE CONTROLLER
Ben Rosenfield
Controller
Monique Zmuda
Deputy Controller
December 13, 2011
Board of Directors
Municipal Transportation Agency
1 South Van Ness Avenue, 7th Floor
San Francisco, CA 94103
Edward D. Reiskin
Director of Transportation
Municipal Transportation Agency
1 South Van Ness Avenue, 7th Floor
San Francisco, CA 94103
Chairman Nolan, Directors, and Mr. Reiskin:
The Controller's Office, City Services Auditor Division (CSA), presents its report on the audit of the
Ellis-O’Farrell Parking Garage (garage). Since 1965 the City of San Francisco Ellis-O’Farrell Parking
Corporation (Corporation) has leased the garage from the City and County of San Francisco (City),
through what is now the San Francisco Municipal Transportation Agency (SFMTA). The lease was
renewed in 1991 and will expire in 2041. Parking Concepts, Inc. (PCI) manages and operates the
garage under an agreement with the Corporation.
Reporting Period:
May 1, 2008, through June 30, 2010
Net Revenue:
$12,144,139
Results:
The Corporation reported to SFMTA net revenue (gross revenue less parking taxes) of $12,144,139
and correctly reported expenditures of $8,558,591. However, the Corporation, by itself or through its
operator, PCI, did not fully comply with the operating agreement or SFMTA regulations because it:
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Applied an unapproved seven-minute continuous grace period, including during the two
months of the audit period in which SFMTA allowed only a two-minute grace period.
Did not track unaccounted-for tickets or remit revenue for them as lost tickets.
With the knowledge of SFMTA, applied evening parking rates to some transient (hourly)
parkers in a way that the audit found to be contrary to SFMTA board-approved rates.
The audit report includes eight recommendations for SFMTA to consider concerning these and other
findings in the report. The responses of SFMTA and the Corporation to the audit report are attached
as appendices. CSA will work with SFMTA to follow up on the status of the recommendations made
in this report.
We appreciate the assistance and cooperation that staff of SFMTA, the Corporation, and PCI
provided to us during the audit.
Respectfully,
Tonia Lediju
Director of Audits
415-554-7500
City Hall • 1 Dr. Carlton B. Goodlett Place • Room 316 • San Francisco CA 94102-4694
FAX 415-554-7466
cc:
Mayor
Board of Supervisors
Budget Analyst
Civil Grand Jury
Public Library
LIST OF ABBREVIATIONS AND ACRONYMS
Board
Board of Directors of San Francisco Municipal Transportation Agency
City
Controller
City’s Office of the Controller
Corporation
City of San Francisco Ellis-O’Farrell Parking Corporation
CPA
Certified Public Accountant
CSA
Controller’s City Services Auditor Division
Downtown
City of San Francisco Downtown Parking Corporation
PCI
Parking Concepts, Inc.
SFMTA
San Francisco Municipal Transportation Agency
Office of the Controller, City Services Auditor
Audit of the Ellis-O’Farrell Parking Garage
INTRODUCTION
Audit Authority
The lease agreement between the City and County of San
Francisco (City) and the City of San Francisco EllisO’Farrell Parking Corporation (Corporation) authorizes the
City and its representatives to audit all accounts and
records established under the lease. This audit was
conducted under the authority granted by the lease, the
San Francisco Charter, which provides the City Services
Auditor Division (CSA) of the Office of the Controller
(Controller) with broad authority to conduct audits, and
pursuant to an audit plan agreed to by the Controller and
the San Francisco Municipal Transportation Agency
(SFMTA).
Background
The City leases the Ellis-O’Farrell Parking Garage (garage),
a city-owned, off-street parking facility, to the Corporation
under a 50-year lease agreement dated June 1, 1991,
which will expire in 2041. The lease provides that all rights,
powers, and privileges under the lease may be exercised
by the director of the City’s Department of Parking and
Traffic (now part of SFMTA), while the Administrative Code,
Section 17.8, gives SFMTA jurisdiction and control over all
city-owned parking facilities that are open to the public. The
Corporation paid SFMTA rent of $1 when the lease
commenced.
The Corporation is a nonprofit corporation organized to
assist the City in operating the garage, which is located at
123 O’Farrell Street in San Francisco. Pursuant to its lease,
the Corporation hired Parking Concepts, Inc., (PCI) under
an operating agreement to manage and operate the parking
of vehicles at the facility and to collect all revenue in
connection with the operation of the parking facility. The
Corporation pays all of the garage’s operating expenses,
including salaries and utilities, by submitting requisitions to
the City, which are approved by SFMTA and the Controller.
In addition to reimbursing all of PCI’s operating expenses,
the Corporation pays PCI management fees of $40,000 per
year for its services.
Objectives
The purpose of this audit was to determine whether the
Corporation:
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Scope and Methodology
Reported and correctly submitted to SFMTA all revenue
collected from the operation of the garage.
Correctly reported all of its operating expenses.
Complied with other selected provisions of its lease
agreement with SFMTA.
Has by-laws that adequately provide for the
Corporation’s governance.
The audit covered the period May 1, 2008, through June
30, 2010.
To conduct the audit, the audit team:
Statement of Auditing
Standards
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Reviewed the applicable terms of the lease agreement
between the City and the Corporation, and the operating
agreement between the Corporation and PCI.
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Assessed the Corporation’s internal controls and
procedures over collecting, recording, summarizing, and
reporting gross revenue and expenditures.
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Determined whether the Corporation submitted
complete and accurate monthly statements to report
accurate gross revenue, remitted all revenue collected
according to the terms of the lease agreement, and
correctly submitted operating expenditure reports.
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Reviewed whether the Corporation and PCI complied
with various other lease and operating agreement
provisions.
This performance audit was conducted in accordance with
generally accepted government auditing standards. These
standards require planning and performing the audit to
obtain sufficient, appropriate evidence to provide a
reasonable basis for the findings and conclusions based on
the audit objectives. We believe that the evidence obtained
provides a reasonable basis for the findings and
conclusions based on the audit objectives.
AUDIT RESULTS
The Corporation
Reported Revenue
Received and Correctly
Reported Expenditures
EXHIBIT 1
From May 1, 2008, through June 30, 2010, the Corporation
correctly reported to SFMTA its net revenue (gross revenue
less parking taxes) of $12,144,139 and expenditures of
$8,558,591. However, the audit identified several findings
related to contract compliance and other issues, which are
discussed below. Most notably, some revenue that should
have been received and reported was not. Exhibit 1
summarizes the revenue, expenditures, and net profit
reported by the Corporation.
Reported Revenue and Expenditures
May 1, 2008, Through June 30, 2010
Reporting Period
Revenue*
Expenditures
Net Profit
(Revenue less
Expenditures)
May 1, 2008, through April 30, 2009
$5,504,574
5,672,663
966,902
$4,062,649
3,990,220
505,722
$1,441,925
1,682,443
464,180
$12,144,139
$8,558,591
$3,558,548
Total
*Includes parking, retail rental, and other garage revenue.
Sources: Corporation monthly summary reports.
Finding 1
The Corporation did not collect $230,032 and underpaid
$15,635 because garage customers received an
unauthorized continuous grace period.
Customers were allowed to exit up to seven minutes into
the next increment of time of their stay in the garage
without paying for the additional time. This continuous
grace period was applied to each time increment in the
garage’s rate schedule. For example, a parker who exited
the garage one hour and six minutes after entering was
only charged for one hour of parking rather than the two
hours required by the parking rates approved by SFMTA’s
Board of Directors (board).
The Corporation collected
less revenue than it should
have because of the
continuous grace period.
Continuous grace periods are not provided for or permitted
by the Corporation’s lease or the operator’s management
agreement, and, according to staff of SFMTA’s Off-street
Parking unit, before 2010 SFMTA had not formally
addressed the issue of continuous grace periods. However,
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near the end of the audit period, MTA issued regulations for
city garages, effective May 1, 2010, which allow them to
use a two-minute continuous grace period. Nonetheless,
despite this policy, the garage continued to use a sevenminute grace period in May and June 2010, the last two
months of the audit period.
According to staff of SFMTA’s Off-street Parking unit,
because there was no formal guidance on continuous grace
periods in effect before May 2010, the Corporation was not
out of compliance in this regard during that time. However,
the Corporation did not comply with SFMTA regulations
when it continued to allow a seven-minute continuous grace
period on and after May 1, 2010.
Exhibit 2 shows the loss in revenue to the City as the result
of the seven-minute continuous grace period used at the
garage.
Uncollected Revenue Due to Continuous Grace Period
Period
Uncollected Revenue
$230,032
May 1, 2010, through June 30, 2010*
15,635
Total
$245,667
EXHIBIT 2
*MTA issued guidance effective May 1, 2010, allowing a two-minute continuous grace period. The amount for
May and June 2010 is the difference in revenue lost from the seven-minute grace period used versus the twominute grace period that should have been used.
Sources: Auditor analysis of transaction data from parking control system.
Although continuous grace periods were not provided for by
SFMTA until May 2010, the garage uses two other types of
grace periods that are allowed: an in-and-out grace period
for those who exit the garage within a few minutes of
entering, and a grace period that allows parkers extra time
to exit the garage after paying for parking before retrieving
their vehicle. As with all types of grace periods, the
continuous grace period is a programmed function in the
garages’ revenue control equipment. Although this
equipment is programmed at the direction of SFMTA,
according to staff of SFMTA’s Off-street Parking unit, the
Corporation is responsible for verifying that the equipment
is correctly programmed.
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Recommendations
SFMTA should:
1. Bill the Corporation for $15,635 in revenue that it should
have collected but did not collect because it allowed
customers to receive an unauthorized continuous grace
period of seven minutes in May and June 2010.
2. Instruct the Corporation that it, along with SFMTA, is
responsible for ensuring that the garage’s revenue
control equipment is programmed correctly. Follow up
to ensure that the garage’s equipment is now
programmed to give a two-minute continuous grace
period.
Finding 2
The Corporation did not calculate or report revenue for
unaccounted-for tickets, which totals $220,505.
The monthly reports the Corporation submitted to SFMTA
did not include the number of unaccounted-for tickets. The
Corporation’s management agreement with PCI requires
that tickets that are dispensed but cannot be accounted for
be tracked and reported to SFMTA as revenue tickets. The
management agreement stipulates that any ticket that is not
accounted for should be treated as a lost ticket and the
Corporation should include that ticket in its reported
revenue and apply the lost ticket charge to that ticket in
each daily report. Therefore, per the management
agreement, the Corporation must pay SFMTA for each
unaccounted-for ticket just as if it was a ticket lost by a
customer. During the audit period, the lost ticket charge at
the garage ranged from $27 to $38.
The Corporation did not
report unaccounted-for
tickets to SFMTA as
required.
The audit calculated the number of tickets that should have
been reported as unaccounted for by comparing the
number of tickets issued by dispensers in the garage to the
number of tickets collected, after subtracting tickets voided
due to damage or other reasons and tickets held by
overnight parkers. Unaccounted-for tickets and their value
as lost tickets are shown in Exhibit 3.
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EXHIBIT 3
Unaccounted-for Tickets
Number of
Period*
Unaccounted-for
Tickets
July 1, 2009, through March 4, 2010
March 5, 2010, through June 30, 2010
3,653
2,304
1,267
Total
7,224
Lost Ticket
Rate
Value
$27
32
38
$98,631
73,728
48,146
$220,505
*Periods reflect dates on which SFMTA parking rates changed
Sources: Auditor analysis of transaction data from parking control system
Tickets may go missing for
several reasons.
According to PCI’s facility manager, tickets can go missing
at the garage for reasons including the following.
1. Monthly Parkers. Monthly parkers sometimes pull a ticket
when entering the garage instead of using their access
card. If the parker discards the ticket thinking it will not be
needed to exit, he or she will be unable to exit because
the revenue control equipment is programmed not to
allow exits with monthly parker access cards unless the
card was used to enter. If this occurs, the parker must
then visit the garage’s office and have the access card
reset to allow exit. The discarded ticket cannot be
accounted for.
2. Tailgaters. Drivers can sometimes exit the garage by
closely following the car in front of them so both cars
pass through the gate only using one ticket. The second
driver’s ticket will not be accounted for.
3. Back-out drivers. Some drivers enter the garage entry
area, pull a ticket, then decide not to enter the garage
and back out. This ticket will not be accounted for.
The reasons identified above are likely causes of
unaccounted-for tickets, but there may be other causes that
have not been identified by the Corporation. Whether these
three causes account for the 7,224 missing tickets identified
during the audit period is unknown.
Without a ticket reconciliation process to reduce the
number of unaccounted-for tickets, there is an increased
risk of fraud. That is, unaccounted-for tickets could be
missing because parkers have found some other way
to avoid payment or because garage employees have
found a way to divert parkers’ payments and not turn in
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their tickets.
SFMTA’s current policy
allows a certain amount of
unaccounted-for tickets.
By not reporting unaccounted-for tickets to SFMTA or
paying SFMTA for them, the Corporation did not comply
with the management agreement. This is not a new audit
finding for SFMTA garages. For example, CSA’s recent
audit of the Fifth and Mission Yerba Buena Parking Garage
had a similar finding. However, according to the regulations
SFMTA issued effective May 1, 2010, garage managers
(operators) are not liable for the uncollected value of
missing tickets if the number of unaccounted-for tickets is
equal to or less than 0.25 percent of the number of tickets
dispensed in the garage in a month. This regulation differs
from the missing ticket provision in the garage’s
management agreement, and was in effect for only the last
two months of the audit period. However, given this
regulation, it is not clear that the Corporation or its operator
is responsible for the full value of all unaccounted-for tickets
as determined by the audit.
Recommendations
MTA should:
3. Bill the Corporation for partial or full payment (up to
$220,505) for the missing tickets identified.
4. Require the Corporation to report and remit revenue for
unaccounted-for tickets in accordance with SFMTA’s
May 2010 regulations.
Finding 3
$171,115 was not collected mostly because evening
parking rates were misapplied to some parkers.
Some transient parkers were undercharged because
evening parking rates were applied contrary to the parking
rates approved by the SFMTA board.1
The majority of the undercharges the audit found resulted
from a misapplication of evening rates to parkers who
entered the garage during the daytime rate period and
exited during the evening rate period. According to the
Corporation’s manager and SFMTA, this occurred from
1
The board approves parking rates for city-owned garages, including weekday, weekend, morning,
and evening rates. Transient parkers are those who pay short-term rates, as opposed to monthly
rates paid by monthly parkers.
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May 1, 2008, through June 30, 2009. For this period,
according to SFMTA Off-street Parking unit staff, it appears
that staff in this unit approved the application of evening
rates for evening hours regardless of when the vehicle
entered the garage, and the garage’s revenue control
equipment was programmed accordingly, therefore, the
misapplication of rates was not the responsibility of the
Corporation.
The rates approved by the SFMTA board dictate that to be
eligible for the discounted evening rates, the parker must
enter the garage during the evening rate period, which
began at 6:00 PM during most of the audit period. Parkers
who enter the garage during the daytime rate period
should be charged the full daytime rate for their entire stay.
Parkers who entered the garage during the day rate period
and left during evening hours were incorrectly charged the
evening rate for the evening portion of their stay.
MTA did not receive
$162,784 in revenue
because of incorrectly
applied evening parking
rates.
As a result of the incorrect application of transient parking
rates during 14 months of the audit period, parkers were
undercharged by $171,115. Of that, $162,784 (95 percent)
resulted from the daytime to evening rate issue. The cause
of the remaining $8,331 discrepancy (5 percent) could not
be determined.
Recommendation
5. MTA should ensure that any regulations or other
guidance its staff issues to garages does not contradict
actions of the SFMTA Board of Directors.
Finding 4
The Corporation’s by-laws lack key provisions related
to its Board of Directors.
The Corporation’s by-laws do not address who may serve
on its Board of Directors, how long they may serve, how
often they must attend board meetings, or whether
meetings are open to the public. Additionally, the by-laws
do not specifically describe the Board of Director’s duties.
The Corporation’s by-laws
have not been updated
since 1992.
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The Corporation’s by-laws have not been updated since
1992 and do not include several provisions included in bylaws adopted by another San Francisco nonprofit garage
corporation whose by-laws are more recent. For
comparison, the audit reviewed the by-laws of the City of
San Francisco Downtown Parking Corporation (Downtown),
which were drafted in 2003.
Qualifications of Directors. Downtown’s by-laws require
directors to have prior knowledge of the garage’s
operations, involvement with businesses in the garage’s
vicinity, and/or expertise that will benefit the corporation.
The Corporation’s by-laws do not address directors’
qualifications. Consequently, the Corporation’s board may
elect anyone as a member, including someone with no
parking garage experience or involvement in nearby
businesses. Such a member may be poorly qualified to
make policy decisions regarding garage operations.
Term of Service and Leadership. Downtown limits the
president and vice president of its Board of Directors to
serve three consecutive one-year terms. The Corporation’s
by-laws do not limit the duration of service as a board
officer or member. As a result, the Corporation’s board is
more susceptible to stagnation among the composition of
its members, to a concentration of power within a small
group, and to a loss of commitment by members to the
board.
Meeting Attendance. Neither the Corporation’s or
Downtown’s by-laws address director attendance at
meetings. The Corporation holds four board meetings a
year at which attendance averaged 71 percent for the
period of May 1, 2008, through June 30, 2010. Of the eight
elected board members, only two attended every meeting
during the audit period. Although the meetings reviewed by
the audit had quorums, by not requiring a minimum level of
board meeting attendance by each member, the
Corporation may have directors who are not committed to
their posts. This is evidenced by the fact that one of the
Corporation’s directors did not attend any board meetings
during the 26-month audit period.
Meetings Open to Public. Downtown requires its board
meetings to be open for public comment, with the agenda
posted at least 72 hours in advance. In contrast, the
Corporation’s by-laws do not address public positing
requirements or whether the meetings are open to the
public. By not addressing public access to meetings in its
by-laws, the Corporation does not expressly hold itself to
the state’s Brown Act, which requires nonprofit corporation
board meetings to be noticed in advance and open to the
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public.
The authority of the
Corporation’s Board of
Directors is broad.
The authority of directors for both Downtown and the
Corporation is subject to the limitations of the articles of
incorporation, the by-laws, and state law. The directors
have the authority to select and remove all the other
officers, agents, and employees of the Corporation, change
the principal office location, and borrow money and incur
debt. Corporation directors have the added authority to
conduct, manage, and control the affairs and business of
the corporation which appears to grant them broad
authority.
Recommendation
6. MTA should request that the Corporation update its bylaws to address the qualifications to be a director, term
limits for officers, minimum meeting attendance
requirements for directors, public access to board
meetings, and required advance notice to the public of
corporate board meetings.
Finding 5
The Corporation does not sign or date financial reports
submitted to SFMTA.
Monthly summary reports detailing gross revenue and
expenses are not dated by the Corporation, and SFMTA
does not record the date reports are received. The
management agreement states that monthly summary
reports must be submitted to SFMTA no later than 15 days
after the close of each month. For each day the monthly
report is late, the operator shall incur a late charge of $100
to cover administrative costs for revenue report and
projection revisions.
Because the reports are not dated, it is impossible to
determine whether the City is entitled to assess and receive
late charges from the operator. Further, if reports are late,
SFMTA may not have information it needs to take
appropriate action to ensure that the garage is being
adequately managed and operated.
Recommendation
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7. MTA should ensure that all monthly summary reports
received from the Corporation are dated, and pursue
any eligible late charges from the operator. SFMTA
should also begin recording the dates it receives the
monthly summary reports.
Finding 6
There is no deadline for independent audit reports.
The management agreement states only that the
independent audit, to be completed by a certified public
accountant (CPA), must begin within 30 days of the end of
the fiscal year. It is the Corporation’s responsibility to
ensure the audit begins within that timeframe. The
management agreement does not specify a completion
date or report due date for independent audits. The CPA
audit is an important tool for SFMTA to determine if the
garage manager, in this case the Corporation, correctly
reported revenue and expenses. Because no deadline
exists in the lease more management agreement for
completion of the CPA audit at the Ellis-O’Farrell Garage,
the audit report may be issued later than is useful to
SFMTA. Agreements at some other city garages require the
audit to be completed and report to be delivered to SFMTA
within 90 to 120 days of the end of the fiscal year.
Recommendation
8. MTA should require the Corporation to amend the
management agreement to provide for a deadline for
the independent audit report.
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APPENDIX A: SFMTA’S RESPONSE
A-1
AUDIT RECOMMENDATIONS AND RESPONSES
Recommendation
Responsible
Agency
Response
MTA should:
1. Bill the Corporation for $15,635 in
revenue that it should have collected
but did not collect because it allowed
customers to receive an unauthorized
continuous grace period of seven
minutes in May and June 2010.
SFMTA
Do Not Concur. Since the finalization of this CSA report, it has been
confirmed that SFMTA directed Datapark to change the grace-period
programming on June 23, 2010 and Datapark completed the
programming on June 30, 2010. Because SFMTA's direction was
provided on June 23, 2010, SFMTA does not support billing the
Corporation for uncollected revenue in May and June 2010.
2. Instruct the Corporation that it, along
with SFMTA, is responsible for
ensuring that the garage’s revenue
control equipment is programmed
correctly. Follow up to ensure that the
garage’s equipment is now
programmed to give a two-minute
continuous grace period.
SFMTA
Concur. SFMTA has provided the recommended direction to the
Corporation. Additionally, SFMTA has confirmed that the two-minute
grace period was activated at the EOF garage on June 30, 2010.
A-2
Recommendation
3. Bill the Corporation for partial or full
payment (up to $220,505) for the
missing tickets identified.
Responsible
Agency
SFMTA
Response
Concur. SFMTA concurs with the audit's findings that 7,224
unaccounted parking tickets (UPTs) were documented for the audit
period and that the value of these UPTs, if a daily maximum rate is
applied, is $220,505.
SFMTA is currently analyzing the issue of UPTs in detail. SFMTA is
looking into several issues including benchmarking and current industry
practices, the newly adopted Parking Facility Operation and
Management Regulations and the appropriateness of the zero
tolerance for UPTs included in some existing garage operator
management agreements (including the agreement between Ellis
O'Farrell Parking Corporation and Parking Concepts, Inc. for operation
of the Ellis O'Farrell Garage). SFMTA will establish a policy that will be
consistently applied for reimbursement of UPTs for all recent and future
audits.
4. Require the Corporation to report and
remit revenue for unaccounted-for
tickets in accordance with SFMTA’s
May 2010 regulations.
SFMTA
Concur. See Recommendation #3.
5. Ensure that any regulations or other
guidance its staff issues to garages
does not contradict actions of the
SFMTA Board of Directors.
SFMTA
Concur. SFMTA staff will only issue programming guidance that is
consistent with the rate structure as adopted by the SFMTA Board of
Directors.
A-3
Recommendation
Responsible
Agency
Response
6. Request that the Corporation update
its by-laws to address the
qualifications to be a director, term
limits for officers, minimum meeting
attendance requirements for directors,
public access to corporate board
meetings, and required advance
notice to the public of board meetings.
SFMTA
Concur. In response to a separate audit issued by the City Services
Auditor in June 2011 and the proposed Parking Revenue Bond,
SFMTA is currently negotiating new lease agreements with four nonprofit parking corporations, including the Ellis O'Farrell Parking
Corporation. The draft lease does address these recommendations.
7. Ensure that all monthly summary
reports received from the Corporation
are dated and pursue any eligible late
charges from the operator. SFMTA
should also begin recording the dates
it receives the monthly summary
reports.
SFMTA
Concur. For all Corporations and garage operators, SFMTA has begun
to date stamp monthly summary reports upon receipt and to pursue
late charges as appropriate.
8. Require the Corporation to amend the
management agreement to provide for
a deadline for the independent audit
report.
SFMTA
Concur. SFMTA is in the process of negotiating and finalizing new
lease agreements with four non-profit corporations including EllisO'Farrell Parking Corporation. This recommendation has been
addressed in the draft lease agreement.
A-4
APPENDIX B: CORPORATION’S RESPONSE
B-1
B-2
B-3
B-4
B-5
B-6
B-7
B-8
B-9
B-10
B-11
B-12
B-13
B-14
B-15
B-16

Audit of the Ellis-O`Farrell

Transcription

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