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MANATEE COUNTY CLERK OF THE
CIRCUIT COURT
INTERNAL AUDIT DEPARTMENT
CONVENTION CENTER
EVENT SERVICES INVENTORY AUDIT
A U D I T R E P O R T
TABLE OF CONTENTS
I. INTERNAL
AUDIT REPORT
A. Background; Purpose/Objectives; Scope..................................................................2
B. Methodology; Irregularities, Abuse, or
Illegal Acts; Test of
Compliance; Statement of Internal
Control Structure
....
3
C.
Management
Team and Management Action Plan
4
D. Management Summary..................................................................
..4
- 5
E. Audit Report Authorization...........................................
.............
5
F. Areas of Improvement and Managements Action Plan...........
.
....
..6
- 7
MANATEE COUNTY CLERK OF THE
CIRCUIT COURT
INTERNAL AUDIT DEPARTMENT
CONVENTION CENTER
EVENT SERVICES INVENTORY AUDIT
The Internal Audit Department conducted an audit of
in-house food and liquor inventory under the Convention and Visitors
Department Event Services Division (referred to thereafter as the Convention
Center) for the audit period June 1, 1999 through May 31, 2000. The audit was performed in accordance with Generally Accepted Governmental Auditing Standards, issued by the
Comptroller General of the United States; and the Standards for the Professional Practice of Internal Auditing, issued
by the Institute of Internal Auditors.
BACKGROUND:
The Convention Center's Event Services Division provides
food services for events held at either the Convention Center or the
Crosley Museum through in-house staff or outside catering companies. The Convention Center in-house staff can provide
concession, banquets, short menu or snack items, and all liquor beverage
services. The Convention Center
maintains both food and liquor inventory. The Crosley Museum maintains liquor inventory only.
PURPOSE/OBJECTIVE:
The audit purpose / objectives included, but were not
limited to, the following:
Ψ
Determine whether food and
liquor inventory counts are performed and whether the inventories are
adequately controlled.
Ψ
Determine whether controls
have been implemented and are adequate to monitor food and liquor costs.
SCOPE:
The scope of the audit included
examining on a test basis evidence supporting the controls implemented
by the Convention Center in managing the in-house food and liquor inventories
at both the Convention Center and the Crosley Museum for the twelve
month period ending May 31, 2000.
METHODOLOGY:
Internal control evaluations were accomplished by flow
charting the key operations of this specified area, discussions with
management and staff, observations, and analytical and substantive testing
of individual internal controls. Risk
analysis was used to establish priorities of audit objectives.
IRREGULARITIES,
ABUSE, OR ILLEGAL ACTS:
No indications of irregularities, abuse, or illegal
acts were discovered for the period ending May 31, 2000 in the inventory
audit of the Convention Center Event Services.
TEST OF COMPLIANCE:
Internal Audit tested compliance with certain laws
and regulations, obtained an understanding of internal controls and
assessed control risk. Tests
performed were limited to the specific areas included in the Purpose/Objective
section of this report and appeared to provide sufficient evidence to
support an opinion on compliance and internal controls for the areas
tested.
Except as noted in our audit report, tested items were
in compliance with resolutions and other policies established by the
Convention Center Event Services Division.
STATEMENT
ON INTERNAL CONTROL STRUCTURE:
In planning and performing the inventory audit under
the Convention Center Event Services Division for the period ending
May 31, 2000, the internal control structure was considered in order
to determine the auditing procedures for the purpose of this report. As a result, we noted in the audit report matters involving the
internal control structure and its operations that are considered reportable
conditions under standards established by the U.S. General Accounting
Office, Government Auditing Standards. Reportable conditions involve matters relating
to deficiencies in the design or operation of the internal control structure,
that in our judgment, could adversely affect the organization's ability
to record, process, summarize and report on data consistent with managements
intentions.
Our consideration of the internal control structure
would not necessarily disclose all matters in the internal control structure
that might be reportable conditions, as defined above. In addition, because of the inherent limitations
in any internal control structure, deficiencies in the design or operation
of the internal control structure may exist and not be detected. We believe the conditions identified in our
audit report constitute reportable conditions as previously defined.
MANAGEMENT TEAM AND MANAGEMENT
ACTION PLAN:
A Management Action Plan will be used for each Area of Improvement reported. Management Action Plans are corrective actions with implementation dates developed in cooperation with the Departments Management Team and the Internal Audit Department. The Management Team includes the Director of the Convention and Visitors Department and his top mangers.
MANAGEMENT
SUMMARY:
The Convention Center is staffed
by dedicated individuals who are enthusiastic and pride themselves on
customer service. Through the years, the utilization of both the Convention
Center and the Crosley Museum has increased, along with a significant
improvement in customer service on events held.
With the stabilization of facility utilization and customer service,
Management is now in the position to concentrate on increasing fiscal
accountability. Beginning with inventory accountability, Management
will have the ability to ensure event purchases are reasonable, inventory
used is being charged to an event, the possibility of theft is minimized
and inventory waste is controlled. With these controls, management will be able
to measure profitability goals, and isolate and reevaluate those areas
not meeting management's expectations.
The following are areas identified for improvement and addressed
by our Management Action Plans:
·
The Convention
Center and the Crosley Museum maintain inventory for events. Periodic inventory counts and reconciliation
of both food and liquor have neither been performed completely nor regularly.
The Management Team through its Management Action Plan will develop
procedures requiring inventory counts to be conducted and reconciled
monthly. (See
Area for Improvement #1 on page 6.)
·
The Convention
Center could strengthen their control over inventory access by maintaining
and reviewing a formal list of employees who have been issued keys.
The Management Team through its Management Action Plan has established
a formal list of employees who have been issued keys and will develop
procedures on the issuance and return of keys. (See Area for Improvement #2 on page 6.)
·
The Convention
Center management has agreed to set prices based on actual cost plus
a targeted 40% contribution to overhead as stated in Resolution 96-222. While management continues to believe that
this goal is reasonable, documentation was not available to determine
whether they are meeting this goal.
The Management Team through its Management Action Plan will develop
and implement forms that in conjunction with the Finance System's job
ledger program will begin tracking purchases, labor and other expenses
associated with an event to ensure the targeted overhead contribution
has been realized. (See
Area for Improvement #3 on page 7.)
·
Procedures
are currently in place to determine consumption of alcohol for events
with hosted bars. With cash
bar events, however, consumption is not reconciled to event sales. The
Management Team through its Management Action Plan is in the process
of revising current liquor inventory forms and developing procedures
for their completion. This information will be used to reconcile
liquor consumption to revenue received. (See Area for Improvement #4 on page 7.)
We appreciate the efforts of Convention
Centers management in timely addressing the issues raised during the
audit and aggressively seeking solutions to these matters. We believe through the implementation of the
Management Action Plan included in this report, controls will be strengthened,
improving accountability. We commend the Convention Center for providing
a valuable service to Manatee County.
AUDIT REPORT
AUTHORIZATION:
This audit report has been reviewed and authorized
by:
____________________________________ ___________________________________
Richard
J. Orienti, CIA, CFE
R. B. "Chips"
Shore
Director of Internal Audit Clerk of the
Circuit Court and Comptroller
AREA
FOR IMPROVEMENT #1
Subject: Periodic Inventory Counts and Reconciliation
on Food and Liquor
The Convention Center maintains both food and liquor inventory on hand.
The Crosley Museum maintains liquor inventory only.
While limited inventory counts have been taken, managers have
relied on these counts primarily for reorder points.
Liquor inventory as of September 30, 1999 was conservatively
estimated at $20,000. A food
inventory listing has not been compiled.
By performing periodic inventory counts, the Convention Center
could better ensure that inventory quantities are controlled, inventory
purchases are used and properly charged to an event, inventory waste
is accounted for, and the possibility of theft is deterred.
Management
Action Plan:
Ψ
Management is in the process
of developing procedures that would require inventory counts to be taken
monthly on both food and liquor. These
counts will be reconciled to the monthly sales and purchasing figures
to ensure reasonableness. A limited food inventory will be maintained
on food items selected by management. Implementation of the physical
inventory count will be conducted prior to October 1, 2000.
Procedures for the reconciliation process will be developed by
the end of the year.
AREA
FOR IMPROVEMENT #2
Subject:
Control over Inventory Access
The Convention Center and the Crosley Museum
keep inventory items kept under lock and key.
The Convention Center could strengthen their control over inventory
access by maintaining and reviewing a formal list of employees who have
been issued keys.
Management
Action Plan:
Ψ
Management has already established
a formal list of employees who have been issued keys. This list will be analyzed periodically and
updated accordingly. Procedures
will be established to document the issuance and the return of keys. Management anticipates procedures will be
developed by October 31, 2000.
Ψ
Management is in the process
of analyzing the possibility of changing exiting locks on high dollar
inventory items to locks whose keys can not be duplicated. A decision will be made by October 31, 2000.
AREA
FOR IMPROVEMENT #3
Subject: Liquor and Food Cost Controls
Management has agreed to set prices based on actual cost plus a targeted
40% contribution to overhead as stated in Resolution 96-222. While the Convention Center management continues
to believe that this goal is reasonable, documentation was not available
to determine whether they are meeting this goal.
Management
Action Plan:
Ψ
Management is in the process
of developing and implementing forms that in conjunction with the Finance
System's job ledger program will begin tracking purchases, labor and
other expenses associated with an event.
Procedures will be established to ensure implementation of a
control cycle that will include:
·
Periodic competitive
shopping of vendors and vendor pricing
·
Developing
price standards for food and liquor
·
Obtaining written
purchase approvals prior to ordering
·
Comparing event
purchases to event menus
·
Agreeing shipping
documentation to purchase approval documentation
·
Agreeing invoices
to approved purchases and receiving reports
·
Reconciling
prepared food and excess food to the number of attendees
·
Periodic reviewing
of menu prices
·
Reconciling
food, liquor, and labor costs to events for revenues received to determine
whether the targeted overhead contribution has been met.
Management intends to develop
and implement these procedures by October 1, 2000.
AREA
FOR IMPROVEMENT #4
Subject:
Liquor Consumption Related to Sales
Procedures are currently in
place that requires the weighing of liquor bottles before and after
an event. This information is
used to determine the billing for hosted bar events.
However, when an event has a cash bar, the information is not
used to ensure liquor consumption in relation to cash sales is reasonable. Reconciling consumption by events will provide
management with better control and accountability over liquor inventory.
Management
Action Plan:
Ψ
Management is in the process
of revising their current liquor inventory forms and plans to establish
procedures for their completion. This
will provide management the tools to reconcile liquor consumption to
revenue received. Forms and
procedures will be developed by October 1, 2000.
