HomeMy WebLinkAbout08/01/2011 - Report: Brazos Valley Convention - City Council - Audit Committee
Brazos Valley Convention and Visitors Bureau Audit
August 2011
City Internal Auditor’s Office
City of College Station
File#: 11-01
Audit Executive Summary:
Convention and Visitors Bureau
Why We Did This Audit
This audit was conducted per
direction of the City Council. The
City collects approximately $3.5
million in hotel occupancy tax
(HOT) per year, and the Convention
and Visitors Bureau (CVB) is the
largest recipient of these funds.
What We Recommended
The CVB should not use city
HOT funds to hire consultants
for the purpose of influencing
city policy decisions.
The CVB should update
performance measures and
increase their efforts to collect
more accurate and reliable data.
Management should develop
more comprehensive written
policies and procedures.
Employees should be required to
submit adequate documentation
of purchases.
Entertainment and party
purchases for CVB staff should
not be endorsed by management.
Controls over check processing
procedures need to be updated
and enforced.
Management should improve
supervision of purchasing and
accounting processes.
What We Found
During this audit, we examined financial processes to
determine whether or not adequate controls were in
place to prevent fraud, waste, and abuse. We also
examined the accuracy and completeness of the
Convention and Visitors Bureau’s (CVB) reporting to
the City. Controls were determined to be lacking in
several financial process that we examined. In addition,
data contained in CVB performance reports were found
to be unreliable.
Some of the errors we identified with performance
reporting are the result of the large number and
confusing language of performance measures that the
CVB is required to submit. For example, definite room
nights booked are actually potential room nights
reserved. In addition, the CVB uses unreliable data to
calculate the economic impact of individuals attending
sporting events or conferences. This estimated
economic impact, according to CVB estimates, is nearly
four times greater than the impact we calculated.
Financial controls are inadequate. We found significant
errors when we observed oversight of the financial
system; conducted a review of bank statements and
receipts; and reviewed employee expense reports. Some
of the major errors we found were: (1) inadequate
separation of duties and oversight, (2) HOT fund
expenditures on alcohol, gifts, entertainment, and
parties, (3) insufficient documentation of purchases, and
(4) inadequate check processing controls. The lack of
working internal controls subjects the CVB to a higher
risk of fraud, waste, or abuse.
What We Found
During this audit, we examined financial processes to
determine whether or not adequate controls were in
place to prevent fraud, waste, or abuse. We also
examined the accuracy and completeness of the
Convention and Visitors Bureau’s (CVB) reporting to
the City. Controls were determined to be lacking in
several financial processes that we examined. In
addition, data contained in CVB performance reports
were found to be unreliable.
Some of the errors we identified with performance
reporting are the result of the large number and
confusing language of performance measures that the
CVB is required to submit. For example, definite
room nights booked are actually potential room nights
reserved. In addition, the CVB uses unreliable data to
calculate the economic impact of individuals attending
sporting events or conferences. This estimated
economic impact, according to CVB estimates, is
nearly four times greater than the impact we
calculated.
Financial controls are inadequate. We found
significant errors when we observed oversight of the
financial system; conducted a review of bank
statements and receipts; and reviewed employee
expense reports. Some of the major errors we found
were: (1) inadequate separation of duties and
oversight, (2) HOT fund expenditures on alcohol,
gifts, entertainment, and parties, (3) insufficient
documentation of purchases, and (4) inadequate check
processing controls. The lack of working internal
controls subjects the CVB to a higher risk of fraud,
waste, or abuse.
CVB Audit 1
Convention and Visitors Bureau Audit
Table of Contents
Introduction ................................................................................................................. 2
Brazos Valley Convention and Visitors Bureau Background................................. 3
The Majority of CVB Funding Comes from City HOT Funds ............................... 3
The Use of HOT Funds are Limited by State Law............................................... 6
CVB Funding is Subject to the City’s Funding Agreement ................................ 7
CVB Staffing Levels are Comparable to Benchmark Cities ................................ 7
Audit Objectives ..................................................................................................... 9
Scope and Methodology ......................................................................................... 9
Findings and Analysis .................................................................................................. 12
The CVB Performance Measure Reporting is Inaccurate .................................... 12
Few CVB Measures are Useful Indicators of Performance .............................. 12
Key CVB Performance Measures are Overstated ............................................. 13
The CVB May Offer a Low Return on Investment of HOT Funds ..................... 17
Financial Controls are not Adequate ................................................................... 19
Inadequate Separation of Duties & Management Oversight Exist ................. 19
There is a Lack of Well Communicated Policies & Procedures ....................... 20
Computers Sold to Employee were not Adequately Documented .................. 23
Check Processing Controls can be Circumvented............................................ 24
Recommendations ....................................................................................................... 26
Appendices
Appendix A: Methodology Used to Determine CVB Impact . . . . . . . . . . . . . . . . . . . . 29
Appendix B: Summary of Possible Inappropriate Transactions . . . . . . . . . . . . . . . . . 31
Appendix C: Management’s Response to the Audit Recommendations . . . . . . . . . . . 34
2 CVB Audit
Introduction
The City Internal Auditor conducted this performance audit of the Brazos
Valley Convention and Visitors Bureau pursuant to:
1. Article III Section 30 of the College Station City Charter, which
outlines the City Internal Auditor’s primary duties; and
2. The annual funding agreement between the City of College
Station and the Convention and Visitors Bureau that contains a
provision for the City to conduct monitoring reviews of the Agency
as deemed necessary by the City so as to evaluate the Agency’s
compliance with the provision of the agreement.
A performance audit is an objective, systematic examination of evidence
to assess independently the performance of an organization, program,
activity, or function. The purpose of a performance audit is to provide
information to improve public accountability and facilitate decision-
making. Performance audits encompass a wide variety of objectives,
including those related to assessing program effectiveness and results;
economy and efficiency; internal control; compliance with legal or other
requirements; and objectives related to providing prospective analyses,
guidance, or summary information.
A performance audit of the Brazos Valley Convention and Visitors Bureau
was included in the fiscal year 2011 audit plan based on direction given
by the Audit Committee and City Council. On August 12, 2010, the City
Council approved the City Internal Auditor’s audit plan.
CVB Audit 3
Brazos Valley Convention and Visitors Bureau Background
The Brazos Valley Convention and Visitors Bureau (CVB) was formed in
2003 to enhance economic and social growth in the Brazos Valley by
marketing, promoting, developing and coordinating tourism, conventions,
sports, and hospitality opportunities in the area. To accomplish this
mission, CVB staff members attend numerous trade shows and advertise
through various magazines. In addition, the CVB offers assistance to
convention, sporting, or tourism related event coordinators through
providing:
Hotel room blocks – contacting area hotels to request rates for a
portion of their inventory of rooms to be set aside for a particular
period of time for the client. Blocking hotel rooms through the CVB
may result in lower rates because hoteliers are asked to bid on hotel
blocks based on customer provided criteria.
Visitor information – providing maps, lists of area caterers, speakers,
entertainers, meeting/banquet venues, visitor guides, brochures, or
convention bags to event attendees.
Event planning and scheduling – planning and coordinating special
group activities, children's programs, entertainment, and guest
activities. This may also include registration assistance, creating gift
baskets for event speakers or other special quests, and providing
name tags for event attendees.
Public relations and promotion assistance – providing local media
contacts or media lists, adding events to the CVB calendar, producing
promotional material, or assisting with news stories, press releases, or
other various marketing efforts.
Event Sponsorships – providing monetary support and/or servicing
the event being held.
The Majority of CVB Funding Comes from City HOT Funds
The CVB is a non-profit organization that receives approximately 78
percent of its operating revenues from hotel occupancy tax (HOT) funds
collected by the City of College Station. In addition, College Station
allows the CVB to operate out of a city-owned facility without rental
compensation. Table 1 on the next page provides a summary of CVB
revenue. A large portion of donated services portrayed in this table is the
value of the occupation of the city-owned facility without charge—if this
amount is taken into account, College Station provides over 80 percent of
the Convention and Visitor Bureau’s funding. It is important to note,
however, that the CVB spent over $21,000 in fiscal year 2010 and
4 CVB Audit
$35,000 in 2011 on building repairs and maintenance to this city-owned
facility.
Table 1: CVB Revenues from Fiscal Year 2010 through 2008
CVB Revenue FY10 FY09 FY08 %*
College Station HOT $1,107,000 $1,160,000 $1,060,000 78%
Bryan HOT 133,400 116,900 110,000 8%
Donated Services 107,100 76,000 99,500 7%
Other Revenue** 128,500 87,100 98,100 7%
Total Revenue: $1,476,000 $1,440,000 $1,367,600
* Average percent of total revenue of fiscal years 2010, 2009 and 2008.
** Includes event income, industry participation, interest income, commissions, rental
income, and $25,000 in Brazos County HOT in FY10 only.
The CVB represents over 50 percent of HOT spending. From fiscal
years 2004 through 2008, an average of 56 percent per year of College
Station HOT spending was by the CVB. HOT fund spending in fiscal year
2009 is not representative due to the large one-time expenditure to
purchase land for a future convention center. In fiscal year 2010, CVB
spending represented 52 percent of total city HOT fund spending—26
percent of the city HOT funds spent went to fund CVB related marketing
and 21 percent funded CVB payroll. Figure 1 below summarizes city HOT
spending in fiscal year 2010.
Figure 1: Fiscal Year 2010 College Station HOT Spending
Parks & Rec
Events
20%
Arts Council
13%
Convention
Center
11%
Other
4%
Marketing
26%
Operations
4%Other
1%
Payroll
21%
Convention &
Visitors Bureau
52%
CVB Audit 5
The College Station HOT fund balance is expected to be over
$4.8 million by the end of fiscal year 2011. From fiscal year 2004
through 2008, the College Station HOT collections were on average 34
percent greater than expenditures per year; and the city has earned
approximately $915,000 in interest revenue during this same period. As
a result, the ending HOT fund balance for fiscal year 2008 was over $7.5
million. In fiscal year 2009, a $9.6 million purchase of land for a future
hotel and convention center was made—$7 million was in cash, which
depleted the majority of the HOT fund balance. However, HOT
collections in fiscal year 2010 were 38 percent greater than expenditures.
In addition, 2011 collections are estimated to be 39 percent greater than
expenditures and HOT fund related grants for over $249,000 are
expected—resulting in an estimated fund balance of $4.8 million by the
end of fiscal year 2011 (see Table 2 below).
Table 2: City Hotel Occupancy Tax (HOT) Fund Summary
FY11 Estimate FY10 Actual FY09 Actual
Beginning Fund Balance $ 3,242,000 $ 1,939,000 $ 7,580,000
HOT Revenue & Earnings* 3,617,000 3,442,000 3,587,000
Total HOT Revenue: 6,858,000 5,381,000 11,167,000
City Expenditures 457,000 450,000 527,000
Convention Center 223,000 224,000 7,000,000
Brazos Valley CVB 1,032,000 1,107,000 1,160,000
Other Outside Agency 314,000 347,000 539,000
Total HOT Expenditures: 2,026,000 2,128,000 9,226,000
Adjustments 0 (12,000) (1,000)
Ending Fund Balance $ 4,833,000 $ 3,242,000 $ 1,939,000
* Contains both HOT collections & interest earning made from investing the fund balance
City HOT revenue has experienced recent declines. From fiscal
year 2004 through 2010, the average per year percent increase of City of
College Station HOT fund revenue was 7.96 percent. During this same
period, the average per year percent increase of College Station HOT
funds remitted to the CVB was 3.33 percent. However, from fiscal year
2008 through 2010, College Station HOT revenue has experienced an
average per year decrease of 2.36 percent, while CVB funding from
College Station HOT revenues has increased an average of 2.43 percent
per year—this average increase is due to an increase in funding of
$100,000 from fiscal year 2008 to 2009; CVB funding decreased by
$53,000 in 2010.
6 CVB Audit
The percentage of CVB HOT funding from the City has decreased
somewhat over the years. From fiscal year 2004 through 2010, CVB
HOT funding from College Station as a percentage of City HOT revenue
and spending has experienced some declines. Table 3 below summarizes
City of College Station HOT revenue and expenditures over the last seven
fiscal years and compares these amounts with the level College Station
has funded the CVB through HOT contributions.
Table 3: City HOT Fund Compared to CVB Funding (in thousands $)
Fiscal Year FY10 FY09 FY08 FY07 FY06 FY05 FY04
City HOT Revenue 3,417 3,575 3,586 2,980 2,671 2,307 2,201
City HOT Spending 2,128 9,226 1,937 1,919 1,745 1,740 1,505
CVB HOT Funding 1,107 1,160 1,060 1,060 980 960 915
CVB % of Revenue 32% 32% 30% 36% 37% 42% 42%
CVB % of Spending 52% 13%* 55% 55% 56% 55% 61%
* The City purchased ground for a Convention Center in fiscal year 2009, resulting in the
outlier in HOT spending.
The Use of HOT Funds are Limited by State Law
The hotel occupancy tax is a consumption type tax authorized under state
statute. This tax allows the City of College Station to collect up to its
current tax rate of 7 percent on rental income of hotels and motels within
city limits. The use of funds derived from HOT funds can only be spent if
the following two-part test is met. First, all expenditures must directly
enhance and promote tourism and the convention and hotel industry.
Second, all expenditures must clearly fit into one of nine statutorily
provided categories.
1. Funding the establishment, improvement, or maintenance of a
convention or visitor information center.
2. Paying for the administrative costs for facilitating convention
registration.
3. Paying for tourism related advertising, and promotion of the city or its
vicinity.
4. Funding programs that enhance the arts.
5. Funding historical restoration or preservation projects.
6. Sporting events where the majority of participants are tourists in cities
located in a county with a population of 290,000 or less.
7. Enhancing and upgrading existing sport facilities or fields for certain
municipalities.
8. Funding transportation systems for tourists.
CVB Audit 7
9. Paying for signs that direct the public to sites and attractions that are
visited frequently by hotel guests.
CVB Funding is Subject to the City’s Funding Agreement
In order to receive HOT funds from the City of College Station, the CVB
has a contractual agreement with them to fulfill specified requirements.
According to the CVB’s funding agreement with the City, the CVB is
required to:
1. Submit to the City an annual budget to be approved by the City
Council for each fiscal year, for CVB operation funded by HOT
revenues.
2. Maintain an accounting system whereas HOT revenue is segregated
from other CVB revenues in such a way that any reasonable person
can ascertain the revenue source of any given expenditure. These
funds are required to be classified as restricted funds for audited
financial purposes.
3. Provide the City with a copy of the annual financial audit report.
4. Submit quarterly to the City a financial activity report that summarizes
the fiscal activity of the CVB during a three month period. In
addition, the CVB must provide a detailed expenditure report that
contains every CVB line item purchase related to HOT revenue.
5. Submit quarterly a list of 34 CVB performance measures.
CVB Staffing Levels are Comparable to Benchmark Cities
There are eleven Texas cities that the College Station City Council has
directed city staff to incorporate into comparative analysis for
benchmarking purposes. These cities include: Bryan, Round Rock, San
Marcos, Frisco, Lubbock, Denton, McKinney, Plano, Sugarland, Flower
Mound, and Carrollton. When conducting staffing comparative analysis, it
is important to take into account factors that drive workload. For
example, larger CVB staffing levels may be justified for a city that has a
greater number of visitors who stay in hotel rooms. Obtaining the actual
number of hotel guests per benchmark city is difficult. Fiscal year 2010
staffing and HOT revenue data, however, was available for seven of the
eleven benchmark cities. Therefore, staffing data was normalized by
calculating the ratio of city HOT collections to CVB full-time equivalents.
Figure 2 on the next page, summarizes these results.
8 CVB Audit
Figure 2: FY10 HOT Collections per CVB Full-time Equivalent (FTE)
Although McKinney’s CVB only has 4 FTE compared to 10 for the Brazos
Valley CVB, the City of McKinney collected approximately 472,000 in HOT
revenue in fiscal year 2010 compared to $3.74 million in HOT collection in
College Station and Bryan. Therefore, McKinney’s CVB is staffed at a
higher level compared to the Brazos Valley CVB—when possible workload
demand is factored into the analysis.
The CVB Board is larger than its professional staff. The CVB has a
staff that consists of nine full-time positions and three part-time paid
positions. The three part-time employees combined work a total of 40
hours a week, resulting in a total of 10 FTE. In addition, the CVB
employs up to 5 unpaid student interns. The staff is led by an Executive
Director, who reports to an Executive Board consisting of four executive
members and one chairman—the current director assumed leadership of
the CVB in September 2008. Historically, the executive members of the
board voted on all business matters of the CVB. Currently, however,
there are an additional 10 voting members on the board—bringing the
total to 15 voting members.
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
CVB Audit 9
Audit Objectives
This audit addresses the Brazos Valley Convention and Visitors Bureau’s
use of Hotel Occupancy Tax funds, as well as a review of the program’s
reporting mechanisms and practices. This report answers the following
questions:
Does the CVB fulfill its contractual obligation by submitting all
required performance and financial reports in a manner that is
complete, accurate and free of tampering?
Are there adequate controls to prevent fraud, wasteful spending, and
monetary abuse involving HOT funds remitted to the CVB by the City
of College Station?
Scope and Methodology
This audit was conducted in accordance with government auditing
standards (except for the completion of an external peer review),1 which
are promulgated by the Comptroller General of the United States. Audit
fieldwork was conducted from June 2011 through August 2011. For the
purpose of evaluating the adequacy of CVB reporting, the scope of review
was fiscal year 2010. For the purpose of evaluating internal controls over
HOT funds, the scope included a review of revenue and expenditure
transactional data from October 2007 through June 2011.
The audit methods used to complete both audit objectives included:
Reviewing the work of auditors in other jurisdictions and researching
professional literature to identify best practices for the reporting of
CVB impact and performance measurement.
Interviewing the City of College Station CFO, Director of Economic &
Community Development, Director of Parks and Recreation, and Parks
and Recreation personnel responsible for bidding on and organizing
regional, state, and national sporting events at city athletic facilities.
1 Government auditing standards require audit organizations to undergo an external peer review every three years. A peer
review is planned for 2012.
10 CVB Audit
Conducting several interviews of CVB staff; including the Executive
Director, Accountant, and Director of Group Sales and Marketing.
For the purpose of evaluating the adequacy of CVB reporting, the audit
methods used included:
Examining the CVB funding agreement, quarterly financial reports,
external audit reports, and performance reports.
Obtaining documentation of all events serviced by the CVB in fiscal
year 2010 through the CVB’s information tracking system.
Information obtained included: comprehensive internal and external
correspondence related to each event, number of bookings, event
attendees, estimated spending, actual hotel stays, and various
descriptive data related to the event.
Reviewing the reports of consultants hired by the CVB in order to
determine the analysis and methodology used to develop the
economic impact data the CVB reports to the City.
Developing a systematic rating methodology of CVB impact for
recruiting an event to come to the Brazos Valley based on information
obtained from the information tracking system. See Appendix A at
the end of this report for a more detailed explanation of this
methodology.
For the purpose of evaluating internal controls over HOT funds, the audit
methods used included:
Gaining an understanding of all HOT regulations by attending a HOT
seminar conducted by a HOT expert, examining all state HOT
legislation, reviewing the court transcripts and other applicable
documents of a nearby agency that was recently found liable for
misuse of HOT funds, and reading professional publications regarding
the appropriate use of HOT funds.
Holding confidential interviews where every member of the CVB staff
was individually questioned on specific fraud related topics relating to
CVB operations, personnel, policies, and procedures.
Conducting data analysis using specialized auditing software to test
for fraud indicators and system control failings.
CVB Audit 11
Observing a CVB board meeting to examine the board’s governance
role in decision making, policy formation, and oversight.
Conducting a comparative analysis of budget to actual expenditures
by sub account, and performing a trend analysis by year, quarter and
month for each account to identify fraudulent or wasteful spending
patterns.
Obtaining the log of the audit trail and voided transactions from the
CVB’s financial system and analyzing every entry in these two logs
within the scope of the audit objective.
Selecting a sample of 168 transactions based on (1) findings from
audit work described in the methods above and (2) a review of all
line-item expenditures recorded in the CVB’s financial system within
the audit scope to identify specific transactions that appeared to be
inappropriate uses of HOT funds. For the 168 transactions in the
sample, expense reports were examined, vendors were verified,
transaction support documentation was scrutinized, and CVB staff was
interviewed regarding certain transactions.
Bank statements and support documentation was reviewed for fiscal
year 2010. CVB checks were also examined for compliance with
understood CVB check writing policies and procedures.
12 CVB Audit
Findings and Analysis
The CVB Performance Measure Reporting is Inaccurate
Effective performance measure reporting has the following elements (1)
the measures should be relevant and easily understood, (2) they should
be accurate, and (3) they should adequately reflect actual performance.
The performance reporting of the CVB to the City fails in all three areas.
There are too many measures reported to the City, and the methodology
to calculate them and their descriptions are confusing. The CVB reported
measures are also overstated or misleading. Finally, the reported
measures do not adequately reflect the City’s return on investment.
Few CVB Measures are Useful Indicators of Performance
The CVB has three target markets that serve as performance measures to
the City of College Station: business, leisure, and sports travel. The CVB
reports 34 performance measures on a quarterly basis in order to
quantify the CVB’s impact on these three market segments. The table
below contains the 24 convention and sporting event performance
measures that the CVB reported to the City in fiscal year 2010.
Table 4: FY10 CVB Reported Convention and Sporting Event Measures
Measure*
Bookings** Leads Serviced
Convention Sports Convention Sports Convention Sports
Events 183 88 191 116 218 72
Nights 21,130 25,574 26,787 48,356 62,683 29,293
Attendees 28,701 45,155 39,826 64,645 63,191 46,322
Spending 14,709,263 14,675,375 20,410,825 21,009,625 32,385,388 15,054,650
* For bookings, these measures are described as number of events booked, definite room
nights, number of attendees, and estimated spending.
** Only contains the events the CVB impacted on coming to the area (according to CVB).
According to CVB personnel, booking measures are recorded only for
those events the CVB directly impacts in coming to the Brazos Valley.
These include the number of events booked, definite room nights booked,
and the number of attendees and amount of estimated spending from
events booked by the CVB. These four performance measures are the
most relevant performance data currently reported to the City, because
they are the only measures that attempt to gauge CVB impact. Table 5
on the next page summarizes the booking performance measures for
CVB Audit 13
both conventions and sporting events that the CVB reported to the City
the last three fiscal years.
Table 5: CVB Booking Measures Reported to the City from FY08 to FY10
Reported Bookings FY08 FY09 FY10
Number of Events Booked 299 265 271
Definite Room Nights 91,340 70,537 46,704
Total Event Attendees 104,280 97,258 73,856
Total Estimated Spending $32,646,750 $38,513,725 $29,384,638
According to the CVB Executive Director, a lead is recorded when event
coordinators consider holding their events in the Brazos Valley.
Therefore, leads are measures of potential, not actual outcomes.
Collecting lead data for internal reporting reasons could be beneficial, but
these measures are not useful for external accountability purposes when
other comparable and more meaningful measures are available.
The list of services the CVB offers was discussed in the background
section of this report. When the CVB renders any of these services to an
event held in the Brazos County, it is counted in the ―serviced‖ measures.
CVB serviced measures could be useful as indicators of workload. The
most beneficial aspect of workload indicators is for staffing level
determinations. These types of measures, however, are less useful as
performance indicators used for accountability purposes.
The CVB also reports to the City 10 performance measures related to the
leisure travel market. These measures are organized into the following
three categories: overnight group tours booked, day trip group tours
booked, and individual travel requests for information from advertising.
According to the CVB Executive Director, data for the leisure travel
market is difficult to reliably and consistently collect. Consequently, the
leisure measures reported were treated as not being reliable; and
independent testing to verify their accurateness was not included in the
scope of the audit.
Key CVB Performance Measures are Overstated
According to the Destination Marketing Association International (DMAI)
2011 performance reporting handbook for Destination Marketing
Organizations (DMO), ―one of the chief failings of conversion and
effectiveness studies in the past was they failed to exclude individuals
who had already decided to come to the destination before they
14 CVB Audit
contacted the DMO. As a result, the results tended to overstate the
number of visitors generated by the particular DMO marketing effort
being reviewed.‖ Similar to other DMOs, the CVB has overstated key
performance measures by not accurately excluding individuals who had
already decided to come to the Brazos Valley before they contacted the
CVB.
Audit findings related to booking data differed from CVB
statements. We were told that the blocked performance measures only
included events that the CVB had a direct impact on influencing to come
to the Brazos Valley. Our findings, however, drastically differed from
what we were told. When we conducted our own independent analysis
of every event serviced by the CVB in fiscal year 2010, we discovered
that several events that are reported as booked are not actually recruited
by the CVB (see Appendix A for a description of the methodology
utilized). Table 6 below, summarizes these results.
Table 6: Comparison of FY10 Reported CVB Impact to Audit Findings
Description
Attendees
Room
Nights
Pick-
ups*
Estimated
Spending
Can’t Determine 7,810 5,622 6,076 $ 3,303,564
Some CVB Impact 8,532 2,274 2,043 $ 2,946,338
Likely CVB Impact 3,950 4,828 3,222 $ 1,790,000
Max CVB Impact 20,392 12,724 11,341 $ 8,039,902
Reported Measures 73,856 46,704 NA $ 29,384,638
Min Over-reported 53,464 33,980 NA $ 21,344,736
% Over-reported 72% 73% NA 73%
* Pick-ups are the number of actual room nights stayed at hotels. The CVB collect this
statistic from area hotels, but it is not reported to the City.
There were a number of events in fiscal year 2010, where there was
insufficient evidence to make a determination of CVB impact. It is
unlikely that the CVB directly influenced all of these events in coming to
the Brazos Valley. However, they were all included to calculate the
minimum amount the CVB over-reported for attendees, blocked room
nights, and estimated spending. It is important to note that the data
presented in Table 6, is based on the CVB’s methodology in calculating
these measures. As will be described in later sections of this report,
there are weaknesses in the way the CVB developed their methodology to
calculate these measures.
CVB Audit 15
The definite room night measure is not a measure of actual hotel
room stays. The CVB reported 46,704 definite room nights booked in
fiscal year 2010. A definite room night, however, is not actually a definite
room night. The ―definite room night‖ measure represents the CVB’s
tracking of hotel room reservations per night for events held in College
Station during a specific period. In other words, it is an estimate of the
maximum number of hotel rooms that may be needed for a specific
event. The number of people that actually stay in a hotel for the event is
often much lower. The CVB tracks the number of actual hotel nights
stayed through a statistic called ―pick-ups‖. Although the CVB tracks
pick-ups, they do not report this information to the City.
Booking data is sometimes reported over a year before the event
is held. There is also a timing problem with how booking data is
recorded. For example, we found an event where 450 definite room
nights were booked in July 2008; but the event didn’t actually occur until
July 2010. Included in their fiscal year 2008 estimated spending
numbers, was $230,625 the CVB recorded in spending from this event—
even though the event didn’t actually occur until two years later.
CVB derived estimated spending equations are unreliable.
Estimated spending is calculated for conventions and sporting events
through the use of the following two equations:
Conventions
= # of attendees × $205 × 2.5 days
Sporting Events = # of attendees × $130 × 2.5 days
The first weakness in using these formulas is that they are dependent on
an estimated number of attendees. The number of attendees reported
for an event is reliant on the event coordinator providing an estimate of
attendance—sometimes before the event actually occurs. Therefore, the
estimated number of attendees could be very different from the actual
number of people who participated in the event.
In 2005, the CVB commissioned the Department of Recreation, Park and
Tourism Sciences at Texas A&M University to survey a sample of
conference attendees to identify how much delegates spent while they
were in the community. According to the CVB Executive Director, the
conventions estimated spending equation was based on findings from this
report. We asked for a copy of this report, and the Executive Director
was only able to provide us with a draft copy. In no place in the report
does it suggest using the equation the CVB uses to calculate estimated
16 CVB Audit
spending for conventions. The consultants surveyed participants from 20
different conferences over an 18 month period, and grouped conferences
into three market segments: national, state, and local/regional. Towards
the end of the report, it states ―the best estimates of expenditures per
delegate per night for the three segments are approximately $220 for
national conferences, $205 for state conferences, and $165 for local or
regional conferences.‖
There are at least three errors in how the CVB chose to apply information
from the convention spending report. First, they chose to use the $205
number for state conferences for their equation and apply it to all
conference events. Of the events serviced in fiscal year 2010, the CVB
recorded 14 percent as national or international events, 36 percent as
state events, 42 percent as local or regional events, and did not give any
designation for 8 percent of the events. Second, they used a 2.5 day
multiplier. Not only have we been unable to determine how the CVB
determined this multiplier, but the report also clearly states that the data
is based on a per night amount. In addition, the consultants only
surveyed overnight visitors; whereas, event attendees used in the CVB’s
equation includes day travelers. Finally, the CVB made inferences to their
entire population of conference events based on data from this report
despite the consultants clearly stating that they did not use scientific
sampling procedures. In fact, the consultants warn against this in their
report by stating ―these procedures mean that the results reported here
should be viewed as an approximation or best guess, rather than be
interpreted in literal, precise terms.‖
The CVB also commissioned the Texas AgriLife Extension, Texas A&M
University, to survey participant spending in the area at a selection of
local sporting events hosted in 2009 and one event that occurred in 2007.
Similar to the convention report, the CVB misapplied information from this
study to form their spending equation for sporting events. Like the
convention report, a non-scientific sampling method was used. The CVB
also directed the consultant to study events that are not representative of
a typical sporting event held in College Station. The average number of
participants for the 11 sporting events selected in the study was 1,060.
According to CVB records, the average number of attendees for sporting
events serviced by the CVB in fiscal year 2010 was 705. In addition, the
event that occurred in 2007 was arguably one of the largest national
sporting events ever held in the City, with 1,810 participants and an
estimated economic impact of over $2 million (according to the
consultant’s study). Finally, the consultant uses a very different
CVB Audit 17
methodology than the equation used by the CVB to calculate estimated
spending for the events they studied.
The CVB May Offer a Low Return on Investment of HOT Funds
Return on investment (ROI) is a performance measure used to evaluate
the efficiency of an investment. To calculate ROI, the benefit (return) of
an investment is divided by the cost of an investment. The calculation of
ROI can be modified to suit the situation—the calculation depends on
what the user defines as returns and costs. Therefore, there is not a
single ―right‖ calculation.
Calculating ROI using CVB reported information is difficult
because of flaws in the data. In calculating the ROI for the CVB, the
City should be interested in the cost of funding the CVB and a return in
tax dollars it receives from CVB efforts. Tax dollar benefit comes in two
forms: (1) sales tax receipts and (2) HOT tax receipts. The City’s sales
tax rate is 1.5 percent and the HOT rate is 7 percent. Using existing CVB
data (albeit unreliable based on audit findings), we were able to estimate
a ROI of HOT and sales tax. Table 7 describes this ROI calculation.
Table 7: ROI Using HOT & Sales Tax Method
Reported Bookings CVB Reported Max Amt Min Amt
Total Estimated Spending $29,384,600 $8,039,900 $4,736,300
Spending × 1.5% × 51% 224,800 61,500 36,200
Spending × 7% × 49% 1,007,900 275,800 162,500
CVB HOT Funding $1,265,400 $1,265,400 $1,265,400
ROI Sales Tax $0.18 $0.05 $0.03
ROI HOT $0.80 $0.22 $0.13
Total ROI $0.98 $0.27 $0.16
The weakness in the method of estimating ROI described in Table 7 is
twofold. First, the estimated spending amounts are based on the
convention and sporting equations devised by the CVB. As previously
discussed, these equations are not reliable. Second, we used data from
the report on spending at sporting events to estimate the percentage of
estimated spending on hotel rooms. As mentioned previously, this study
didn’t use scientific sampling methods. Therefore, using this data to
make inferences about a population is inappropriate. Using this method
does, however, give a sense of what the CVB’s ROI would be if all the
information they reported to the City was accurate and reliable—i.e. the
CVB’s ROI would be 98 cents for every dollar of HOT funding they
18 CVB Audit
receive. The maximum and minimum amounts seen in Table 7 are based
on the audit findings of CVB impact of recruiting events to come to the
Brazos Valley (see Table 6 discussed previously in this report).
Other methods used to more accurately calculate ROI led to
extremely low results. An alternative method to estimating HOT dollar
benefit is to multiply the room nights by room rates by the HOT rate of 7
percent. The major weakness of this method is that it does not take into
account sales tax collections resulting from estimated spending created
through CVB impact. However, this method may be a more accurate way
to estimate the amount of HOT revenue the City gets back for every HOT
dollar the City invests in the CVB. The equation below summarizes this
ROI methodology.
ROI = ( Room Nights × Room Rate × 7% )
HOT Funding
This method yields an extremely low ROI. For example, using the
number of definite room nights the CVB reported in fiscal year 2010
yields in ROI of 24 cents; if we assume that the average room rate in
Brazos Valley hotels is $93 a night.
ROI = ( 46,704 × $93 × 7% ) = $0.24 $ 1,265,400
Using actual hotel room rate data collected by the CVB and the actual
hotel stays (i.e. pickups) the CVB impacted in coming to the Brazos Valley
yields a ROI of between three and six cents on the dollar. According to
the CVB staff, pickup and room rate data is dependent on area hotels
accurately supplying the information. As a result, sometimes the data
may be incomplete or inaccurate.
CVB Audit 19
Financial Controls are Not Adequate
Several control deficiencies were identified that could increase the risk of
fraud, waste, or abuse. For example, some internal controls can be
circumvented and management oversight is lacking given the absence of
separation of duties over the CVB’s financial system and records. We
also found written policies and procedures were either absent, not
communicated, or ineffective. As a result, we found several expenditures
that may have been an inappropriate use of HOT funds.
Inadequate Separation of Duties & Management Oversight Exist
According to the Association of Certified Fraud Examiners, 30 percent of
all fraud occurs in small businesses. A common reason is that small
companies generally have single person accounting staffs and limited
internal controls. Similarly, the CVB has one accountant and there is
limited management oversight over daily accounting operations.
The CVB’s accountant currently uses the QuickBooks system to manage
accounting records. QuickBooks has a built-in audit trail feature that
allows managers to review transactions that have been voided, changed,
or altered. Despite having this control functionality, it has never been
used by CVB personnel. Based on our review, we found there to be little
oversight or review of the bookkeeping duties. The CVB’s accountant
was the only employee who demonstrated any knowledge of the
QuickBooks system. In addition, this employee has access to all
functions within the entire financial system.
Separation of duty, as a security principle, has as its primary objective the
prevention of fraud and errors. This objective is achieved by
disseminating the tasks and associated privileges for a specific business
process among multiple users. To achieve the highest level of internal
control no single employee should have access to two or more of the
following functions: authorization, custodianship, and record keeping.
Not only does the CVB’s accountant have super user access (with limited
oversight over the financial system) she also has access to check stock,
reconciles bank statements, makes bank deposits, and maintains physical
control over incoming checks.
Small organizations sometimes lack sufficient staff to have appropriate
separation of duties. In these instances, management should mitigate for
this lack of control by providing sufficient oversight of the accounting
system and records. The CVB’s Executive Director’s lack of oversight and
20 CVB Audit
knowledge of the financial system constitutes a significant control
deficiency.
There is a Lack of Well Communicated Policies & Procedures
According to the CVB Director, all CVB employees are required to have an
understanding of HOT codes. However, the CVB does not currently have
written policies to guide employees on proper purchasing processes using
their business credit cards. The lack of effective written policies has
increased the number of opportunities for employees to use their cards
inappropriately. For example, on multiple occasions during business trips
employees have used their cards to purchase admission to local
attractions. Additionally, several employees used their cards to purchase
alcohol while dining during reimbursable travel meals.
There is inadequate oversight of employee expense reports. The
CVB uses employee expense reports to account for employee purchases.
Employee expense reports should be signed by an employee and his/her
supervisor. We found two instances where there were no signatures on
employee expense reports. Additionally, we found a minimum of 11
expense reports that only contained the signature of the purchaser.
There were at least two instances where a subordinate and their
supervisor went on a business trip together, and the supervisor approved
the expense report. The inability of the CVB to adequately prevent the
circumvention of internal controls has made the organization suspect to
several types of wasteful expenditures.
The CVB’s accountable plan is not sufficiently monitored. There
are two methods which an organization may use to reimburse employees
for purchases made on business-related travel. The first method is a per
diem plan. Under this plan, employees are allocated a certain amount of
funds to expend on meals and lodging each day during travel. The
amount allotted varies by locality, which effectively ensures that
employees receive adequate reimbursement for expenditures. The other
method used is the accountable plan. Under an accountable plan,
employees may spend what they wish, but they must provide adequate
documentation to prove that their expenses are legitimate business
purchases. The documentation is then reviewed and approved by an
employee with sufficient authority to approve or deny the expense
reimbursement.
If an organization determines that an accountable plan is the best
reimbursement plan for the organization, several factors should be
CVB Audit 21
incorporated into their decision. Accountable plans are intended to save
organizations money. The entity needs to evaluate whether or not it is
more cost effective to reimburse employees for actual expenses. This
includes actual costs incurred during travel, the administrative costs of
reviewing expense reports, and the burden placed on organizational staff
to adequately document purchases.
The CVB used the per diem plan in the past, but found it to be ineffective
since employees sometimes take meeting planners out for meals. The
CVB currently uses an accountable plan. Under the accountable plan, we
found evidence of wasteful or inappropriate expenditures and instances
of inadequate documentation. For example, we found an employee spent
$120.47 on meals for one day of travel to West Palm Beach, Florida.
Under the per diem reimbursement method, this employee would have
received $64 per day. The employee also failed to submit itemized
receipts for their meals during this trip, which are mandatory under an
accountable plan. Federal income tax rules state that failing to submit
adequate documentation constitutes a non-accountable plan—which
would require the CVB to include the amounts of any expense allowance
with the employee’s wages on his W-2 form.
Itemized receipts are not required for reimbursement of
expenses. The CVB failed to produce itemized receipts for 22 percent of
the records we reviewed (see Appendix B). We did not find any instances
where an employee was required to remit payment to the CVB for
purchases that lacked sufficient documentation. We also found multiple
expenditures that (1) occurred after normal business hours, (2) were for
an amount greater than $1,000, and (3) were not accompanied by an
itemized receipt. For example, no itemized receipts were found for
approved purchases made in 2010 of $2,586.25 at a local bar occurring
at 10:44 PM on a Saturday night, $1,000 at a local steakhouse, and
$2,015 at a restaurant in Austin.
HOT funds are used to pay for staff parties and receptions. The
CVB used HOT funds on multiple occasions to pay for Christmas,
birthday, and going away parties. For example, in December 2010, the
CVB staff held a Christmas party at Café Excel in College Station; the bill
was for $577.25 and purchases for alcohol were $107.50 of the total. In
2009, $1,587 was spent on the staff Christmas party. In September
2008, the CVB held interviews for candidates for the executive director
position. Following the interviews, the three candidates, the CVB board
and two staff members attended an after-hours ―reception‖ at
Christopher’s World Grille in Bryan, Texas. The total bill for the reception
22 CVB Audit
was $1,597.20, of which $329 was spent on alcohol. In Fiscal Year 2008,
a going away party was held for the previous CVB Director that cost
$3,931.20, of which $1,404 was spent on alcohol. The same director also
had an inter-organizational going away party at Grand Station, a local
entertainment facility. The party used $122.38 in HOT funds, including
$34 for employees to play laser tag.
CVB employees frequently use their CVB credit cards to purchase
alcohol for non-business related purposes. During our examination
of high-risk receipts, we discovered that employees frequently use their
cards for alcohol purchases. There are no controls currently in place to
prevent or limit when employees use their credit card for non-business
related purchases of alcohol. During an interview with the CVB Director,
we determined that the practice of purchasing alcohol during meals is
endorsed. We were not able to determine an exact or estimated number
of instances, because employees frequently submit non-itemized receipts.
Some alcohol purchases may be legitimate due to the nature of the
destination marketing business culture. For this reason, alcohol
purchases were intensively reviewed to determine if there was a possible
business-related purpose for making the purchase. We found multiple
instances where no such reasoning could be identified.
For example, in November 2009, the CVB Director submitted an
employee expense report that contained a purchase totaling $12 for
―drinks at a cash bar‖ for her and a subordinate. On the same expense
report, the director submitted an itemized receipt from a local restaurant
that listed $7.75 for alcoholic beverages. In August 2010, another
employee expense report was submitted by the Director that listed a
$6.20 purchase for a Bloody Mary at O’Malley’s Pub in Florida.
HOT funds are used to purchase gifts and personal items. The
CVB also uses HOT funds to buy gifts for employees, board members,
and interns. We found at least 12 instances where a gift was purchased
as a going away, wedding, Christmas, or appreciation gift. In addition,
no evidence could be found that the purposes of these gifts were related
to appreciation for work accomplishments. For example, a purchase of
$88 was made to a local sports bar as a wedding gift for a CVB employee.
Employees have also made personal purchases using their CVB credit
card. In May 2008, an employee purchased a gear fleece jacket from the
Houston National Golf Club. The employee paid $54.69 using their CVB
credit card and did not reimburse the CVB for the purchase. The
CVB Audit 23
purchase was approved by the current CVB Executive Director. In
December 2009, an employee was reimbursed for the expenses incurred
for rental clubs and the fees associated with a round of golf. Although
the employee failed to provide sufficient documentation that he may have
played with a potential client, the CVB reimbursed the employee $99.
The use of HOT funds for entertainment is endorsed by senior
management. According to the current CVB Director, the previous
director condoned using CVB funds to visit tourist attractions while on
business trips. This is not a frequent occurrence, but we found at least
three instances where employees used HOT funds to purchase admission
tickets to a local tourist attraction. All of the entertainment expenditures
we identified were approved by the same supervisor.
For example, while on a business trip to Orlando, an employee used his
CVB credit card to purchase admission for ―one day, one park‖ to
Universal Studios. The ticket was purchased early in the morning and
other receipts from the same day provide evidence that the employee
spent the majority of the day at the attraction. The cost to the CVB for
this employee to attend the tourist attraction is in excess of $400 (hotel,
admission ticket, meals, and salary).
On two trips, an employee and their supervisor attended the same tourist
attraction and the expenditure forms were approved by the supervisor.
In November 2010, the employees went to the Richard Petty Driving
Experience in Charlotte, North Carolina. The admission costs incurred by
the CVB were $99 per employee. In April 2009, the employees attended
a Major League Baseball game between the Colorado Rockies and the
San Diego Padres in Denver, Colorado. The two tickets cost $108, and
meal charges at the field were $24. This purchase was approved by the
current CVB Director, indicating that the policy of using CVB funds to
purchase entertainment is still considered a legitimate use of HOT funds.
Computers Sold to Employee were Not Adequately Documented
During the course of our examination of CVB expense records, we
discovered that four computers were sold to the same senior-level
employee. On one occasion the employee purchased three computers
and on another occasion the employee purchased one computer from the
CVB. The average purchasing price was $25 for each of the computers.
The CVB was unable to provide reasonable documentation to support the
make, model, value, year, serial number, or reason for selling any of the
computers.
24 CVB Audit
Check Processing Controls can be Circumvented
The CVB currently keeps four individuals on the signature block for
writing checks: the CVB Director, the CVB Board Treasurer, the CVB
Board Chairman, and a mid-management level employee. Current
internal controls require two signatures be present on all checks; the CVB
Director and the CVB Board Treasurer are required to sign and review all
checks. When the Board Treasurer is unavailable, the Board Chairman is
authorized to sign checks. If the CVB Director is unavailable, her
designee may sign checks in her place. The signature of senior
management and a board member is an acceptable control.
However, CVB policy also allows a mid-management level employee to
sign checks in place of a board member. According to CVB personnel,
after they have determined that no one from the board will be available
for an extended period of time, the mid-management level employee is
allowed to sign checks. From the 2010 population of checks reviewed,
we found that 2 percent of all checks signed did not contain the proper
signatures. During our review of the bank statements from Fiscal Year
2010, we found at least 11 instances where the only two signatures on
checks were those of the CVB Director and the mid-management level
employee.
Employees have signed their own checks. During our examination
of the bank account used to maintain HOT funds, we found 12 separate
instances where an employee signed their own check—8 of the 12 errors,
or 66 percent were payroll checks. Typically, the CVB pays employees
through direct deposit. For the second pay period in May 2010, however,
CVB employees were paid with checks from the CVB operations account.
All of the paychecks were signed by two employees. Therefore, the two
employees who signed everyone else’s paycheck also signed their own
paycheck. The paychecks reconciled with the amounts of other
paychecks, but this is an example of a control deficiency that creates a
high-risk opportunity for employees to commit fraud.
Non-payroll checks have been issued to employees. The CVB
currently uses direct deposit to pay employees. In fiscal year 2010, we
found 55 non-payroll checks that were issued to employees; which
constitutes 9.27 percent of all outgoing checks processed. There may be
completely legitimate reasons for an employee to receive a non-payroll
check such as being reimbursed for a business purchase they made with
personal funds. However, these transactions are high-risk because check
CVB Audit 25
authorization controls can be circumvented. For example, an employee
received a check for $500 that was signed by a mid-management level
employee and did not contain the signature of a board member.
26 CVB Audit
Recommendations
The Brazos Valley Convention and Visitors Bureau needs a few
improvements, encompassed in the following audit recommendations.
Implementing these recommendations will increase internal controls to
reduce the risk of fraud, waste and abuse. It will also increase the level
of accountability by improving the accurateness and reliability of
performance measures reported to the City.
1. The CVB should not use city HOT funds to hire consultants to provide
information to city officials in order to influence policy decisions.
Being able to control (1) the scope of work of a study and (2) the
data the study produces can lead to data manipulation.
Consequently, information said to be the result of a consultant’s study
is less reliable when the consultant’s client has a strong incentive for
the results to be favorable. The City Council may desire to have
studies conducted to determine the best uses of HOT funding, return
on investment of HOT allocations, or the estimated spending of those
visiting the City. If the City Council requests to know this type of
information, they should direct city staff to use HOT funds to
commission the consultant work. However, the use of HOT funds by
the CVB for consultant services could be appropriate under certain
circumstances. For example, consultants may be needed to provide
essential information required to receive grant funding. The CVB’s
use of consultants’ studies to obtain information to improve CVB
operations, productivity, or performance may also be beneficial.
2. The CVB should increase efforts to collect more accurate and reliable
pickup and room rate data from area hotels. This could be done by
effectively communicating to area hotels that CVB funding is
dependent upon gathering this information. If area hotels value the
service the CVB provides to them, they should be willing to offer
information that cost them very little to provide. One possible use of
this information would be to provide a more precise return on
investment of HOT funds using the following equation:
ROI = ( Pickup Nights × Room Rate × 7% )
HOT Funding
3. The CVB should update the type of measures they are reporting to
the City. The measures reported should be reliable, clear, and
CVB Audit 27
concise. They should also effectively measure CVB workload and
outcome. The CVB may stop reporting several measures that
currently don’t fit these criteria in order to focus on more meaningful
and accurate reporting. Workload and outcome measures the CVB
could possibly report to the City are as follows:
Workload Measure Examples:
The total number of events the CVB serviced
The total number of hotel rooms that were booked by the CVB
The total number of pickups from events serviced by the CVB
Outcome Measure Examples:
The total number of pickups where the CVB had an impact on the
event coming to the Brazos Valley
The percentage of CVB impacted pickups to the total number
bookings from events serviced by the CVB
Return on investment (see recommendation 2)
4. The CVB Executive Director should develop written policies and
procedures that adequately govern the daily operations of CVB
personnel. The policies should be designed to (1) promote
conformance with HOT rules and regulations and (2) provide
assurance that HOT funds are being safeguarded and appropriately
spent. Personnel should receive training regarding these written
policies and procedures when they are initially hired and periodically
throughout the term of their employment.
5. If the CVB continues to use an accountable plan to account for
employee purchases, employees should be required to provide
sufficient documentation to justify the business expense—providing
non-itemized receipts is not sufficient documentation. If the
employee cannot provide sufficient documentation to prove that the
purchase met a legitimate business need, they should be required to
pay for the purchase.
6. The CVB Executive Director should no longer endorse travel
expenditures on entertainment or inter-organizational parties that use
College Station HOT funds as a funding source. If the CVB wishes to
continue to make these types of expenditures, they should expend
funds from an account where City HOT funds are not maintained. For
example, they could use funds from the events account for staff
entertainment or party expenditures.
28 CVB Audit
7. Adequate supervision of purchases needs to become a focal point of
CVB management. Purchases such as gifts, alcohol, or local meals
should have a greater deal of scrutiny because they can easily be
interpreted as non-legitimate business expenditures. An approval
hierarchy should be implemented, where the individual approving the
transaction is sufficiently independent to be able to not approve the
requested expense reimbursement if inadequate documentation is
provided to determine the business purpose of the purchase.
8. Existing controls over check purchasing processes need to be
enforced and updated. Future check processing controls should
require the signatures of the CVB Executive Director or her designee
and a board member on every check. There should be a system of
internal control that prevents two employees or two board members
from signing any check.
9. Because the CVB is a small organization, implementing proper
separation of duties as a security control may not be feasible.
Therefore, increased management oversight over the accounting
system should be implemented as a mitigating control. The Executive
Director should become familiar with the QuickBooks system and the
features that allow her to review voided transactions and other high
risk expenditures. For example, the CVB Executive Director could
review voided transaction or audit trail reports on a periodic basis to
verify that inappropriate adjustments are not being made to cover
fraudulent behavior.
CVB Audit 29
Appendix A: Methodology Used to Determine CVB Impact
Communication between CVB staff and event coordinators, planners, attendees and hoteliers are
documented in the CVB’s information tracking system (Infotrac). We obtained all communication
contained in this system for each event serviced by the CVB in fiscal year 2010. We reviewed this
documentation for specific communication indicating the CVB impact on bringing the event to the Bryan
or College Station area (B/CS). The list below contains examples of some of the types of indicators we
found to help us determine the impact the CVB had on bringing an event to B/CS. This list is not all
inclusive, but is meant to serve as examples.
Examples of Strong Negative Indicators
1. The event coordinator, planner or attendee was contacted by the CVB after she had already been
holding her event in B/CS.
2. The event was held in B/CS the previous year, and the event was not originally recruited to be held
in B/CS by the CVB. Additionally, the event may have used the CVB as a booking agent some years
and not others, while still holding their event in B/CS.
Examples of Medium Negative Indicators
3. Negative actions by the CVB did not keep the event from coming to B/CS.
4. The event was directly related to Texas A&M University or was bid on by university employees.
5. The event was bid on or recruited and brought into B/CS by another agency, such as the City’s Parks
and Recreation Department.
6. The event type was a wedding or reunion. These types of events are not normally ―recruited‖ and
are normally local events.
Examples of Weak Negative Indicators
7. The CVB had no contact with the event coordinator, planner or attendee; the only interaction found
in the Infotrac system is with hotels’ staff or inter-organizationally among CVB staff.
8. The event headquarters is located in B/CS.
9. The event planner does its own booking.
The list below contains examples of indicators that the CVB had an impact in bringing an event to B/CS.
This list is not all inclusive, but is meant to serve as examples.
Examples of Strong Positive Indicators
1. The event appeared to not by coming B/CS, but through CVB recruitment efforts the event took place
in B/CS. For example, the event coordinator stated they or the decision-making entity for the
organization were disinterested in the location, but the event ended up coming to B/CS after
communication with CVB personnel.
2. The CVB recruited the event over a few years and was specifically mentioned as the reason B/CS was
considered as a venue.
Examples of Medium Positive Indicators
3. The event is a major national (or perhaps regional) event that is heavily recruited by other venues.
4. The CVB put a bid on the event to bring the event to B/CS.
Examples of Weak Positive Indicators
5. The event coordinator refers to meeting CVB staff at a tradeshow or event.
6. The CVB putting a great deal of time into recruiting, that may have led to the event coming to B/CS—
evidenced by numerous e-mails and the workload determined within the Infotrac system (i.e.
preparing bags, brochures, servicing an event, etc).
30 CVB Audit
Appendix A (cont.): Methodology Used to Determine CVB Impact
The following is a list of examples that would indicate that the CVB may or may not have had an impact
on the event coming to B/CS; therefore, they are listed as neutral indicators. This list is not all inclusive,
but is meant to serve as examples.
Examples of Neutral Indicators
1. Although the event coordinators wanted to bring the event to B/CS, the CVB assisted in making that
decision definite.
2. There are some weak negative and some weak positive indicators present in the communication for
the event.
3. There is little or no evidence of positive or negative indicators found in the Infotrac system for the
event.
We recorded a quantifiable score between 1 and 5 for each event serviced by the CVB in fiscal year 2010.
The criteria used to determine this score is described below. If there was inadequate information to
make a determination, the event was given a neutral score of ―3‖.
Score Scoring Definition
1 = There are no positive indicators (regardless if they are strong, medium or weak positive
indicators) and there is evidence of indicators that would fit into the strong negative indicators
category or there are multiple medium and weak (more than 2) negative indicators.
2 = There is no evidence of negative indicators that would fit into the strong category, or if there is
evidence of a strong negative indicator it is offset by examples of medium or weak positive
indicators. Examples of weak negative indicators exist without the presence of positive
indicators, or medium negative indicators may exist that are somewhat offset by weak positive
indicators.
3 = There is evidence of neutral indicators or there are an equal number of positive and negative
indicators of the same type (typically weak indicators).
4 = There is no evidence of positive indicators that would fit into the strong category, or if there is
evidence of a strong positive indicator it is offset by examples of medium or weak negative
indicators. Examples of weak positive indicators exist without the presence of negative
indicators, or medium positive indicators may exist that are somewhat offset by weak negative
indicators.
5 = There are no negative indicators (regardless if they are strong, medium or weak positive
indicators) and there is evidence of indicators that would fit into the strong positive indicators
category or there are multiple medium and weak (more than 2) positive indicators.
CVB Audit 31
Appendix B: Summary of Possible Inappropriate Transactions
Vendor Amount FY Description
Christopher’s World Grille 3,931.20 2008 Alcohol ($1,404), Party
The Tap Piano Bar 2,586.25 2010 No Itemized Receipt
Christopher’s World Grille 2,536.75 2008 No Itemized Receipt, After Hours
Carmelo’s Restaurant 2,015.00 2008 No Itemized Receipt
Christopher’s World Grille 1,597.20 2008 Alcohol ($329), Party
Office Christmas Party 1,587.00 2010 Party
Hurricane Harry’s 1,575.00 2008 No Itemized Receipt
J. Cody’s BBQ 1,196.00 2008 No Itemized Receipt
Hurricane Harry’s 1,050.00 2008 No Itemized Receipt
Christopher’s World Grille 1,000.00 2010 No Itemized Receipt
The Eagle 775.00 2008 Local Advertising
Café Excel 577.25 2011 Alcohol ($107.50), Party
Boys and Girl Club 550.00 2011 Donation to Local Club
J.J.’s 536.59 2010 Alcohol
Luke’s Bartending 420.00 2010 Alcohol
Atami Japanese Restaurant 386.13 2009 No Itemized Receipt, Party
Christopher’s World Grille 368.64 2008 No Itemized Receipt, After Hours
Sam’s Club 308.00 2009 Alcohol ($33.98)
The Eagle 300.00 2009 Local Advertising
Truman Chocolates 276.13 2010 No Itemized Receipt, Gift
The Eagle 255.00 2009 Local Advertising
Spec’s Wine & Spirits 244.15 2010 Alcohol
Abuelo’s 200.00 2010 No Itemized Receipt
Richard Petty Driving Exp. 198.00 2011 Employee Entertainment
Sam’s Club 193.88 2010 Alcohol
The Tap Piano Bar 185.75 2009 No Itemized Receipt
Abuelo’s 160.00 2010 No Itemized Receipt, Going Away Meal
Riviera Day Spa 150.50 2008 No Itemized Receipt, Gift
Marriott Desert Ridge Resort 125.00 2009 Employee Entertainment
Office Depot 123.85 2008 Party Supplies
Various Restaurants 120.47 2009 Cost Under Accountable Plan
Things Remembered 114.76 2010 Board Gift
Abuelo’s 111.00 2009 No Itemized Receipt, Going Away Meal
Colorado Rockies Game 108.00 2009 Employee Entertainment
Cavender’s Boot City 102.84 2008 Employee Gift
Gift cards for interns 102.00 2010 Employee Gift
Parkinson’s Disease Strikeout 100.00 2009 Donation to Individual
Golf 99.00 2010 Employee Entertainment
Hilton Lobby Bar 96.00 2008 No Itemized Receipt, After Hours
Things Remembered 95.25 2010 Employee Gift
Wings N’ More 91.42 2009 Employee 15-year Meal
Grand Station 88.30 2008 Party
Fox and Hound 88.00 2010 Employee Gift
Sam’s Club 87.86 2011 Alcohol
Aggieland Outfitters 81.18 2010 Employee Gift
Dixie Chicken 80.75 2011 Meal During Staff Photo
32 CVB Audit
Appendix B (cont.): Summary of Possible Inappropriate Transactions
Vendor Amount FY Description
Hobby Lobby 80.21 2008 Employee Gift
Garlands Parks Funeral Home 79.90 2010 Employee Gift
Universal Studios Orlando 79.88 2009 Employee Entertainment
Hospice Brazos Valley 75.00 2009 Employee Gift
Fleming’s Steakhouse 74.50 2010 Alcohol
Petal Patch 67.95 2010 Employee Gift
Petal Patch 60.00 2009 Gift
Sports Bar 60.00 2011 No Itemized Receipt
Discount Trophy Bryan 55.50 2009 Employee Gift
Houston National Golf Club 54.69 2008 Personal Purchase
Rosa’s Café 54.51 2008 Birthday
Various 54.07 2009 Gift
Petal Patch 51.00 2008 Employee Gift
Ritz-Carlton Hotel 51.00 2009 No Itemized Receipt
REI 50.00 2009 Employee Gift
DTE/Aggieland 45.00 2008 Employee Gift
Everton Hotel 43.00 2010 Alcohol
Wynkoop Brewing Company 38.00 2009 No Itemized Receipt
HEB 36.75 2008 Birthday
Mi Cocina 35.37 2011 Birthday
Great American Cookie 34.99 2009 Birthday
Drover Saloon, KS City, MO 34.46 2009 No Itemized Receipt
Mi Cocina 34.12 2009 No Itemized Receipt, Birthday
Grand Station (Laser Tag) 34.00 2008 Party
Staff Christmas Picture 33.00 2011 Staff Christmas Picture
Mi Cocina 31.68 2010 No Itemized Receipt, Birthday
Coldstone Creamery 28.12 2010 No Itemized Receipt, Birthday
Cash Bar 26.00 2011 No Itemized Receipt
Cheesecake Factory 25.15 2011 Alcohol
Aramark Coors Field 24.00 2009 No Itemized Receipt
Margarita Rocks 23.29 2008 No Itemized Receipt, After Hours
Pechanga Resort and Casino 23.00 2010 No Itemized Receipt
Moonshine Patio Bar 23.00 2009 No Itemized Receipt
Bluegrass Brewing Company 21.00 2011 No Itemized Receipt
Hilton Bar 20.00 2011 No Itemized Receipt
Krogers 18.39 2010 Gift
McDonalds 17.49 2010 Local Meal
Mai Tai Bar, Daytona Beach, FL 17.00 2011 No Itemized Receipt, After Hours
Brewzzi, West Palm Beach, FL 15.00 2009 No Itemized Receipt, After Hours
Dirty Nelly’s 14.25 2009 No Itemized Receipt, After Hours
Cash Bar 12.00 2010 No Itemized Receipt
Spec’s Wine and Spirits 11.93 2010 Alcohol, Gift
Marriott Bar 11.10 2011 No Itemized Receipt
Cash Bar 10.00 2008 No Itemized Receipt
Marriott Bar 8.23 2011 No Itemized Receipt
Marriott Bar 8.06 2011 No Itemized Receipt
CVB Audit 33
Appendix B (cont.): Summary of Possible Inappropriate Transactions
Vendor Amount FY Description
Drinks for photographers 8.00 2010 No Itemized Receipt
Murphy’s Law 7.75 2010 Alcohol
O’malley’s Pub, FL 6.20 2010 Alcohol
Caesar’s Palace (Mini Bar) 5.41 2010 Alcohol
Marriott Bar 5.36 2011 No Itemized Receipt
Moonshine Bar 4.00 2011 Alcohol
Hula Hut 4.00 2011 Alcohol
34 CVB Audit
Appendix C: Management’s Response to the Audit Recommendations
CVB Audit 35
Appendix C (cont.): Management’s Response to the Audit Recommendations
36 CVB Audit
Appendix C (cont.): Management’s Response to the Audit Recommendations
CVB Audit 37
Appendix C (cont.): Management’s Response to the Audit Recommendations