Audit of DPS basketball gate receipts finds lack of control over funds

A review of the cash receipts process at Detroit Public Schools’ basketball games by the DPS Office of the Auditor General (OAG) has concluded that school officials must make improvements to the process of tracking and safeguarding the funds.
The OAG, which attended and reviewed 22 regular-season games during the 2009-2010 school year, found cash management procedures were inconsistent, varied by school, and were not in compliance with policies and procedures outlined in the School Financial Management Manual and the DPS Interscholastic Athletic Manuals.
The review was conducted at the direction of DPS Emergency Financial Manager Robert Bobb following a similar review of procedures during the 2009 football season. Many of the non-compliances cited during football season were still apparent at basketball games.
“We noted limited progress has been made in controls over cash receipts at DPS sporting events since our audit was performed in the Fall of 2009,” said Odell Bailey, DPS Auditor General.
“To ensure compliance with District policy and full accountability over cash receipts at sporting events, we believe a concerted effort is needed to train administrators, monitor the level of compliance and enforce penalties for non compliance.”
Specifically, the OAG noted that ticket selling and ticket taking were performed by the same person, that cash was accepted without tickets being sold, and that concession sales were not recorded on an approved fundraising form.
Because of those practices, the OAG concluded there is no assurance that all cash collected is accounted for and raises the risk of theft.
The OAG also found initial gate and concessions funds were not provided by the bookkeeper and required funds to be loaned from personal sources and repaid out of cash receipts prior to reconciliation. This practice, the OAG concluded, results in co-mingling of school and personal funds without verification controls and reduces cash-receipts accountability.
In addition, the OAG reported cash proceeds were not immediately reconciled and, in one instance, were reconciled by one person, thus increasing the risk of errors going undetected and reducing the accountability of cash receipts. It was also found that cash receipts were not deposited into the Office of Athletics Revenue Account and untimely deposits resulted in funds not being available for their intended purpose.
The OAG also noted that there were no uniform practices followed by the Office of Athletics regarding free admission for staff, administrators, coaches, scouts, children, etc., food handling procedures for concessions, and inventory procedures for concessions.
To address the issues of non-compliance, the OAG recommended that the Office of Athletics train all athletic coordinators on the cash management process and monitor for compliance. With regard to the lack of standards, the OAG recommended that the Office of Athletics issue policy to address the noted areas to help ensure consistency among all participating high schools.
To help ensure collected cash is safeguarded, the OAG listed several Matters for Consideration to the Office of Athletics: Working with the Finance Department to establish cash management processes that allow greater monitoring of school athletic events; working with the Office of Public Safety to ensure officers are present and on-time at games and stationed near the ticket seller; working with Payroll to develop a method to ensure DPS staff that work additional hours at sporting events are paid through the normal payroll process rather than with a check from the school’s bank account.
Given the popularity of DPS basketball, a substantial amount of money is generated. For the 22 regular-season games reviewed, the OAG noted that nearly $19,000 was collected from gate receipts and concession sales for an average of $862 a game. Post-season and tournament games were not reviewed but the OAG noted that the Office of Athletics collected nearly $100,000 from these events from Dec. 1, 2009 through April 1, 2010.
“DPS must redouble its efforts to provide every athlete, every parent, every athletic spectator, a complete sense of assurance that all controls are in place to guarantee that every dollar intended for the students’ athletics programs is handled in such a manner that it can only be used for the benefit of students,” Bobb said. “I am very concerned that this has taken too long already.”

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