Date: February 14, 2014 To: Thomas Deller, Director, Department of Development Services From: Patrick Campbell, Chief Auditor Tele: 860.757.9951
HP
City Of Hartford Department of Development Services Special Event Fee Billing and Collection Audit Report 1411 I. Executive Summary
In accordance with our audit plan for the fiscal year ending June 30, 2014, we completed an audit in January 2014 of the City of Hartford Department of Development Services Special Event Fee Billing and Collection Operations. The purpose of the audit was to evaluate and test internal accounting and operating controls, the accuracy and propriety of transactions processed, the degree of compliance with established operating policy and procedures, and to recommend improvements where required. The results of our audit were reviewed with T. Deller, Director, Department of Development Services; K. Chapman, Interim Director, Department of Public Works; J. Rovella, Chief of Police; J. Ruffo, Interim Director, Finance Department; K. Newman-Scott, Director, Marketing, Events and Cultural Affairs; Domenic Greco, Revenue Manager, Finance Department; and, other responsible members of operating management. The summary that follows includes only the exceptions disclosed and recommended operating improvements. Management has also noted actions taken or planned, including timeframes, to resolve each finding and/or recommendation in this report. We thank Department of Development Services management and staff and others we worked with for their cooperation and courtesies extended to us during our audit. Background The Marketing, Events and Cultural Affairs Division of the Department of Development Services is responsible for the management and oversight for the billing of the costs of services provided by the City of Hartford in support of special events. The Marketing, Events and Cultural Affairs Division (MECA) Special Events Coordinator is primarily responsible for preparing invoices and billing event sponsors for expenses incurred by the City of Hartford (the City) on behalf of these events. In May 2013, the Police Department began separately billing sponsors for the costs of Police services incurred on behalf of these events. The MUNIS Financial Management System (MUNIS) is used for billing these costs to sponsors and as the basis for collecting special event fees. A number of departments including Police, Public Works and Fire provide various services in support of the special events that take place throughout the City. The Revenue Management Unit of the Finance Department is responsible for the collection of special event fees that have been billed but not paid. Sponsors of these events must complete and submit a permit application to the Department of Development Services (DDS) Licenses and Inspections Division at least sixty days prior to the date of the event. The permit application is then passed along to the Special Events Coordinator who obtains cost estimates from departments for City services that will be  provided during the event. In accordance with an ordinance that was adopted on July 11, 2011, the process for billing special event fees was
 
City Of Hartford Department of Development Services Special Event Fee Billing and Collection Audit
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changed from being done on an actual cost basis to a combination of actual costs and flat fees. During the 15 months ended September 30, 2013, $342,195 in special event fees were billed to 102 event sponsors and $275,471 was collected. Scope The scope of our audit included various reviews and tests of transactions recorded during the 15 months ended September 30, 2013. The following audit procedures were performed: Reviews and evaluations of policies, procedures and related internal operating and accounting controls; Reviews to determine the effectiveness and efficiency of processes and functions; Tests of amounts billed; Reviews of the effectiveness of efforts to collect fees due and outstanding; and, Tests of cash receipts and deposits. General In general, we found that policies, procedures and controls relating to the billing and collection of special event fees were not fully documented and/or needed some improvement. In addition, it was not readily evident that all related special event fees for special events were being billed as required. We found that $2,350 in fees were not billed as required for six special events and fees for a number of other special events were not  billed or collected in accordance with related policies and procedures. Finally, according to data compiled by MECA, the City is recovering about 56% of its actual costs associated with special events through the current fee billing process.
II. Audit Results
Various tests, noted in the scope section above, and reviews of related operations disclosed the following: Department of Development Services As previously noted, the MECA Division of DDS is responsible for the overall management and oversight for the billing of sponsors for the costs of services provided by the City of Hartford in support of special events. We identified the following as a result of our tests and reviews of this operation and related activities: 1.
 
As noted in the details that follow, policies procedures and controls relating to the special event fee billing process were not fully documented and needed some improvement.
 
City Of Hartford Department of Development Services Special Event Fee Billing and Collection Audit
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a.
 
In certain instances, the Special Events Coordinator receives checks paid by sponsors for special event fees. For control and segregation of duty purposes, the person responsible for the billing of special event fees should not receive and/or have access to checks for fees  paid by special event sponsors. Although MECA management informed us that they immediately forward any checks they receive to the Finance Department Revenue Management Unit, this does not mitigate the control issue. We recommend that DDS management make other arrangements with either the Finance Department Revenue Manager or the Licenses and Inspections Division for the receipt and processing of checks in these instances.  b.
 
Special event fees are not always being billed in a timely manner. We noted that a $10,000 fee for an event that occurred in October 2013 was not billed until January 22, 2014. In addition, at least 50% of this fee should have been paid by the sponsor before the event occurred. We recommend that action be taken to ensure that all special event fees are billed and paid in a timely manner in the future. c.
 
Special event fees are not always being billed in accordance with
 policies and procedures. According to the policies and procedures, “If
the Event Organizer (EO) is a non-profit 100% of the invoice will be invoiced and the EO must pay upfront 50% of the total SE costs. All for profit events will be invoiced and must pay 100% of the cost
s upfront.”
 i.
 
MECA did not ensure that fees totaling $4,546 for four special events were paid by the sponsors before the events occurred. As a result, the related fees remained unpaid and outstanding for periods of one to four months. MECA management informed us
that these fees, which were for weddings, were billed up front as required and that it is the Finance Department’s responsibi
lity to collect them. We believe, however, that MECA should not allow these events to occur without the fees being paid as required. We also believe that this is something that would be more effectively handled and controlled by MECA. ii.
 
MECA did not require non-profit sponsors to pay 50% of the total costs for eight events upfront as required. As a result, the related fees totaling $13,405 remained unpaid and outstanding for periods of one to four months. We recommend that DDS management take action to ensure that all special event fees are paid in advance before the events occur as in the case of the weddings noted above and are billed in accordance with policies and procedures in the future. 2.
 
It is not easily discernible that the standard flat fees and/or any other applicable costs associated with departments that provide services or support for each special event are billed to the respective sponsors as required. a.
 
We noted that while the estimated costs associated with the departments involved in the support of special events are discussed during the review and planning process, the estimated costs are not documented. As a result, there is no record of what the total estimated costs to the City will be for each special event for the services and support provided by the Police, Public Works, Fire or any other applicable department.  b.
 
It is not easily discernible how the fees to be billed for each event were developed and established because the related process and basis for what is ultimately billed to the sponsor is not documented. c.
 
It is not readily evident that all special event fees and costs are billed to sponsors as required because special events are not being tracked and reported on from the time a permit is issued by the DDS Licenses and Inspections Division until any related fees or actual costs are billed to the respective event sponsor.
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